ECN 211 Exam 1 Review ASU Questions with 100% Correct Answers

Ten Principes Correct Answer Principle 1: People face tradeoffs Principle 2: The cost of something what you give up getting it Principle 3: Rational people think at the margin Principle 4: People respond to incentives Principle 5: Trade can make everyone better off Principle 6: Markets are usually a good way to organize economic Principle 7: Government can sometimes improve market outcomes Principle 8: A country's standard of living depends on its ability to produce goods and services Principle 9: Prices rise when government prints too much money Principle 10: Society faces a short-run trade off between inflation and unemployment First 4 principles have to do with what? Correct Answer How people make descisions What do the last 4 principles have to do with? Correct Answer Productivity are the ultimate source of living Scarcity Correct Answer The limited nature of society's resources Economics Correct Answer The study of how society manages its scarce resources The economist plays 2 roles Correct Answer Scientist: Trying to explain the world Policy Advisers: Trying to improve the world Circular-flow diagram is what? Correct Answer A visual model of the economy, slows how dollars and goods and services flow through markets among households and firms Factors of production are defined as? and what are some examples? Correct Answer the resources the economy uses to produce goods and services including 1. Labor 2. Land 3. Capital (buildings and machines used in production) Households in the circular-flow diagram do what? Correct Answer 1. Own the factors of production, sell/rent them to firms for income 2. Buy and consume goods and services Firms in the circular-flow diagram do what? Correct Answer 1. Buy/hire factors of production, use them to produce goods and services 2. Sell goods and services for wages, rent, and profit