ECON 2306 EXAM 3 WEHR QUESTIONS
AND ANSWERS 100% PASS 2026/2027
Absolute Advantage - ANS who can produce most
-Adam Smith
Allocative Efficiency - ANS producing what people want (right mix of goods)
Arrow's Impossibility Theorem - ANS it is impossible to devise a voting scheme which satisfies
all elements of a set of criteria including:
1. transitivity
2. free of irrelevant outcomes
3. no dictator.
The basis for trade is _____ advantage - ANS comparative
Bilateral Monopoly - ANS a case in which there is both a labor union(monopoly) and a
monopsony
Carrot & Stick Regulation - ANS carrot represents the reward and the stick represents the
penalty.
2026/2027 ALLRIGHTS RESERVED 1
, -example: clean air act of 1990. Only one group benefited which was the landlords. Lead to a
market of pollution units. If a company goes over the limit, they will be taxed or shut down.
Condorcet's Paradox - ANS issue of intransitivity
Cross-Subsidization - ANS one activity helps pay for another activity
Differentiated Product - ANS a product that is made different from others through advertising
or quality variation....?
basis for trade - ANS why nations export and import certain products....?
Economic Profit - ANS total revenue minus total cost,
-including both explicit and implicit costs
Elasticity of Land - ANS ?
Exclusive Union - ANS driving up wages by EXCLUDING certain workers
Externalities - ANS the cost or benefit that affects a party who did not choose to incur that
cost or benefit.
free rider - ANS someone who would not choose to pay for a certain good or service, but
who would get the benefits of it anyway if it were provided as a public good.
2026/2027 ALLRIGHTS RESERVED 2
AND ANSWERS 100% PASS 2026/2027
Absolute Advantage - ANS who can produce most
-Adam Smith
Allocative Efficiency - ANS producing what people want (right mix of goods)
Arrow's Impossibility Theorem - ANS it is impossible to devise a voting scheme which satisfies
all elements of a set of criteria including:
1. transitivity
2. free of irrelevant outcomes
3. no dictator.
The basis for trade is _____ advantage - ANS comparative
Bilateral Monopoly - ANS a case in which there is both a labor union(monopoly) and a
monopsony
Carrot & Stick Regulation - ANS carrot represents the reward and the stick represents the
penalty.
2026/2027 ALLRIGHTS RESERVED 1
, -example: clean air act of 1990. Only one group benefited which was the landlords. Lead to a
market of pollution units. If a company goes over the limit, they will be taxed or shut down.
Condorcet's Paradox - ANS issue of intransitivity
Cross-Subsidization - ANS one activity helps pay for another activity
Differentiated Product - ANS a product that is made different from others through advertising
or quality variation....?
basis for trade - ANS why nations export and import certain products....?
Economic Profit - ANS total revenue minus total cost,
-including both explicit and implicit costs
Elasticity of Land - ANS ?
Exclusive Union - ANS driving up wages by EXCLUDING certain workers
Externalities - ANS the cost or benefit that affects a party who did not choose to incur that
cost or benefit.
free rider - ANS someone who would not choose to pay for a certain good or service, but
who would get the benefits of it anyway if it were provided as a public good.
2026/2027 ALLRIGHTS RESERVED 2
