ECN 221: Final Exam Question and
answers already passed 2025
What is scarcity? - correct answer ✔The concept that there is less of
something freely available from nature than people would like.
What are the eight guideposts to economic thinking? - correct answer ✔1.
Because resources are scarce, trade-offs must be made.
2. Individuals are rational.
3. Incentives matter.
4. Individuals make decisions on the margin.
5. Information is important, but costly to attain.
6. Beware of secondary effects.
7. The value of goods is subjective.
8. The test of a theory is it's ability to predict.
What is the difference between positive and normative economics? - correct
answer ✔Positive economics - a testable scientific study of what is.
Normative economics - judgements about what ought to be.
What are the four pitfalls it avoid to economic thinking? - correct answer ✔1.
Violation of ceteris paribus principle.
2. Good intentions always have desirable outcomes (nirvana fallacy).
3. Association is Causation
4. Fallacy of composition (what is true for one is true for all).
, How does trade create value and lead to economic progress? - correct
answer ✔1. Gains from specialization and division of labor.
2. Gains from mass production methods.
3. Gains from innovation.
What are the four incentives to property rights? - correct answer ✔1.
Incentive to use resources in ways that are considered beneficial to others.
2. Private owners have an incentive to care for and manage what they own.
3. Private owners have an incentive to conserve for the future.
4. Private owners have an incentive to make sure their property does not
damage your property.
How do you read a production possibilities curve (PPC) and identify the
points? - correct answer ✔A PPC curve outlines the possible combinations
of total output between two alternatives.
The slope indicates the amount of one alternative that must be given up to
produce the other.
Efficient - a point that falls on the curve.
Inefficient - a point that falls on the inside of the curve.
Unattainable - falls on the outside of the curve.
What are the four factors that shift the PPC curve? - correct answer ✔1.
Change in available resources.
2. Changes in technology.
3. Change in institutions.
4. Changes in work habits.
answers already passed 2025
What is scarcity? - correct answer ✔The concept that there is less of
something freely available from nature than people would like.
What are the eight guideposts to economic thinking? - correct answer ✔1.
Because resources are scarce, trade-offs must be made.
2. Individuals are rational.
3. Incentives matter.
4. Individuals make decisions on the margin.
5. Information is important, but costly to attain.
6. Beware of secondary effects.
7. The value of goods is subjective.
8. The test of a theory is it's ability to predict.
What is the difference between positive and normative economics? - correct
answer ✔Positive economics - a testable scientific study of what is.
Normative economics - judgements about what ought to be.
What are the four pitfalls it avoid to economic thinking? - correct answer ✔1.
Violation of ceteris paribus principle.
2. Good intentions always have desirable outcomes (nirvana fallacy).
3. Association is Causation
4. Fallacy of composition (what is true for one is true for all).
, How does trade create value and lead to economic progress? - correct
answer ✔1. Gains from specialization and division of labor.
2. Gains from mass production methods.
3. Gains from innovation.
What are the four incentives to property rights? - correct answer ✔1.
Incentive to use resources in ways that are considered beneficial to others.
2. Private owners have an incentive to care for and manage what they own.
3. Private owners have an incentive to conserve for the future.
4. Private owners have an incentive to make sure their property does not
damage your property.
How do you read a production possibilities curve (PPC) and identify the
points? - correct answer ✔A PPC curve outlines the possible combinations
of total output between two alternatives.
The slope indicates the amount of one alternative that must be given up to
produce the other.
Efficient - a point that falls on the curve.
Inefficient - a point that falls on the inside of the curve.
Unattainable - falls on the outside of the curve.
What are the four factors that shift the PPC curve? - correct answer ✔1.
Change in available resources.
2. Changes in technology.
3. Change in institutions.
4. Changes in work habits.
