ECO 2013 UCF Exam 1 Study Questions with 100% Correct Answers | Guarantee Pass

ECO 2013 UCF Exam 1 Study Questions with 100% Correct Answers | Guarantee Pass 1. What is economics? - ANSWER The study of how economic units make decisions under scarcity and the incentives that influence those decisions. 2. What is scarcity? - ANSWER Limited quantities of resources to meet unlimited wants 3. What are resources? - ANSWER The things used in making goods and providing services 4. _________________ is the study of how people manage resources - ANSWER economics 5. An increase in the number of potential buyers in a market will __________________ demand - ANSWER increase 6. ___________________ is a fundamental characteristic of supply which states that, all else equal, quantity supplied rises as price rises - ANSWER law of supply 7. What are the five nonprice determinants of supply? - ANSWER producer expectations, technology, number of sellers, prices of related goods, prices of inputs 8. If the price of production is expected to rise, production rate and consequently supply __________________ for the near future - ANSWER decreases 9. How does improvement to technology enable more efficient production? - ANSWER lowers production costs and increases the quantity producers are willing to supply at each price 10.When the prices of inputs increase, the production costs ______________, and the quantity of the product that the producers are willing to supply ___________________. - ANSWER increases...decreases 11.Asking ____________________________________ can help prevent bad decisions by predicting the undesirable side effects of a change in prices or policies - ANSWER how others will respond 12._____________________________ is a simplified flowed representation of how the economy's transactions work together - ANSWER circular flow model 13.What are the three things that a good model should do? - ANSWER predict cause and effect, make clear assumptions, describe the real world accurately 14.______________________ is a statement that makes a factual claim about how the world actually works - ANSWER positive statement 15._______________________ is a statement that makes a claim about how the world should be - ANSWER normative statement 16.How do economists test their models? - ANSWER by observing what happens in the world and collecting data that can be used to support or reject their models 17.The ___________________________ is a natural outcome of people everywhere acting in their own self interest to improve their own line - ANSWER global production line 18.______________________ is a line or curve that shows all the possible combinations of outputs that can be produced using all available resources - ANSWER production possibility frontier 19.Which two variables should you know before you know the trade offs of something? - ANSWER Wants and constraints 20.What is a central idea in economics? - ANSWER the collective reaction to a changing trade off 21._______________________ is something that causes people to behave in a certain way by changing the trade offs they face - ANSWER incentive 22.____________________ makes people less likely to do something - ANSWER disincentive 23.What are the five categories that group nonprice determinants of demand? - ANSWER consumer preference, prices of related goods, income, expectations of future price, number of buyers in the market 24.______________________ are goods that serve a similar enough purpose that a consumer might purchase one in place of the other - ANSWER substitutes 25._______________ are goods that are consumed together so that purchasing one will make consumers more likely to purchase the other - ANSWER complements 26.__________________ are goods for which demand increases as income increases - ANSWER normal goods 27.________________ pioneered the trading system. - ANSWER specialization 28._____________________ is the improvement in outcomes that occurs when producers specialize and exchange goods and services - ANSWER gains from trade 29.What constitutes for room for trade? - ANSWER when two producers differ in opportunity cost and they set a trading price that falls between those opportunity costs 30.What are the two main factors that drive the change in the U.S. production possibilities? - ANSWER technology and number of workers/population 31.How can trade be driven by self interest? - ANSWER everyone gets more of the things they want than they would if they were self sufficient