ECON 2100 UGA EXAM 1 STUDY GUIDE
Economics - Answer -the study of how society manages its scarce resources and
influences
Six key ideas define the economic way of thinking: - Answer -•A choice is a tradeoff
•People make rational choices by comparing benefits and costs.
•Benefit is what you gain from something.
•Cost is what you must give up to get something.
•Most choices are "how much" choices made at the margin.
•Choices respond to incentives.
Markets can fail - Answer -Externalities (positive or negative)
Public goods (non-rival and non-excludable)
Tragedy of the commons (depletion or spoiling of shared resources)
Economic theory explains - Answer -What we observe in reality, including
environmental problems
circular flow model - Answer -A diagram that traces the flow of resources, products,
income, and revenue among economic decision makers
Materials Balance Model - Answer -positions the circular flow within a larger schematic
to show the connections between economic decision making and the natural
environment
Residuals - Answer -Pollution remaining in the environment after some process has
occurred.
Can be delayed, but not prevented, through recovery, recycling, and reuse.
First Law of Thermodynamics - Answer -Energy can be transferred and transformed,
but it cannot be created or destroyed.
Second Law of Thermodynamics - Answer -When energy is transformed, the quantity
of energy remains the same, but its ability to do work diminishes
Nature's capacity to convert matter and energy is not without bound
Economics - Answer -the study of how society manages its scarce resources and
influences
Six key ideas define the economic way of thinking: - Answer -•A choice is a tradeoff
•People make rational choices by comparing benefits and costs.
•Benefit is what you gain from something.
•Cost is what you must give up to get something.
•Most choices are "how much" choices made at the margin.
•Choices respond to incentives.
Markets can fail - Answer -Externalities (positive or negative)
Public goods (non-rival and non-excludable)
Tragedy of the commons (depletion or spoiling of shared resources)
Economic theory explains - Answer -What we observe in reality, including
environmental problems
circular flow model - Answer -A diagram that traces the flow of resources, products,
income, and revenue among economic decision makers
Materials Balance Model - Answer -positions the circular flow within a larger schematic
to show the connections between economic decision making and the natural
environment
Residuals - Answer -Pollution remaining in the environment after some process has
occurred.
Can be delayed, but not prevented, through recovery, recycling, and reuse.
First Law of Thermodynamics - Answer -Energy can be transferred and transformed,
but it cannot be created or destroyed.
Second Law of Thermodynamics - Answer -When energy is transformed, the quantity
of energy remains the same, but its ability to do work diminishes
Nature's capacity to convert matter and energy is not without bound
