ECON 1100 COMPLETE LATEST CH 1
BASED QUESTIONS AND ANSWERS
Economics - ANSWER-a social science that studies how choices are made and the consequences of those
choices
Economy - ANSWER-refers to all the decisions, or choices, made by economic agents within a given
geographic area that involve the use of scarce resources
Economic System - ANSWER-the way a society is organized to decide what outputs to produce and to
decide who gets to consume those outputs
Microeconomics - ANSWER-studies the individual parts of the economy: the households, the firms, the
markets, and the various organizations that exist within the economy; the main focus is the behavior of
consumers (buyers) and producers (sellers) on their market activity and the production and pricing
decisions of firms
Macroeconomics - ANSWER-uses measures of total economic activity, or economic aggregates, such as
gross domestic product, inflation, and the national unemployment rate to gauge the performance of the
overall economy; main focus is the economy as a whole
Positive Economics - ANSWER-uses factual information and economic analysis to identify what is without
making a value judgment; looks at a situation, often using information both past and present to assess
the situation without evaluating it as, for example, good or bad
Normative Economics - ANSWER-evaluates a situation with respect to what should be which requires a
value judgment; takes a subjective approach to a situation and attempts to classify it as good or bad,
desirable or undesirable, right or wrong
Positive Microeconomics- example - ANSWER-"People are likely to buy more new cars if the price of new
cars fall substantially."
Positive Macroeconomics- example - ANSWER-"The unemployment rate increases when the economy is
in a recession."
Normative Microeconomics- examples - ANSWER-"Parking on college campuses should be free for
students enrolled in college."
Normative Macroeconomics- examples - ANSWER-"Raising taxes on corporations and wealthy individuals
is the best way to balance the federal budget."
Scarcity - ANSWER-the basic economic problem that forces all societies to decide:
-what outputs to produce
-how to produce the outputs
-who ultimately gets to consume the outputs
Scarce Resources - ANSWER--land (natural resources)
-labor
-capital
-entrepreneurship
Scarce Resource- Land - ANSWER-encompasses all gifts of nature, including land and other resources
such as timber, water, minerals, and climate
Scarce Resource- Labor - ANSWER-the human effort applied to the production process. Production is
defined as the transformation of inputs into outputs and can mean a lot of different types of activity
such as transforming a piece of lumber into a bookshelf or moving crates of lettuce from the field to the
grocery store
Scarce Resource- Capital - ANSWER-refers to the equipment and buildings used in production such as the
factories, the machines, the computers, and the delivery trucks that have been produced in the past,
which can be used to produce goods and provide services in the present and in the future
BASED QUESTIONS AND ANSWERS
Economics - ANSWER-a social science that studies how choices are made and the consequences of those
choices
Economy - ANSWER-refers to all the decisions, or choices, made by economic agents within a given
geographic area that involve the use of scarce resources
Economic System - ANSWER-the way a society is organized to decide what outputs to produce and to
decide who gets to consume those outputs
Microeconomics - ANSWER-studies the individual parts of the economy: the households, the firms, the
markets, and the various organizations that exist within the economy; the main focus is the behavior of
consumers (buyers) and producers (sellers) on their market activity and the production and pricing
decisions of firms
Macroeconomics - ANSWER-uses measures of total economic activity, or economic aggregates, such as
gross domestic product, inflation, and the national unemployment rate to gauge the performance of the
overall economy; main focus is the economy as a whole
Positive Economics - ANSWER-uses factual information and economic analysis to identify what is without
making a value judgment; looks at a situation, often using information both past and present to assess
the situation without evaluating it as, for example, good or bad
Normative Economics - ANSWER-evaluates a situation with respect to what should be which requires a
value judgment; takes a subjective approach to a situation and attempts to classify it as good or bad,
desirable or undesirable, right or wrong
Positive Microeconomics- example - ANSWER-"People are likely to buy more new cars if the price of new
cars fall substantially."
Positive Macroeconomics- example - ANSWER-"The unemployment rate increases when the economy is
in a recession."
Normative Microeconomics- examples - ANSWER-"Parking on college campuses should be free for
students enrolled in college."
Normative Macroeconomics- examples - ANSWER-"Raising taxes on corporations and wealthy individuals
is the best way to balance the federal budget."
Scarcity - ANSWER-the basic economic problem that forces all societies to decide:
-what outputs to produce
-how to produce the outputs
-who ultimately gets to consume the outputs
Scarce Resources - ANSWER--land (natural resources)
-labor
-capital
-entrepreneurship
Scarce Resource- Land - ANSWER-encompasses all gifts of nature, including land and other resources
such as timber, water, minerals, and climate
Scarce Resource- Labor - ANSWER-the human effort applied to the production process. Production is
defined as the transformation of inputs into outputs and can mean a lot of different types of activity
such as transforming a piece of lumber into a bookshelf or moving crates of lettuce from the field to the
grocery store
Scarce Resource- Capital - ANSWER-refers to the equipment and buildings used in production such as the
factories, the machines, the computers, and the delivery trucks that have been produced in the past,
which can be used to produce goods and provide services in the present and in the future
