ECON 104 EXAM 1 REVIEW ANSWERS 1.Micro- Study of a single house hold Macro-Study of the whole economy 2.Economics is the study of how people make choices given that resources are scarce a.Positive-used data/verifiable “what is” b.Normative-opinion based “what ought to be” 3.Centrally Planned-gov’t decides “what” “how” “who” a.Market-Firms decide “how” & “what” Market decides “who” 4.Health care costs has made the medical industry go governmental and not individual based due to high costs of insurance etc. 5.Capital- initial investment into a company (PHYSICAL STUFF) 6.Factors of production- Land, labor, capital a.Opportunity Cost- the price when taking a risk b.Ceteris Paribus- everything held constant 7.Production Possibility Frontier(PPF)- Illustrates: Tradeoffs, opport. Cost, ceteris paribus, shifts 8.The bow shows an increase in opportunity cost 9.# 10. # 11. Productivity- 12. # 13. Law of Opportunity Cost- The opportunity cost increases as production of one output expands 14. Society is limited to the points ON the curve on a PPF graph
