ECN 211 FINAL EXAM 2026 FINAL ASSESSMENT
PAPER ECONOMIC THEORY AND POLICY
COMPREHENSIVE QUESTIONS AND ANSWERS
VERIFIED A+
◉ Which of the following is not held constant in a supply schedule?
Answer: the price of the good
◉ Today's supply curve for gasoline could shift in response to a
change in Answer: the expected future price of gasoline.
◉ The opportunity cost of an item is Answer: what you give up to get
that item.
◉ Government policies can change the costs and benefits that
people face. Those policies have the potential to
a) alter people's behavior.
b) alter people's decisions at the margin.
c) produce results that policymakers did not intend.
d) All of the above are correct. Answer: All of the above are correct.
,◉ Prices direct economic activity in a market economy by Answer:
influencing the actions of buyers and sellers.
◉ Refer to Figure 2-17. The opportunity cost of producing an
additional pair of shoes increases as more shoes are produced.
Answer: True
◉ Positive statements are Answer: claims about how the world is.
◉ The circular-flow diagram
a) incorporates two types of decision makers: households and firms.
b) represents the flows of inputs, outputs, and dollars.
c) is an economic model.
d) All of the above are correct. Answer: All of the above are correct.
◉ Refer to Table 3-22. Suppose Zimbabwe decides to increase its
production of toothbrushes by 10. What is the opportunity cost of
this decision? Answer: 3 hairbrushes
◉ Refer to Figure 3-16. At which of the following prices would both
Hosne and Merve gain from trade with each other? Answer: 5
wallets for 3.75 purses
,◉ Refer to Figure 3-18. The opportunity cost of 1 bowl for Bintu is
Answer: 4 cups.
◉ Which of the following is not a result of rent control? Answer:
higher quality housing
◉ When a binding price floor is imposed on a market,
a) the quantity demanded at the price floor exceeds the quantity
that would have been demanded without the price floor.
b) all sellers benefit.
c) All of the above are correct.
d) price no longer serves as a rationing device. Answer: price no
longer serves as a rationing device.
◉ The goal of rent control is to Answer: help the poor by making
housing more affordable.
◉ Suppose the typical household spends $3,500 on goods and
services during the month of January, and $4,300 on the same goods
and services in February. Using January as the base period, what is
the consumer price index for February? Answer: 122.9
, ◉ Marion collected Social Security payments of $250 a month in
1985. If the price index rose from 90 to 108 between 1985 and
1986, then her Social Security payments for 1986 should have been
Answer: $300.
◉ Suppose OPEC succeeds in raising world oil prices by 300 percent.
This price increase causes inventors to look at alternative sources of
fuel for internal-combustion engines. A hydrogen-powered engine is
developed which is cheaper to operate than gasoline engines. Which
problems in the construction of the CPI does this situation
represent? Answer: substitution bias and introduction of new goods
◉ Janelle earned a salary of $62,000 in 2004 and $80,000 in 2014.
The consumer price index was 126 in 2004 and 170 in 2014.
Janelle's 2004 salary in 2014 dollars is Answer: $83,651.
◉ A Minnesota farmer buys a new tractor made in Iowa by a German
company. As a result, Answer: U.S. investment and GDP increase, but
German GDP is unaffected.
◉ A U.S. citizen buys a tea kettle manufactured in China by a
company that is owned and operated by U.S citizens. In which of the
following components of U.S. GDP is this transaction accounted for?
Answer: consumption and imports
PAPER ECONOMIC THEORY AND POLICY
COMPREHENSIVE QUESTIONS AND ANSWERS
VERIFIED A+
◉ Which of the following is not held constant in a supply schedule?
Answer: the price of the good
◉ Today's supply curve for gasoline could shift in response to a
change in Answer: the expected future price of gasoline.
◉ The opportunity cost of an item is Answer: what you give up to get
that item.
◉ Government policies can change the costs and benefits that
people face. Those policies have the potential to
a) alter people's behavior.
b) alter people's decisions at the margin.
c) produce results that policymakers did not intend.
d) All of the above are correct. Answer: All of the above are correct.
,◉ Prices direct economic activity in a market economy by Answer:
influencing the actions of buyers and sellers.
◉ Refer to Figure 2-17. The opportunity cost of producing an
additional pair of shoes increases as more shoes are produced.
Answer: True
◉ Positive statements are Answer: claims about how the world is.
◉ The circular-flow diagram
a) incorporates two types of decision makers: households and firms.
b) represents the flows of inputs, outputs, and dollars.
c) is an economic model.
d) All of the above are correct. Answer: All of the above are correct.
◉ Refer to Table 3-22. Suppose Zimbabwe decides to increase its
production of toothbrushes by 10. What is the opportunity cost of
this decision? Answer: 3 hairbrushes
◉ Refer to Figure 3-16. At which of the following prices would both
Hosne and Merve gain from trade with each other? Answer: 5
wallets for 3.75 purses
,◉ Refer to Figure 3-18. The opportunity cost of 1 bowl for Bintu is
Answer: 4 cups.
◉ Which of the following is not a result of rent control? Answer:
higher quality housing
◉ When a binding price floor is imposed on a market,
a) the quantity demanded at the price floor exceeds the quantity
that would have been demanded without the price floor.
b) all sellers benefit.
c) All of the above are correct.
d) price no longer serves as a rationing device. Answer: price no
longer serves as a rationing device.
◉ The goal of rent control is to Answer: help the poor by making
housing more affordable.
◉ Suppose the typical household spends $3,500 on goods and
services during the month of January, and $4,300 on the same goods
and services in February. Using January as the base period, what is
the consumer price index for February? Answer: 122.9
, ◉ Marion collected Social Security payments of $250 a month in
1985. If the price index rose from 90 to 108 between 1985 and
1986, then her Social Security payments for 1986 should have been
Answer: $300.
◉ Suppose OPEC succeeds in raising world oil prices by 300 percent.
This price increase causes inventors to look at alternative sources of
fuel for internal-combustion engines. A hydrogen-powered engine is
developed which is cheaper to operate than gasoline engines. Which
problems in the construction of the CPI does this situation
represent? Answer: substitution bias and introduction of new goods
◉ Janelle earned a salary of $62,000 in 2004 and $80,000 in 2014.
The consumer price index was 126 in 2004 and 170 in 2014.
Janelle's 2004 salary in 2014 dollars is Answer: $83,651.
◉ A Minnesota farmer buys a new tractor made in Iowa by a German
company. As a result, Answer: U.S. investment and GDP increase, but
German GDP is unaffected.
◉ A U.S. citizen buys a tea kettle manufactured in China by a
company that is owned and operated by U.S citizens. In which of the
following components of U.S. GDP is this transaction accounted for?
Answer: consumption and imports
