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ECON 101 EXAM FALL 2024/2025 VERIFIED QUESTIONS AND ANSWERS WITH RATIONALE GRADED A+(SOLVED)
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ECON 101 EXAM FALL 2024/2025 VERIFIED QUESTIONS AND ANSWERS WITH RATIONALE GRADED A+(SOLVED)
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ECON 101 EXAM FALL 2024/2025 VERIFIEDQUESTIONS AND ANSWERS WITH RATIONALE
GRADED A+(SOLVED)
Economics is the
(A) study of the distribution of unlimited resources to satisfy limited wants.
(B) study of political organization.
(C) exclusive study of financial markets and instruments.
(D) study of the consumption, production, and distribution of goods and services.
(D) study of the consumption, production, and distribution of goods and services.
Why:
* Many economists have many different definitions for economics. At its core, economics is the study of
the consumption, production, and distribution of goods and services.
* Some economists define economics as the study of the distribution of limited resources (scarcity) to
satisfy unlimited wants.
An economy is
(A) the political organization of a nation.
(B) the geographical boundaries of a nation.
(C) the system society uses to coordinate productive activities.
,(D) the group of individuals who lead a society.
(C) the system society uses to coordinate productive activities.
Why:
* An economy is the system by which society coordinates productive activities. It can be a market
economy where buyers and sellers trade to determine what is produced. An economy can also be a
command economy where a central authority decides what is produced.
Daniel has decided to open his own bakery using locally sourced ingredients and supplies. He provides
income and jobs to local suppliers. He also provides his community with a place to buy delicious baked
goods. This is an example of
(A) the invisible hand.
(B) a command economy.
(C) market failure.
(D) a recession.
(A) the invisible hand.
Why:
* Notice, though, that Daniel and his suppliers do not set out to help society. They are motivated by
profit. Despite acting "selfishly" by trying to earn profit, they each are taking actions that ultimately
benefit society.
* The invisible hand is a term coined by Adam Smith that describes how people acting in their own
interest often make choices that benefit society as well.
,There are limited resources to satisfy all of society's wants.
(A) business cycle
(B) trade-off
(C) margins
(D) scarcity
(E) entrepreneurship
(F) recession
Comparing the benefits and costs of engaging in an activity
(A) scarcity
(B) trade-off
(C) recession
(D) margins
(E) financial capital
(F) resources
(D) and (B)
Why:
* Economics is the study of how people use their limited resources to satisfy their unlimited wants. In
other words, it is the study of how people and society satisfy wants under conditions of scarcity.
* Because of scarcity, people have to decide between alternatives, and may have to give up one good in
order to have another. Such decisions involve weighing the benefits of an activity against its costs. This is
called a trade-off.
, Which is NOT an example of a resource?
(A) land
(B) firms
(C) labor
(D) human capital
(E) machinery
(B) firms
Why:
A resource is anything used in the production of a product or service. The most common examples of
resources are land, labor, capital, and human capital. Firms are not examples of resources in the
economic sense. Firms typically turn resources into goods and services that are sold in a market.
The $15 Kelly's Big Burger gift card that your friend gave you for your birthday expires today. You can
either use the gift card to buy yourself dinner at Kelly's Big Burger, or you can stay home and eat a
delicious home-cooked meal. What is the opportunity cost of eating the home-cooked meal?
(A) There is no opportunity cost since you did not pay for the gift card.
(B) The value of a $!5 meal at Kelly's Big Burger.
(C) The time it takes to eat your home-cooked meal, and the value of a $15 meal at Kelly's Big Burger.
(D) the value of the ingredients that go into the home-cooked meal, and the value of a $15 meal at
Kelly's Big Burger.
(E) The value of the ingredients that go into the home-cooked meal.
(D) the value of the ingredients that go into the home-cooked meal, and the value of a $15 meal at
Kelly's Big Burger.
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