Economics 101 Study Guide Exam And All Actual Answers.
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Course
Econ 101
Institution
Econ 101
economics - Answer the study of how people make choices under conditions of scarcity and of the results of those choices for society
rational person - Answer someone with well-defined goals who tries to fulfill those goals as best as he or she can
economic surplus - Answer the benefit o...
Economics 101 Study Guide Exam And
All Actual Answers.
economics - Answer the study of how people make choices under conditions of scarcity and of the
results of those choices for society
rational person - Answer someone with well-defined goals who tries to fulfill those goals as best as he
or she can
economic surplus - Answer the benefit of taking any action minus its cost
opportunity cost - Answer the value of the next-best alternative that must be foregone in order to
undertake the activity
positive economics - Answer economic analysis that offers cause-and-effect explanations of economic
relationships; the propositions, or hypotheses, that emrege from positive economics can, in principle, be
confirmed or refuted by data; in principle, data can also be used to measure the magnitude of effects
predicted by positive economics
normative economics - Answer economic statements that reflect subjective value judgments and are
based on ethical positions
The Scarcity Problem - Answer Having to make a choice- more of one good thing means having less of
another
The Cost-Benefit Principle - Answer An individual will be better off taking an action if, and only if, the
extra benefits from taking the action are greater than the extra costs
time value of money - Answer the fact that a given dollar amount today is equivalnet to a larger dollar
amount in the future, because the money can be invested in an interest-bearing account in the
meantime
, sunk cost - Answer a cost that is beyond recovery at the moment a decision must be made
marginal cost - Answer the increase in total cost that results from carrying out one additional unit of an
activity
marginal benefit - Answer the increase in total benefit that results from carrying out one more unit of
an activity
average cost - Answer total cost of undertaking n units of an activity divided by n
average benefit - Answer total benefit of undertaking n units of an activity divided by n
fixed cost - Answer a cost that does not very with the level of an activity
variable cost - Answer a cost that varies with the level of activity
microeconomics - Answer the study of individual choice under scarcity and its implications for the
behaviour of prices and quantities in individual markets
macroeconomics - Answer the study of the performance of national economies and the policies that
governments use to try to improve that performance
absolute advantage - Answer one person has an absolute advantage over another if he or she takes
fewer hours to perfom a task than the other person
comparative advantage - Answer one person has a comparative advantage over another if his or her
opportunity cost of performing a task is lower than the other person's opportunity cost
The Principle of Comparative Advantage - Answer total output is largest when each person concentrates
on the activities for which his or her opportunity cost is lowest
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