ECON 1001 Final Exam | Actual study |
Questions and Answers
Economics - ANSW-The study of how people use their scarce resources to satisfy their unlimited wants
Resources - ANSW-- the inputs, or factors of production, used to produce the goods and services that
people want; resources consist of labor, capital, natural resources, and entrepreneurial ability.
Labor - ANSW-The physical and mental effort used to produce goods and services.
Capital - ANSW-The buildings, equipment, and human skills used to produce goods and services.
Natural Resources - ANSW-All gifts of nature used to produce goods and services; includes and
exhaustible resources.
Entrepreneurial
ability - ANSW-- The imagination required to develop a new product or process, the skill needed to
organize production, and the willingness to take the risk of profit or loss.
Entrepreneur - ANSW-A profit-seeking decision maker who starts with an idea, organizes an enterprise to
bring that idea to life, and assumes the risk of the operation.
Wages - ANSW-Payment to resource owners for their labor.
Interest - ANSW-- Payment to resource owners for the use of their capital.
Rent - ANSW-Payment to resource owners for the use of their natural resources.
Profit - ANSW-Reward for entrepreneurial ability; sales minus resource cost.
Good - ANSW-A tangible product used to satisfy human wants.
Service - ANSW-An activity, or intangible product, used to satisfy human wants.
Scarcity - ANSW-Occurs when the amount people desire exceeds the amount at zero price.
Market - ANSW-A set of arrangements by buyers and sellers who carry out exchange at mutually
agreeable terms.
Product Market - ANSW-A market in which a good or service is bought and sold.
Resource Market - ANSW-A market in which a resource is bought and sold.
Circular-flow model - ANSW-A diagram that traces the flow of resources, products, income, and revenue
among economic decision makers
Rational self-interest - ANSW-Each individual tries to maximize the expected benefit achieved with a
given cost or to minimize the expected cost of achieving a given benefit.
Marginal - ANSW-Incremental, additional, or extra; used to describe a change in an economic variable.
Microeconomics - ANSW-The study of the economic behavior in particular markets, such as that for
computers or unskilled labor.
Macroeconomics - ANSW-The study of the economic behavior of entire economies, as measured, for
example, by total production and unemployment. (GDP)
Economic Fluctuations - ANSW-The rise and fall of economic activity relative to the long-term growth
trend the economy; also called business cycles.
Economic Theory (Model) - ANSW-A simplification of reality used to make predictions about cause and
effect in the real world.
, The Scientific Method - ANSW-...begin with a question...
Variable - ANSW-A measure, such as price or quantity, that can take on different values at different
times.
Other- things-constant assumption - ANSW-The assumption, when focusing on the relation among key
economic variables, that other variables remain unchanged, in Latin, ceteris paribus.
Behavioral Assumption - ANSW-An assumption that describes the expected behavior of economic
decision makers; what motivates them.
Hypothesis - ANSW-A theory about how key variables relate to each other.
Positive Economic Statement - ANSW-A statement that can be proved or disproved by reference to facts.
Normative Economic Statement - ANSW-A statement that reflects on opinion, which cannot be proved or
disproved by reference to the facts.
- No factual evidence
- What you think, what you feel
Association-is causation fallacy - ANSW-The incorrect idea that if two variables are associated in time,
one must necessarily cause the other.
Fallacy of composition - ANSW-The incorrect belief that what is true for the individual, or part, must
necessarily be true for the group, or the whole.
Secondary Effects - ANSW-unintended consequences of economic actions that may develop slowly over
time a people react to events.
Opportunity Cost - ANSW-The value of the best alternative forgone when an item or activity is chosen.
- (Opportunity cost of going to college)
Sunk cost - ANSW-A cost that has already been incurred in the past, cannot be recovered, and thus is
irrelevant for the present and future economic decisions.
Absolute Advantage - ANSW-The ability to produce something using fewer resources than other
producers use. (Adam Smith) Great Britain
- Wealth of Nation (1776)
- Mercantilism System (1500)
o The age of discovery
o Gold and silver
o Form companies
§ King, queens, and their friends
- Laissez-faire
- Invisible hand
o Defense mechanism
Division of Labor - ANSW-Organizing production of a good into its separate tasks.
Specialization of Labor - ANSW-Focusing work effort on a particular product or single task.
Comparative Advantage - ANSW-The ability to produce something at a lower opportunity cost than other
producers face.
