ECON 248 Final Question and Answer [2026] |
UPDATED ACTUAL Exam | Complete Exam Prep
• A person should consume more of something when its marginal: -✓✓ Benefits
exceeds its marginal costs
• Economics may best be defined as the: -✓✓ the social science concerned with how
individuals, institutions, and society make optimal choices under conditions of scarcity
• The economic perspective entails: -✓✓ a comparison of marginal benefits and
marginal costs in decision making
• The assertion that "there is no free lunch" means that: -✓✓ all production involves the
use of scarce resources and thus the sacrifice of alternative goods
• The process by which economists test hypotheses against facts to develop theories,
principles, and models is called: -✓✓ the scientific method
• Ben says that "An increase in the tax on beer will raise its price." Holly argues that
"Taxes should be increased on beer because college students drink too much." We can
conclude that: -✓✓ Holly's statement is normative, but Ben's is positive
• The economizing problem is: -✓✓ the need to make choices because economic wants
exceed economic means
• The budget line shows: -✓✓ all possible combinations of two goods that can be
purchased, given money income and the prices of the goods.
• An economic system: -✓✓ is a particular set of institutional arrangements and a
coordinating mechanism used to respond to the economizing problem.
• The term "laissez-faire" suggests that: -✓✓ government should not interfere with the
operation of the economy.
• Economic systems differ according to which two main characteristics? -✓✓ Who owns
the factors of production and the methods used to coordinate economic activity.
• Command systems are also known as: -✓✓ Communism
• A fundamental difference between the command system and laissez-faire capitalism is
that, in command systems: -✓✓ the division of output is decided by central planning
rather than by individuals operating freely through markets
, • Which of the following is a fundamental characteristic of the market system? -✓✓
Property rights
• The regulatory mechanism of the market system is: -✓✓ competition
• The use of money contributes to economic efficiency because: -✓✓ it promotes
specialization by overcoming the problems with barter
• The presence of market failures implies that: -✓✓ there is an active role for
government, even in a market system.
• Economic profits and losses: -✓✓ are essential to the reallocation of resources from
less desired to more desired goods.
• The competitive market system: -✓✓ encourages innovation because successful
innovators are rewarded with economic profits.
• The law of demand states that, other things equal: -✓✓ price and quantity demanded
are inversely related
• The relationship between quantity supplied and price is ________ and the relationship
between quantity demanded and price is ________. -✓✓ direct; inverse
• When the price of a product increases, a consumer is able to buy less of it with a given
money income. This describes the: -✓✓ income effect
• In presenting the idea of a demand curve, economists presume the most important
variable in determining the quantity demanded is: -✓✓ the price of the product itself
• The income and substitution effects account for: -✓✓ downward sloping demand curve
• When the price of a product falls, the purchasing power of our money income rises
and thus permits consumers to purchase more of the product. This statement describes:
-✓✓ the income effect
• A recent study found that an increase in the federal tax on beer (and thus an increase
in the price of beer) would reduce the demand for marijuana. We can conclude that: -
✓✓ beer and marijuana are complimentary goods
• Which of the following would NOT shift the demand curve for beef? -✓✓ A reduction in
the price of cattle feed
• Blu-ray players and Blu-ray discs are: -✓✓ complementary goods
UPDATED ACTUAL Exam | Complete Exam Prep
• A person should consume more of something when its marginal: -✓✓ Benefits
exceeds its marginal costs
• Economics may best be defined as the: -✓✓ the social science concerned with how
individuals, institutions, and society make optimal choices under conditions of scarcity
• The economic perspective entails: -✓✓ a comparison of marginal benefits and
marginal costs in decision making
• The assertion that "there is no free lunch" means that: -✓✓ all production involves the
use of scarce resources and thus the sacrifice of alternative goods
• The process by which economists test hypotheses against facts to develop theories,
principles, and models is called: -✓✓ the scientific method
• Ben says that "An increase in the tax on beer will raise its price." Holly argues that
"Taxes should be increased on beer because college students drink too much." We can
conclude that: -✓✓ Holly's statement is normative, but Ben's is positive
• The economizing problem is: -✓✓ the need to make choices because economic wants
exceed economic means
• The budget line shows: -✓✓ all possible combinations of two goods that can be
purchased, given money income and the prices of the goods.
• An economic system: -✓✓ is a particular set of institutional arrangements and a
coordinating mechanism used to respond to the economizing problem.
• The term "laissez-faire" suggests that: -✓✓ government should not interfere with the
operation of the economy.
• Economic systems differ according to which two main characteristics? -✓✓ Who owns
the factors of production and the methods used to coordinate economic activity.
• Command systems are also known as: -✓✓ Communism
• A fundamental difference between the command system and laissez-faire capitalism is
that, in command systems: -✓✓ the division of output is decided by central planning
rather than by individuals operating freely through markets
, • Which of the following is a fundamental characteristic of the market system? -✓✓
Property rights
• The regulatory mechanism of the market system is: -✓✓ competition
• The use of money contributes to economic efficiency because: -✓✓ it promotes
specialization by overcoming the problems with barter
• The presence of market failures implies that: -✓✓ there is an active role for
government, even in a market system.
• Economic profits and losses: -✓✓ are essential to the reallocation of resources from
less desired to more desired goods.
• The competitive market system: -✓✓ encourages innovation because successful
innovators are rewarded with economic profits.
• The law of demand states that, other things equal: -✓✓ price and quantity demanded
are inversely related
• The relationship between quantity supplied and price is ________ and the relationship
between quantity demanded and price is ________. -✓✓ direct; inverse
• When the price of a product increases, a consumer is able to buy less of it with a given
money income. This describes the: -✓✓ income effect
• In presenting the idea of a demand curve, economists presume the most important
variable in determining the quantity demanded is: -✓✓ the price of the product itself
• The income and substitution effects account for: -✓✓ downward sloping demand curve
• When the price of a product falls, the purchasing power of our money income rises
and thus permits consumers to purchase more of the product. This statement describes:
-✓✓ the income effect
• A recent study found that an increase in the federal tax on beer (and thus an increase
in the price of beer) would reduce the demand for marijuana. We can conclude that: -
✓✓ beer and marijuana are complimentary goods
• Which of the following would NOT shift the demand curve for beef? -✓✓ A reduction in
the price of cattle feed
• Blu-ray players and Blu-ray discs are: -✓✓ complementary goods
