NCSU EC 205 Exam 1 Prep & Practice.
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, NCSU EC 205 Exam 1 Prep & Practice.
1. microeconomics analyzes choices made by individuals in an economy
-how prices are determined/influence decisions
2. macroeconomics analyzes overall performance of an economy
-total production, price level, rate of inflation, GDP
3. inflation a general increase in prices
4. deflation a general decrease in prices
5. scarcity imbalance between limited productive resources and unlimited human
wants
-must make tradeotts between resources
6. opportunity cost sacrifice of the next best alternative use of resources when those
resources are used for any specific purpose
7. marginal benefit the value placed on an extra (one more) unit of an item
8. marginal cost the cost of producing one more unit of a good
9. rational behavior actions will not be harmful, respond to incentives, individuals seek
net gains by which MB > MC
10. equality everyone gets the same (ex: equal slices of cake)
11. efficiency distributes means in a way that makes sense (ex: those who do not
want cake/al- lergic don't get as much)
12. net benefit = total benefit - total cost
13. highest first item. satisfied individual, less MC
marginal
benefit gain
14. economy mechanism through which resource use is organized to satisfy the desires
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1/
8
, NCSU EC 205 Exam 1 Prep & Practice.
1. microeconomics analyzes choices made by individuals in an economy
-how prices are determined/influence decisions
2. macroeconomics analyzes overall performance of an economy
-total production, price level, rate of inflation, GDP
3. inflation a general increase in prices
4. deflation a general decrease in prices
5. scarcity imbalance between limited productive resources and unlimited human
wants
-must make tradeotts between resources
6. opportunity cost sacrifice of the next best alternative use of resources when those
resources are used for any specific purpose
7. marginal benefit the value placed on an extra (one more) unit of an item
8. marginal cost the cost of producing one more unit of a good
9. rational behavior actions will not be harmful, respond to incentives, individuals seek
net gains by which MB > MC
10. equality everyone gets the same (ex: equal slices of cake)
11. efficiency distributes means in a way that makes sense (ex: those who do not
want cake/al- lergic don't get as much)
12. net benefit = total benefit - total cost
13. highest first item. satisfied individual, less MC
marginal
benefit gain
14. economy mechanism through which resource use is organized to satisfy the desires
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