D089 PRINCIPLES OF ECONOMICS EXAM
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,Economics The study of how humans make decisions in the face of scarcity.
Factors of Production Describes theninputs used in the production of goods or services to make an economic
profit.
Macroeconomics A branch of economic dealing with the performance, structure, behavior and decision
making of an economy as a whole.
Microeconomics A branch of economics that studies the behavior of individuals, and firms in making
decisions regarding the allocation of scarce resources and the interactions among these
individuals and firms.
Scarcity The basic economic problem, the gap between limited, scarce, resources and
theoretically limitless wants
Opportunity Cost The next best alternative that is given up when a choice is made.
Think at the Margin Thinking about what the next step or an additional action means for a person.
Marginal Benefit The incremental increase in the benefit to a consumer caused by the consumption of one
additional unit of a good or service.
1st (Principles of Economics ) Everyone faces tradeoffs
2nd (Principles of Economics ) The cost of something is determined by what you give up to get it.
3rd (Principles of Economics ) Rational people think at the margin.
4th (Principles of Economics ) People respond to incentives.
5th (Principles of Economics ) Trade can benefit everyone.
6th (Principles of Economics ) Markets are a sound method of organizing economic activity.
7th (Principles of Economics ) Government may be able to improve market outcomes.
, 8th (Principles of Economics ) A nation's standard of living depends on its ability to produce.
9th (Principles of Economics ) Printing too much money causes prices to rise.
10th (Principles of Economics ) There is short-run tradeoff between inflation and unemployment.
Economic Systems A system of the production, resource allocation, and distribution of goods and services
within a society or give geographic area.
Traditional Economy A economic system that relies on customs, history. and time-honored beliefs. Guides
economic decisions such as production and distribution.
Command Economy An economic system in which production, investment, prices, and incomes are
determined centrally by a government.
(Centralized)
Market Economy An economic system in which the decisions regarding investment, production, and
distribution are guided by the price signals created by the forces of supply and demand
(Decentralized)
Mixed Economy An economic system in which both private enterprise and a degree of state monopoly
(usually in public services, defense, infrastructure, and basic industries) coexist.
Positive Economics The study of economics concerned with what is and what will happen if a course of
action is taken or not taken.
Normative Economics The study of economics with what is and what will happen if a course of action is taken or
not taken.
Economic Models A simplified version of reality that allows people to observe, understand and make
predictions about economic behavior.
Economic Indicators A statistic about an economic activity.
PREP | STUDY GUIDE | QUESTIONS AND
ANSWERS | OBJECTIVE ASSESSMENT
REVIEW| GRADED A+ | GUARANTEED
SUCCESS
Updated Questions and Answers | 100% Verified Exam Prep
,Economics The study of how humans make decisions in the face of scarcity.
Factors of Production Describes theninputs used in the production of goods or services to make an economic
profit.
Macroeconomics A branch of economic dealing with the performance, structure, behavior and decision
making of an economy as a whole.
Microeconomics A branch of economics that studies the behavior of individuals, and firms in making
decisions regarding the allocation of scarce resources and the interactions among these
individuals and firms.
Scarcity The basic economic problem, the gap between limited, scarce, resources and
theoretically limitless wants
Opportunity Cost The next best alternative that is given up when a choice is made.
Think at the Margin Thinking about what the next step or an additional action means for a person.
Marginal Benefit The incremental increase in the benefit to a consumer caused by the consumption of one
additional unit of a good or service.
1st (Principles of Economics ) Everyone faces tradeoffs
2nd (Principles of Economics ) The cost of something is determined by what you give up to get it.
3rd (Principles of Economics ) Rational people think at the margin.
4th (Principles of Economics ) People respond to incentives.
5th (Principles of Economics ) Trade can benefit everyone.
6th (Principles of Economics ) Markets are a sound method of organizing economic activity.
7th (Principles of Economics ) Government may be able to improve market outcomes.
, 8th (Principles of Economics ) A nation's standard of living depends on its ability to produce.
9th (Principles of Economics ) Printing too much money causes prices to rise.
10th (Principles of Economics ) There is short-run tradeoff between inflation and unemployment.
Economic Systems A system of the production, resource allocation, and distribution of goods and services
within a society or give geographic area.
Traditional Economy A economic system that relies on customs, history. and time-honored beliefs. Guides
economic decisions such as production and distribution.
Command Economy An economic system in which production, investment, prices, and incomes are
determined centrally by a government.
(Centralized)
Market Economy An economic system in which the decisions regarding investment, production, and
distribution are guided by the price signals created by the forces of supply and demand
(Decentralized)
Mixed Economy An economic system in which both private enterprise and a degree of state monopoly
(usually in public services, defense, infrastructure, and basic industries) coexist.
Positive Economics The study of economics concerned with what is and what will happen if a course of
action is taken or not taken.
Normative Economics The study of economics with what is and what will happen if a course of action is taken or
not taken.
Economic Models A simplified version of reality that allows people to observe, understand and make
predictions about economic behavior.
Economic Indicators A statistic about an economic activity.
