ECON 110 EXAM 1 STUDY SET EXAM QUESTIONS
WITH CORRECT ANSWERS 2026/2027
What is economics? - CORRECT ANSWER -The study of how society manages scarce resources to
produce maximum goods and services.
What do economists study? - CORRECT ANSWER -Decision-making, hypotheses/testing with
data, interactions, and patterns/trends.
Principle 1: What do people face? - CORRECT ANSWER -Trade-offs.
Principle 2: What is the cost of something? - CORRECT ANSWER -What you give up to get it
(opportunity cost).
Principle 3: Rational people think at the ___? - CORRECT ANSWER -Margin.
Principle 4: How do people respond to incentives? - CORRECT ANSWER -They act if they get
something out of it.
Principle 5: How does trade benefit society? - CORRECT ANSWER -Makes everyone better off
(specialization, variety).
Principle 6: How are markets useful? - CORRECT ANSWER -They organize economic activity;
resources go to those willing/able to pay.
Principle 7: How can governments affect markets? - CORRECT ANSWER -By setting
rules/regulations and correcting market failures.
WITH CORRECT ANSWERS 2026/2027
What is economics? - CORRECT ANSWER -The study of how society manages scarce resources to
produce maximum goods and services.
What do economists study? - CORRECT ANSWER -Decision-making, hypotheses/testing with
data, interactions, and patterns/trends.
Principle 1: What do people face? - CORRECT ANSWER -Trade-offs.
Principle 2: What is the cost of something? - CORRECT ANSWER -What you give up to get it
(opportunity cost).
Principle 3: Rational people think at the ___? - CORRECT ANSWER -Margin.
Principle 4: How do people respond to incentives? - CORRECT ANSWER -They act if they get
something out of it.
Principle 5: How does trade benefit society? - CORRECT ANSWER -Makes everyone better off
(specialization, variety).
Principle 6: How are markets useful? - CORRECT ANSWER -They organize economic activity;
resources go to those willing/able to pay.
Principle 7: How can governments affect markets? - CORRECT ANSWER -By setting
rules/regulations and correcting market failures.
