Exam (elaborations)
Econ 201 Exam 1 Terms Detailed Questions And Expert Answers
- Course
- ECO 201
- Institution
- Southern New Hampshire University
Econ 201 Exam 1 Terms Detailed Questions And Expert Answers
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Econ 201 Exam 1 Terms Detailed Questions AndExpert Answers
Economics - ANS The study of the choices consumers, business managers, and
government officials make to attain their foals, give scarce resources.
Scarcity - ANS Although our wants are unlimited, the resources available are not.
3 Key Economic Ideas - ANS People are rational. People respond to economics
incentives. Optimal decisions are made at the margin.
Tradeoffs - ANS Producing more of one good or service means producing less of
another good or service.
Opportunity Cost - ANS The highest valued alternative that must be given up to
engage in an activity.
Centrally Planned Economy - ANS An economy in which the government decides
how economic resources will be allocated.
Market Economy - ANS An economy in which the decisions of households and
firms interacting in markets allocate economic resources.
Market Economy - ANS Households and firms
, Centrally Planned - ANS Government
Mixed Economy - ANS An economy in which most economic decisions result from
the interaction of buyers and sellers in markets but in which the government plays
a significant role in the allocation of resources.
Productive Efficiency - ANS When a good or service is produced at the lowest
possible cost.
Allocative Efficiency - ANS A state of the economy in which production is in
accordance with consumer preferences; in particular, every good or service is
produced up to the point where the last unit provides a marginal benefit to society
equal to the marginal cost of producing it.
Steps Economists use to make a useful economic model - ANS Decide on the
assumptions to use in developing the model. Formulate a testable hypothesis. Use
economic data to test the hypothesis. Revise the model if it fails to explain the
economic data well. Retain the revised model to help answer similar economic
questions in the future.
Economic Variable - ANS Something measurable that can have different values,
such as the incomes of doctors.
Hypothesis - ANS Statement that can be correct or incorrect about an economic
variable.
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