ECON 150 Final Exam questions and
answers
Economics - answers-The science of scarcity, and the study of choices.
-Social science concerned with the efficient use of limited resources to achieve
maximum satisfaction of economic wants.
Scarcity - answersThe condition in which our wants are greater than our limited
resources. You must choose how you use your resources.
Microeconomics - answersStudy of small economic units such as individuals, firms, and
industries (competitive markets, labor markets, and personal decision making, etc.)
How is economics used? - answers-Economists use the scientific method to make
generalizations and abstractions to develop theories. This is called theoretical
economics.
-Theories are applied to fix problems or meet economic goals.
Positive Statement - answersBased on facts. Avoids value judgements (what is).
Normative Statement - answersincludes value judgements (what ought to be).
Marginal Analysis - answers-Marginal = Additional
-Involves making decisions based on the additional benefit vs. the additional cost.
5 Key Economic Assumptions - answers1. Society's wants are unlimited, but ALL
resources are limited (scarcity).
2. Due to scarcity, choices must be made. Every choice has a cost (a trade-off).
3. Everyone's goal is to make choices that maximize their satisfaction. Everyone acts in
their own "self- interest."
4. Everyone acts rationally by comparing the marginal costs and marginal benefits of
every choice
5. Real-life situations can be explained and analyzed through simplified models and
graphs.
Trade-Offs - answersThe alternatives that we give up whenever we choose one course
of action over others.
answers
Economics - answers-The science of scarcity, and the study of choices.
-Social science concerned with the efficient use of limited resources to achieve
maximum satisfaction of economic wants.
Scarcity - answersThe condition in which our wants are greater than our limited
resources. You must choose how you use your resources.
Microeconomics - answersStudy of small economic units such as individuals, firms, and
industries (competitive markets, labor markets, and personal decision making, etc.)
How is economics used? - answers-Economists use the scientific method to make
generalizations and abstractions to develop theories. This is called theoretical
economics.
-Theories are applied to fix problems or meet economic goals.
Positive Statement - answersBased on facts. Avoids value judgements (what is).
Normative Statement - answersincludes value judgements (what ought to be).
Marginal Analysis - answers-Marginal = Additional
-Involves making decisions based on the additional benefit vs. the additional cost.
5 Key Economic Assumptions - answers1. Society's wants are unlimited, but ALL
resources are limited (scarcity).
2. Due to scarcity, choices must be made. Every choice has a cost (a trade-off).
3. Everyone's goal is to make choices that maximize their satisfaction. Everyone acts in
their own "self- interest."
4. Everyone acts rationally by comparing the marginal costs and marginal benefits of
every choice
5. Real-life situations can be explained and analyzed through simplified models and
graphs.
Trade-Offs - answersThe alternatives that we give up whenever we choose one course
of action over others.
