Econ 1001 Midterm | Actual study set |
Questions and verified Answers
Scarcity - ANSW-the limited nature of society's resources
Economics - ANSW-the study of how society manages its scarce resources
Efficiency - ANSW-the property of society getting the most it can from its scarce resources
Equity - ANSW-the property of distributing economic prosperity fairly among the members of society
opportunity cost - ANSW-whatever must be given up to obtain some item
rational people - ANSW-people who systematically and purposefully do the best they can to achieve
their objectives
marginal change - ANSW-a small incremental adjustment to a plan of action
incentive - ANSW-something that induces a person to act
market economy - ANSW-an economy that allocates resources through the decentralized decisions of
many firms and households as they interact in markets for goods and services
property rights - ANSW-the ability of an individual to own and exercise control over scarce resources
market failure - ANSW-a situation in which a market left on its own fails to allocate resources efficiently
Externality - ANSW-the impact of one person's actions on the well-being of a bystander
market power - ANSW-the ability of a single economic actor (or small group of actors) to have a
substantial influence on market prices
Productivity - ANSW-the quantity of goods and services produced from each unit of labor input
Inflation - ANSW-an increase in the overall level of prices in the economy
business cycle - ANSW-Fluctuations in economic activity, such as employment and production
circular flow diagram - ANSW-a visual model of the economy that shows how dollars flow through
markets among households and firms
production possibilities frontier - ANSW-a graph that shows the combinations of output that the
economy can possibly produce given the available factors of production and the available production
technology
Microeconomics - ANSW-the study of how households and firms make decisions and how they interact
in markets
Macroeconomics - ANSW-the study of economy-wide phenomena, including inflation, unemployment,
and economic growth
positive statement - ANSW-claims that attempt to describe the world as it is
normative statement - ANSW-claims that attempt to prescribe how the world should be
absolute advantage - ANSW-the comparison among producers of a good according to their productivity
smaller quantity of inputs to produce a good
comparative advantage - ANSW-the comparison among producers of a good according to their
opportunity cost
for both parties to gain from trade, where must the price be? - ANSW-the price at which they trade must
lie between the two opportunity costs
, Imports - ANSW-goods produced abroad and sold domestically
export - ANSW-goods and services produced domestically and sold abroad
market - ANSW-a group of buyers and sellers of a particular good or service
competitive market - ANSW-a market in which there are many buyers and many sellers so that each has
a negligible impact on the market price
quantity demanded - ANSW-the amount of a good that buyers are willing and able to purchase
Law of Demand - ANSW-the claim that, other things being equal, the quantity demanded of a good falls
when the price of the good rises
demand schedule - ANSW-a table that shows the relationship between the price of a good and the
quantity demanded
demand curve - ANSW-a graph of the relationship between the price of a good and the quantity
demanded
market demand - ANSW-the sum of all the individual demands for a particular good or service
increase in demand - ANSW-a rightward shift of the demand curve
decrease in demand - ANSW-a leftward shift of the demand curve
normal good - ANSW-a good for which, other things equal, an increase in income leads to an increase in
demand
inferior good - ANSW-a good for which, other things equal, an increase in income leads to a decrease in
demand
Which variables shift the demand curve? - ANSW-Income, price of related goods, tastes, expectations,
number of buyers
What variable represents a movement along the demand curve? - ANSW-Price of the good itself
Substitutes - ANSW-two goods for which an increase in the price of one leads to an increase in the
demand for the other
complement - ANSW-two goods for which an increase in the price of one leads to a decrease in the
demand for the other
quantity supplied - ANSW-the amount of a good that sellers are willing and able to sell
Law of Supply - ANSW-the claim that, other things equal, the quantity supplied of a good rises when the
price of the good rises
supply schedule - ANSW-a table that shows the relationship between the price of a good and the
quantity supplied
supply curve - ANSW-a graph of the relationship between the price of a good and the quantity supplied
increase in supply - ANSW-a rightward shift of the supply curve
decrease in supply - ANSW-a leftward shift of the supply curve
Which variables shift the supply curve? - ANSW-Input prices, technology, expectations, number of sellers
A change in which variable represents a movement along the supply curve? - ANSW-Price of the good
itself
Equilibrium - ANSW-a situation in which the market price has reached the level at which quantity
supplied equals quantity demanded
equilibrium price - ANSW-the price that balances quantity supplied and quantity demanded
