ECON-B 251 EXAM 1 ACTUAL PAPER 2026
QUESTIONS ANSWERS GRADED A+
◉ scarcity. Answer: unlimited wants and limited resources
◉ the economic problem. Answer: deals with the problem of scarcity
◉ Microeconomics. Answer: studies decisions by individual firms
and governments
◉ Macroeconomics. Answer: studies decisions made or actions
taken by the entire economy
ex. inflation, unemployment, GDP
◉ rationality assumption. Answer: assumes that people do not
intentionally make decisions that would leave them worse off.
◉ bounded rationality. Answer: assumes peoples rationality is
constrained because they do not have full information
◉ prospect theory. Answer: demonstrates how people react
differently to potential loss and potential gain.
,◉ maximizer. Answer: try to make optimal decisions based on the
rationality assumption
◉ satisficer. Answer: try to find a "good enough" solution based on
bounded rationality
◉ self-interest. Answer: pursuit of one's own goals. Maximize
happiness.
◉ social-interest. Answer: choices that are best for society as a
whole
◉ tradeoff. Answer: when we choose one thing, we give up
something else
◉ non-strategic. Answer: decisions based on an individual's or firm's
own costs and benefits
◉ strategic. Answer: decisions based on others' decisions as well as
one's cost and benefits
, ◉ opportunity cost. Answer: The highest-valued, next-best
alternative that must be sacrificed to obtain something or to satisfy a
want
◉ marginal analysis. Answer: evaluates the consequences of making
incremental changes in the use of their resources
◉ positive economics. Answer: purely descriptive statements or
scientific predictions- a statement of what is.
◉ normative economics. Answer: analysis involving value
judgements-- what ought to be
◉ models. Answer: Simplified representations of the real world used
as the basis for predictions or explanations
◉ three scarcity questions. Answer: 1. what to produce?
2. how to produce?
3. for whom?
◉ Four factors of production. Answer: land, labor, capital,
entrepreneurship
QUESTIONS ANSWERS GRADED A+
◉ scarcity. Answer: unlimited wants and limited resources
◉ the economic problem. Answer: deals with the problem of scarcity
◉ Microeconomics. Answer: studies decisions by individual firms
and governments
◉ Macroeconomics. Answer: studies decisions made or actions
taken by the entire economy
ex. inflation, unemployment, GDP
◉ rationality assumption. Answer: assumes that people do not
intentionally make decisions that would leave them worse off.
◉ bounded rationality. Answer: assumes peoples rationality is
constrained because they do not have full information
◉ prospect theory. Answer: demonstrates how people react
differently to potential loss and potential gain.
,◉ maximizer. Answer: try to make optimal decisions based on the
rationality assumption
◉ satisficer. Answer: try to find a "good enough" solution based on
bounded rationality
◉ self-interest. Answer: pursuit of one's own goals. Maximize
happiness.
◉ social-interest. Answer: choices that are best for society as a
whole
◉ tradeoff. Answer: when we choose one thing, we give up
something else
◉ non-strategic. Answer: decisions based on an individual's or firm's
own costs and benefits
◉ strategic. Answer: decisions based on others' decisions as well as
one's cost and benefits
, ◉ opportunity cost. Answer: The highest-valued, next-best
alternative that must be sacrificed to obtain something or to satisfy a
want
◉ marginal analysis. Answer: evaluates the consequences of making
incremental changes in the use of their resources
◉ positive economics. Answer: purely descriptive statements or
scientific predictions- a statement of what is.
◉ normative economics. Answer: analysis involving value
judgements-- what ought to be
◉ models. Answer: Simplified representations of the real world used
as the basis for predictions or explanations
◉ three scarcity questions. Answer: 1. what to produce?
2. how to produce?
3. for whom?
◉ Four factors of production. Answer: land, labor, capital,
entrepreneurship
