ECON 201 Microeconomics Exam
Questions and Answers 100% Pass
Scarcity - ✔✔refers to the limited nature of society's resources given the unlimited
wants and needs
Economics - ✔✔the study of how people allocate their limited resources to satisfy their
nearly unlimited wants
Micrieconomics - ✔✔the study of the individual units that make up the economy
*determining if policies are effective at achieving their goal
Macroeconomics - ✔✔the study of the overall aspects and workings of an economy
The 5 Foundations of Economics - ✔✔Trade
Incentives
Marginal Thinking
Trade-Offs
Opportunity Cost
(TIMTO)
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 1
, Incentives - ✔✔factors that motivate one to act or exert effort
Incentives have 2 paired categories
1) Direct and Indirect
2) Positive and Negative
Positive Incentive - ✔✔encourage action by positive consequence
Negative Incentives - ✔✔encourage action by negative consequence
Direct Incentive - ✔✔an intended factor that motivates one to act or exert effort
Indirect Incentive - ✔✔an unintended factor that motivates one to act or exert effort
Innovation - ✔✔advances society by the means of technological advancement; "the
engine of economic growth"
Trade-Offs - ✔✔something given up in order to reach an economic goal
Economists - ✔✔study decision making
Policy - ✔✔an action taken by someone to influence behavior
Prices - ✔✔The ratio at which two goods are exchanged in a market
Opportunity Cost - ✔✔the highest-valued alternative that must be sacrificed in order to
get something else
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 2
Questions and Answers 100% Pass
Scarcity - ✔✔refers to the limited nature of society's resources given the unlimited
wants and needs
Economics - ✔✔the study of how people allocate their limited resources to satisfy their
nearly unlimited wants
Micrieconomics - ✔✔the study of the individual units that make up the economy
*determining if policies are effective at achieving their goal
Macroeconomics - ✔✔the study of the overall aspects and workings of an economy
The 5 Foundations of Economics - ✔✔Trade
Incentives
Marginal Thinking
Trade-Offs
Opportunity Cost
(TIMTO)
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 1
, Incentives - ✔✔factors that motivate one to act or exert effort
Incentives have 2 paired categories
1) Direct and Indirect
2) Positive and Negative
Positive Incentive - ✔✔encourage action by positive consequence
Negative Incentives - ✔✔encourage action by negative consequence
Direct Incentive - ✔✔an intended factor that motivates one to act or exert effort
Indirect Incentive - ✔✔an unintended factor that motivates one to act or exert effort
Innovation - ✔✔advances society by the means of technological advancement; "the
engine of economic growth"
Trade-Offs - ✔✔something given up in order to reach an economic goal
Economists - ✔✔study decision making
Policy - ✔✔an action taken by someone to influence behavior
Prices - ✔✔The ratio at which two goods are exchanged in a market
Opportunity Cost - ✔✔the highest-valued alternative that must be sacrificed in order to
get something else
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 2
