B250 Exam 1
Economics - CORRECT ANSWER-the study of how people allocate their limited
resources to satisfy their unlimited wants
Scarcity - CORRECT ANSWER-Occurs when the ingredients for producing
things that people desire are insufficient to satisfy all wants
Microeconomics - CORRECT ANSWER-The study of decision making
undertaken by individuals (or households) and by firms and government
Macroeconomics - CORRECT ANSWER-The study of the behavior of the
economy as a whole
Opportunity Cost - CORRECT ANSWER-the most desirable alternative given up
as the result of a decision
posititve economics - CORRECT ANSWER-Descriptive statements or scientific
predictions
normative economics - CORRECT ANSWER-Value judgements-opinion based
three scarcity questions - CORRECT ANSWER-what, how, for whom
factors of production - CORRECT ANSWER-land, labor, capital,
entrepreneurship
Land earns - CORRECT ANSWER-rent
Labor earns - CORRECT ANSWER-wages
Capital earns - CORRECT ANSWER-interest
Entrepreneurship earns - CORRECT ANSWER-profit
, Law of Increasing Relative Cost - CORRECT ANSWER-as society attempts to
produce more of a good, the opportunity cost of additional units of that good
generally increases
Marginal Benefit - CORRECT ANSWER-the benefit received from consuming
one more unit of it
Principle of decreasing marginal benefit - CORRECT ANSWER-the more of have
of any good, the smaller is its marginal benefit and the less we are willing to pay
for an additional unit of it
absolute advantage - CORRECT ANSWER-the ability to produce more units of a
good with fixed amount of resources or producing the same amount with less
resources
comparative advantage - CORRECT ANSWER-the ability to produce a good or
service at a lower opportunity cost
Equation for Per-Worker Production Function - CORRECT
ANSWER-Q=A*F(K,L,H,N)
Growth Rate Formula - CORRECT ANSWER-New Real GDP=Old GDP x (1 +
growth rate)^N
Rule of 70 - CORRECT ANSWER-70/growth rate
Market - CORRECT ANSWER-any location in which a voluntary exchange
occurs between buyers and sellers
English auction - CORRECT ANSWER-ascending price, last bidder wins
First price, sealed bid - CORRECT ANSWER-Everyone bids blind. Highest bid
wins and pays the amount he/she bid.
Second price, sealed bid - CORRECT ANSWER-Everyone bids blind. Highest
bid wins and pays the second highest price.
Economics - CORRECT ANSWER-the study of how people allocate their limited
resources to satisfy their unlimited wants
Scarcity - CORRECT ANSWER-Occurs when the ingredients for producing
things that people desire are insufficient to satisfy all wants
Microeconomics - CORRECT ANSWER-The study of decision making
undertaken by individuals (or households) and by firms and government
Macroeconomics - CORRECT ANSWER-The study of the behavior of the
economy as a whole
Opportunity Cost - CORRECT ANSWER-the most desirable alternative given up
as the result of a decision
posititve economics - CORRECT ANSWER-Descriptive statements or scientific
predictions
normative economics - CORRECT ANSWER-Value judgements-opinion based
three scarcity questions - CORRECT ANSWER-what, how, for whom
factors of production - CORRECT ANSWER-land, labor, capital,
entrepreneurship
Land earns - CORRECT ANSWER-rent
Labor earns - CORRECT ANSWER-wages
Capital earns - CORRECT ANSWER-interest
Entrepreneurship earns - CORRECT ANSWER-profit
, Law of Increasing Relative Cost - CORRECT ANSWER-as society attempts to
produce more of a good, the opportunity cost of additional units of that good
generally increases
Marginal Benefit - CORRECT ANSWER-the benefit received from consuming
one more unit of it
Principle of decreasing marginal benefit - CORRECT ANSWER-the more of have
of any good, the smaller is its marginal benefit and the less we are willing to pay
for an additional unit of it
absolute advantage - CORRECT ANSWER-the ability to produce more units of a
good with fixed amount of resources or producing the same amount with less
resources
comparative advantage - CORRECT ANSWER-the ability to produce a good or
service at a lower opportunity cost
Equation for Per-Worker Production Function - CORRECT
ANSWER-Q=A*F(K,L,H,N)
Growth Rate Formula - CORRECT ANSWER-New Real GDP=Old GDP x (1 +
growth rate)^N
Rule of 70 - CORRECT ANSWER-70/growth rate
Market - CORRECT ANSWER-any location in which a voluntary exchange
occurs between buyers and sellers
English auction - CORRECT ANSWER-ascending price, last bidder wins
First price, sealed bid - CORRECT ANSWER-Everyone bids blind. Highest bid
wins and pays the amount he/she bid.
Second price, sealed bid - CORRECT ANSWER-Everyone bids blind. Highest
bid wins and pays the second highest price.
