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AGEC 217 Exam 1|107 Questions and Answers A+ Graded
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AGEC 217 Exam 1|107 Questions and Answers A+ Graded
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AGEC 217 Exam 1|107 Questionsand Answers A+ Graded
We analyze our choices when we do things, what we will give up to get
something. - -Explain how economic analysis can be used in decision
making.
- Study of the ways individuals, firms, and society make decision to allocate
limited resources to competing wants - -Define economics.
- People are...
- rational
- self interested
- respond to incentives - -What are the 3 assumptions made in economics?
- Factors that drive an individual/firm to choose an action - -Define
incentives
- Study of decision making by individuals, businesses, and industries - -
Microeconomics definition.
- Study of broader issues in economy like inflation, unemployment, and
national output - -Macroeconomics definition.
- Use simplified models to explain/visualize situations
Models crafted from new ideas, then tested against real world data - -
Describe how economists use models.
- All other relevant factors/variables held constant - -Described the ceteris
paribus assimption.
- How well resources are used and allocated
Do people get the goods/services they want at the lowest possible resource
cost? - -Define efficiency.
- The fairness of various issues and policies
Should executive salaries and bonuses be capped for publicly traded
corporations? - -Define equity.
- Efficiency is about reducing waste, equity is about fairness (in different
policies and issues) - -What is the difference between efficiency and equity?
, - Can be answered by available information or facts - -Define positive
question.
- Addresses society's beliefs about what should or should not take place - -
Define normative question.
- 1. Economics is concerned with making choices with limited resources
2. When making decisions, one must take into account tradeoffs and
opportunity costs
3. Specialization leads to gains for all involved
4. People respond to incentives (good and bad)
5. Rational behavior requires thinking on the margin
6. Markets are generally efficient (when not, gov can sometimes correct
failure)
7. Economic growth, low unemployment, low inflation are economic goals
(don't always coincide)
8. Institutions and human creativity help explain the wealth of nations - -List
the 8 key principles of economics.
- Unlimited wants clash with limited resources - -Define scarcity.
- The next best alternative
What you give up to do something or purchase something
For PPFs, the cost of a good in terms of another that must be given up - -
Define opportunity cost.
- Individuals work in careers most suited to them, make better products in
less time - -How does specialization lead to gains for all involved?
- Private markets and competition force businesses to be efficient or be
driven out - -Define efficiency of competition.
- If there is too much pollution, the government can set guidelines to
regulate it - -What is one example where the government might need to
step in to regulate a market?
- 1. What goods and services are to be produced?
2. How are the goods and services to be produced?
3. Who will receive these goods and services? - -What are the 3 economic
questions that each society needs to answer?
- Land, labor, capital, entrepreneurial ability (ideas) - -What are the 4
factors of production?
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