Econ 206 Midterm 1 Oertel Exam Questions and Answers Graded A+
Economics Definition - Answers Studies the use of scarce resources to satisfy unlimited human wants
Economists assume consumers maximize their: - Answers utility
Economists assume producers/ firms maximize their: - Answers profits
marginal benefit - Answers the additional benefit to a consumer from consuming one more unit of a
good or service
marginal cost - Answers the cost of producing one more unit of a good
3 types of economies - Answers traditional (ancestors), command (make what a planning committee
decides), market (what's profitable)
opportunity cost - Answers Cost of the next best alternative use of money, time, or resources when one
choice is made rather than another
sunk cost - Answers a cost that has already been committed and cannot be recovered
production possibilities frontier - Answers shows the combinations of goods that can be produced when
the total amount of inputs is fixed
law of diminishing marginal returns - Answers if a business (individual/ gov.) increases one input and
holds all other inputs constant, the additions to output will eventually get smaller
quantity demanded - Answers the amount of a good that consumers wish to purchase at a given price
quantity exchanged - Answers amount of a good that consumers actually purchased
law of demand - Answers the price of a product and its quantity demanded are negatively related
demand curve - Answers shows the relationship between price and quantity demanded
when the price falls the quantity... - Answers increases
what causes demand to increase? - Answers (1) population increase
(2) rise in avg. consumer income
(3) increase in price of a substitute
(4) changes in consumer trends
price and quantity supplies are... (positive or negatively related) - Answers positively related
what causes the supply curve to shift right? - Answers (1) increase in number of firms
Economics Definition - Answers Studies the use of scarce resources to satisfy unlimited human wants
Economists assume consumers maximize their: - Answers utility
Economists assume producers/ firms maximize their: - Answers profits
marginal benefit - Answers the additional benefit to a consumer from consuming one more unit of a
good or service
marginal cost - Answers the cost of producing one more unit of a good
3 types of economies - Answers traditional (ancestors), command (make what a planning committee
decides), market (what's profitable)
opportunity cost - Answers Cost of the next best alternative use of money, time, or resources when one
choice is made rather than another
sunk cost - Answers a cost that has already been committed and cannot be recovered
production possibilities frontier - Answers shows the combinations of goods that can be produced when
the total amount of inputs is fixed
law of diminishing marginal returns - Answers if a business (individual/ gov.) increases one input and
holds all other inputs constant, the additions to output will eventually get smaller
quantity demanded - Answers the amount of a good that consumers wish to purchase at a given price
quantity exchanged - Answers amount of a good that consumers actually purchased
law of demand - Answers the price of a product and its quantity demanded are negatively related
demand curve - Answers shows the relationship between price and quantity demanded
when the price falls the quantity... - Answers increases
what causes demand to increase? - Answers (1) population increase
(2) rise in avg. consumer income
(3) increase in price of a substitute
(4) changes in consumer trends
price and quantity supplies are... (positive or negatively related) - Answers positively related
what causes the supply curve to shift right? - Answers (1) increase in number of firms
