EC 200 Test1
Economics - Answer-The study of how society manages it's scarce resources
Microeconomics - Answer-The study of how households and firms make decisions and how they interact
in markets
Macroeconomics - Answer-The study of economy-wide phenomena, including inflation, unemployment,
and economic growth
Ten principles of economics - Answer-1. People face trade-offs
2. The cost of something is what you give up to get it
3. Rational people think at the margin
4. People respond to incentives
5. Trade can make everyone better off
6. Markets are usually a good way to organize economic activity
7. Governments can sometimes improve market outcomes
8. A country's standard of living depends on its ability to produce goods and services
9. Prices rise when the government prints too much money
10. Society faces short-run trade-off between inflation and unemployment
What do economists normally assume about people's behavior? - Answer-are rational and self-
interested
, How do rational people make decisions? - Answer-by comparing marginal benefits and marginal costs
What is the difference between Supply and QS? Demand and QD? - Answer-Quantity demand is the
amount of a good that buyers are willing and able to purchase.
Demand is the relationship between the price of a good and quantity demanded.
Quantity supplied is the amount of a good sellers are willing and able to sell.
Supply is the relationship between the price of a good and the quantity supplied.
What is Adam Smith known for? - Answer-Adam Smith is known for being the father of economics and
for writing "Wealth of Nations," in 1776.
What does the term ïnvisible hand" refer to? - Answer-Invisible hand is how households and firms
interact in markets.
What is a Good and what is the opposite? - Answer-Something we want more of.
A bad is something we want less of.
What is the difference between scarce and rare? - Answer-Scarce means you need to give up something
to get it.
Rare means there is relatively few.
What are some common methods of rationing? - Answer-1. Money pricing
2. Equal shares for all
3. By merit
4. Survival of the fittest
5. First come first serve
Economics - Answer-The study of how society manages it's scarce resources
Microeconomics - Answer-The study of how households and firms make decisions and how they interact
in markets
Macroeconomics - Answer-The study of economy-wide phenomena, including inflation, unemployment,
and economic growth
Ten principles of economics - Answer-1. People face trade-offs
2. The cost of something is what you give up to get it
3. Rational people think at the margin
4. People respond to incentives
5. Trade can make everyone better off
6. Markets are usually a good way to organize economic activity
7. Governments can sometimes improve market outcomes
8. A country's standard of living depends on its ability to produce goods and services
9. Prices rise when the government prints too much money
10. Society faces short-run trade-off between inflation and unemployment
What do economists normally assume about people's behavior? - Answer-are rational and self-
interested
, How do rational people make decisions? - Answer-by comparing marginal benefits and marginal costs
What is the difference between Supply and QS? Demand and QD? - Answer-Quantity demand is the
amount of a good that buyers are willing and able to purchase.
Demand is the relationship between the price of a good and quantity demanded.
Quantity supplied is the amount of a good sellers are willing and able to sell.
Supply is the relationship between the price of a good and the quantity supplied.
What is Adam Smith known for? - Answer-Adam Smith is known for being the father of economics and
for writing "Wealth of Nations," in 1776.
What does the term ïnvisible hand" refer to? - Answer-Invisible hand is how households and firms
interact in markets.
What is a Good and what is the opposite? - Answer-Something we want more of.
A bad is something we want less of.
What is the difference between scarce and rare? - Answer-Scarce means you need to give up something
to get it.
Rare means there is relatively few.
What are some common methods of rationing? - Answer-1. Money pricing
2. Equal shares for all
3. By merit
4. Survival of the fittest
5. First come first serve
