Econ Exam 2025 With 100% Correct
Answers
Economics - CORRECT ANSWER✔✔The study of how societies manage their scarce resources.
Approach - CORRECT ANSWER✔✔-Amoral (Positive economics (what is) vs. Normative
economics (what should be))
-Model Based
Scarcity and Choice - CORRECT ANSWER✔✔-Unlimited wants
-Limited resources
-Societies need to make choices What to produce/ how to produce/ distribution of production
and income)
Resources (What are the 3 factors of Production?) - CORRECT ANSWER✔✔1) Land (paid for via
rent)
2) Labor (paid for via wages, Human Capital)
3) Capital ( Paid for via interest, Technology)
When resources are allocated, the goal is to... - CORRECT ANSWER✔✔Maximize social well
being, or minimize the effects of scarcity.
Efficiency - CORRECT ANSWER✔✔All resources being used, utilizing the best technology
available. Period.
Opportunity Cost - CORRECT ANSWER✔✔The economic cost of anything is the value of
everything you gave up to get it.
, Increasing Opportunity Cost - CORRECT ANSWER✔✔As incremental units of a good or service
are produced, the value of what you must give up to get it increases. This gives the PPC its
shape.
Diminishing Marginal Returns - CORRECT ANSWER✔✔As we utilize more resources to increase
production of a good or service, ultimately the increase we achieve, per unit increase in input,
will decline.
"Marginal" - CORRECT ANSWER✔✔Refers to the last event, economic decision, sale or
purchase. Last unit produced.
Sunk Costs - CORRECT ANSWER✔✔Cost that occurred prior to the even being considered. Sunk
costs are irrelevant to a rational deciison.
Decision Rule - CORRECT ANSWER✔✔1) Marginal Benefit is less than Marginal Cost: DON'T do it
2) If Marginal Cost is less than Marginal Benefit: DO it
Marginal Private Costs - CORRECT ANSWER✔✔Costs related to the last unit produced and/or
purchased affecting those within the market.
Marginal External Costs - CORRECT ANSWER✔✔Costs related to the last unit produced/or
purchased, affecting those outside the market.
Marginal Social Costs - CORRECT ANSWER✔✔MPC plus MEC
Marginal Private Benefits - CORRECT ANSWER✔✔Benefits related to the last unit produced/or
purchased, affecting those within the market.
Answers
Economics - CORRECT ANSWER✔✔The study of how societies manage their scarce resources.
Approach - CORRECT ANSWER✔✔-Amoral (Positive economics (what is) vs. Normative
economics (what should be))
-Model Based
Scarcity and Choice - CORRECT ANSWER✔✔-Unlimited wants
-Limited resources
-Societies need to make choices What to produce/ how to produce/ distribution of production
and income)
Resources (What are the 3 factors of Production?) - CORRECT ANSWER✔✔1) Land (paid for via
rent)
2) Labor (paid for via wages, Human Capital)
3) Capital ( Paid for via interest, Technology)
When resources are allocated, the goal is to... - CORRECT ANSWER✔✔Maximize social well
being, or minimize the effects of scarcity.
Efficiency - CORRECT ANSWER✔✔All resources being used, utilizing the best technology
available. Period.
Opportunity Cost - CORRECT ANSWER✔✔The economic cost of anything is the value of
everything you gave up to get it.
, Increasing Opportunity Cost - CORRECT ANSWER✔✔As incremental units of a good or service
are produced, the value of what you must give up to get it increases. This gives the PPC its
shape.
Diminishing Marginal Returns - CORRECT ANSWER✔✔As we utilize more resources to increase
production of a good or service, ultimately the increase we achieve, per unit increase in input,
will decline.
"Marginal" - CORRECT ANSWER✔✔Refers to the last event, economic decision, sale or
purchase. Last unit produced.
Sunk Costs - CORRECT ANSWER✔✔Cost that occurred prior to the even being considered. Sunk
costs are irrelevant to a rational deciison.
Decision Rule - CORRECT ANSWER✔✔1) Marginal Benefit is less than Marginal Cost: DON'T do it
2) If Marginal Cost is less than Marginal Benefit: DO it
Marginal Private Costs - CORRECT ANSWER✔✔Costs related to the last unit produced and/or
purchased affecting those within the market.
Marginal External Costs - CORRECT ANSWER✔✔Costs related to the last unit produced/or
purchased, affecting those outside the market.
Marginal Social Costs - CORRECT ANSWER✔✔MPC plus MEC
Marginal Private Benefits - CORRECT ANSWER✔✔Benefits related to the last unit produced/or
purchased, affecting those within the market.
