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ECON 104 EXAM 1 Questions And Answers
100% Pass
1. How is microeconomics different from macroeconomics? - ANS 1. Micro→ the study of
how households and firms interact in markets and make decisions, and how the government
attempts to influence their choices
2. Macro→ the study of the economy as a whole, including topics such as inflation,
unemployment, and economic growth
2. What is economics? - ANS 1. Economics→ the study of choices people make to attain their
goals, given their scarce resources
3. What are the 3 key economic ideas about how people interact and make choices in the
marketplace? - ANS 1. People are rational
2. People act in response to economic incentives
3. Optimal decisions are made at the margin
4. What is the economic problem facing every society? - ANS 1. A limited amount of
economic resources and unlimited wants
2. Trade-offs are produced
5. Standard of Living refers to ________________________. - ANS 1. Unlimited wants
2. The amount of goods and services we can buy
, ©EVERLY 2025 ALL RIGHTS RESERVED
3. To produce more goods and services, society needs resources which are scarce
6. The factors of production are land, labor, capital and ___________________. - ANS 1.
Entrepreneurship
2. Land→ including water, oil, i.e. natural resources
3. Capital →
1. Physical - machines, factories, computers, software
2. Human - accumulated training and skills workers possess
4. Entrepreneur→ organizes and operates a business; takes on great risk
7. In economics, "capital", "capital goods", "human capital" or the "capital stock" refers to
______________. - ANS 1. Capital-machinery, factory, resources
2. Capital Goods- durable used to produce goods and services
3. Human Capital-knowledge it takes to start a business
4. Capital Stock - how many machines, how many factory buildings (a value of all machines,
factories, etc)
1. All factors of production and investment
2. Change in capital is referred to as→ investment
1. Buying more machines, more inputs, bettering a factory etc
8. How is a centrally planned economy different from a market economy? What is a mixed
economy? True or False: The U.S. economy is a Market economy. According to the Index of
Economic Freedom (http://www.heritage.org/index/ranking), which country has the greatest
amount of economic freedom? Which country has the least? - ANS 1. Centrally planned
economy→ an economy in which the government decides how economic resources will be
allocated
2. Market Economy→ an economy in which the decisions of households and firms interacting in
markets allocate economic resources
3. The us is a market economy (mostly free)
4. Hong Kong is the most free
ECON 104 EXAM 1 Questions And Answers
100% Pass
1. How is microeconomics different from macroeconomics? - ANS 1. Micro→ the study of
how households and firms interact in markets and make decisions, and how the government
attempts to influence their choices
2. Macro→ the study of the economy as a whole, including topics such as inflation,
unemployment, and economic growth
2. What is economics? - ANS 1. Economics→ the study of choices people make to attain their
goals, given their scarce resources
3. What are the 3 key economic ideas about how people interact and make choices in the
marketplace? - ANS 1. People are rational
2. People act in response to economic incentives
3. Optimal decisions are made at the margin
4. What is the economic problem facing every society? - ANS 1. A limited amount of
economic resources and unlimited wants
2. Trade-offs are produced
5. Standard of Living refers to ________________________. - ANS 1. Unlimited wants
2. The amount of goods and services we can buy
, ©EVERLY 2025 ALL RIGHTS RESERVED
3. To produce more goods and services, society needs resources which are scarce
6. The factors of production are land, labor, capital and ___________________. - ANS 1.
Entrepreneurship
2. Land→ including water, oil, i.e. natural resources
3. Capital →
1. Physical - machines, factories, computers, software
2. Human - accumulated training and skills workers possess
4. Entrepreneur→ organizes and operates a business; takes on great risk
7. In economics, "capital", "capital goods", "human capital" or the "capital stock" refers to
______________. - ANS 1. Capital-machinery, factory, resources
2. Capital Goods- durable used to produce goods and services
3. Human Capital-knowledge it takes to start a business
4. Capital Stock - how many machines, how many factory buildings (a value of all machines,
factories, etc)
1. All factors of production and investment
2. Change in capital is referred to as→ investment
1. Buying more machines, more inputs, bettering a factory etc
8. How is a centrally planned economy different from a market economy? What is a mixed
economy? True or False: The U.S. economy is a Market economy. According to the Index of
Economic Freedom (http://www.heritage.org/index/ranking), which country has the greatest
amount of economic freedom? Which country has the least? - ANS 1. Centrally planned
economy→ an economy in which the government decides how economic resources will be
allocated
2. Market Economy→ an economy in which the decisions of households and firms interacting in
markets allocate economic resources
3. The us is a market economy (mostly free)
4. Hong Kong is the most free
