ECO2023 FSU Hammock Final Exam
Questions and Answers 2026-2027
Updated.
Scarcity - Answer Stuff is limited.
Choice - Answer One alternative is selected over another.
Opportunity Cost - Answer The value of the best thing given up.
Positive economics - Answer The way the world is
Normative economics - Answer The way the world ought to be
Benefits of trade - Answer - Increased variety of goods
- Increased competition
- Technology transfer
- More efficient large-scale production
Production Possibility Curve - Answer A curve depicting all maximum output possibilities for
two goods, given a set of inputs consisting of resources and other factors. The PFF assumes that
all inputs are used efficiently.
The Law of Comparative Advantage - Answer An economic law referring to the ability of any
given economic actor to produce goods and services at a lower opportunity cost than other
economic actors.
Terms of Trade - Answer Refers to the relative price of imports in terms of exports and is
defined as the ratio of export prices to import prices. It can be interpreted as the amount of
import goods an economy can purchase per unit of export goods.
Law of Demand - Answer As prices rise, quantity demanded falls; negative relationship.
Consumer surplus - Answer The difference between what a consumer is willing to pay, and
what the consumer actually pays.
Normal goods. - Answer As income rises, demand for these goes up.
, Inferior goods - Answer As income rises, demand for these down down.
Producer surplus - Answer The difference between the price at which a good is sold and its
marginal cost.
Substitutes - Answer Goods that can serve as replacements for one another; when the price of
one increases, demand for the other increases.
Complements - Answer Two goods for which an increase in the price of one leased to a
decrease in the demand for the other and vice versa.
Law of supply - Answer As prices rises, quantity supplied rises; direct relationship.
Equilibrium - Answer The point at which quantity demanded and quantity supplied are equal.
- Price above equilibrium price = surplus
- Price below equilibrium price = shortage
When we say equilibrium is efficient, we mean that: - Answer - Total surplus is maximized
- Marginal benefits = marginal cost
- Every unit that is produced has a benefit to consumers that is greater than (or equal to) the
cost of its production.
Shortage - Answer Quantity demanded exceeds quantity supplied.
Surplus - Answer Quantity supplied exceeds quantity demanded.
Arc-Own Price Elasticity of Demand - Answer e>0, goods are substitutes
e=0, goods are unrelated
e<0, goods are complements
Arc Income Elasticity of Demand - Answer e>0, the good is normal
e=0, income has no effect
e<0, the good is inferior
Price Elasticity of Supply - Answer e>1, supply is elastic
Questions and Answers 2026-2027
Updated.
Scarcity - Answer Stuff is limited.
Choice - Answer One alternative is selected over another.
Opportunity Cost - Answer The value of the best thing given up.
Positive economics - Answer The way the world is
Normative economics - Answer The way the world ought to be
Benefits of trade - Answer - Increased variety of goods
- Increased competition
- Technology transfer
- More efficient large-scale production
Production Possibility Curve - Answer A curve depicting all maximum output possibilities for
two goods, given a set of inputs consisting of resources and other factors. The PFF assumes that
all inputs are used efficiently.
The Law of Comparative Advantage - Answer An economic law referring to the ability of any
given economic actor to produce goods and services at a lower opportunity cost than other
economic actors.
Terms of Trade - Answer Refers to the relative price of imports in terms of exports and is
defined as the ratio of export prices to import prices. It can be interpreted as the amount of
import goods an economy can purchase per unit of export goods.
Law of Demand - Answer As prices rise, quantity demanded falls; negative relationship.
Consumer surplus - Answer The difference between what a consumer is willing to pay, and
what the consumer actually pays.
Normal goods. - Answer As income rises, demand for these goes up.
, Inferior goods - Answer As income rises, demand for these down down.
Producer surplus - Answer The difference between the price at which a good is sold and its
marginal cost.
Substitutes - Answer Goods that can serve as replacements for one another; when the price of
one increases, demand for the other increases.
Complements - Answer Two goods for which an increase in the price of one leased to a
decrease in the demand for the other and vice versa.
Law of supply - Answer As prices rises, quantity supplied rises; direct relationship.
Equilibrium - Answer The point at which quantity demanded and quantity supplied are equal.
- Price above equilibrium price = surplus
- Price below equilibrium price = shortage
When we say equilibrium is efficient, we mean that: - Answer - Total surplus is maximized
- Marginal benefits = marginal cost
- Every unit that is produced has a benefit to consumers that is greater than (or equal to) the
cost of its production.
Shortage - Answer Quantity demanded exceeds quantity supplied.
Surplus - Answer Quantity supplied exceeds quantity demanded.
Arc-Own Price Elasticity of Demand - Answer e>0, goods are substitutes
e=0, goods are unrelated
e<0, goods are complements
Arc Income Elasticity of Demand - Answer e>0, the good is normal
e=0, income has no effect
e<0, the good is inferior
Price Elasticity of Supply - Answer e>1, supply is elastic
