ECON 110 TEST 1 QUESTIONS WITH CORRECT
ANSWERS 2026/2027
Scarcity - CORRECT ANSWER -the limited nature of society's resources
Economics - CORRECT ANSWER -the study of how society manages its scarce resources
Efficiency - CORRECT ANSWER -the property of society getting the most it can from its scarce
resources
Equality - CORRECT ANSWER -the property of distributing economic prosperity uniformly among
the members of society
Opportunity Cost - CORRECT ANSWER -whatever must be given up to obtain some item
Rational people - CORRECT ANSWER -people who systematically and purposefully do the best
they can to achieve their objects and goals
Marginal Change - CORRECT ANSWER -a small incremental adjustment to a plan of action
Incentive - CORRECT ANSWER -something that induces a person to act/response to potential
benefits
Market Economy - CORRECT ANSWER -an economy that allocates resources through the
decentralized decisions of many firms and households as they interact in markets for goods and
services
, Property Rights - CORRECT ANSWER -the ability of an individual to own and exercise control
over scarce resources
Market Failure - CORRECT ANSWER -a situation in which a market left on its own fails to allocate
resources efficiently
Externality - CORRECT ANSWER -the impact of one person's actions on the well-being of a
bystander
Market Power - CORRECT ANSWER -the ability of a single economic actor(s) to have a
substantial influence on market prices
Productivity - CORRECT ANSWER -the quantity of goods and services produced from each unit
of labor input
Inflation: an increase in the overall level of prices in the economy
Business Cycle - CORRECT ANSWER -fluctuations in economic activity such as employment and
production
Chapter Two - CORRECT ANSWER -...
Circular Flow Diagram - CORRECT ANSWER -a visual model of the economy that shows how
dollars flow through markets among households and firms
Production Possibilities Frontier (PPF) - CORRECT ANSWER -a graph that shows the
combinations of output that the economy can possibly produce given the available factors of
production and the available production technology
ANSWERS 2026/2027
Scarcity - CORRECT ANSWER -the limited nature of society's resources
Economics - CORRECT ANSWER -the study of how society manages its scarce resources
Efficiency - CORRECT ANSWER -the property of society getting the most it can from its scarce
resources
Equality - CORRECT ANSWER -the property of distributing economic prosperity uniformly among
the members of society
Opportunity Cost - CORRECT ANSWER -whatever must be given up to obtain some item
Rational people - CORRECT ANSWER -people who systematically and purposefully do the best
they can to achieve their objects and goals
Marginal Change - CORRECT ANSWER -a small incremental adjustment to a plan of action
Incentive - CORRECT ANSWER -something that induces a person to act/response to potential
benefits
Market Economy - CORRECT ANSWER -an economy that allocates resources through the
decentralized decisions of many firms and households as they interact in markets for goods and
services
, Property Rights - CORRECT ANSWER -the ability of an individual to own and exercise control
over scarce resources
Market Failure - CORRECT ANSWER -a situation in which a market left on its own fails to allocate
resources efficiently
Externality - CORRECT ANSWER -the impact of one person's actions on the well-being of a
bystander
Market Power - CORRECT ANSWER -the ability of a single economic actor(s) to have a
substantial influence on market prices
Productivity - CORRECT ANSWER -the quantity of goods and services produced from each unit
of labor input
Inflation: an increase in the overall level of prices in the economy
Business Cycle - CORRECT ANSWER -fluctuations in economic activity such as employment and
production
Chapter Two - CORRECT ANSWER -...
Circular Flow Diagram - CORRECT ANSWER -a visual model of the economy that shows how
dollars flow through markets among households and firms
Production Possibilities Frontier (PPF) - CORRECT ANSWER -a graph that shows the
combinations of output that the economy can possibly produce given the available factors of
production and the available production technology
