ECON 1100 COMPLETE LATEST EXAM 1
BASED WITH QUESTIONS AND
ANSWERS
microeconomics - ANSWER-studies the decisions of individuals, households, and firms. focuses on the
interaction of buyers and sellers.
macroeconomics - ANSWER-studies economic aggregates, such as the national unemployment rate, rate
of inflation, and the economy's growth rate.
positive economics - ANSWER-deals with statements that are TRUE
normative economics - ANSWER-deals with statements of WHAT SHOULD BE
ceteris paribus assummption - ANSWER-used to isolate the relationship between two variables by
holding other influences on the relationship constant
fallacy of false cause - ANSWER-occurs when it is assumed that because ONE event follows ANOTHER,
the first event must have CAUSED the SECOND
fallacy of division - ANSWER-occurs when it is incorrectly assumed that what is good for or true for the
WHOLE is also good or true for the PARTS
fallacy of composition - ANSWER-occurs when it is incorrectly assumed that what is true for the PARTS is
also true for the WHOLE
scarcity - ANSWER-exists because there are not enough resources to produce everything people WANT
and NEED
resources - ANSWER-include all the inputs used to manufacture goods and provide services
factors of production (resources) - ANSWER-- land and other natural resources
- labor services
- capital (structures and equipment)
- entrepreneurial ability
opportunity cost - ANSWER-defines as the value of the best alternative that must be given up when a
choice is made
economic system - ANSWER-is comprised of the laws, traditions, institutions, and mechanisms, designed
to ANSWER basic economic questions
economic questions - ANSWER-of "what outputs to produce?" or "how to produce the outputs?" or
"who gets to consume the outputs?"
circular flow model - ANSWER-designed to explain economic relationships
- consists of two sectors= business and household
- consists of two markets= product and resource
household sectors with markets - ANSWER-- consumers (households) DEMAND final goods and services
like FOOD, CLOTHING, HOUSING, MEDICAL CARE, ENTERTAINMENT, which are exchanged in PRODUCT
MARKETS
- resource owners, households SUPPLY labor services and other factors of production, such as the drilling
rights to land they own, to RESOURCE MARKETS
trade surplus - ANSWER-is when the value of Exports EXCEEDS value of Imports
trade deficit - ANSWER-is when the value of Imports EXCEEDS the value of Exports
balance of trade - ANSWER-is when the value of exports equals the value of imports
marginal cost - ANSWER-is the additional COST incurred as a result of the action, such as producing one
more unit of output
BASED WITH QUESTIONS AND
ANSWERS
microeconomics - ANSWER-studies the decisions of individuals, households, and firms. focuses on the
interaction of buyers and sellers.
macroeconomics - ANSWER-studies economic aggregates, such as the national unemployment rate, rate
of inflation, and the economy's growth rate.
positive economics - ANSWER-deals with statements that are TRUE
normative economics - ANSWER-deals with statements of WHAT SHOULD BE
ceteris paribus assummption - ANSWER-used to isolate the relationship between two variables by
holding other influences on the relationship constant
fallacy of false cause - ANSWER-occurs when it is assumed that because ONE event follows ANOTHER,
the first event must have CAUSED the SECOND
fallacy of division - ANSWER-occurs when it is incorrectly assumed that what is good for or true for the
WHOLE is also good or true for the PARTS
fallacy of composition - ANSWER-occurs when it is incorrectly assumed that what is true for the PARTS is
also true for the WHOLE
scarcity - ANSWER-exists because there are not enough resources to produce everything people WANT
and NEED
resources - ANSWER-include all the inputs used to manufacture goods and provide services
factors of production (resources) - ANSWER-- land and other natural resources
- labor services
- capital (structures and equipment)
- entrepreneurial ability
opportunity cost - ANSWER-defines as the value of the best alternative that must be given up when a
choice is made
economic system - ANSWER-is comprised of the laws, traditions, institutions, and mechanisms, designed
to ANSWER basic economic questions
economic questions - ANSWER-of "what outputs to produce?" or "how to produce the outputs?" or
"who gets to consume the outputs?"
circular flow model - ANSWER-designed to explain economic relationships
- consists of two sectors= business and household
- consists of two markets= product and resource
household sectors with markets - ANSWER-- consumers (households) DEMAND final goods and services
like FOOD, CLOTHING, HOUSING, MEDICAL CARE, ENTERTAINMENT, which are exchanged in PRODUCT
MARKETS
- resource owners, households SUPPLY labor services and other factors of production, such as the drilling
rights to land they own, to RESOURCE MARKETS
trade surplus - ANSWER-is when the value of Exports EXCEEDS value of Imports
trade deficit - ANSWER-is when the value of Imports EXCEEDS the value of Exports
balance of trade - ANSWER-is when the value of exports equals the value of imports
marginal cost - ANSWER-is the additional COST incurred as a result of the action, such as producing one
more unit of output
