age 1 of 39
ECON 2020 EXAM 1 PREP 2025/2026 COMPLETE
QUESTIONS WITH CORRECT DETAILED ANSWERS ||
100% GUARANTEED PASS <BRAND NEW VERSION>
Four Properties of Trade .......Answer.........1. Trade helps both
sides
2. Trade creates value
3. Trade is a positive sum game
4. Trade encourages diverse interactions
Unconstrained Vision of Economics .......Answer.........Presupposes
that we have sufficient resources to satisfy all wants and needs,
you don't have to choose
Constrained Vision of Economics .......Answer.........We have
limited resources, but unlimited wants and desires
,age 2 of 39
Scarcity .......Answer.........When economic resources are limited,
economics start with constrained visions (we can only satisfy
some wants and desires
Resources, labor, capital
Scarcity → Choices → Tradeoffs → Opportunity Cost →
Incentives (Incentives affect behavior**)→ Behavior
Production Possibilities Frontier .......Answer.........- Output of two
things on each axis
- Can produce on what is in or on the frontier, not what is outside
- Illustrates tradeoffs, scarcity, and opportunity cost → higher
opportunity cost leads to increased trade-off
Three Fundamental Questions of Production .......Answer.........1.
What will be produced?
,age 3 of 39
2. How will it be produced?
3. For whom will it be produced
Law of Demand .......Answer.........All else equal, quantity
demanded falls when price rises and rises when price falls
Incentives affect behavior
Foundations of Economics: Incentives .......Answer.........Motives for
people to act or exert effort, people will make the choice that
will most improve their situation
Can be: positive or negative, direct or indirect
Foundations of Economics: Trade-offs .......Answer.........Choosing
to do one thing preventing you from going another
, age 4 of 39
Foundations of Economics: Opportunity Cost
.......Answer.........Quantifies what and how much is being given
up, highest valued alternative must be be sacrificed to get
something else
Foundations of Economics: Marginal Thinking
.......Answer.........What is worth what you are giving up, whether
the benefit of one more unit of something is greater than its cost
First Two Rotunda Principles .......Answer.........1. Trade creates
value
2. Incentives affect behavior
Comparative Advantage .......Answer.........The situation an
individual, business, or country can produce at a lower
opprotunity cost than a competitor can: power of specialization
ECON 2020 EXAM 1 PREP 2025/2026 COMPLETE
QUESTIONS WITH CORRECT DETAILED ANSWERS ||
100% GUARANTEED PASS <BRAND NEW VERSION>
Four Properties of Trade .......Answer.........1. Trade helps both
sides
2. Trade creates value
3. Trade is a positive sum game
4. Trade encourages diverse interactions
Unconstrained Vision of Economics .......Answer.........Presupposes
that we have sufficient resources to satisfy all wants and needs,
you don't have to choose
Constrained Vision of Economics .......Answer.........We have
limited resources, but unlimited wants and desires
,age 2 of 39
Scarcity .......Answer.........When economic resources are limited,
economics start with constrained visions (we can only satisfy
some wants and desires
Resources, labor, capital
Scarcity → Choices → Tradeoffs → Opportunity Cost →
Incentives (Incentives affect behavior**)→ Behavior
Production Possibilities Frontier .......Answer.........- Output of two
things on each axis
- Can produce on what is in or on the frontier, not what is outside
- Illustrates tradeoffs, scarcity, and opportunity cost → higher
opportunity cost leads to increased trade-off
Three Fundamental Questions of Production .......Answer.........1.
What will be produced?
,age 3 of 39
2. How will it be produced?
3. For whom will it be produced
Law of Demand .......Answer.........All else equal, quantity
demanded falls when price rises and rises when price falls
Incentives affect behavior
Foundations of Economics: Incentives .......Answer.........Motives for
people to act or exert effort, people will make the choice that
will most improve their situation
Can be: positive or negative, direct or indirect
Foundations of Economics: Trade-offs .......Answer.........Choosing
to do one thing preventing you from going another
, age 4 of 39
Foundations of Economics: Opportunity Cost
.......Answer.........Quantifies what and how much is being given
up, highest valued alternative must be be sacrificed to get
something else
Foundations of Economics: Marginal Thinking
.......Answer.........What is worth what you are giving up, whether
the benefit of one more unit of something is greater than its cost
First Two Rotunda Principles .......Answer.........1. Trade creates
value
2. Incentives affect behavior
Comparative Advantage .......Answer.........The situation an
individual, business, or country can produce at a lower
opprotunity cost than a competitor can: power of specialization
