ECN 211 EXAM 1 REVIEW ASU QUESTIONS WITH COMPLETE ANSWERS
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Course
ECN211 ASU
Institution
ECN211 ASU
Ten Principes - CORRECT ANSWER Principle 1: People face tradeoffs
Principle 2: The cost of something what you give up getting it
Principle 3: Rational people think at the margin
Principle 4: People respond to incentives
Principle 5: Trade can make everyone better off
Principle 6: Market...
The economist plays 2 roles - CORRECT ANSWER Scientist: Trying to explain
the world
Policy Advisers: Trying to improve the world
Circular-flow diagram is what? - CORRECT ANSWER A visual model of the
economy, slows how dollars and goods and services flow through markets among
households and firms
Factors of production are defined as? and what are some examples? - CORRECT
ANSWER the resources the economy uses to produce goods and services
including
1. Labor
2. Land
3. Capital (buildings and machines used in production)
Households in the circular-flow diagram do what? - CORRECT ANSWER 1.
Own the factors of production, sell/rent them to firms for income
2. Buy and consume goods and services
Firms in the circular-flow diagram do what? - CORRECT ANSWER 1. Buy/hire
factors of production, use them to produce goods and services
2. Sell goods and services for wages, rent, and profit
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