ECO 201 EXAM 1 NIETFELD
QUESTIONS AND ANSWERS
100% PASS
scarcity - ✔✔refers to the inherently limited nature of society's resources, given
society's unlimited wants and needs
economics - ✔✔the study of how individuals and societies allocate their limited
resources to satisfy their unlimited wants
microeconomics - ✔✔the study of the individual units that make up the economy
macroeconomics - ✔✔the study of the overall aspects and workings of an economy
incentives - ✔✔factors that motivate a person to act or exert effort
opportunity cost - ✔✔the highest-valued alternative that must be sacrificed to get
something else
economic thinking - ✔✔a purposeful evaluation of the available opportunities to make
the best decision possible
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, marginal thinking - ✔✔the evaluation of whether the benefit of one more unit of
something is greater than its cost
markets - ✔✔systems that bring buyers and sellers together to exchange goods and
services
circular flow diagram - ✔✔a diagram that shows how goods, services, and resources
flow through the economy
trade - ✔✔the voluntary exchange of goods and services between two or more parties
comparative advantage - ✔✔the situation where an individual, business, or country can
produce at a lower opportunity cost than a competitor can
positive statement - ✔✔an assertion that can be tested and validated; it describes "what
is"
normative statement - ✔✔an opinion that cannot be tested or validated; it describes
"what ought to be"
ceteris peribus - ✔✔meaning "other things being equal," the concept under which
economists examine a change in one variable while holding everything else constant
indigenous factors - ✔✔the variables that are inside a model
exogenous factors - ✔✔the variables that are outside a model
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 2
QUESTIONS AND ANSWERS
100% PASS
scarcity - ✔✔refers to the inherently limited nature of society's resources, given
society's unlimited wants and needs
economics - ✔✔the study of how individuals and societies allocate their limited
resources to satisfy their unlimited wants
microeconomics - ✔✔the study of the individual units that make up the economy
macroeconomics - ✔✔the study of the overall aspects and workings of an economy
incentives - ✔✔factors that motivate a person to act or exert effort
opportunity cost - ✔✔the highest-valued alternative that must be sacrificed to get
something else
economic thinking - ✔✔a purposeful evaluation of the available opportunities to make
the best decision possible
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 1
, marginal thinking - ✔✔the evaluation of whether the benefit of one more unit of
something is greater than its cost
markets - ✔✔systems that bring buyers and sellers together to exchange goods and
services
circular flow diagram - ✔✔a diagram that shows how goods, services, and resources
flow through the economy
trade - ✔✔the voluntary exchange of goods and services between two or more parties
comparative advantage - ✔✔the situation where an individual, business, or country can
produce at a lower opportunity cost than a competitor can
positive statement - ✔✔an assertion that can be tested and validated; it describes "what
is"
normative statement - ✔✔an opinion that cannot be tested or validated; it describes
"what ought to be"
ceteris peribus - ✔✔meaning "other things being equal," the concept under which
economists examine a change in one variable while holding everything else constant
indigenous factors - ✔✔the variables that are inside a model
exogenous factors - ✔✔the variables that are outside a model
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 2
