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ECON 202 Portillo (Midterm #1) Questions with Correct Answers
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ECON 202 Portillo (Midterm #1) Questions with Correct Answers
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ECON 202 Portillo (Midterm #1) Questions withCorrect Answers
Chapter 1: The Economic Approach Correct Answer-
Scarcity Correct Answer-Fundamental concept of economics that
indicates that *there is less of a good freely available than people would
like*.
Scarcity is the concept that our wants are _______________ but the fact
is that we live in a world of _____________ resources. Correct Answer-
Unlimited, limited
Even if large amounts of a good have been produced, it is still
considered _____________. Correct Answer-Scarce
Choice Correct Answer-The act of selecting among alternatives, is the
logical sequence of scarcity.
When we make choices, we constantly face _______________ between
meeting one desire or another. Correct Answer-trade-offs
Scarcity DOES NOT EQUAL __________. Correct Answer-Poverty
What is the difference between *scarcity* and *Poverty*? Correct
Answer--*Scarcity* is an OBJECTIVE concept that describes a
FACTUAL situation in which the limited nature of our resources keeps
,us from being able to completely fulfill our desires for goods and
services.
-*poverty* is a SUBJECTIVE concept that refers to a PERSONAL
OPINION of whether someone meets an arbitrary defined level of
income.
Resource Correct Answer-An input used to produce economic goods.
Land, labor, skills, natural resources, and human-made tools and
equipment provide examples.
What are the 3 types of resources? Correct Answer-1. Human Resources
2. Physical Resources
3. Natural Resources
Human resources Correct Answer-Innate or acquired knowledge, skills,
strengths, etc.
*Ex:* getting your degree
Physical Resources Correct Answer-Human made resources used to
produce other goods and services.
*Ex:* tools, machines, and computers
Natural Resources Correct Answer-Land, mineral deposits, rivers,
oceans, coal, etc.
,Competition Correct Answer-The natural outgrowth of scarcity and the
desire of human beings to improve their conditions.
Rarity Correct Answer-Is a physical quality, only so much of something
exists in the world. It is a supply issue alone.
*Ex:* If a good is rare-- Like a one of a kind painting where only one
exists in the world-- it DOES NOT mean it is valuable or desired.
*Ex2:* What professor Portillo did with the bonus points in front of the
class.
Scarcity makes ___________ necessary. Correct Answer-*Rationing*-
is a system of determining how limited goods and services are allocated
or distributed among individuals.
What are some various methods that can be used to ration? Correct
Answer--Violence
-Political means
-First come first served (Problem: Some people might not have
transportation or resources to accomplish this).
-Market (Prices)
What is the *truest system* that we have for scarcity and rationing?
Correct Answer-The Price system
When rationing is done by price, individuals will have an
_______________ to get involved in productive activities in order to get
, paid. Correct Answer-*Incentive*- a thing that motivates or encourages
one to do something.
Self interest leads to benefits for _______________. Correct Answer-
Others
Economics Correct Answer-Rigorously applied common sense.
- What you think is the correct answer might not be.
8 Guideposts to economic thinking Correct Answer-1. The use of scarce
resources is costly, so decision makers must make trade-offs.
2. Individuals choose purposefully-they try to get the most from their
limited resources.
3. Incentives matter- changes in incentives influence human choices in a
predictable way. Both monetary and nonmonetary incentives matter.
4. Individuals make decisions at the margin.
5. Although information can help us make better choices, its acquisition
is costly.
6. Beware of the secondary effects: Economic actions often generate
indirect as well as direct effects.
7. The value of a good or service is subjective.
8. The test of a theory is its ability to predict.
1. The use of scarce resources is costly, so decision makers must make
trade-offs. Correct Answer--"There is no such thing as free lunch".
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