APEC – Exam 1 (Modules 1 & 2) – Agricultural and Applied Economics – study
material
What is economics? - correct answer ✔✔social science studying human behavior as the
relationship between scarce resources and unlimited
wants.
- "The study of the use of scarce resources that have alternative uses"
- Economists study the choices people make!
Institutions - correct answer ✔✔social or legal rules and norms that structure social order: established
laws, practices, or customs
-can be formal or informal
-identified with a social purpose, transcending individuals, and intentions by mediating the rules that
govern living behavior
Economics as a science - correct answer ✔✔Economics is a social science
-economists use the scientific method
-positive analysis and normative analysis
Positive analysis - correct answer ✔✔Examination of research questions that can be tested and
proven right or wrong
-The study of "What is?"
-Economics generally perform this type of analysis
Normative analysis - correct answer ✔✔Research that express subjective opinions or relies on value
-based judgements.-the study of "what ought to be?"
Incentive - correct answer ✔✔Something, such as money, a reward, or lack of cost, which motivates
an individual to perform an action
-when incentives change, so do behavior
, Trade-off - correct answer ✔✔A balance achieved between two desirable but incompatible features
Trade offs are necessary because - correct answer ✔✔human wants are unlimited and resources are
scarce
Do you have time to do everything you want to do?
• Does you have enough money to buy everything you want?
• Do governments have enough resources to solve all problems? - correct answer ✔✔Trade offs
Rational behavior - correct answer ✔✔In economics, agents who make choices to maximize some
type of objective are rational.
A business owner could seek to maximize profits or a student could work to maximize gpa - correct
answer ✔✔examples of rational behavior
Market - correct answer ✔✔A focal center where goods and services are exchanged
-buyers and sellers to interact in order to facilitate exchange
Non-market value - correct answer ✔✔Benefits of a good or service that are not exchanged in a
market
-ex: outdoor recreation, wild game, air quality
Natural resource - correct answer ✔✔natural occurring materials or substances that can be used for
economic gain
-ex: forests, oil, mining
Good institutions - correct answer ✔✔align self interest with social interest
Economic institutions - correct answer ✔✔When markets work well, individuals pursuing their own
interest also promote social interest
material
What is economics? - correct answer ✔✔social science studying human behavior as the
relationship between scarce resources and unlimited
wants.
- "The study of the use of scarce resources that have alternative uses"
- Economists study the choices people make!
Institutions - correct answer ✔✔social or legal rules and norms that structure social order: established
laws, practices, or customs
-can be formal or informal
-identified with a social purpose, transcending individuals, and intentions by mediating the rules that
govern living behavior
Economics as a science - correct answer ✔✔Economics is a social science
-economists use the scientific method
-positive analysis and normative analysis
Positive analysis - correct answer ✔✔Examination of research questions that can be tested and
proven right or wrong
-The study of "What is?"
-Economics generally perform this type of analysis
Normative analysis - correct answer ✔✔Research that express subjective opinions or relies on value
-based judgements.-the study of "what ought to be?"
Incentive - correct answer ✔✔Something, such as money, a reward, or lack of cost, which motivates
an individual to perform an action
-when incentives change, so do behavior
, Trade-off - correct answer ✔✔A balance achieved between two desirable but incompatible features
Trade offs are necessary because - correct answer ✔✔human wants are unlimited and resources are
scarce
Do you have time to do everything you want to do?
• Does you have enough money to buy everything you want?
• Do governments have enough resources to solve all problems? - correct answer ✔✔Trade offs
Rational behavior - correct answer ✔✔In economics, agents who make choices to maximize some
type of objective are rational.
A business owner could seek to maximize profits or a student could work to maximize gpa - correct
answer ✔✔examples of rational behavior
Market - correct answer ✔✔A focal center where goods and services are exchanged
-buyers and sellers to interact in order to facilitate exchange
Non-market value - correct answer ✔✔Benefits of a good or service that are not exchanged in a
market
-ex: outdoor recreation, wild game, air quality
Natural resource - correct answer ✔✔natural occurring materials or substances that can be used for
economic gain
-ex: forests, oil, mining
Good institutions - correct answer ✔✔align self interest with social interest
Economic institutions - correct answer ✔✔When markets work well, individuals pursuing their own
interest also promote social interest