Questions and Answers
Economics - ANSW-The study of how people use their scarce resources to satisfy their unlimited wants
Resources - ANSW-- the inputs, or factors of production, used to produce the goods and services that
people want; resources consist of labor, capital, natural resources, and entrepreneurial ability.
Labor - ANSW-The physical and mental effort used to produce goods and services.
Capital - ANSW-The buildings, equipment, and human skills used to produce goods and services.
Natural Resources - ANSW-All gifts of nature used to produce goods and services; includes and
exhaustible resources.
Entrepreneurial
ability - ANSW-- The imagination required to develop a new product or process, the skill needed to
organize production, and the willingness to take the risk of profit or loss.
Entrepreneur - ANSW-A profit-seeking decision maker who starts with an idea, organizes an enterprise to
bring that idea to life, and assumes the risk of the operation.
Wages - ANSW-Payment to resource owners for their labor.
Interest - ANSW-- Payment to resource owners for the use of their capital.
Rent - ANSW-Payment to resource owners for the use of their natural resources.
Profit - ANSW-Reward for entrepreneurial ability; sales minus resource cost.
Good - ANSW-A tangible product used to satisfy human wants.
Service - ANSW-An activity, or intangible product, used to satisfy human wants.
Scarcity - ANSW-Occurs when the amount people desire exceeds the amount at zero price.
Market - ANSW-A set of arrangements by buyers and sellers who carry out exchange at mutually
agreeable terms.
Product Market - ANSW-A market in which a good or service is bought and sold.
Resource Market - ANSW-A market in which a resource is bought and sold.
Circular-flow model - ANSW-A diagram that traces the flow of resources, products, income, and revenue
among economic decision makers
Rational self-interest - ANSW-Each individual tries to maximize the expected benefit achieved with a
given cost or to minimize the expected cost of achieving a given benefit.
Marginal - ANSW-Incremental, additional, or extra; used to describe a change in an economic variable.
Microeconomics - ANSW-The study of the economic behavior in particular markets, such as that for
computers or unskilled labor.
Macroeconomics - ANSW-The study of the economic behavior of entire economies, as measured, for
example, by total production and unemployment. (GDP)
Economic Fluctuations - ANSW-The rise and fall of economic activity relative to the long-term growth
trend the economy; also called business cycles.
Economic Theory (Model) - ANSW-A simplification of reality used to make predictions about cause and
effect in the real world.
, The Scientific Method - ANSW-...begin with a question...
Variable - ANSW-A measure, such as price or quantity, that can take on different values at different
times.
Other- things-constant assumption - ANSW-The assumption, when focusing on the relation among key
economic variables, that other variables remain unchanged, in Latin, ceteris paribus.
Behavioral Assumption - ANSW-An assumption that describes the expected behavior of economic
decision makers; what motivates them.
Hypothesis - ANSW-A theory about how key variables relate to each other.
Positive Economic Statement - ANSW-A statement that can be proved or disproved by reference to facts.
Normative Economic Statement - ANSW-A statement that reflects on opinion, which cannot be proved or
disproved by reference to the facts.
- No factual evidence
- What you think, what you feel
Association-is causation fallacy - ANSW-The incorrect idea that if two variables are associated in time,
one must necessarily cause the other.
Fallacy of composition - ANSW-The incorrect belief that what is true for the individual, or part, must
necessarily be true for the group, or the whole.
Secondary Effects - ANSW-unintended consequences of economic actions that may develop slowly over
time a people react to events.
Opportunity Cost - ANSW-The value of the best alternative forgone when an item or activity is chosen.
- (Opportunity cost of going to college)
Sunk cost - ANSW-A cost that has already been incurred in the past, cannot be recovered, and thus is
irrelevant for the present and future economic decisions.
Absolute Advantage - ANSW-The ability to produce something using fewer resources than other
producers use. (Adam Smith) Great Britain
- Wealth of Nation (1776)
- Mercantilism System (1500)
o The age of discovery
o Gold and silver
o Form companies
§ King, queens, and their friends
- Laissez-faire
- Invisible hand
o Defense mechanism
Division of Labor - ANSW-Organizing production of a good into its separate tasks.
Specialization of Labor - ANSW-Focusing work effort on a particular product or single task.
Comparative Advantage - ANSW-The ability to produce something at a lower opportunity cost than other
producers face.
