ECON 2010 Test 1, Elzinga UVA
Questions with Solved Solutions 2025-
2026 Updated.
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.
Coordination problems - Answer 1. What, and how much, to produce.
2. How to produce it.
3. For whom to produce it.
scarcity - Answer the goods available are too few to satisfy individuals' desires, degree of this
is constantly changing--economy deals with this via coercion
coercion - Answer limiting people's wants and increasing the amount of work individuals are
willing to do to fulfill those wants
marginal cost - Answer additional cost to you over and above the costs you have already
incurred.
sunk costs - Answer costs that have already been incurred and cannot be recovered.
marginal benefit - Answer additional benefit above what you've already derived.
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.
opportunity cost - Answer the benefit that you might have gained from choosing the next-best
alternative; TANSTAAFL (There ain't no such thing as a free lunch); the less time you spend on
one thing the more time you spend on another; takes into account costs and benefits of all
other options, and converts these alternative benefits into costs of the decision you're now
making.
, market force - Answer An economic force that is given relatively free rein by society to work
through the market, rationed by changing prices: shortage = higher price, surplus = lower price
invisible hand - Answer the price mechanism, the rise and fall of prices that guides our actions
in a market; a market economy, through the price mechanism, will tend to allocate resources
efficiently
What happens in society can be seen as the reaction to, and interaction of - Answer 1.
Economic forces
2. Political and legal forces
3. Social and historical forces
economic model - Answer A framework that places the generalized insights of the theory in a
more specific contextual setting
economic principle - Answer a commonly held economic insight stated as a law or principle
economic theorems - Answer 1. When the quantity supplied is greater than the quantity
demanded, price falls.
2. When the quantity demanded is greater than the quantity supplied, price rises.
Efficiency - Answer achieving a goal as cheaply as possible
economic institutions - Answer laws, common practices, and organizations in a society that
affect the economy (corporations, government, cultural norms); can have social political and
religious dimensions, which causes them to differ significantly among different countries
Economic policies - Answer the actions (or inaction) taken by the government to influence
economic activities
positive economics - Answer the study of what is, and how the economy works
normative economics - Answer the study of what the goals of the economy should be;
Questions with Solved Solutions 2025-
2026 Updated.
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.
Coordination problems - Answer 1. What, and how much, to produce.
2. How to produce it.
3. For whom to produce it.
scarcity - Answer the goods available are too few to satisfy individuals' desires, degree of this
is constantly changing--economy deals with this via coercion
coercion - Answer limiting people's wants and increasing the amount of work individuals are
willing to do to fulfill those wants
marginal cost - Answer additional cost to you over and above the costs you have already
incurred.
sunk costs - Answer costs that have already been incurred and cannot be recovered.
marginal benefit - Answer additional benefit above what you've already derived.
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.
opportunity cost - Answer the benefit that you might have gained from choosing the next-best
alternative; TANSTAAFL (There ain't no such thing as a free lunch); the less time you spend on
one thing the more time you spend on another; takes into account costs and benefits of all
other options, and converts these alternative benefits into costs of the decision you're now
making.
, market force - Answer An economic force that is given relatively free rein by society to work
through the market, rationed by changing prices: shortage = higher price, surplus = lower price
invisible hand - Answer the price mechanism, the rise and fall of prices that guides our actions
in a market; a market economy, through the price mechanism, will tend to allocate resources
efficiently
What happens in society can be seen as the reaction to, and interaction of - Answer 1.
Economic forces
2. Political and legal forces
3. Social and historical forces
economic model - Answer A framework that places the generalized insights of the theory in a
more specific contextual setting
economic principle - Answer a commonly held economic insight stated as a law or principle
economic theorems - Answer 1. When the quantity supplied is greater than the quantity
demanded, price falls.
2. When the quantity demanded is greater than the quantity supplied, price rises.
Efficiency - Answer achieving a goal as cheaply as possible
economic institutions - Answer laws, common practices, and organizations in a society that
affect the economy (corporations, government, cultural norms); can have social political and
religious dimensions, which causes them to differ significantly among different countries
Economic policies - Answer the actions (or inaction) taken by the government to influence
economic activities
positive economics - Answer the study of what is, and how the economy works
normative economics - Answer the study of what the goals of the economy should be;
