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ECON2100 Exam 1 Questions and Correct
Answers
economics— Ans: the social science concerned with how
individuals, institutions, and society make optimal (bet) choices
under conditions of scarcity
economic perspective— Ans: A viewpoint that envisions
individuals and institutions making rational decisions by
comparing the marginal benefits and marginal costs associated
with their actions.
scarcity— Ans: the limits placed on the amounts and types of
goods and services available for consumption as the result of there
being only limited economic resources from which to produce
output
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, 2 | Page
opportunity cost— Ans: the amount of other products that must
be forgone or sacrificed to produce a unit of a product
utility— Ans: the pleasure, happiness, or satisfaction obtained
from consuming a good or service
marginal analysis— Ans: the comparison of marginal benefits and
marginal costs, usually for decision making
scientific method— Ans: the procedure for the systematic pursuit
of knowledge involving the observation of facts and the
formulation and testing of hypotheses to obtain theories,
principles, and laws
economic principle— Ans: a widely accepted generalization about
the economic behavior of individuals or institutions
other-things-equal assumption— Ans: the assumption that factors
other than those being considered are held constant
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also known as the ceteris paribus assumption
microeconomics— Ans: the part of economics concerned with
decision making by individual units such as a household, a firm, or
an industry and individual markets, specific goods and services,
and product and resource prices
macroeconomics— Ans: examines the performance and behavior
of the economy as a whole
Focuses on economic growth, the business cycle, interest rates,
inflation, and the behavior of major economic aggregates such as
the household, business, and government sectors.
aggregate— Ans: a collection of specific economic units treated as
if they were one unit
positive economics— Ans: the analysis of facts or data to establish
scientific generalizations about economic behavior
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, 4 | Page
normative economics— Ans: the part of economics involving value
judgements about what the economy should be like; focused on
which economic goals and policies should be implemented; policy
economics
economizing problem— Ans: the need to make choices because
economic wants exceed economic means
budget line— Ans: a schedule or curve that shows various
combinations of two products a consumer can purchase with a
specific income
budget line varies - income— Ans: increase in income shifts
budget line to the right
decrease in income shifts budget line to to the left
straight line budget constraints— Ans: imply constant opportunity
costs for both goods
© 2025 All rights reserved
ECON2100 Exam 1 Questions and Correct
Answers
economics— Ans: the social science concerned with how
individuals, institutions, and society make optimal (bet) choices
under conditions of scarcity
economic perspective— Ans: A viewpoint that envisions
individuals and institutions making rational decisions by
comparing the marginal benefits and marginal costs associated
with their actions.
scarcity— Ans: the limits placed on the amounts and types of
goods and services available for consumption as the result of there
being only limited economic resources from which to produce
output
© 2025 All rights reserved
, 2 | Page
opportunity cost— Ans: the amount of other products that must
be forgone or sacrificed to produce a unit of a product
utility— Ans: the pleasure, happiness, or satisfaction obtained
from consuming a good or service
marginal analysis— Ans: the comparison of marginal benefits and
marginal costs, usually for decision making
scientific method— Ans: the procedure for the systematic pursuit
of knowledge involving the observation of facts and the
formulation and testing of hypotheses to obtain theories,
principles, and laws
economic principle— Ans: a widely accepted generalization about
the economic behavior of individuals or institutions
other-things-equal assumption— Ans: the assumption that factors
other than those being considered are held constant
© 2025 All rights reserved
, 3 | Page
also known as the ceteris paribus assumption
microeconomics— Ans: the part of economics concerned with
decision making by individual units such as a household, a firm, or
an industry and individual markets, specific goods and services,
and product and resource prices
macroeconomics— Ans: examines the performance and behavior
of the economy as a whole
Focuses on economic growth, the business cycle, interest rates,
inflation, and the behavior of major economic aggregates such as
the household, business, and government sectors.
aggregate— Ans: a collection of specific economic units treated as
if they were one unit
positive economics— Ans: the analysis of facts or data to establish
scientific generalizations about economic behavior
© 2025 All rights reserved
, 4 | Page
normative economics— Ans: the part of economics involving value
judgements about what the economy should be like; focused on
which economic goals and policies should be implemented; policy
economics
economizing problem— Ans: the need to make choices because
economic wants exceed economic means
budget line— Ans: a schedule or curve that shows various
combinations of two products a consumer can purchase with a
specific income
budget line varies - income— Ans: increase in income shifts
budget line to the right
decrease in income shifts budget line to to the left
straight line budget constraints— Ans: imply constant opportunity
costs for both goods
© 2025 All rights reserved
