ECON 110 FINAL EXAM REVIEW EXAM QUESTIONS WITH
CORRECT ANSWERS 2026/2027
The opportunity cost of undertaking an activity includes any sunk cost - CORRECT ANSWER -
False
Deciding what the distribution income should be is an example of normative economics -
CORRECT ANSWER -true
Only marginal costs, not sunk costs, affect economic decisions if individuals are rational -
CORRECT ANSWER -true
the production possibility model can be used to demonstrate the concept of opportunity cost -
CORRECT ANSWER -true
Two nations with differing comparative advantages will be able to consume more if each
produces the good for which the opportunity costs is highest and trades for the good for which
opportunity cost is lowest - CORRECT ANSWER -false
In a market economy, society relies on the self-interest of individuals to determine what, how,
and for whom to produce - CORRECT ANSWER -true
Governments establish the laws that regulate the interaction between businesses and
households but do not serve as actors in the economy themselves - CORRECT ANSWER -false
The law of supply states that more of a good will be supplied the lower its price, other things
constant. - CORRECT ANSWER -false
When quantity demanded is greater than quantity supplied, the resulting shortage causes the
price to fall - CORRECT ANSWER -false
,An increase in demand causes equilibrium price and quantity to rise, other things constant -
CORRECT ANSWER -true
The quantity go goods and services available to society - CORRECT ANSWER -b. depends on
human actions
Which of the following best defines rational behavior - CORRECT ANSWER -b. improving net gain
by pursuing decisions as longs as the marginal benefits exceed the marginal costs
Economic reasoning would argue that there is an opportunity cost to - CORRECT ANSWER -a. all
choices
Economic forces: - CORRECT ANSWER -a. are a reaction to scarcity
Many drugs are illegal in the United States. Despite this law, illegal drugs are usually available at
a price many times higher than they would be if the drugs weren't illegal. The high price of
illegal drugs is an example of: - CORRECT ANSWER -b. political forces affecting the market
Propositions that are logically true based on assumptions of a model are known as - CORRECT
ANSWER -b. theorems
Macroeconomics includes the study of - CORRECT ANSWER -a. inflation
Normative economics seeks to - CORRECT ANSWER -a. determine the most appropriate
economic goals for a society
Which of the following is not an economic institution - CORRECT ANSWER -d. none of these
options
, A necessary assumption behind the invisible hand theorem is that - CORRECT ANSWER -d.
people behave rationally
Evan can grow both roses and carnations in his garden. His production possibility table is shown
below. If he is currently producing 110 roses, his opportunity cost of producing 40 more roses is
- CORRECT ANSWER -c. 31 carnations
Increasing marginal opportunity cost means that the production possibility curve is - CORRECT
ANSWER -c. bowed out so that for every additional unit of a good given up, you get fewer and
fewer units of the other good
If you move from a point inside the production possibility curve to a point on the production
possibility curve, it follows that efficiency is - CORRECT ANSWER -a. increased because the
economy is now on the production possibility curve
Which of the shifts explains what will happen to the production possibility curve if political
unrest and strikes disrupt all sectors of an economy equally - CORRECT ANSWER -d. IV
The text attributes the growth of economies over the last 200 years largely to - CORRECT
ANSWER -a. the development of markets
Trade based on comparative advantage benefits - CORRECT ANSWER -a. consumers in all
countries
Which of the following is an example of the law of one price - CORRECT ANSWER -d. because
their countries have similar institutions, computer programmers in Germany and the United
States either are or will be paid about the same
CORRECT ANSWERS 2026/2027
The opportunity cost of undertaking an activity includes any sunk cost - CORRECT ANSWER -
False
Deciding what the distribution income should be is an example of normative economics -
CORRECT ANSWER -true
Only marginal costs, not sunk costs, affect economic decisions if individuals are rational -
CORRECT ANSWER -true
the production possibility model can be used to demonstrate the concept of opportunity cost -
CORRECT ANSWER -true
Two nations with differing comparative advantages will be able to consume more if each
produces the good for which the opportunity costs is highest and trades for the good for which
opportunity cost is lowest - CORRECT ANSWER -false
In a market economy, society relies on the self-interest of individuals to determine what, how,
and for whom to produce - CORRECT ANSWER -true
Governments establish the laws that regulate the interaction between businesses and
households but do not serve as actors in the economy themselves - CORRECT ANSWER -false
The law of supply states that more of a good will be supplied the lower its price, other things
constant. - CORRECT ANSWER -false
When quantity demanded is greater than quantity supplied, the resulting shortage causes the
price to fall - CORRECT ANSWER -false
,An increase in demand causes equilibrium price and quantity to rise, other things constant -
CORRECT ANSWER -true
The quantity go goods and services available to society - CORRECT ANSWER -b. depends on
human actions
Which of the following best defines rational behavior - CORRECT ANSWER -b. improving net gain
by pursuing decisions as longs as the marginal benefits exceed the marginal costs
Economic reasoning would argue that there is an opportunity cost to - CORRECT ANSWER -a. all
choices
Economic forces: - CORRECT ANSWER -a. are a reaction to scarcity
Many drugs are illegal in the United States. Despite this law, illegal drugs are usually available at
a price many times higher than they would be if the drugs weren't illegal. The high price of
illegal drugs is an example of: - CORRECT ANSWER -b. political forces affecting the market
Propositions that are logically true based on assumptions of a model are known as - CORRECT
ANSWER -b. theorems
Macroeconomics includes the study of - CORRECT ANSWER -a. inflation
Normative economics seeks to - CORRECT ANSWER -a. determine the most appropriate
economic goals for a society
Which of the following is not an economic institution - CORRECT ANSWER -d. none of these
options
, A necessary assumption behind the invisible hand theorem is that - CORRECT ANSWER -d.
people behave rationally
Evan can grow both roses and carnations in his garden. His production possibility table is shown
below. If he is currently producing 110 roses, his opportunity cost of producing 40 more roses is
- CORRECT ANSWER -c. 31 carnations
Increasing marginal opportunity cost means that the production possibility curve is - CORRECT
ANSWER -c. bowed out so that for every additional unit of a good given up, you get fewer and
fewer units of the other good
If you move from a point inside the production possibility curve to a point on the production
possibility curve, it follows that efficiency is - CORRECT ANSWER -a. increased because the
economy is now on the production possibility curve
Which of the shifts explains what will happen to the production possibility curve if political
unrest and strikes disrupt all sectors of an economy equally - CORRECT ANSWER -d. IV
The text attributes the growth of economies over the last 200 years largely to - CORRECT
ANSWER -a. the development of markets
Trade based on comparative advantage benefits - CORRECT ANSWER -a. consumers in all
countries
Which of the following is an example of the law of one price - CORRECT ANSWER -d. because
their countries have similar institutions, computer programmers in Germany and the United
States either are or will be paid about the same
