Econ Test 1

Question 1

Alfred Marshall’s definition of economics

Answer 1

the study of mankind in the ordinary business of life

Question 2

Mankiw’s definition of economics

Answer 2

the study of how society manages its scarce resources

Question 3

resources

Answer 3

whatever you have that helps you get what you want

Question 4

scarcity

Answer 4

not enough compared to what we want

Question 5

trade-off choosing

Answer 5

the choice to do one thing and not to another

Question 6

opportunity cost

Answer 6

what you give up when you choose to do something

Question 7

economics in this class

Answer 7

the study of decisions made where there is an opportunity cost

Question 8

theory

Answer 8

system of relations between factors, including interactions and cause/effect links

Question 9

model

Answer 9

simplified representation of how the world works

Question 10

hypothesis

Answer 10

conditional prediction

Question 11

production possibilities

Answer 11

curve or schedule that shows all combinations of goods that can be produced using all available resources and technology

Question 12

feasible

Answer 12

its possible and can be done

Question 13

efficient

Answer 13

most output possible

Question 14

technology

Answer 14

all the known ways to combine resources to produce goods

Question 15

positive economics

Answer 15

descriptive economics, tells about how the world works and what is

Question 16

normative economics

Answer 16

welfare economics, tells about the changes that should be made and what ought to be

Question 17

economic system

Answer 17

structure of laws, customs, and government bodies that generates our answers

Question 18

price system

Answer 18

market sets the price and people respond to them

Question 19

quantity demanded

Answer 19

the amount people are willing to buy at one particular price

Question 20

demand

Answer 20

the curve or schedule that shows quantities people are willing to buy at various prices

Question 21

normal good

Answer 21

as income increases the demand increases

Question 22

inferior good

Answer 22

when income increases the demand decreases.

Question 23

quantity supplied

Answer 23

the amount people are willing to sell at one particular price

Question 24

supply

Answer 24

the curve or schedule that shows the quantities people are willing to sell at various prices

Question 25

equilibrium

Answer 25

no net force for change