Exam 1

Question 1

name the 5 reasons we study the economy

Answer 1

1. be participant in Information revolution
   2.Informed voter
   3.understand society and what shapes us
   4.understand global affairs
   5.learn way of thinking

Question 2

what’s scientific method

Answer 2

using hypothesis and observations to find cause and effect

Question 3

what is generalizations

Answer 3

tendencies of a consumer, buyer or market

Question 4

other-things-equal

Answer 4

factors don’t change others than those being considered

Question 5

what’s ockahms razor

Answer 5

cut out irrelevant info

Question 6

post hoc fallacy

Answer 6

after this, therefor this

Question 7

fallacy of composition

Answer 7

what’s true for one is true for the group

Question 8

what are the 3 economic ideas

Answer 8

1.people are rational (self-interest)
2. respond to economic incentives
3.optimal decisions made at the margin

Question 9

what is marginal analysis

Answer 9

decisions based on comparing marginal cost to marginal benefit

Question 10

what are the 3 questions

Answer 10

1.What goods or serviced produced?
2.how will it be produced
3.who will receive

Question 11

what is a centrally planned economy?

Answer 11

socialism and communism, when gouv makes decisions

Question 12

father of communism?

Answer 12

Karl Marx

Question 13

what is a market economy?

Answer 13

capitalism

Question 14

describe capitalism?

Answer 14

private property, self-interest, freedom of choice, competition between firms

Question 15

father of capitalism?

Answer 15

Adam Smith

Question 16

what is pure competition

Answer 16

many firms, no control on price but the same price, ease of entry

Question 17

what is a oligopoly?

Answer 17

2-3 firms and hard entry

Question 18

what is oligopsony?

Answer 18

few buyers

Question 19

what are the 4 scarce resources and how they get paid?

Answer 19

1.land (rent)
2.labour (wages+salary)
3.capital (interest)
4.entrepreneurial ability (profit)

Question 20

what are the 4 assumptions for the possibility model?

Answer 20

1. full employment
   2.fixed resources
2. fixed technology
3. 2 goods, 1 consumer 1 capital

Question 21

what is productive efficiency

Answer 21

point on the curve

Question 21

what’s is allocative efficiency

Answer 21

the one special point that maximizes efficiency

Question 21

what are the 3 ways fro economic growth

Answer 21

1. increase resources quality
   2.increase resources quantity
2. technology advancements