3/19/26, 9:09 AM UNC Econ 101 Midterm
UNC Econ 101 Midterm 1 Caldwell Questions and Answers 100%
Pass
Econ
The study of decision-making under scarcity
Scarcity
The condition in which the desire for something is greater than the supply of that
thing
Cost-Benefit Principle
Before making a decision, evaluate all the costs and benefits of the decision.
Economic surplus
The total benefit minus the total cost flowing from a decision.
Opportunity Cost
The next-best alternative that you give up when you make a choice.
Sunk costs
A cost that has been incurred and cannot be reversed.
1/18
,3/19/26, 9:09 AM UNC Econ 101 Midterm
Marginal Principle
Decisions about quantities are best made incrementally.
Marginal benefit
The extra benefit from one extra unit.
Marginal cost
The extra cost from one extra unit.
Interdependence Principle
Your best choice depends on your other choices, or on many linked factors.
Production Possibility Frontier (PPF)
Shows what combinations of stuff a person/business/nation can produce.
Absolute Advantage
The ability to do a task using fewer resources.
Comparative advantage
The ability to do a task at a lower opportunity cost.
2/18
, 3/19/26, 9:09 AM UNC Econ 101 Midterm
Trade
For two people to engage in trade, both need to benefit.
Law of Diminishing Marginal Returns
Each additional unit yields a smaller marginal benefit than the previous one.
Market
Brings people together to help them take advantage of their comparative
advantage.
Gains from Trade
The benefits that arise from trading goods and services.
Terms of Trade
The minimum and maximum prices at which trade can occur.
Opportunity Cost of PPF
Always express opportunity costs as something we give up.
Inefficient Production
Occurs when production is below the production possibilities frontier.
3/18
UNC Econ 101 Midterm 1 Caldwell Questions and Answers 100%
Pass
Econ
The study of decision-making under scarcity
Scarcity
The condition in which the desire for something is greater than the supply of that
thing
Cost-Benefit Principle
Before making a decision, evaluate all the costs and benefits of the decision.
Economic surplus
The total benefit minus the total cost flowing from a decision.
Opportunity Cost
The next-best alternative that you give up when you make a choice.
Sunk costs
A cost that has been incurred and cannot be reversed.
1/18
,3/19/26, 9:09 AM UNC Econ 101 Midterm
Marginal Principle
Decisions about quantities are best made incrementally.
Marginal benefit
The extra benefit from one extra unit.
Marginal cost
The extra cost from one extra unit.
Interdependence Principle
Your best choice depends on your other choices, or on many linked factors.
Production Possibility Frontier (PPF)
Shows what combinations of stuff a person/business/nation can produce.
Absolute Advantage
The ability to do a task using fewer resources.
Comparative advantage
The ability to do a task at a lower opportunity cost.
2/18
, 3/19/26, 9:09 AM UNC Econ 101 Midterm
Trade
For two people to engage in trade, both need to benefit.
Law of Diminishing Marginal Returns
Each additional unit yields a smaller marginal benefit than the previous one.
Market
Brings people together to help them take advantage of their comparative
advantage.
Gains from Trade
The benefits that arise from trading goods and services.
Terms of Trade
The minimum and maximum prices at which trade can occur.
Opportunity Cost of PPF
Always express opportunity costs as something we give up.
Inefficient Production
Occurs when production is below the production possibilities frontier.
3/18
