CHAPTER 1 - Econ 1021 - Midterm 1 UPDATED ACTUAL Questions
and CORRECT Answers
Question: Where do all economic questions arise from?
Correct Answer: The idea that we want more than we can get
Question: Scarcity
Correct Answer: Our inability to satisfy our wants (eg. we want more time, more than we can afford, etc.)
Question: As a result of scarcity, what must we make?
Correct Answer: Choices (eg. how much time to spend doing something, how much money to spend, etc.)
Question: What are choices dependent on?
Correct Answer: The incentives we face.
Question: Incentive
Correct Answer: A reward that encourages an action or a penalty that discourages one.
Question: Economics
Correct Answer: The social science that studies choices that individuals, businesses, governments and
societies make as they cope with scarcity and the incentives that influence and reconcile these choices.
Question: Microeconomics
Correct Answer: The study of choices that individuals and businesses make, the way these choices interact
in markets and influence of governments (eg. Why are people downloading more movies? How would a tax
on e-commerce effect Amazon?)
Question: Macroeconomics
Correct Answer: the study of the performance of the national and global economies (eg. why does the
unemployment rate fluctuate in Canada?)
Question: What are the 2 big economic questions?
Correct Answer: 1. How do choices end up determining what, how and for whom goods and services are
produced? 2. Do choices made in the self-interest also promote the social interest?
Question: What are goods and services?
Correct Answer: Objects that people value and produce to satisfy wants (goods are physical objects,
services are tasks)
Question: WHAT do we produce?
Correct Answer: What are the goods and services that we produce? (ie. agriculture, manufactured goods or
services)
Question: HOW do we produce?
Correct Answer: Factors of production: resources used to produce goods and services (4 main ones) 1.
Land (natural resources/ "gifts of nature" used to produce goods and services) 2. Labour (work time and
work effort that people devote to producing goods and services) - quality of labour is dependant on human
capital (knowledge and skill that people obtain from education, training and experience) 3. Capital (tools,
and CORRECT Answers
Question: Where do all economic questions arise from?
Correct Answer: The idea that we want more than we can get
Question: Scarcity
Correct Answer: Our inability to satisfy our wants (eg. we want more time, more than we can afford, etc.)
Question: As a result of scarcity, what must we make?
Correct Answer: Choices (eg. how much time to spend doing something, how much money to spend, etc.)
Question: What are choices dependent on?
Correct Answer: The incentives we face.
Question: Incentive
Correct Answer: A reward that encourages an action or a penalty that discourages one.
Question: Economics
Correct Answer: The social science that studies choices that individuals, businesses, governments and
societies make as they cope with scarcity and the incentives that influence and reconcile these choices.
Question: Microeconomics
Correct Answer: The study of choices that individuals and businesses make, the way these choices interact
in markets and influence of governments (eg. Why are people downloading more movies? How would a tax
on e-commerce effect Amazon?)
Question: Macroeconomics
Correct Answer: the study of the performance of the national and global economies (eg. why does the
unemployment rate fluctuate in Canada?)
Question: What are the 2 big economic questions?
Correct Answer: 1. How do choices end up determining what, how and for whom goods and services are
produced? 2. Do choices made in the self-interest also promote the social interest?
Question: What are goods and services?
Correct Answer: Objects that people value and produce to satisfy wants (goods are physical objects,
services are tasks)
Question: WHAT do we produce?
Correct Answer: What are the goods and services that we produce? (ie. agriculture, manufactured goods or
services)
Question: HOW do we produce?
Correct Answer: Factors of production: resources used to produce goods and services (4 main ones) 1.
Land (natural resources/ "gifts of nature" used to produce goods and services) 2. Labour (work time and
work effort that people devote to producing goods and services) - quality of labour is dependant on human
capital (knowledge and skill that people obtain from education, training and experience) 3. Capital (tools,
