ECO 201 Chapter 1 What is Economics? Questions Solved Correctly
Benefit - Answers The gain or pleasure that something brings, determined by preferences.
Capital - Answers The tools, instruments, machines, buildings, and other constructions that businesses
use to produce goods and services.
Economic Model - Answers A description of some aspect of the economic world that includes only those
features that are needed for the purpose at hand.
Economics - Answers The social science that studies the choices that individuals, businesses,
governments, and entire societies make as they cope with scarcity and the incentives that influence and
reconcile those choices.
Efficient - Answers When it is not possible to make someone better off without making someone else
worse off.
Entrepreneurship - Answers The human resource that organizes labor, land, and capital.
Factors of Production - Answers The resources used to produce goods and services, groups into land,
labor, capital, and entrepreneurship.
Goods and Services - Answers The objects that people value and produce to satisfy wants.
Human Capital - Answers The knowledge and skill that people obtain from education, on-the-job
training, and work experience.
Incentive - Answers A reward that encourages an action or a penalty that discourages one.
Interest - Answers Capital earns interest.
Labor - Answers Labor earns wages.
Land - Answers Land earns rent.
Macroeconomics - Answers The study of the performance of the national economy and the global
economy.
Margin - Answers When making a decision, you compare the benefit of a little bit more study time with
its cost - you make your choice at the margin.
Marginal Benefit - Answers The benefit that arises from an increase in an activity.
Marginal Cost - Answers The opportunity cost of an increase in an activity.
Microeconomics - Answers The study of the choices that individuals and businesses make, the way these
choices interact in markets, and the influence of governments.
Benefit - Answers The gain or pleasure that something brings, determined by preferences.
Capital - Answers The tools, instruments, machines, buildings, and other constructions that businesses
use to produce goods and services.
Economic Model - Answers A description of some aspect of the economic world that includes only those
features that are needed for the purpose at hand.
Economics - Answers The social science that studies the choices that individuals, businesses,
governments, and entire societies make as they cope with scarcity and the incentives that influence and
reconcile those choices.
Efficient - Answers When it is not possible to make someone better off without making someone else
worse off.
Entrepreneurship - Answers The human resource that organizes labor, land, and capital.
Factors of Production - Answers The resources used to produce goods and services, groups into land,
labor, capital, and entrepreneurship.
Goods and Services - Answers The objects that people value and produce to satisfy wants.
Human Capital - Answers The knowledge and skill that people obtain from education, on-the-job
training, and work experience.
Incentive - Answers A reward that encourages an action or a penalty that discourages one.
Interest - Answers Capital earns interest.
Labor - Answers Labor earns wages.
Land - Answers Land earns rent.
Macroeconomics - Answers The study of the performance of the national economy and the global
economy.
Margin - Answers When making a decision, you compare the benefit of a little bit more study time with
its cost - you make your choice at the margin.
Marginal Benefit - Answers The benefit that arises from an increase in an activity.
Marginal Cost - Answers The opportunity cost of an increase in an activity.
Microeconomics - Answers The study of the choices that individuals and businesses make, the way these
choices interact in markets, and the influence of governments.
