ECON 104 Final Exam | Newest Questions and
Answers | 2026 Update | Expert Verified
• Every individual, no matter how rich or poor, is faced with making trade-offs. -
✓✓ True
• When voluntary exchange takes place, only one party gains from the exchange. -
✓✓ False
• A college must decide if it wants to offer more Internet-based classes. This
decision involves answering the economic question of "what to produce." -✓✓
True
• One desirable outcome of a market economy is that it leads to a more equitable
distribution of income. -✓✓ False
• An economic model is a simplified version of reality used to analyze real-world
economic situations. -✓✓ True
• The decisions Apple makes in determining production levels for its iPhone is an
example of a macroeconomics topic. -✓✓ False
• Economic resources are also called factors of production. -✓✓ true
• A curved line has slope values that change at every point. -✓✓ true
• A straight line has a slope of zero. -✓✓ false
,• If a country is producing efficiently and is on the production possibilities frontier,
the only way to produce more of one good is to produce less of the other. -✓✓
false
• If a country produces only two goods, then it is not possible to have a
comparative advantage in the production of both those goods. -✓✓ true
• Any output combination outside a production possibility frontier is associated
with unused or underutilized resources. -✓✓ false
• An increase in the labor force shifts the production possibility frontier inwards
over time. -✓✓ false
• If Sanjaya can shuck more oysters in one hour than Tatiana, then Sanjaya has a
comparative advantage in shucking oysters. -✓✓ false
• The basis for trade is comparative advantage, not absolute advantage. -✓✓ True
• In a two-good, two country world, if one country has an absolute advantage in the
production of both goods, it cannot benefit by trading with the other country. -✓✓
false
• For a person to have a comparative advantage in producing a product, she must
be able to produce that product at a lower opportunity cost than her competitors. -
✓✓ true
, • It is possible to have a comparative advantage in producing a good or service
without having an absolute advantage. -✓✓ true
• An increase in the unemployment rate may be represented as a movement from a
point on the production possibilities frontier to a point inside the frontier. -✓✓ true
• The full-employment rate of unemployment is zero. -✓✓ false
• In general, economists rely more heavily on the establishment survey rather than
the household survey to evaluate the state of the labor market. -✓✓ true
• If Ethel sold her 2003 Ford Focus for $2,250 in 2017, the sale of her car
contributed $2,250 to 2017 GDP. -✓✓ false
• If an increase in residential burglaries results in households spending more
money on security systems, GDP will rise. -✓✓ true
• Consumption is negatively related to stock market wealth but positively related to
taxes and tax rates. -✓✓ false
• If aggregate expenditures rise unexpectedly, then inventories will also rise
unexpectedly. -✓✓ false
• Services are the most interest rate sensitive component of consumption. -✓✓
false
• Investment is the least cyclical component of aggregate expenditures. -✓✓ true
Answers | 2026 Update | Expert Verified
• Every individual, no matter how rich or poor, is faced with making trade-offs. -
✓✓ True
• When voluntary exchange takes place, only one party gains from the exchange. -
✓✓ False
• A college must decide if it wants to offer more Internet-based classes. This
decision involves answering the economic question of "what to produce." -✓✓
True
• One desirable outcome of a market economy is that it leads to a more equitable
distribution of income. -✓✓ False
• An economic model is a simplified version of reality used to analyze real-world
economic situations. -✓✓ True
• The decisions Apple makes in determining production levels for its iPhone is an
example of a macroeconomics topic. -✓✓ False
• Economic resources are also called factors of production. -✓✓ true
• A curved line has slope values that change at every point. -✓✓ true
• A straight line has a slope of zero. -✓✓ false
,• If a country is producing efficiently and is on the production possibilities frontier,
the only way to produce more of one good is to produce less of the other. -✓✓
false
• If a country produces only two goods, then it is not possible to have a
comparative advantage in the production of both those goods. -✓✓ true
• Any output combination outside a production possibility frontier is associated
with unused or underutilized resources. -✓✓ false
• An increase in the labor force shifts the production possibility frontier inwards
over time. -✓✓ false
• If Sanjaya can shuck more oysters in one hour than Tatiana, then Sanjaya has a
comparative advantage in shucking oysters. -✓✓ false
• The basis for trade is comparative advantage, not absolute advantage. -✓✓ True
• In a two-good, two country world, if one country has an absolute advantage in the
production of both goods, it cannot benefit by trading with the other country. -✓✓
false
• For a person to have a comparative advantage in producing a product, she must
be able to produce that product at a lower opportunity cost than her competitors. -
✓✓ true
, • It is possible to have a comparative advantage in producing a good or service
without having an absolute advantage. -✓✓ true
• An increase in the unemployment rate may be represented as a movement from a
point on the production possibilities frontier to a point inside the frontier. -✓✓ true
• The full-employment rate of unemployment is zero. -✓✓ false
• In general, economists rely more heavily on the establishment survey rather than
the household survey to evaluate the state of the labor market. -✓✓ true
• If Ethel sold her 2003 Ford Focus for $2,250 in 2017, the sale of her car
contributed $2,250 to 2017 GDP. -✓✓ false
• If an increase in residential burglaries results in households spending more
money on security systems, GDP will rise. -✓✓ true
• Consumption is negatively related to stock market wealth but positively related to
taxes and tax rates. -✓✓ false
• If aggregate expenditures rise unexpectedly, then inventories will also rise
unexpectedly. -✓✓ false
• Services are the most interest rate sensitive component of consumption. -✓✓
false
• Investment is the least cyclical component of aggregate expenditures. -✓✓ true
