ECON B251 Final Exam 2025/2026 Exam
Questions and Answers | A+ Score
Assured
Scarcity Principle - 🧠 ANSWER ✔✔all actions have tradeoffs
Opportunity Cost - 🧠 ANSWER ✔✔call of the best foregone alternative
action
Marginal cost-benefit principle - 🧠 ANSWER ✔✔take an action if and only if
the extra benefits are at least as great as the extra costs
Absolute advantage - 🧠 ANSWER ✔✔the ability to complete a task using
less resources (time, money, etc.)
Comparative advantage - 🧠 ANSWER ✔✔lower opportunity cost
Efficient - 🧠 ANSWER ✔✔if there is no alternative that improves outcomes
for someone without harming at least one other person
,Inefficiency - 🧠 ANSWER ✔✔it is possible to make someone better off
without hurting anyone else
Equity - 🧠 ANSWER ✔✔How fair an allocation rule is
Result's based equity - 🧠 ANSWER ✔✔after the allocation happens, how
widely dispersed are the resulting values?
Rule-based equity - 🧠 ANSWER ✔✔if you knew the rule, would you prefer
to be any particular participant?
Producer surplus - 🧠 ANSWER ✔✔the extra benefit producers receive from
selling a good or service, measured by the price the producer actually
received minus the price the producer would have been willing to accept
Consumer surplus - 🧠 ANSWER ✔✔the amount a buyer is willing to pay for
a good minus the amount the buyer actually pays for it
Who does the tax burden fall on? - 🧠 ANSWER ✔✔the less elastic side of
the market
Utility - 🧠 ANSWER ✔✔the satisfaction people derive from consumption
Maximized utility - 🧠 ANSWER ✔✔when marginal utility is 0 or the last time
marginal utility was positive
, Rational Spending Rule - 🧠 ANSWER ✔✔spending should be allocated
across goods so that the marginal utility per dollar is the same for each
good
(must be spending the entire budget)
Perfect competition - 🧠 ANSWER ✔✔market price won't change
Monopoly - 🧠 ANSWER ✔✔firm can "choose" market price (consistent with
market demand)
Shutdown - 🧠 ANSWER ✔✔refers to a short-run decision not to produce
anything during a specific period of time because of current market
conditions
Market exit - 🧠 ANSWER ✔✔Occurs if a business cannot make a profit and
can find no way of competing effectively
Setting a price floor - 🧠 ANSWER ✔✔require that the firm produce at least
the socially optimal quantity if they want to produce at all
Setting a price ceiling - 🧠 ANSWER ✔✔the firm will find it profitable to
produce all units with marginal cost below p
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
Questions and Answers | A+ Score
Assured
Scarcity Principle - 🧠 ANSWER ✔✔all actions have tradeoffs
Opportunity Cost - 🧠 ANSWER ✔✔call of the best foregone alternative
action
Marginal cost-benefit principle - 🧠 ANSWER ✔✔take an action if and only if
the extra benefits are at least as great as the extra costs
Absolute advantage - 🧠 ANSWER ✔✔the ability to complete a task using
less resources (time, money, etc.)
Comparative advantage - 🧠 ANSWER ✔✔lower opportunity cost
Efficient - 🧠 ANSWER ✔✔if there is no alternative that improves outcomes
for someone without harming at least one other person
,Inefficiency - 🧠 ANSWER ✔✔it is possible to make someone better off
without hurting anyone else
Equity - 🧠 ANSWER ✔✔How fair an allocation rule is
Result's based equity - 🧠 ANSWER ✔✔after the allocation happens, how
widely dispersed are the resulting values?
Rule-based equity - 🧠 ANSWER ✔✔if you knew the rule, would you prefer
to be any particular participant?
Producer surplus - 🧠 ANSWER ✔✔the extra benefit producers receive from
selling a good or service, measured by the price the producer actually
received minus the price the producer would have been willing to accept
Consumer surplus - 🧠 ANSWER ✔✔the amount a buyer is willing to pay for
a good minus the amount the buyer actually pays for it
Who does the tax burden fall on? - 🧠 ANSWER ✔✔the less elastic side of
the market
Utility - 🧠 ANSWER ✔✔the satisfaction people derive from consumption
Maximized utility - 🧠 ANSWER ✔✔when marginal utility is 0 or the last time
marginal utility was positive
, Rational Spending Rule - 🧠 ANSWER ✔✔spending should be allocated
across goods so that the marginal utility per dollar is the same for each
good
(must be spending the entire budget)
Perfect competition - 🧠 ANSWER ✔✔market price won't change
Monopoly - 🧠 ANSWER ✔✔firm can "choose" market price (consistent with
market demand)
Shutdown - 🧠 ANSWER ✔✔refers to a short-run decision not to produce
anything during a specific period of time because of current market
conditions
Market exit - 🧠 ANSWER ✔✔Occurs if a business cannot make a profit and
can find no way of competing effectively
Setting a price floor - 🧠 ANSWER ✔✔require that the firm produce at least
the socially optimal quantity if they want to produce at all
Setting a price ceiling - 🧠 ANSWER ✔✔the firm will find it profitable to
produce all units with marginal cost below p
COPYRIGHT©PROFFKERRYMARTIN 2025/2026. YEAR PUBLISHED 2025. COMPANY REGISTRATION NUMBER: 619652435. TERMS OF USE.
PRIVACY STATEMENT. ALL RIGHTS RESERVED
