Economics 1500 Final Exam Review
Questions and Answers (Latest 2026)
Incentives: - Correct Answers ✅Rewards and penalties that
motivate behavior. (Fame, power, reputation)
Invisible Hand: - Correct Answers ✅In a free market
economy, self interested individuals operate through a
system of mutual interdependence. The will of the invisible
hand is better than that of the visible boot. "By acting out of
my own self-interest I benefit the economy."(Self interest first,
benefiting the economy is the effect)
The Great Economic Problem: - Correct Answers ✅How to
use limited resources to satisfy our limitless needs
Opportunity Costs: - Correct Answers ✅The cost of doing
one thing instead of another. (Going to college over working
full time. How much money do I miss out on by being here)
(cost/value of what was lost)
Marginal: - Correct Answers ✅The cost/benefit of the next
item. I.E.: How much is it to make the 50th item from the
49th
What are examples of incentives: - Correct Answers ✅Tax
credits
Discounts
Subsidies
,Economics 1500 Final Exam Review
Questions and Answers (Latest 2026)
Cashback
Sex
Love
What is the great economic problem? - Correct Answers
✅Satisfying our unlimited wants with our limited resources
What are trade-offs: - Correct Answers ✅One choice
means that you are losing out on another opportunity
Give an example of opportunity costs: - Correct Answers
✅Going to breakfast with Randy vs sleeping in
What does it mean to think on the margin? - Correct
Answers ✅To think of things in terms of one or two units
difference.
Absolute Advantage: - Correct Answers ✅One produces
MORE goods and services than another (produce something
better; more effectively, lower input cost)
EX: U.S producing airplanes more efficiently than any other
country
Comparative Advantage: - Correct Answers ✅Producing
goods at a lower opportunity cost when compared to another
,Economics 1500 Final Exam Review
Questions and Answers (Latest 2026)
EX: Mexico producing t-shirts instead of the U.S
Production Possibilities Frontier: - Correct Answers ✅A
graph that shows all the different combinations of output of
two goods that can be produced using available resources
and technology
What are the benefits of trade? - Correct Answers ✅Trade
makes people better off when preferences differ
Can a country benefit from trade if it has absolute
advantage? - Correct Answers ✅Yes, just because one
party has an absolute advantage doesn't mean that they
benefit from comparative advantage.
Trade makes people better off when... - Correct Answers
✅Preferences differ.
How does trade increase productivity? - Correct Answers
✅Through specialization and division of knowledge
Trade leads to increased - Correct Answers ✅Productivity
through specialization
Without trade there is no....? - Correct Answers
✅Specialization
, Economics 1500 Final Exam Review
Questions and Answers (Latest 2026)
The demand curve: - Correct Answers ✅A function that
shows the quantity demanded at different prices
The supply curve: - Correct Answers ✅A function that
shows the quantity supplied at different prices
Quantity demanded: - Correct Answers ✅The quantity of a
good that is demanded at a particular price
Quantity supplied: - Correct Answers ✅The quantity of a
good supplied at a particular price
What are demand-shifters? (PIPPET) *price of good is NOT a
demand shifter* - Correct Answers ✅Income
Population
Price of substitutes
Price of Complements
Expectations
Tastes
What are supply-shifters? - Correct Answers ✅*Price tells
us quantity supplied*
Technological innovations and changes in the price of inputs
Taxes and subsidies
Questions and Answers (Latest 2026)
Incentives: - Correct Answers ✅Rewards and penalties that
motivate behavior. (Fame, power, reputation)
Invisible Hand: - Correct Answers ✅In a free market
economy, self interested individuals operate through a
system of mutual interdependence. The will of the invisible
hand is better than that of the visible boot. "By acting out of
my own self-interest I benefit the economy."(Self interest first,
benefiting the economy is the effect)
The Great Economic Problem: - Correct Answers ✅How to
use limited resources to satisfy our limitless needs
Opportunity Costs: - Correct Answers ✅The cost of doing
one thing instead of another. (Going to college over working
full time. How much money do I miss out on by being here)
(cost/value of what was lost)
Marginal: - Correct Answers ✅The cost/benefit of the next
item. I.E.: How much is it to make the 50th item from the
49th
What are examples of incentives: - Correct Answers ✅Tax
credits
Discounts
Subsidies
,Economics 1500 Final Exam Review
Questions and Answers (Latest 2026)
Cashback
Sex
Love
What is the great economic problem? - Correct Answers
✅Satisfying our unlimited wants with our limited resources
What are trade-offs: - Correct Answers ✅One choice
means that you are losing out on another opportunity
Give an example of opportunity costs: - Correct Answers
✅Going to breakfast with Randy vs sleeping in
What does it mean to think on the margin? - Correct
Answers ✅To think of things in terms of one or two units
difference.
Absolute Advantage: - Correct Answers ✅One produces
MORE goods and services than another (produce something
better; more effectively, lower input cost)
EX: U.S producing airplanes more efficiently than any other
country
Comparative Advantage: - Correct Answers ✅Producing
goods at a lower opportunity cost when compared to another
,Economics 1500 Final Exam Review
Questions and Answers (Latest 2026)
EX: Mexico producing t-shirts instead of the U.S
Production Possibilities Frontier: - Correct Answers ✅A
graph that shows all the different combinations of output of
two goods that can be produced using available resources
and technology
What are the benefits of trade? - Correct Answers ✅Trade
makes people better off when preferences differ
Can a country benefit from trade if it has absolute
advantage? - Correct Answers ✅Yes, just because one
party has an absolute advantage doesn't mean that they
benefit from comparative advantage.
Trade makes people better off when... - Correct Answers
✅Preferences differ.
How does trade increase productivity? - Correct Answers
✅Through specialization and division of knowledge
Trade leads to increased - Correct Answers ✅Productivity
through specialization
Without trade there is no....? - Correct Answers
✅Specialization
, Economics 1500 Final Exam Review
Questions and Answers (Latest 2026)
The demand curve: - Correct Answers ✅A function that
shows the quantity demanded at different prices
The supply curve: - Correct Answers ✅A function that
shows the quantity supplied at different prices
Quantity demanded: - Correct Answers ✅The quantity of a
good that is demanded at a particular price
Quantity supplied: - Correct Answers ✅The quantity of a
good supplied at a particular price
What are demand-shifters? (PIPPET) *price of good is NOT a
demand shifter* - Correct Answers ✅Income
Population
Price of substitutes
Price of Complements
Expectations
Tastes
What are supply-shifters? - Correct Answers ✅*Price tells
us quantity supplied*
Technological innovations and changes in the price of inputs
Taxes and subsidies
