ECN-601 Exam 1/ ECN 601 Exam 1 to help me study for
the future. Updated NEW EDITION RATED A+ 2025/2026
NEW
The one thing that unites all economists is their use of: - Ans The ra onal actor paradigm
A well-designed organiza on is one in which employee incen ves are aligned with: - Ans
Organiza onal goals
If people behave ra onally, op mally, and self-interestedly, a bad decision occurs for which of
these reason(s)? - Ans Both a. and c.
a. the decision maker did not have enough informa on to make a good decision
c. the decision-maker did not have the incen ve to make a good decision
There are three levers one can push to correct bad decision-making. Which of the following is
NOT such a lever? - Ans Let someone else who has no rela onship to the problem make the
decision
The ra onal-actor paradigm is: - Ans A tool for analyzing behavior
A buyer willingly buys if the price of a good is: - Ans Below his value
The zero sum fallacy is: - Ans Both b. and c.
b. O)en used to jus fy limits on profitability
c. Means that if one person is making money, someone else is losing money
,The absence of property rights contributes to: - Ans Poverty
Money-making opportuni es result from: - Ans Assets in lower-valued uses
Determining whether a policy is good or bad requires that we look: - Ans Both a. and b.
a. At those who benefit from the policy
b. Those who lose because of the policy
An individual's value for a good or service is - Ans The amount of money he or she is willing to
pay for it
The biggest advantage of capitalism is that - Ans d. All of the above.
a. It allows the market to self-regulate.
b. It allows a person to follow his self interest.
c. It allows voluntary transac ons, which create wealth.
Wealth-crea ng transac ons are more likely to occur - Ans d. All of the above.
a. With private property rights.
b. With strong contract enforcement.
c. With black markets.
Which of these ac ons creates value? - Ans d. All of the above
a. Buying a struggling firm and selling off its assets for more than the purchase price
, b. Baseball slugger drawing paying fans into the ballpark
c. Student increasing his decision making ability with an MBA
Which of the following are examples of a price floor? - Ans Minimum wages
A price ceiling - Ans Is an implicit tax on producers and an implicit subsidy to consumers
Taxes - Ans d. All of the above
a. Impede the movement of assets to higher-valued uses.
b. Reduce incen ves to work.
c. Decrease the number of wealth-crea ng transac ons.
A consumer values a car at $20,000 and it costs a producer $15,000 to make the same car. If
the transac on is completed at $18,000, the transac on will generate - Ans $2,000 worth of
buyer surplus and $3,000 of seller surplus
A consumer values a car at $525,000 and a producer values the same car at $485,000. If sales
tax is 8% and is levied on the seller, then the seller's bo?om-line price is (rounded to the nearest
thousand) - Ans $527,000
Wealth genera ng ac vi es always: - Ans Increase total surplus
To compute price, we need: - Ans d. a. and b.
a. MR
b. MC
the future. Updated NEW EDITION RATED A+ 2025/2026
NEW
The one thing that unites all economists is their use of: - Ans The ra onal actor paradigm
A well-designed organiza on is one in which employee incen ves are aligned with: - Ans
Organiza onal goals
If people behave ra onally, op mally, and self-interestedly, a bad decision occurs for which of
these reason(s)? - Ans Both a. and c.
a. the decision maker did not have enough informa on to make a good decision
c. the decision-maker did not have the incen ve to make a good decision
There are three levers one can push to correct bad decision-making. Which of the following is
NOT such a lever? - Ans Let someone else who has no rela onship to the problem make the
decision
The ra onal-actor paradigm is: - Ans A tool for analyzing behavior
A buyer willingly buys if the price of a good is: - Ans Below his value
The zero sum fallacy is: - Ans Both b. and c.
b. O)en used to jus fy limits on profitability
c. Means that if one person is making money, someone else is losing money
,The absence of property rights contributes to: - Ans Poverty
Money-making opportuni es result from: - Ans Assets in lower-valued uses
Determining whether a policy is good or bad requires that we look: - Ans Both a. and b.
a. At those who benefit from the policy
b. Those who lose because of the policy
An individual's value for a good or service is - Ans The amount of money he or she is willing to
pay for it
The biggest advantage of capitalism is that - Ans d. All of the above.
a. It allows the market to self-regulate.
b. It allows a person to follow his self interest.
c. It allows voluntary transac ons, which create wealth.
Wealth-crea ng transac ons are more likely to occur - Ans d. All of the above.
a. With private property rights.
b. With strong contract enforcement.
c. With black markets.
Which of these ac ons creates value? - Ans d. All of the above
a. Buying a struggling firm and selling off its assets for more than the purchase price
, b. Baseball slugger drawing paying fans into the ballpark
c. Student increasing his decision making ability with an MBA
Which of the following are examples of a price floor? - Ans Minimum wages
A price ceiling - Ans Is an implicit tax on producers and an implicit subsidy to consumers
Taxes - Ans d. All of the above
a. Impede the movement of assets to higher-valued uses.
b. Reduce incen ves to work.
c. Decrease the number of wealth-crea ng transac ons.
A consumer values a car at $20,000 and it costs a producer $15,000 to make the same car. If
the transac on is completed at $18,000, the transac on will generate - Ans $2,000 worth of
buyer surplus and $3,000 of seller surplus
A consumer values a car at $525,000 and a producer values the same car at $485,000. If sales
tax is 8% and is levied on the seller, then the seller's bo?om-line price is (rounded to the nearest
thousand) - Ans $527,000
Wealth genera ng ac vi es always: - Ans Increase total surplus
To compute price, we need: - Ans d. a. and b.
a. MR
b. MC
