ISU ECO 105 - Exam 1 Study Guide (6 pages)

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Exam 1 Study Guide

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Exam 1 Study Guide


Questions, answers and review notes for lectures 1-6 in preparation for Exam 1

Study Guide
Illinois State University
Eco 105 - Principles of Economics

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ECON 105 Exam 1 Study Guide Lectures 1 6 Lecture 1 August 20 What does Economics and scarcity mean Economics is the study of how scarce resources are allocated among compelling ends uses Then scarcity refers to when demand exceeds supply meaning resources are scarce What are the four main factors of production and one example of each 1 2 3 4 Land rent Labor wages Capital interest Entrepreneurship profits sales costs Name three economic agents and specify which two are the main ones The three economic agents are buyers sellers and government Buyers and sellers are the two main agents in economics Describe the difference between a plant firm and industry A plant is an individual manufacturing facility Then you have firms which are business enterprises which can have many different plants With a firm there is only one firm When it comes to an industry there are many firms within an industry but all firms are in the same line of business What are durable and nondurable goods and provide at least one example for both Durable goods are used for many time periods for an example washing machine microwave cars Nondurable goods are used very quickly such as groceries gas and etc Lecture 2 August 25 What is opportunity costs An opportunity cost is the cost of the next best alternative forgone Ask yourself what are you willing to give up in order to have do something else Maybe if you take an hour long nap your opportunity cost would be losing an hour worth of time you could have been doing your homework so now you have to stay up longer What are the three questions economist ask when talking about goods and resources What to produce necessities vs luxuries How to produce labor intensive vs capital intensive For whom to produce Be sure to review and look over the circular flow of economic activity What is money price What is relative price Money price of a good or service in the unit of currency euros dollars pesos Relative prices are a price in other terms or service Lecture 3

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