NCSU ARE 201 Questions and Answers
3 Assumptions (class)
1)Perfect Info
2) People maximize happiness and firms maximize profits
3)Everybody faces constraints
3 Key Ideas (book)
1) People are rational
2) People respond to initiatives
3) Optimal decisions are made at the margin
...
3 Assumptions (class) - answer 1)Perfect Info
2) People maximize happiness and firms maximize profits
3)Everybody faces constraints
3 Key Ideas (book) - answer 1) People are rational
2) People respond to initiatives
3) Optimal decisions are made at the margin
Positive econ. - answer "what is"
Normative econ. - answer "what ought to be"
Production Possibilities Frontier - answer A graph of all the combinations of 2 goods
a frim can produce given constraints
Traditional Economy - answer no thought process; do what your parents did
Planned Economy - answer Gov. tells you what to do
Market Economy - answer Individuals decide based on resources & prices
Total Economic Cost - answer accounting cost + opportunity cost
PPF Recession - answer Anytime you are inside the PPF Curve
Gross Domestic Production Recession - answer 2 calender quarters of -GDP growth
Qd - answer amount of a good that an individual is willing & able to purchase at a
given price
Demand curve - answer shows all the different Qd's at all different price leves
Law of Demand - answer increase in price will cause a decrease in Qd
3 exceptions to Law of Demand - answer 1)Perfectly inelastic demand
2)Perfectly elastic demand
3)Giffen curve
Percfectly inelastic demand - answer Same Qd no matter the price
Perfectly elastic demand - answer Same price no matter the Qd
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