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ECO 2023 FSU Exam 1 (1).
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ECO 2023 FSU Exam 1 (1).
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ECO 2023 FSU Exam 1Economics - ANS-The study of how individuals manage scare resources
Scarcity - ANS-The result of simultaneously having limited goods/resources and unlimited wants
Scarcity necessities - ANS-Choice
Choice - ANS-The act of selecting among alternatives
Opportunity Cost - ANS-Th highest valued alternative that must be foregone when making a
choice; the value of the second-best option
Scarcity imposes - ANS-Rationing
Methods for Rationing - ANS-- First come, first served
- Lottery
- Personal attributes
- Competitions
- Prices
Economists believe that ________ is the best method of rationing - ANS-The price system
What are the Eight Concepts in Economic Thinking - ANS-1. The use of scarcity resources is
costly, so decision-makers must make trade-offs "There's no such thing as a free lunch"
2. Individuals act with rational self-interest
3. People respond to incentives
4. Individuals make decisions at the margin, through marginal decision-making
5. Information is costly
6. Economic actions often generate primary and secondary effects
7. Value is subjective
8. Good economic theory should predict human behavior
Economizing Behavior - ANS-Choosing the option that offers the greatest benefit at the least
possible cost
Utility - ANS-The subjective benefit or satisfaction a person expects from a choice
Incentives - ANS-A thing that encourages or motivates one to do something
Marginal - ANS-Term used to describe the effects of a change in the current situation
, Primary Effects - ANS-The effects that are expected or intended to happen
Secondary Effects - ANS-The indirect impact of an event or policy that may not be easily
observable
Failure to consider ______ _______ is one of the most common economic errors -
ANS-Secondary effects
Positive Economics - ANS-The scientific study of "what is" among economic relationships
Normative Economics - ANS-Judgements about "what ought to be" in economic matters
Four Pitfalls to Avoid - ANS-1. A violation of Ceteris Paribus can lead to wrong conclusions
2. Good intentions do not guarantee desirable outcomes
3. Association does not equal causation
4. Fallacy of composition: What is true for some may not be true for all
Ceteris Paribus - ANS-"Other things constant"
Economics is concerned with ______, not with ______ - ANS-Causation; Correlation
Start of modern economics: - ANS-Adam Smith's An Inquiry Into the Nature and Causes of the
Wealth of Nations
Alfred Marshall - ANS-Wrote the first textbook: The Principles of Economics
Microeconomics - ANS-The branch of economics that focuses on the individual decision-making
of consumers and producers operating in a defined market
Trade - ANS-A voluntary exchange between two parties
Trade Benefits Both Parties - ANS-1. When individuals engage in voluntary exchange, both
parties are better off
2. Trade creates value and increases the wealth created by a society's resources
Transaction Costs - ANS-The costs of time, effort and other resources necessary to search out,
negotiate and complete and exchange
Property Rights - ANS-The rights to use, control and obtain benefits from a good or resource
Property Rights Involve 3 Things - ANS-1. The right to exclusive use of the property
2. Legal protection against invasion from other individuals
3. The right to transfer, sell, exchange or mortgage the property
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