LSU ECON 2030 UNIT TWO STUDY GUIDE
EVALUATION 2026 TESTED ANSWERS
GRADED A+
⩥ Economic models.
Answer: Simplified versions of reality used to analyze real-world
economic applications
⩥ What are the 3 key economic ideas?.
Answer: People are rational
People respond to incentives
Optimal decisions are made at the margin
⩥ Marginal cost [MC]/Marginal benefit [MB].
Answer: The additional cost or benefit associated with a small amount
extra of some action
⩥ Marginal analysis.
Answer: Comparing marginal cost and marginal benefit
⩥ When should you choose an action?.
Answer: When MB ≥ MC
, ⩥ Trade-off.
Answer: An increase in the production of one good requires the
reduction in the production of some other good
⩥ Opportunity cost.
Answer: The highest-valued alternative given up in order to engage in
some activity
⩥ What are the types of economies?.
Answer: Centrally planned economies
Market economies
Mixed economies
⩥ Centrally planned economies.
Answer: Where governments decide what to produce, how to produce it,
and who received the goods and services Example: former USSR
⩥ Market economies.
Answer: Where the decisions of households and firms determine what is
produced, how it is produced, and who receives the goods and services
⩥ Mixed economies.
EVALUATION 2026 TESTED ANSWERS
GRADED A+
⩥ Economic models.
Answer: Simplified versions of reality used to analyze real-world
economic applications
⩥ What are the 3 key economic ideas?.
Answer: People are rational
People respond to incentives
Optimal decisions are made at the margin
⩥ Marginal cost [MC]/Marginal benefit [MB].
Answer: The additional cost or benefit associated with a small amount
extra of some action
⩥ Marginal analysis.
Answer: Comparing marginal cost and marginal benefit
⩥ When should you choose an action?.
Answer: When MB ≥ MC
, ⩥ Trade-off.
Answer: An increase in the production of one good requires the
reduction in the production of some other good
⩥ Opportunity cost.
Answer: The highest-valued alternative given up in order to engage in
some activity
⩥ What are the types of economies?.
Answer: Centrally planned economies
Market economies
Mixed economies
⩥ Centrally planned economies.
Answer: Where governments decide what to produce, how to produce it,
and who received the goods and services Example: former USSR
⩥ Market economies.
Answer: Where the decisions of households and firms determine what is
produced, how it is produced, and who receives the goods and services
⩥ Mixed economies.
