LSUS MHA 710 ECONOMICS EXAM 1
PRACTICE SOLUTION TEST 2026
QUESTIONS AND ANSWERS GRADED A+
●● Exhaust from a factory that increases health risks for people living
near the factory is an example of an externality. True or False.
Answer: True
●● In 2008 and 2009, the U.S. economy experienced a deep economic
downturn. If there is a short-run trade-off between inflation and
unemployment, to combat the high unemployment, President Obama
should have pursued an inflationary policy such as a stimulus package of
reduced taxes and increased government spending. True or False.
Answer: True
●● A society faces many decisions, but a household does not. True or
False.
Answer: False
●● Public policies aimed at increasing the size of the economic pie also
lead to a higher degree of equality. True or False.
Answer: False
,●● You can stay home and study to do well on your exam or you can go
to the movies with your friends, but not both. This example illustrates:
A. Scarcity and tradeoffs
B. Scarcity but not tradeoffs
C. Tradeoffs but not scarcity
D. Neither tradeoffs nor scarcity
Answer: A. Scarcity and tradeoffs
●● Your opportunity cost of going to a Maroon 5 concert during your
Spring Break is:
A. Zero, because Maroon 5 is your favorite
B. The price of the concert ticket
C. The price of the concert ticket plus the cost of any beverages you buy
at the concert
D. The price of the concert ticket, plus the cost of any beverages you buy
at the concert, and the value of your time
Answer: D. The price of the concert ticket, plus the cost of any
beverages you buy at the concert, and the value of your time
●● Certain employees are eligible for unemployment compensation if
they lose their jobs through no fault of their own. If Jim, a factory
worker, will receive compensation of half his regular pay for 52 weeks
while he looks for a job, then:
, A. The unemployment compensation most likely raises Jim's incentive
to save while he is working. Unemployment compensation most likely
increases Jim's efforts to find a new job.
B. The unemployment compensation most likely raises Jim's incentive to
save while he is working. Unemployment compensation most likely
decreases Jim's efforts to find a new job.
C. The unemployment compensation most likely lowers Jim's incentive
to save while he is working. Unemployment compensation most likely
increases Jim's efforts to find a new job.
D. The unemployment compensation most likely lowers Jim's incentive
to save while he is working. Unemployment compensation most likely
decreases Jim's efforts
Answer: D. The unemployment compensation most likely lowers Jim's
incentive to save while he is working. Unemployment compensation
most likely decreases Jim's efforts to find a new job.
●● Micah has spent $30 for a taxi ride to attend a Colts game. When he
arrives at the stadium, he discovers that he left his ticket at home. He
doesn't have time to return home to get it. He paid $60 for his ticket, but
can buy another one for $80. In deciding whether he should buy another
ticket Micah should compare the value he places on attending the game
to:
A. $30
B. $80
C. $90
D. $170
PRACTICE SOLUTION TEST 2026
QUESTIONS AND ANSWERS GRADED A+
●● Exhaust from a factory that increases health risks for people living
near the factory is an example of an externality. True or False.
Answer: True
●● In 2008 and 2009, the U.S. economy experienced a deep economic
downturn. If there is a short-run trade-off between inflation and
unemployment, to combat the high unemployment, President Obama
should have pursued an inflationary policy such as a stimulus package of
reduced taxes and increased government spending. True or False.
Answer: True
●● A society faces many decisions, but a household does not. True or
False.
Answer: False
●● Public policies aimed at increasing the size of the economic pie also
lead to a higher degree of equality. True or False.
Answer: False
,●● You can stay home and study to do well on your exam or you can go
to the movies with your friends, but not both. This example illustrates:
A. Scarcity and tradeoffs
B. Scarcity but not tradeoffs
C. Tradeoffs but not scarcity
D. Neither tradeoffs nor scarcity
Answer: A. Scarcity and tradeoffs
●● Your opportunity cost of going to a Maroon 5 concert during your
Spring Break is:
A. Zero, because Maroon 5 is your favorite
B. The price of the concert ticket
C. The price of the concert ticket plus the cost of any beverages you buy
at the concert
D. The price of the concert ticket, plus the cost of any beverages you buy
at the concert, and the value of your time
Answer: D. The price of the concert ticket, plus the cost of any
beverages you buy at the concert, and the value of your time
●● Certain employees are eligible for unemployment compensation if
they lose their jobs through no fault of their own. If Jim, a factory
worker, will receive compensation of half his regular pay for 52 weeks
while he looks for a job, then:
, A. The unemployment compensation most likely raises Jim's incentive
to save while he is working. Unemployment compensation most likely
increases Jim's efforts to find a new job.
B. The unemployment compensation most likely raises Jim's incentive to
save while he is working. Unemployment compensation most likely
decreases Jim's efforts to find a new job.
C. The unemployment compensation most likely lowers Jim's incentive
to save while he is working. Unemployment compensation most likely
increases Jim's efforts to find a new job.
D. The unemployment compensation most likely lowers Jim's incentive
to save while he is working. Unemployment compensation most likely
decreases Jim's efforts
Answer: D. The unemployment compensation most likely lowers Jim's
incentive to save while he is working. Unemployment compensation
most likely decreases Jim's efforts to find a new job.
●● Micah has spent $30 for a taxi ride to attend a Colts game. When he
arrives at the stadium, he discovers that he left his ticket at home. He
doesn't have time to return home to get it. He paid $60 for his ticket, but
can buy another one for $80. In deciding whether he should buy another
ticket Micah should compare the value he places on attending the game
to:
A. $30
B. $80
C. $90
D. $170
