ECON 104 PSU EXAM 1 REVIEW
EXAM QUESTIONS & ANSWERS
RATED 100% COMPLETE
What is Macroeconomics - Correct Answer ✔✔ The study of the economy as a whole
including topics such as inflation unemployment and economic growth
What is the current unemployment rate - Correct Answer ✔✔ 4.1%
What are the 3 economic ideas about how people make choices in the market - Correct
Answer ✔✔ 1 people are rational
2 people respond to economic incentives
3 optimal decisions are made at the margins
What does people are rational mean - Correct Answer ✔✔ people take into account all
available information when making a decision
What does people respond to economic incentives mean - Correct Answer ✔✔ people
try to optimize there pay in every way they can
example the bus driver will sit in traffic
What is true about marginal cost and benefit - Correct Answer ✔✔ if MB>MC people will
allow others to pay less until MB=MC
What is the economic problem every society has to solve - Correct Answer ✔✔ Scarce
resources and unlimited wants
What does margin mean - Correct Answer ✔✔ additional or a small adjustment to
something
What does unlimited wants have to do with - Correct Answer ✔✔ improving our
standard of living
What is standard of living - Correct Answer ✔✔ the amount of goods and services we
can buy
What do we need to produce more goods and services - Correct Answer ✔✔ resources
which are scarce
4 factors of production - Correct Answer ✔✔ land
capital
labor
, entrepreneurship
What 3 things does socity decide to do - Correct Answer ✔✔ What to produce
how to produce
for whom to produce
What is a centrally planned economy - Correct Answer ✔✔ government run economy.
they make all the decisions. example North Korea and Russia
What is a market economy - Correct Answer ✔✔ economy driven by free markets
government collect tax
What is a mixed economy - Correct Answer ✔✔ a mixture of free market economy with
regulations on the economy coming from the government. The USA is and example of
this economy
What is positive economics - Correct Answer ✔✔ statements that can be verified and or
tested scientifically using real world data and economic models
What is normative economics - Correct Answer ✔✔ statements based upon opinion and
are scientifically untestable
What is more economic freedom associated with - Correct Answer ✔✔ improved quality
of life
What does the PPF show - Correct Answer ✔✔ shows the maximum attainable
combinations of two products that may be produced ceteris paribus
What does ceteris paribus mean - Correct Answer ✔✔ all other things remain
unchanged
What does opportunity cost mean - Correct Answer ✔✔ the highest valued alternative
that must be given up to engage in an activity
What does increasing marginal opportunity cost mean - Correct Answer ✔✔ as an
economy moves down along PPF it can experience increasing opportunity cost
Why do opportunity costs increase from A to E - Correct Answer ✔✔ Some resources
are better suited for production of one good opposed to the other good
3 Assumptions of the PPF - Correct Answer ✔✔ 1 resources are fixed
2 full employment of resources
3 technology is unchanged
If we relax the ceteris paribus assumptions the PPF will do what - Correct Answer ✔✔
shift out which is economic growth or shift inward which is economic decline
EXAM QUESTIONS & ANSWERS
RATED 100% COMPLETE
What is Macroeconomics - Correct Answer ✔✔ The study of the economy as a whole
including topics such as inflation unemployment and economic growth
What is the current unemployment rate - Correct Answer ✔✔ 4.1%
What are the 3 economic ideas about how people make choices in the market - Correct
Answer ✔✔ 1 people are rational
2 people respond to economic incentives
3 optimal decisions are made at the margins
What does people are rational mean - Correct Answer ✔✔ people take into account all
available information when making a decision
What does people respond to economic incentives mean - Correct Answer ✔✔ people
try to optimize there pay in every way they can
example the bus driver will sit in traffic
What is true about marginal cost and benefit - Correct Answer ✔✔ if MB>MC people will
allow others to pay less until MB=MC
What is the economic problem every society has to solve - Correct Answer ✔✔ Scarce
resources and unlimited wants
What does margin mean - Correct Answer ✔✔ additional or a small adjustment to
something
What does unlimited wants have to do with - Correct Answer ✔✔ improving our
standard of living
What is standard of living - Correct Answer ✔✔ the amount of goods and services we
can buy
What do we need to produce more goods and services - Correct Answer ✔✔ resources
which are scarce
4 factors of production - Correct Answer ✔✔ land
capital
labor
, entrepreneurship
What 3 things does socity decide to do - Correct Answer ✔✔ What to produce
how to produce
for whom to produce
What is a centrally planned economy - Correct Answer ✔✔ government run economy.
they make all the decisions. example North Korea and Russia
What is a market economy - Correct Answer ✔✔ economy driven by free markets
government collect tax
What is a mixed economy - Correct Answer ✔✔ a mixture of free market economy with
regulations on the economy coming from the government. The USA is and example of
this economy
What is positive economics - Correct Answer ✔✔ statements that can be verified and or
tested scientifically using real world data and economic models
What is normative economics - Correct Answer ✔✔ statements based upon opinion and
are scientifically untestable
What is more economic freedom associated with - Correct Answer ✔✔ improved quality
of life
What does the PPF show - Correct Answer ✔✔ shows the maximum attainable
combinations of two products that may be produced ceteris paribus
What does ceteris paribus mean - Correct Answer ✔✔ all other things remain
unchanged
What does opportunity cost mean - Correct Answer ✔✔ the highest valued alternative
that must be given up to engage in an activity
What does increasing marginal opportunity cost mean - Correct Answer ✔✔ as an
economy moves down along PPF it can experience increasing opportunity cost
Why do opportunity costs increase from A to E - Correct Answer ✔✔ Some resources
are better suited for production of one good opposed to the other good
3 Assumptions of the PPF - Correct Answer ✔✔ 1 resources are fixed
2 full employment of resources
3 technology is unchanged
If we relax the ceteris paribus assumptions the PPF will do what - Correct Answer ✔✔
shift out which is economic growth or shift inward which is economic decline
