Eco 201 exam 1 Questions and
Answers 100% Pass
Economics - ✔✔the study of the choices that individuals make the given presence of
scarcity/ the study of how human beings coordinate their wants
scarcity - ✔✔limited resources but unlimited wants
Types of Resources (Factors of production) - ✔✔1. Land: natural resources
2. Nonhuman animal resources
3. Labors: Human Capital
4. Capital: Resources produced using land and labor
5. Technology
6. Entrepreneurial Ability
The economy - ✔✔the institutional structure through which individuals in a society
coordinate their diverse wants
Economic agents in the economy - ✔✔1. households
2. firms
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 1
, 3. government
Issues of Allocation/ 3 Big Economic Questions - ✔✔1. what and how much to produce
2. how to produce it
3. for whom to produce it
economize - ✔✔getting the maximum benefit at the minimum cost
Economic Decision Rule - ✔✔if the marginal benefit of an action exceeds the marginal
cost, do it
Economic theory - ✔✔generalizations about the working of an abstract economy
economic models - ✔✔designed to duplicate reality in a simple way
positive statement - ✔✔a statement that can be tested, proven or disproven
Normative Statement - ✔✔A statement of opinion, cannot be proven or disproven
Invisible Hand - ✔✔is the price mechanism. prices rise when quantity supplied is less
than quantity demanded
Invisible Handshake - ✔✔Social and historical forces and cultural norms that influence
market outcomes
The invisible Foot - ✔✔political and legal forces
Ceteris Paribus - ✔✔holding all else constant
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 2
Answers 100% Pass
Economics - ✔✔the study of the choices that individuals make the given presence of
scarcity/ the study of how human beings coordinate their wants
scarcity - ✔✔limited resources but unlimited wants
Types of Resources (Factors of production) - ✔✔1. Land: natural resources
2. Nonhuman animal resources
3. Labors: Human Capital
4. Capital: Resources produced using land and labor
5. Technology
6. Entrepreneurial Ability
The economy - ✔✔the institutional structure through which individuals in a society
coordinate their diverse wants
Economic agents in the economy - ✔✔1. households
2. firms
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 1
, 3. government
Issues of Allocation/ 3 Big Economic Questions - ✔✔1. what and how much to produce
2. how to produce it
3. for whom to produce it
economize - ✔✔getting the maximum benefit at the minimum cost
Economic Decision Rule - ✔✔if the marginal benefit of an action exceeds the marginal
cost, do it
Economic theory - ✔✔generalizations about the working of an abstract economy
economic models - ✔✔designed to duplicate reality in a simple way
positive statement - ✔✔a statement that can be tested, proven or disproven
Normative Statement - ✔✔A statement of opinion, cannot be proven or disproven
Invisible Hand - ✔✔is the price mechanism. prices rise when quantity supplied is less
than quantity demanded
Invisible Handshake - ✔✔Social and historical forces and cultural norms that influence
market outcomes
The invisible Foot - ✔✔political and legal forces
Ceteris Paribus - ✔✔holding all else constant
EMILY CHARLENE © 2025, ALL RIGHTS RESERVED 2
