ECON 111: Principles of Macroeconomics Exam 1 || 100%
CORRECT SOLUTIONS!!
Economics correct answers the social science dealing with the allocation of scarce resources
to meet unlimited wants; science of constrained choice
Social Science correct answers a science dealing with human behavior
Allocation correct answers distribution, assigning
4 correct answers How many factors of production are there?
Factors of Production correct answers 1.Land
2. Labor
3. Capital
4. Entrepreneurial Ability
Land correct answers all natural resources (air, minerals, etc.)
Labor correct answers all mental and physical human effort; This includes human capital
Capital correct answers tools, equipment, and machinery (includes building) used in
production process; NOT money
ex: power drill, conveyor belt, etc.
Entrepreneurial Ability correct answers individual or group of individuals that takes the risk
and pulls together all of the factors of production
Depreciation correct answers tools, equipment, and machinery falling or breaking apart
Factors of Production correct answers used to produce goods and services
The Economic Problem correct answers Unlimited wants; Human beings have an insatiable
desire for goods and services; Scarce resources and unlimited wants (problem)
Scarcity correct answers this requires choice
Choice correct answers When you make this something must be given up
Opportunity Cost correct answers the most important thing you give up when a choice is
made; next best alternative; second choice; this concept explains or behavior and decision
making
Model correct answers simplification of reality
Ceteris Paribus correct answers other things remaining equal; all other things remaining
constant
Production Possibilities correct answers model that shows production possibilities
, Assumptions for production possibilities correct answers 1. Two-good economy
2. Resources are efficiently utilized (no idle or unemployed)
3. Technology and resources are fixed
Factors of Production correct answers these are designed as factors of production
Opportunity Cost correct answers will always be stated in the terms of the good you are
giving up
Law of Increasing Cost correct answers As production of a good increases, the opportunity
cost in terms of the other good given will increase; explains why the PPC is concave to the
origin
Why is the law of increasing cost correct? correct answers Resources are specialized and not
perfectly adaptable among uses
In PPC the best place to operate correct answers On the curve
Three Fundamental Questions (questions all economic systems must answer) correct answers
1. What? (what goods and services will be produced)
2. How? (how will they produced)
-By the businesses that can do so efficiently and make profit
3. Who? (who will get those services)
-Those who are willing and able to pay
Dollar Votes correct answers says when you continually buy something, you are casting a
vote
Consumer Sovereignty correct answers says the consumer is in charge
Growth correct answers All systems must accommodate change and promote ____
Capitalism or Market Economy correct answers What kind of Economic System do we have?
Market correct answers any place or mechanism that brings togethers buyers and sellers
Market System correct answers allocates scarce resources through the interaction buyers and
sellers
Mixed Market System correct answers A little help from the government; government is
responsible for much less than people think
Three Economic Systems correct answers 1. Market System
2. Command or Planned Economy
3. Tradition and Custom
Command or Planned Economy correct answers Main issue with this: how can you make
people want to work?
CORRECT SOLUTIONS!!
Economics correct answers the social science dealing with the allocation of scarce resources
to meet unlimited wants; science of constrained choice
Social Science correct answers a science dealing with human behavior
Allocation correct answers distribution, assigning
4 correct answers How many factors of production are there?
Factors of Production correct answers 1.Land
2. Labor
3. Capital
4. Entrepreneurial Ability
Land correct answers all natural resources (air, minerals, etc.)
Labor correct answers all mental and physical human effort; This includes human capital
Capital correct answers tools, equipment, and machinery (includes building) used in
production process; NOT money
ex: power drill, conveyor belt, etc.
Entrepreneurial Ability correct answers individual or group of individuals that takes the risk
and pulls together all of the factors of production
Depreciation correct answers tools, equipment, and machinery falling or breaking apart
Factors of Production correct answers used to produce goods and services
The Economic Problem correct answers Unlimited wants; Human beings have an insatiable
desire for goods and services; Scarce resources and unlimited wants (problem)
Scarcity correct answers this requires choice
Choice correct answers When you make this something must be given up
Opportunity Cost correct answers the most important thing you give up when a choice is
made; next best alternative; second choice; this concept explains or behavior and decision
making
Model correct answers simplification of reality
Ceteris Paribus correct answers other things remaining equal; all other things remaining
constant
Production Possibilities correct answers model that shows production possibilities
, Assumptions for production possibilities correct answers 1. Two-good economy
2. Resources are efficiently utilized (no idle or unemployed)
3. Technology and resources are fixed
Factors of Production correct answers these are designed as factors of production
Opportunity Cost correct answers will always be stated in the terms of the good you are
giving up
Law of Increasing Cost correct answers As production of a good increases, the opportunity
cost in terms of the other good given will increase; explains why the PPC is concave to the
origin
Why is the law of increasing cost correct? correct answers Resources are specialized and not
perfectly adaptable among uses
In PPC the best place to operate correct answers On the curve
Three Fundamental Questions (questions all economic systems must answer) correct answers
1. What? (what goods and services will be produced)
2. How? (how will they produced)
-By the businesses that can do so efficiently and make profit
3. Who? (who will get those services)
-Those who are willing and able to pay
Dollar Votes correct answers says when you continually buy something, you are casting a
vote
Consumer Sovereignty correct answers says the consumer is in charge
Growth correct answers All systems must accommodate change and promote ____
Capitalism or Market Economy correct answers What kind of Economic System do we have?
Market correct answers any place or mechanism that brings togethers buyers and sellers
Market System correct answers allocates scarce resources through the interaction buyers and
sellers
Mixed Market System correct answers A little help from the government; government is
responsible for much less than people think
Three Economic Systems correct answers 1. Market System
2. Command or Planned Economy
3. Tradition and Custom
Command or Planned Economy correct answers Main issue with this: how can you make
people want to work?
