PRINCIPLES OF ECONOMICS
COMPREHENSIVE EXAM 2026 QUESTIONS
WITH SOLUTIONS GRADED A+
◉ scarcity. Answer: the limited nature of society's resources
◉ efficiency. Answer: when society gets the most from its scarce
resources
◉ equality. Answer: when prosperity is distributed uniformly among
society's members
◉ incentive. Answer: something that induces person to act
* could be either reward or punishment
◉ market. Answer: a group of buyers and sellers
*need not to be in a single location
◉ organize economic activity. Answer: - what to produce
- how to produce
, - who gets it
- how much to produce
◉ market economy. Answer: allocates resources through the
decentralized decisions of many households and firms as they interact in
markets
◉ opportunity cost. Answer: anything that you give up to obtain
something
◉ rational people. Answer: - systematically and purposefully do their
best to achieve their objectives
- make decisions by evaluating costs and benefits of marginal changes,
incremental adjustments to existing plans
◉ productivity. Answer: the amount of goods and services produced per
unit of labor
◉ market failure. Answer: when the market fails to allocate society's
resources efficiently
* causes of market failure: externalities, market power
◉ externalities. Answer: when the production and consumption affects
bystanders
COMPREHENSIVE EXAM 2026 QUESTIONS
WITH SOLUTIONS GRADED A+
◉ scarcity. Answer: the limited nature of society's resources
◉ efficiency. Answer: when society gets the most from its scarce
resources
◉ equality. Answer: when prosperity is distributed uniformly among
society's members
◉ incentive. Answer: something that induces person to act
* could be either reward or punishment
◉ market. Answer: a group of buyers and sellers
*need not to be in a single location
◉ organize economic activity. Answer: - what to produce
- how to produce
, - who gets it
- how much to produce
◉ market economy. Answer: allocates resources through the
decentralized decisions of many households and firms as they interact in
markets
◉ opportunity cost. Answer: anything that you give up to obtain
something
◉ rational people. Answer: - systematically and purposefully do their
best to achieve their objectives
- make decisions by evaluating costs and benefits of marginal changes,
incremental adjustments to existing plans
◉ productivity. Answer: the amount of goods and services produced per
unit of labor
◉ market failure. Answer: when the market fails to allocate society's
resources efficiently
* causes of market failure: externalities, market power
◉ externalities. Answer: when the production and consumption affects
bystanders
