ECON 248 FINAL TEST PAPER 2026
COMPLETE QUESTIONS AND CORRECT
ANSWERS GRADED A+
●● Joe sold gold coins for $1000 that he bought a year ago for $1000.
He says, "At least I didn't lose any money on my financial investment."
His economist friend points out that in effect he did lose money, because
he could have received a 3 percent return on the $1000 if he had bought
a bank certificate of deposit instead of the coins. The economist's
analysis in this case incorporates the idea of:
Answer: Opportunity costs
●● A person should consume more of something when its marginal:
Answer: Benefits exceeds its marginal costs
●● Economics may best be defined as the:
Answer: the social science concerned with how individuals, institutions,
and society make optimal choices under conditions of scarcity
●● The economic perspective entails:
Answer: a comparison of marginal benefits and marginal costs in
decision making
, ●● The assertion that "there is no free lunch" means that:
Answer: all production involves the use of scarce resources and thus the
sacrifice of alternative goods
●● The process by which economists test hypotheses against facts to
develop theories, principles, and models is called:
Answer: the scientific method
●● Ben says that "An increase in the tax on beer will raise its price."
Holly argues that "Taxes should be increased on beer because college
students drink too much." We can conclude that:
Answer: Holly's statement is normative, but Ben's is positive
●● The economizing problem is:
Answer: the need to make choices because economic wants exceed
economic means
●● The budget line shows:
Answer: all possible combinations of two goods that can be purchased,
given money income and the prices of the goods.
●● An economic system:
Answer: is a particular set of institutional arrangements and a
coordinating mechanism used to respond to the economizing problem.
COMPLETE QUESTIONS AND CORRECT
ANSWERS GRADED A+
●● Joe sold gold coins for $1000 that he bought a year ago for $1000.
He says, "At least I didn't lose any money on my financial investment."
His economist friend points out that in effect he did lose money, because
he could have received a 3 percent return on the $1000 if he had bought
a bank certificate of deposit instead of the coins. The economist's
analysis in this case incorporates the idea of:
Answer: Opportunity costs
●● A person should consume more of something when its marginal:
Answer: Benefits exceeds its marginal costs
●● Economics may best be defined as the:
Answer: the social science concerned with how individuals, institutions,
and society make optimal choices under conditions of scarcity
●● The economic perspective entails:
Answer: a comparison of marginal benefits and marginal costs in
decision making
, ●● The assertion that "there is no free lunch" means that:
Answer: all production involves the use of scarce resources and thus the
sacrifice of alternative goods
●● The process by which economists test hypotheses against facts to
develop theories, principles, and models is called:
Answer: the scientific method
●● Ben says that "An increase in the tax on beer will raise its price."
Holly argues that "Taxes should be increased on beer because college
students drink too much." We can conclude that:
Answer: Holly's statement is normative, but Ben's is positive
●● The economizing problem is:
Answer: the need to make choices because economic wants exceed
economic means
●● The budget line shows:
Answer: all possible combinations of two goods that can be purchased,
given money income and the prices of the goods.
●● An economic system:
Answer: is a particular set of institutional arrangements and a
coordinating mechanism used to respond to the economizing problem.
