Econ 201 Midterm Questions and
Answers 100% Pass
Scarcity - ✔✔Refers to the limited nature of a resource given society's unlimited wants
and needs.
Economics - ✔✔How people allocate their limited resources to satisfy their unlimited
wants.
Microeconomics - ✔✔study of individual units in an economy
Macroeconomics - ✔✔study of overall aspects of a working economy.
Incentives - ✔✔that factor that motivates people to do something or exert effort
Opportunity Cost - ✔✔highest valued alternative that must be sacrificed in order to get
something
Marginal Thinking - ✔✔requires decision-makers to evaluate weather the benefit of one
or more unit of some-thing is greater than the cost
Trade - ✔✔the voluntary exchange of goods and services between two or more parties.
Comparative Advantage - ✔✔refers to a situation where an individual, business, or
country can produce at lower opportunity cost than a competitor can
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, Positive Statement - ✔✔Can be tested and validated; describes what is
Normative Statement - ✔✔an opinion, can't be tested or validated; describes what
ought to be.
Ceteris Paribus - ✔✔concept which economists examine a change in one variable where
everything else remains constant.
Endogenous Factors - ✔✔the variables that can be controlled for a model
Exogenous Factors - ✔✔are variables that cannot be controlled for I'm a model
PPF (production possibilities frontier) - ✔✔model that illustrates the combination of
outputs that a society can produce if all of its resources are being used efficiently
Law of Increasing Relative cost - ✔✔the opportunity cost of producing a good rises as a
society produces more of it.
Absolute Advantage - ✔✔refers to the ability of one producer to make more of a good
with the same quantity of resources.
Consumer Goods - ✔✔produced for presents consumption
Capital Goods - ✔✔Help produce other valuable goods and services in the future
Investment - ✔✔is the process of using resources to create or buy new capital
Positive Correlation - ✔✔occurs when two variables move in the same direction
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Answers 100% Pass
Scarcity - ✔✔Refers to the limited nature of a resource given society's unlimited wants
and needs.
Economics - ✔✔How people allocate their limited resources to satisfy their unlimited
wants.
Microeconomics - ✔✔study of individual units in an economy
Macroeconomics - ✔✔study of overall aspects of a working economy.
Incentives - ✔✔that factor that motivates people to do something or exert effort
Opportunity Cost - ✔✔highest valued alternative that must be sacrificed in order to get
something
Marginal Thinking - ✔✔requires decision-makers to evaluate weather the benefit of one
or more unit of some-thing is greater than the cost
Trade - ✔✔the voluntary exchange of goods and services between two or more parties.
Comparative Advantage - ✔✔refers to a situation where an individual, business, or
country can produce at lower opportunity cost than a competitor can
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 1
, Positive Statement - ✔✔Can be tested and validated; describes what is
Normative Statement - ✔✔an opinion, can't be tested or validated; describes what
ought to be.
Ceteris Paribus - ✔✔concept which economists examine a change in one variable where
everything else remains constant.
Endogenous Factors - ✔✔the variables that can be controlled for a model
Exogenous Factors - ✔✔are variables that cannot be controlled for I'm a model
PPF (production possibilities frontier) - ✔✔model that illustrates the combination of
outputs that a society can produce if all of its resources are being used efficiently
Law of Increasing Relative cost - ✔✔the opportunity cost of producing a good rises as a
society produces more of it.
Absolute Advantage - ✔✔refers to the ability of one producer to make more of a good
with the same quantity of resources.
Consumer Goods - ✔✔produced for presents consumption
Capital Goods - ✔✔Help produce other valuable goods and services in the future
Investment - ✔✔is the process of using resources to create or buy new capital
Positive Correlation - ✔✔occurs when two variables move in the same direction
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 2
