Indiana Bloomington B251 Graf Econ Exam 1
QUESTIONS 2026/2027 COMPLETE & ACCURATE EXAM
QUESTIONS AND CORRECT VERIFIED ANSWERS WITH
DETAILED RATIONALES (100% CORRECT VERIFIED
ANSWERS) CURRENTLY UPDATED VERSION 2026
EDITION |GUARANTEED PASS A+ |FULL REVISED EXAM
Nonstrategic decisions
Personal decisions; based on an individual or firm's own cost and
benefits; based on market conditions
Strategic decisions
Consider other people's wants and needs; "put myself in their shoes;
based on Game Theory
____ is also a forgone opportunity
Cost
Opportunity cost
highest valued, next best alternative that must be given up to attain
something or satisfy a want
TANSTAAFL: "There ain't no such thing as a free lunch"
Opportunity cost measures
Implicit and explicit costs
,Marginal benefit
additional satisfaction derived from an activity or choice
Marginal cost
additional cost or penalty from an activity or choice
Rational choices respond to
incentives
Positive incentive
giving something in additional (ex: subsidy)
Negative incentive
taking something away (ex: tax or fine)
, Positive economic statement
Can be proven or disproven with evidence; can be tested; cause
and effect; factual
Normative economic statement
Belief or opinion; subjective; what ought to be; cannot be tested
GDP =
C + I + G + (X-M)
Consumer spending, investments, government spending, net
exports
Economic theory
a generalization that summarizes what we think we understand
about the economic choices that people make and the
performance of industries and entire economies
Economic assumptions
the set of circumstances in which a model is applicable
Ceteris Paribus Assumption
all other things being equal; nothing changes except the factor or
factors being studied
QUESTIONS 2026/2027 COMPLETE & ACCURATE EXAM
QUESTIONS AND CORRECT VERIFIED ANSWERS WITH
DETAILED RATIONALES (100% CORRECT VERIFIED
ANSWERS) CURRENTLY UPDATED VERSION 2026
EDITION |GUARANTEED PASS A+ |FULL REVISED EXAM
Nonstrategic decisions
Personal decisions; based on an individual or firm's own cost and
benefits; based on market conditions
Strategic decisions
Consider other people's wants and needs; "put myself in their shoes;
based on Game Theory
____ is also a forgone opportunity
Cost
Opportunity cost
highest valued, next best alternative that must be given up to attain
something or satisfy a want
TANSTAAFL: "There ain't no such thing as a free lunch"
Opportunity cost measures
Implicit and explicit costs
,Marginal benefit
additional satisfaction derived from an activity or choice
Marginal cost
additional cost or penalty from an activity or choice
Rational choices respond to
incentives
Positive incentive
giving something in additional (ex: subsidy)
Negative incentive
taking something away (ex: tax or fine)
, Positive economic statement
Can be proven or disproven with evidence; can be tested; cause
and effect; factual
Normative economic statement
Belief or opinion; subjective; what ought to be; cannot be tested
GDP =
C + I + G + (X-M)
Consumer spending, investments, government spending, net
exports
Economic theory
a generalization that summarizes what we think we understand
about the economic choices that people make and the
performance of industries and entire economies
Economic assumptions
the set of circumstances in which a model is applicable
Ceteris Paribus Assumption
all other things being equal; nothing changes except the factor or
factors being studied
