Exam (elaborations)
ECN 101 Exam Correct Answers Latest Update
- Course
- ECN 101
- Institution
- Arizona State University
ECN 101 Exam Correct Answers Latest Update
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Solution 2024/2025Pepper
ECN 101 Exam Correct Answers Latest Update
Economics ANS✔✔ The study of how individuals and societies manage
scares resource
Why is scarcity the fundamental concept of economics? ANS✔✔ Scarcity
compels us to make choice
Microeconomics ANS✔✔ studies the decision making of individuals and firms
and how these decisions are coordinated in
market
examples: the effects of tax policy on the hiring decisions of small business,
the impact tuition cost of college
attendance, the effect of social security on the retirement decision of
worker
Macroeconomics ANS✔✔ studies economy-wide phenomenon's, such as
aggregate production, unemployment, and
inflation
examples: the effect of the housing market crash on GDP, the central banks
decision to raise interest rates
Review principles of microeconomics - two categories
Why do people face tradeoffs?
, Solution 2024/2025
Pepper
What must be given up when making a particular choice
society - equity vs efficiency tradeoff ANS✔✔ Society - equity vs. efficiency
tradeoff
Equity - the property of distributing prosperity uniformly among members of
society (the distribution of the pie)
Efficiency - the property of getting the most it can from scarce resources
(the size of the economic pie)
What is opportunity cost?
What costs should be included? excluded? ANS✔✔ Whatever must be given
up when pursuing a particular choice
Includes explicit and implicit costs
Explicit - costs that require a cash outlay
Implicit - costs that do not require a cash outlay
Does not include sunk costs
Sunk costs ANS✔✔ cost that has already been incurred and cannot be
recovered
How do people respond to incentives? ANS✔✔ Reward or punishment that
induces someone to act
Prices act as incentives and are essential for understanding markets
Public policies often provide incentives that affect behavior
#2: How people interact
Why does trade make everyone better off?
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