Econ 211 UTK exam 1 Study Questions and Answers
Economics - Answer️️ -The study of how people make decisions given
the scarcity of resources
Incentives - Answer️️ -a positive or negative environmental stimulus that
motivates behavior
Ceteris Paribus - Answer️️ -meaning everything e...
2. People are self interested (opposite is altruistic)
3. People respond to incentives
Marginal = - Answer✔️✔️-additional
Capitalist/ market economy - Answer✔️✔️-private individuals and firms
own most of the resources, innovation due to competition, government role
is to protect property rights
Communist/ Planned economy - Answer✔️✔️-Most resources owned by the
government
Mixed economy - Answer✔️✔️-is a mixture between capitalist/market and
communist/planned
What are the four factors of production? - Answer✔️✔️-land, labor, capital,
entrepreneurship
Investment = - Answer✔️✔️-purchase of new capital
Investment DOES NOT mean - Answer✔️✔️-investing in the stock market
PPF assumptions - Answer✔️✔️-all factors of production go towards the
production of 2 goods
Linear PPF - Answer✔️✔️-opportunity cost is the slope (constant)
To shift PPF inward... - Answer✔️✔️-Destroy capital or other factors of
production (natural disasters, war)
2
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