ECON 100 EXAM #1 QUESTIONS AND
CORRECT ANSWERS
Marginal Benefit ✅✅CORRECT ANSW-the benefit of hte consumption of one additional unit
Positive Economics ✅✅CORRECT ANSW-describes the economy as it actually is, avoiding value
judgments and attempting to establish scientific statements about economic behavior
Normative Economics ✅✅CORRECT ANSW-involves value judgments about what the economy
should be like and the desirability of the policy options available
Budget Line ✅✅CORRECT ANSW-the combinations of goods/services that a consumer can
purchase given current prices with his/her income
Capital Goods ✅✅CORRECT ANSW-goods purchased by firms that aid in future produciton of
other goods
PPF Curve ✅✅CORRECT ANSW-a curve that depicts the maximum output of an economy,
devoting its production to two goods under fixed resources and technology
Law of Increasing Opportunity Cost ✅✅CORRECT ANSW-as produciton of a good increases so
does cost associated with the production of that good
Command System ✅✅CORRECT ANSW-an economic system where production and use of
resources is centrally planned
Economics ✅✅CORRECT ANSW-the social science that studies how individuals, institituions and
society make optimal choices under conditions of scarcity.
Scarcity ✅✅CORRECT ANSW-limited resources
Opportunity Cost ✅✅CORRECT ANSW-the lost or forgoing of the next best thing to recieve an
additional unit of something
, Utility ✅✅CORRECT ANSW-the benefit an indicidual recieves from the consumption of a good or
service
Marginal Cost ✅✅CORRECT ANSW-the cost of consumption of one additoinal unit
Market System ✅✅CORRECT ANSW-an economic system where production and use of resources
is dependent on the market
The Invisible Hand ✅✅CORRECT ANSW-a theory by Adam Smith that says markets guided by self
interest and competition can lead to an efficient allocation of resources
Laissez-faire ✅✅CORRECT ANSW-economic concept promoting a self-regulating economy
Market ✅✅CORRECT ANSW-a mechanism that allows for bers and sellers to meet and exchange
goods and services
Law of Demand ✅✅CORRECT ANSW-all esle equal, there is a negative relationship between price
and the quantity demanded by consumers
Demand ✅✅CORRECT ANSW-a curve that represents the number of products that consumers are
willing to purchase at that price
Diminishing Marginal Utility ✅✅CORRECT ANSW-for an individual, additonal consumptions of the
same good will yield less and less utility in return
Change in Quantity Demanded ✅✅CORRECT ANSW-movement along the demand curve caused b
y a price change
Change in Demand ✅✅CORRECT ANSW-shift in a demand curve
Normal Goods ✅✅CORRECT ANSW-products taht are purchased more when an individuals
income increases
CORRECT ANSWERS
Marginal Benefit ✅✅CORRECT ANSW-the benefit of hte consumption of one additional unit
Positive Economics ✅✅CORRECT ANSW-describes the economy as it actually is, avoiding value
judgments and attempting to establish scientific statements about economic behavior
Normative Economics ✅✅CORRECT ANSW-involves value judgments about what the economy
should be like and the desirability of the policy options available
Budget Line ✅✅CORRECT ANSW-the combinations of goods/services that a consumer can
purchase given current prices with his/her income
Capital Goods ✅✅CORRECT ANSW-goods purchased by firms that aid in future produciton of
other goods
PPF Curve ✅✅CORRECT ANSW-a curve that depicts the maximum output of an economy,
devoting its production to two goods under fixed resources and technology
Law of Increasing Opportunity Cost ✅✅CORRECT ANSW-as produciton of a good increases so
does cost associated with the production of that good
Command System ✅✅CORRECT ANSW-an economic system where production and use of
resources is centrally planned
Economics ✅✅CORRECT ANSW-the social science that studies how individuals, institituions and
society make optimal choices under conditions of scarcity.
Scarcity ✅✅CORRECT ANSW-limited resources
Opportunity Cost ✅✅CORRECT ANSW-the lost or forgoing of the next best thing to recieve an
additional unit of something
, Utility ✅✅CORRECT ANSW-the benefit an indicidual recieves from the consumption of a good or
service
Marginal Cost ✅✅CORRECT ANSW-the cost of consumption of one additoinal unit
Market System ✅✅CORRECT ANSW-an economic system where production and use of resources
is dependent on the market
The Invisible Hand ✅✅CORRECT ANSW-a theory by Adam Smith that says markets guided by self
interest and competition can lead to an efficient allocation of resources
Laissez-faire ✅✅CORRECT ANSW-economic concept promoting a self-regulating economy
Market ✅✅CORRECT ANSW-a mechanism that allows for bers and sellers to meet and exchange
goods and services
Law of Demand ✅✅CORRECT ANSW-all esle equal, there is a negative relationship between price
and the quantity demanded by consumers
Demand ✅✅CORRECT ANSW-a curve that represents the number of products that consumers are
willing to purchase at that price
Diminishing Marginal Utility ✅✅CORRECT ANSW-for an individual, additonal consumptions of the
same good will yield less and less utility in return
Change in Quantity Demanded ✅✅CORRECT ANSW-movement along the demand curve caused b
y a price change
Change in Demand ✅✅CORRECT ANSW-shift in a demand curve
Normal Goods ✅✅CORRECT ANSW-products taht are purchased more when an individuals
income increases
