ECON 201 Exam questions with
answers rated A+
Invisible hand - ANS✅✅The unobservable market force that helps the demand and supply of
goods in a free market to reach equilibrium automatically
Opportunity cost - ANS✅✅Cost of the next best alternative use of money, time, or resources when
one choice is made rather than another
Medium of exchange - ANS✅✅anything that is used to determine value during the exchange of
goods and services
ex. $5 in exchange for a hamburger
store of value - ANS✅✅holds value over time ex. saving accounts
unit of account - ANS✅✅provides a means for comparing the values of goods and services ex.
hamburger costs $5, and a steak costs $15
barter - ANS✅✅trading system in which people exchange goods directly without using money
commodity money - ANS✅✅objects that have value in themselves and that are also used as
money
fiat money - ANS✅✅money that has value because the government has ordered that it is an
acceptable
nominal value - ANS✅✅value on bill
real value - ANS✅✅the value of an amount of money in terms of what it can buy
prices up - ANS✅✅real value down
prices down - ANS✅✅real value up
, supply shortage (less sellers/more buyers) - ANS✅✅price up
supply surplus (more sellers/less buyers) - ANS✅✅price down
Ceteris Paribus - ANS✅✅a Latin phrase that means "all other things held constant"
Law of Demand - ANS✅✅consumers buy more of a good when its price decreases and less when
its price increases
normal good - ANS✅✅a good that consumers demand more of when their incomes increase ex.
steak
inferior good - ANS✅✅a good that consumers demand less of when their incomes increase ex. off
brand chips
compliment goods - ANS✅✅goods that are purchases together; demand for the goods is related
(& moves together)
substitute goods - ANS✅✅goods that can be used to replace the purchase of similar goods when
prices rise (demand moves oppositely)
cost - ANS✅✅how much to obtain and sell product
price - ANS✅✅retail value
cost up = price up - ANS✅✅to maintain profit
Market Equilbrium - ANS✅✅The price that works when supply=demand
price elasticity of demand - ANS✅✅% change in quantity demanded / % change in price
price elasticity of demand - ANS✅✅a measure of the sensitivity of demand to changes in price
answers rated A+
Invisible hand - ANS✅✅The unobservable market force that helps the demand and supply of
goods in a free market to reach equilibrium automatically
Opportunity cost - ANS✅✅Cost of the next best alternative use of money, time, or resources when
one choice is made rather than another
Medium of exchange - ANS✅✅anything that is used to determine value during the exchange of
goods and services
ex. $5 in exchange for a hamburger
store of value - ANS✅✅holds value over time ex. saving accounts
unit of account - ANS✅✅provides a means for comparing the values of goods and services ex.
hamburger costs $5, and a steak costs $15
barter - ANS✅✅trading system in which people exchange goods directly without using money
commodity money - ANS✅✅objects that have value in themselves and that are also used as
money
fiat money - ANS✅✅money that has value because the government has ordered that it is an
acceptable
nominal value - ANS✅✅value on bill
real value - ANS✅✅the value of an amount of money in terms of what it can buy
prices up - ANS✅✅real value down
prices down - ANS✅✅real value up
, supply shortage (less sellers/more buyers) - ANS✅✅price up
supply surplus (more sellers/less buyers) - ANS✅✅price down
Ceteris Paribus - ANS✅✅a Latin phrase that means "all other things held constant"
Law of Demand - ANS✅✅consumers buy more of a good when its price decreases and less when
its price increases
normal good - ANS✅✅a good that consumers demand more of when their incomes increase ex.
steak
inferior good - ANS✅✅a good that consumers demand less of when their incomes increase ex. off
brand chips
compliment goods - ANS✅✅goods that are purchases together; demand for the goods is related
(& moves together)
substitute goods - ANS✅✅goods that can be used to replace the purchase of similar goods when
prices rise (demand moves oppositely)
cost - ANS✅✅how much to obtain and sell product
price - ANS✅✅retail value
cost up = price up - ANS✅✅to maintain profit
Market Equilbrium - ANS✅✅The price that works when supply=demand
price elasticity of demand - ANS✅✅% change in quantity demanded / % change in price
price elasticity of demand - ANS✅✅a measure of the sensitivity of demand to changes in price
