ECON 2030 - Charles LSU Exam 1
Questions And Complete Answers
Ch. 1: Define Economics - answer the study of how human beings coordinate their wants
and desires, given the decision-making mechanisms, social customs and political
realities of the society.
Ch. 1: what does the term coordination refer to? - answer how these three central
problems facing any economy are solved
- What, and how much to produce
- How to produce it
- for whom to produce it
Ch. 1: How does the economy deal w/ scarcity? - answer - coercion
- in all known economies, coordination has involved some type of coercion - limiting
people's wants and increasing the amount of work individuals are willing to do to fulfill
those wants
ch. 1: Define Markets - answer 1) Not a physical place lol
2) Social process - not a place or a thing - its human behavior
3) Goods and services are exchanged for money
Ch. 1: Define market economy - answer 1) the flow of goods and services in exchange
for money
- Buyer (cost) and seller (benefit) - Benefit or cost?
- Benefit: what you get
- Cost: what you give up
2) The good is the cost of the seller and the benefit of the buyer! The money is the
benefit to the seller, and the cost to the buyer
Ch. 1: Difference between Micro and Macro economics - answer 1) Micro - the study of
individual choice and how that choice is influenced by economic forces; things like
pricing policies of firms, households' decisions what to buy, and how markets allocate
resources among alternative ends.
, 2) Macro - is the study of the economy as a whole; problems of inflation, unemployment,
business circles and growth; focuses on aggregate relationships such as how
household consumption is related to income and how government policies can affect
growth
ch.1: Define Marginal cost, Sunk cost and Marginal benefit - answer 1) Marginal cost -
the additional cost to you over and above the costs you have already incurred
2) sunk costs - costs that have already been incurred and cannot be recovered (in the
relevant cost when making a decision). - EXAMPLES: you've already paid college tuition
3) marginal benefit: additional benefit above what you've already derived. the additional
knowledge you get from reading a chapter in the book
Ch. 1: what is the economic decision rule? - answer If the marginal benefits of doing
something exceed the marginal costs, do it
If the marginal costs of doing something exceed the marginal benefits, don't do it.
Ch. 1: define opportunity cost - answer -the benefit that you might have gained from
chosen the next-best alternative. To obtain the benefit of something, you must give up
something else- namely, the next best alternative
- the value of the next best alternative, because in choosing 1 thing, you are precluding
an alternative choice.
Ch. 1: State whether this is a micro or macro economic issue - Should U.S. interest rates
be lowered to decrease the amount of unemployment? - answer
Ch. 1: State whether this is a micro or macro economic issue - Will the fact that more
and more doctors are selling their practices to managed care networks increase the
efficiency of medical providers? - answer
Ch. 1: State whether this is a micro or macro economic issue - Should federal minimum
wage be raised? - answer
Ch. 1: State whether this is a micro or macro economic issue - Should commercial banks
be required to provide loans in all areas of the territory from which they accept
deposits? - answer
Ch. 1 List two micro and two macro economic problems - answer
Ch. 1: Calculate, using the best estimates you can:
a. Your opportunity cost of attending college
b. your opportunity cost of taking this course
c. your opportunity cost of attending yesterday's lecture in this course - answer
Questions And Complete Answers
Ch. 1: Define Economics - answer the study of how human beings coordinate their wants
and desires, given the decision-making mechanisms, social customs and political
realities of the society.
Ch. 1: what does the term coordination refer to? - answer how these three central
problems facing any economy are solved
- What, and how much to produce
- How to produce it
- for whom to produce it
Ch. 1: How does the economy deal w/ scarcity? - answer - coercion
- in all known economies, coordination has involved some type of coercion - limiting
people's wants and increasing the amount of work individuals are willing to do to fulfill
those wants
ch. 1: Define Markets - answer 1) Not a physical place lol
2) Social process - not a place or a thing - its human behavior
3) Goods and services are exchanged for money
Ch. 1: Define market economy - answer 1) the flow of goods and services in exchange
for money
- Buyer (cost) and seller (benefit) - Benefit or cost?
- Benefit: what you get
- Cost: what you give up
2) The good is the cost of the seller and the benefit of the buyer! The money is the
benefit to the seller, and the cost to the buyer
Ch. 1: Difference between Micro and Macro economics - answer 1) Micro - the study of
individual choice and how that choice is influenced by economic forces; things like
pricing policies of firms, households' decisions what to buy, and how markets allocate
resources among alternative ends.
, 2) Macro - is the study of the economy as a whole; problems of inflation, unemployment,
business circles and growth; focuses on aggregate relationships such as how
household consumption is related to income and how government policies can affect
growth
ch.1: Define Marginal cost, Sunk cost and Marginal benefit - answer 1) Marginal cost -
the additional cost to you over and above the costs you have already incurred
2) sunk costs - costs that have already been incurred and cannot be recovered (in the
relevant cost when making a decision). - EXAMPLES: you've already paid college tuition
3) marginal benefit: additional benefit above what you've already derived. the additional
knowledge you get from reading a chapter in the book
Ch. 1: what is the economic decision rule? - answer If the marginal benefits of doing
something exceed the marginal costs, do it
If the marginal costs of doing something exceed the marginal benefits, don't do it.
Ch. 1: define opportunity cost - answer -the benefit that you might have gained from
chosen the next-best alternative. To obtain the benefit of something, you must give up
something else- namely, the next best alternative
- the value of the next best alternative, because in choosing 1 thing, you are precluding
an alternative choice.
Ch. 1: State whether this is a micro or macro economic issue - Should U.S. interest rates
be lowered to decrease the amount of unemployment? - answer
Ch. 1: State whether this is a micro or macro economic issue - Will the fact that more
and more doctors are selling their practices to managed care networks increase the
efficiency of medical providers? - answer
Ch. 1: State whether this is a micro or macro economic issue - Should federal minimum
wage be raised? - answer
Ch. 1: State whether this is a micro or macro economic issue - Should commercial banks
be required to provide loans in all areas of the territory from which they accept
deposits? - answer
Ch. 1 List two micro and two macro economic problems - answer
Ch. 1: Calculate, using the best estimates you can:
a. Your opportunity cost of attending college
b. your opportunity cost of taking this course
c. your opportunity cost of attending yesterday's lecture in this course - answer
