College Exam #1 Review

Match the Economic concepts to the correct defintion

• Scarcity

• Limited resources versus unlimited wants.

• Marginal Cost

• The additional cost of producing one more unit.

• Microeconomics

• The study of the economy as a whole, including inflation and GDP.

• Opportunity Cost

• The value of the next best alternative when a choice is made.

• Macroeconomics

• The study of individual decision-making and markets.

Match these economic concepts

• Trade-Offs

• Giving up one thing to gain another.

• Comparative Advantage

• A graph showing trade-offs between two goods with fixed resources.

• Production Possibility Frontier (PPF)

• A factual economic statement that can be tested.

• Absolute Advantage

• When a country or person has a lower opportunity cost in production.

• Positive Statement

• When a country or person produces more of a good using the same resources.

Match the economic concepts

• Normative Statement

• The assumption that all other factors remain constant in an analysis.

• Ceteris Paribus

• An opportunity cost, such as forgone salary.

• Explicit Cost

• A subjective statement based on opinions or values.

• Implicit Cost

• A direct monetary cost like rent or wages.

• Incentives

• Rewards or punishments that influence behavior.

What is the additional cost of producing one more unit of a good?

• Scarcity

• Marginal Cost

• Absolute Advantage

• Trade-Off

What describes the economic principle that assumes all other variables are held constant?

• Implicit Cost

• Ceteris Paribus

• PPF

• Macroeconomics

Which of the following is an example of a positive economic statement?

• The government should raise taxes to fund healthcare.

• Raising the minimum wage will lead to higher unemployment

• The economy is unfair to low-income workers.

• Companies should reduce pollution to protect the environment.

Which of the following best describes opportunity cost?

• The amount of money a business pays for rent.

• The next best alternative that is given up when a decision is made.

• The total revenue a company makes in a year.

• The cost of hiring additional workers.

Which of the following is an explicit cost?

• A factory owner's time that could have been used elsewhere.

• The salary a business owner gave up to start a company.

• The rent paid for a business office.

• The cost of missing a family event to work overtime.

If a country can produce more steel than another country with the same resources, it has a(n) _______.

• Absolute Advantage

• Comparative Advantage

• Opportunity Cost

• Normative Statement

If a worker must choose between working overtime or taking a weekend trip, the lost income from not working overtime is an example of:

• Explicit Cost

• Implicit Cost

• Trade-Off

• Comparative Advantage