Test 1

Question 1

When human wants and needs exceed the available amount, we call this

Answer 1

Scarcity

Question 2

Economics is the study of how society, firms, and individuals manage ________ resources.

Answer 2

Scarce

Question 3

List the 4 categories of factors of production:

Answer 3

Land, Labor, Capital and Entrepreneurial Ability (aka: Entrepreneurship)

Question 4

The branch of economics that focuses on individual units is called _______________.

Answer 4

Microeconomics

Question 5

The branch of economics that focuses on the whole or overall economy is called _________.

Answer 5

Macroeconomics

Question 6

Simplified descriptions of reality used to understand the relationship between variables are called ___________________________.

Answer 6

Economic Models

Question 7

Using opinions to validate a claim is operating in the realm of _____________ economics.

Answer 7

Normative

Question 8

Using facts to validate a claim is operating in the realm of ____________ economics.

Answer 8

Positive

Question 9

When two variables move or change in the same direction, they have a __________________ relationship.

Answer 9

Positive or Direct

Question 10

When two variables move or change in opposite directions, they have a __________________ relationship.

Answer 10

Negative or Inverse

Question 11

When you give up one alternative for another alternative, we call this concept _______________________.

Answer 11

Opportunity Cost

Question 12

One of the central questions in economics is dealing with __________________.

Answer 12

Scarcity

Question 13

If a line has an upward slope, we say the relationship between the two variables is ________________________or ________________.

Answer 13

Positive or Direct

Question 14

If a line has a downward slope, we say the relationship between the two variables is
__________________ or _______________.

Answer 14

Negative or Inverse

Question 15

Regarding the PPC model, a point inside the curve is said to be _______________.

Answer 15

Some type of deficiency (most often called “inefficient”)

Question 16

Regarding the PPC model, a point on the curve is called a(n) ___________ point.

Answer 16

Efficient

Question 17

Regarding the PPC model, a point outside the curve is said to be _______________.

Answer 17

Unattainable

Question 18

The outside temperature and the number of people who go to the beach are likely to exhibit a _____________ relationship.

Answer 18

Direct or Positive (If Temperature goes up, # of beach goers goes up as well)

Question 19

The outside temperature and the number of clothing items worn are likely to exhibit a _____________ relationship.

Answer 19

Inverse or Negative (If Temperature goes up, # of clothing items worn goes down)

Question 20

When one variable increases and this causes another variable to increase, we say the two variables have a(n) _____________ relationship.

Answer 20

Direct or Positive

Question 21

When one variable increases and this causes another variable to decrease, we say the two variables have a(n) ____________ relationship.

Answer 21

Inverse or Negative

Question 22

As production gets higher, then generally speaking, a __________ standard of living exists for a nation’s residences.

Answer 22

Higher

Question 23

List the two reasons for market failure:

Answer 23

Externalities and Market Power