Questions and verified Answers
Scarcity - ANSW-the limited nature of society's resources
Economics - ANSW-the study of how society manages its scarce resources
Efficiency - ANSW-the property of society getting the most it can from its scarce resources
Equity - ANSW-the property of distributing economic prosperity fairly among the members of society
opportunity cost - ANSW-whatever must be given up to obtain some item
rational people - ANSW-people who systematically and purposefully do the best they can to achieve
their objectives
marginal change - ANSW-a small incremental adjustment to a plan of action
incentive - ANSW-something that induces a person to act
market economy - ANSW-an economy that allocates resources through the decentralized decisions of
many firms and households as they interact in markets for goods and services
property rights - ANSW-the ability of an individual to own and exercise control over scarce resources
market failure - ANSW-a situation in which a market left on its own fails to allocate resources efficiently
Externality - ANSW-the impact of one person's actions on the well-being of a bystander
market power - ANSW-the ability of a single economic actor (or small group of actors) to have a
substantial influence on market prices
Productivity - ANSW-the quantity of goods and services produced from each unit of labor input
Inflation - ANSW-an increase in the overall level of prices in the economy
business cycle - ANSW-Fluctuations in economic activity, such as employment and production
circular flow diagram - ANSW-a visual model of the economy that shows how dollars flow through
markets among households and firms
production possibilities frontier - ANSW-a graph that shows the combinations of output that the
economy can possibly produce given the available factors of production and the available production
technology
Microeconomics - ANSW-the study of how households and firms make decisions and how they interact
in markets
Macroeconomics - ANSW-the study of economy-wide phenomena, including inflation, unemployment,
and economic growth
positive statement - ANSW-claims that attempt to describe the world as it is
normative statement - ANSW-claims that attempt to prescribe how the world should be
absolute advantage - ANSW-the comparison among producers of a good according to their productivity
smaller quantity of inputs to produce a good
comparative advantage - ANSW-the comparison among producers of a good according to their
opportunity cost
for both parties to gain from trade, where must the price be? - ANSW-the price at which they trade must
lie between the two opportunity costs
, Imports - ANSW-goods produced abroad and sold domestically
export - ANSW-goods and services produced domestically and sold abroad
market - ANSW-a group of buyers and sellers of a particular good or service
competitive market - ANSW-a market in which there are many buyers and many sellers so that each has
a negligible impact on the market price
quantity demanded - ANSW-the amount of a good that buyers are willing and able to purchase
Law of Demand - ANSW-the claim that, other things being equal, the quantity demanded of a good falls
when the price of the good rises
demand schedule - ANSW-a table that shows the relationship between the price of a good and the
quantity demanded
demand curve - ANSW-a graph of the relationship between the price of a good and the quantity
demanded
market demand - ANSW-the sum of all the individual demands for a particular good or service
increase in demand - ANSW-a rightward shift of the demand curve
decrease in demand - ANSW-a leftward shift of the demand curve
normal good - ANSW-a good for which, other things equal, an increase in income leads to an increase in
demand
inferior good - ANSW-a good for which, other things equal, an increase in income leads to a decrease in
demand
Which variables shift the demand curve? - ANSW-Income, price of related goods, tastes, expectations,
number of buyers
What variable represents a movement along the demand curve? - ANSW-Price of the good itself
Substitutes - ANSW-two goods for which an increase in the price of one leads to an increase in the
demand for the other
complement - ANSW-two goods for which an increase in the price of one leads to a decrease in the
demand for the other
quantity supplied - ANSW-the amount of a good that sellers are willing and able to sell
Law of Supply - ANSW-the claim that, other things equal, the quantity supplied of a good rises when the
price of the good rises
supply schedule - ANSW-a table that shows the relationship between the price of a good and the
quantity supplied
supply curve - ANSW-a graph of the relationship between the price of a good and the quantity supplied
increase in supply - ANSW-a rightward shift of the supply curve
decrease in supply - ANSW-a leftward shift of the supply curve
Which variables shift the supply curve? - ANSW-Input prices, technology, expectations, number of sellers
A change in which variable represents a movement along the supply curve? - ANSW-Price of the good
itself
Equilibrium - ANSW-a situation in which the market price has reached the level at which quantity
supplied equals quantity demanded
equilibrium price - ANSW-the price that balances quantity supplied and quantity demanded
