©SOPHIABENNETT@2024-2025 Monday, August 26, 2024 6:09 AM
Econ 211 UTK exam 1 Study Questions and Answers
Economics - Answer✔️✔️-The study of how people make decisions given
the scarcity of resources
Incentives - Answer✔️✔️-a positive or negative environmental stimulus that
motivates behavior
Ceteris Paribus - Answer✔️✔️-meaning everything else stays the same
What 3 things can you never have enough of (scarcity and opportunity
cost) - Answer✔️✔️-time, money, and resources
Microeconomics - Answer✔️✔️-the study of how households and firms
make decisions and how they interact in markets
Economic model - Answer✔️✔️-a simplified version of reality used to
analyze real-world economic situations
positive analysis - Answer✔️✔️-analysis concerned with what is (can be
answered using facts and information)
normative analysis - Answer✔️✔️-analysis concerned with what ought to be
(based on beliefs and/or opinions
What is equity? - Answer✔️✔️-fairness
What are the three main assumptions in economics? - Answer✔️✔️-1. People
are rational
1
, ©SOPHIABENNETT@2024-2025 Monday, August 26, 2024 6:09 AM
2. People are self interested (opposite is altruistic)
3. People respond to incentives
Marginal = - Answer✔️✔️-additional
Capitalist/ market economy - Answer✔️✔️-private individuals and firms
own most of the resources, innovation due to competition, government role
is to protect property rights
Communist/ Planned economy - Answer✔️✔️-Most resources owned by the
government
Mixed economy - Answer✔️✔️-is a mixture between capitalist/market and
communist/planned
What are the four factors of production? - Answer✔️✔️-land, labor, capital,
entrepreneurship
Investment = - Answer✔️✔️-purchase of new capital
Investment DOES NOT mean - Answer✔️✔️-investing in the stock market
PPF assumptions - Answer✔️✔️-all factors of production go towards the
production of 2 goods
Linear PPF - Answer✔️✔️-opportunity cost is the slope (constant)
To shift PPF inward... - Answer✔️✔️-Destroy capital or other factors of
production (natural disasters, war)
2
Econ 211 UTK exam 1 Study Questions and Answers
Economics - Answer✔️✔️-The study of how people make decisions given
the scarcity of resources
Incentives - Answer✔️✔️-a positive or negative environmental stimulus that
motivates behavior
Ceteris Paribus - Answer✔️✔️-meaning everything else stays the same
What 3 things can you never have enough of (scarcity and opportunity
cost) - Answer✔️✔️-time, money, and resources
Microeconomics - Answer✔️✔️-the study of how households and firms
make decisions and how they interact in markets
Economic model - Answer✔️✔️-a simplified version of reality used to
analyze real-world economic situations
positive analysis - Answer✔️✔️-analysis concerned with what is (can be
answered using facts and information)
normative analysis - Answer✔️✔️-analysis concerned with what ought to be
(based on beliefs and/or opinions
What is equity? - Answer✔️✔️-fairness
What are the three main assumptions in economics? - Answer✔️✔️-1. People
are rational
1
, ©SOPHIABENNETT@2024-2025 Monday, August 26, 2024 6:09 AM
2. People are self interested (opposite is altruistic)
3. People respond to incentives
Marginal = - Answer✔️✔️-additional
Capitalist/ market economy - Answer✔️✔️-private individuals and firms
own most of the resources, innovation due to competition, government role
is to protect property rights
Communist/ Planned economy - Answer✔️✔️-Most resources owned by the
government
Mixed economy - Answer✔️✔️-is a mixture between capitalist/market and
communist/planned
What are the four factors of production? - Answer✔️✔️-land, labor, capital,
entrepreneurship
Investment = - Answer✔️✔️-purchase of new capital
Investment DOES NOT mean - Answer✔️✔️-investing in the stock market
PPF assumptions - Answer✔️✔️-all factors of production go towards the
production of 2 goods
Linear PPF - Answer✔️✔️-opportunity cost is the slope (constant)
To shift PPF inward... - Answer✔️✔️-Destroy capital or other factors of
production (natural disasters, war)
2
