Economic Principles
LSU ECON 2030 - ECONOMIC PRINCIPLES | FINAL
EXAM QUESTIONS AND CORRECT ANSWERS |
LATEST 2026/2027
Lsu Econ 2030 FINAL
ECONOMIC PRINCIPLES
1. Economics is best described as the study of:
A. How governments decide how much money to print
B. How businesses maximize sales revenue
C. How to earn the highest return in the stock market
D. How society manages its scarce resources
D. How society manages its scarce resources
Resources are limited relative to wants, so every society must
decide how to allocate them. That allocation problem is the core
of economics.
Page 1 of 68
, Economic Principles
2. The opportunity cost of an item is:
A. The cost of producing it minus the revenue it earns
B. The total dollar price paid for it
C. The sum of every alternative that was available
D. The value of the next best alternative given up to obtain it
D. The value of the next best alternative given up to obtain
it
Opportunity cost counts only the single best forgone option, not
every option that was passed over.
3. Maya skips a work shift that would have paid her $60 so she
can attend a concert with a $40 ticket. What is her opportunity
cost of attending?
A. $100
B. $40
C. $20
D. $60
A. $100
She gives up the $60 in wages and also pays $40 for the ticket,
so the full cost of the concert is $100.
4. A point lying inside a country's production possibilities
frontier (PPF) indicates that:
A. Resources are being used inefficiently or are unemployed
B. The economy is producing at maximum efficiency
C. The economy has experienced economic growth
D. The output combination cannot be reached with current
resources
A. Resources are being used inefficiently or are unemployed
Inside the frontier, more of one good could be produced without
giving up any of the other, which signals idle or wasted
resources.
Page 2 of 68
, Economic Principles
5. A PPF that is bowed outward (concave to the origin)
reflects:
A. Increasing opportunity costs, because resources are not
equally suited to producing both goods
B. Constant opportunity costs between the two goods
C. Decreasing opportunity costs as production shifts
D. High unemployment in the economy
A. Increasing opportunity costs, because resources are not
equally suited to producing both goods
As production shifts toward one good, less suitable resources
must be used, so each extra unit costs more of the other good.
6. Which of the following would shift a nation's PPF outward?
A. A move from inside the frontier to a point on it
B. A reduction in the unemployment rate
C. A decline in the size of the labor force
D. An improvement in production technology
D. An improvement in production technology
Better technology raises the maximum output possible. Reducing
unemployment only moves the economy toward the existing
frontier.
7. A producer has a comparative advantage in a good when it
can produce that good:
A. And sell it at a higher price than other producers
B. At a lower opportunity cost than other producers
C. Only with the help of government protection
D. Using fewer total inputs than other producers
B. At a lower opportunity cost than other producers
Comparative advantage is about opportunity cost. Producing
with fewer inputs describes absolute advantage.
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, Economic Principles
8. In one hour, a worker in Country A can make 4 shirts or 2
bushels of wheat, while a worker in Country B can make 3
shirts or 3 bushels of wheat. Which statement is correct?
A. Country A has a comparative advantage in shirts and Country
B in wheat
B. Country B has a comparative advantage in shirts and Country
A in wheat
C. Country A has a comparative advantage in both goods
D. Neither country can gain from trade
A. Country A has a comparative advantage in shirts and
Country B in wheat
A shirt costs Country A 0.5 bushel but costs Country B 1 bushel,
so A should specialize in shirts and B in wheat.
9. Which of the following is a positive economic statement?
A. An increase in the minimum wage reduces employment
among teenage workers
B. The government ought to reduce income inequality
C. Tax rates on high earners are unfairly low
D. The minimum wage should be raised to $15 per hour
A. An increase in the minimum wage reduces employment
among teenage workers
A positive statement describes how the world is and can be
tested with evidence. Words like "should" and "unfair" signal
normative statements.
Page 4 of 68
LSU ECON 2030 - ECONOMIC PRINCIPLES | FINAL
EXAM QUESTIONS AND CORRECT ANSWERS |
LATEST 2026/2027
Lsu Econ 2030 FINAL
ECONOMIC PRINCIPLES
1. Economics is best described as the study of:
A. How governments decide how much money to print
B. How businesses maximize sales revenue
C. How to earn the highest return in the stock market
D. How society manages its scarce resources
D. How society manages its scarce resources
Resources are limited relative to wants, so every society must
decide how to allocate them. That allocation problem is the core
of economics.
Page 1 of 68
, Economic Principles
2. The opportunity cost of an item is:
A. The cost of producing it minus the revenue it earns
B. The total dollar price paid for it
C. The sum of every alternative that was available
D. The value of the next best alternative given up to obtain it
D. The value of the next best alternative given up to obtain
it
Opportunity cost counts only the single best forgone option, not
every option that was passed over.
3. Maya skips a work shift that would have paid her $60 so she
can attend a concert with a $40 ticket. What is her opportunity
cost of attending?
A. $100
B. $40
C. $20
D. $60
A. $100
She gives up the $60 in wages and also pays $40 for the ticket,
so the full cost of the concert is $100.
4. A point lying inside a country's production possibilities
frontier (PPF) indicates that:
A. Resources are being used inefficiently or are unemployed
B. The economy is producing at maximum efficiency
C. The economy has experienced economic growth
D. The output combination cannot be reached with current
resources
A. Resources are being used inefficiently or are unemployed
Inside the frontier, more of one good could be produced without
giving up any of the other, which signals idle or wasted
resources.
Page 2 of 68
, Economic Principles
5. A PPF that is bowed outward (concave to the origin)
reflects:
A. Increasing opportunity costs, because resources are not
equally suited to producing both goods
B. Constant opportunity costs between the two goods
C. Decreasing opportunity costs as production shifts
D. High unemployment in the economy
A. Increasing opportunity costs, because resources are not
equally suited to producing both goods
As production shifts toward one good, less suitable resources
must be used, so each extra unit costs more of the other good.
6. Which of the following would shift a nation's PPF outward?
A. A move from inside the frontier to a point on it
B. A reduction in the unemployment rate
C. A decline in the size of the labor force
D. An improvement in production technology
D. An improvement in production technology
Better technology raises the maximum output possible. Reducing
unemployment only moves the economy toward the existing
frontier.
7. A producer has a comparative advantage in a good when it
can produce that good:
A. And sell it at a higher price than other producers
B. At a lower opportunity cost than other producers
C. Only with the help of government protection
D. Using fewer total inputs than other producers
B. At a lower opportunity cost than other producers
Comparative advantage is about opportunity cost. Producing
with fewer inputs describes absolute advantage.
Page 3 of 68
, Economic Principles
8. In one hour, a worker in Country A can make 4 shirts or 2
bushels of wheat, while a worker in Country B can make 3
shirts or 3 bushels of wheat. Which statement is correct?
A. Country A has a comparative advantage in shirts and Country
B in wheat
B. Country B has a comparative advantage in shirts and Country
A in wheat
C. Country A has a comparative advantage in both goods
D. Neither country can gain from trade
A. Country A has a comparative advantage in shirts and
Country B in wheat
A shirt costs Country A 0.5 bushel but costs Country B 1 bushel,
so A should specialize in shirts and B in wheat.
9. Which of the following is a positive economic statement?
A. An increase in the minimum wage reduces employment
among teenage workers
B. The government ought to reduce income inequality
C. Tax rates on high earners are unfairly low
D. The minimum wage should be raised to $15 per hour
A. An increase in the minimum wage reduces employment
among teenage workers
A positive statement describes how the world is and can be
tested with evidence. Words like "should" and "unfair" signal
normative statements.
Page 4 of 68
