FSU ECO 2023 Final Exam Test
Questions All Solved Correctly 2026-
2027 Updated.
Scarcity - Answer A situation in which unlimited wants exceed the limited resources available
to fulfill those wants
Eight Guideposts to Economic Thinking - Answer 1. The use of scarce resources is costly; trade-
offs must always be made
2. Individuals choose purposefully; they try to get the most from their limited resources
3. Incentives matter: choice is influenced in a predictable way by changes in incentives
4. Individuals make decisions at the margin
5. Information is costly but very helpful
6. Beware of secondary effects: economic actions often generate indirect as well as direct
effects
7. The value of goods and services is subjective
8. The test of a theory is its ability to predict
Positive Economics - Answer concerned with "what is," can be tested, and is objective
Normative Economics - Answer concerned with what "should be," can NOT be tested, and is
subjective.
Pitfalls to avoid in economic thinking - Answer 1. Violation of the ceterus paribus condition can
lead to the wrong conclusion
2. Good intentions do not guarantee desirable outcomes
3. Association is causation
, 4. Fallacy of composition: what is true for one person might not be true for all.
Microeconomics vs. Macroeconomics - Answer Microeconomics is the study of economics at
an individual, group or company level. Macroeconomics, on the other hand, is the study of a
national economy as a whole.
Opportunity Cost - Answer The highest valued alternative that must be given up to engage in
an activity
Trade Creates Value - Answer participants in markets are able to specialize in the production of
goods and services that they have a comparative advantage in making. The values of goods are
also subjective.
Private Property Rights - Answer the concept that people have the right and privilege to
control their possessions as they wish
Incentives of Private Property Rights - Answer 1. Cause owners to bear the opportunity costs
of ignoring the wishes of others
2. Provide incentives for good stewardship
3. Create incentives for conservation or environmental quality
4. Hold owners accountable for their actions
5. Can align incentives so as to promote conservation versus extinction
Production Possibilities Curve - Answer A curve showing the maximum attainable
combinations of two products that can be produced.
Assumptions of the PPC (Production Possibilities Curve) - Answer (1) a fixed amount of
productive resources
(2) a given amount of technical knowledge, and
(3) full and efficient use of those resources. The slope of the curve indicates the amount of one
product that must be given up to produce the other.
What is an efficient point on the PPC? - Answer All points directly on the curve
Questions All Solved Correctly 2026-
2027 Updated.
Scarcity - Answer A situation in which unlimited wants exceed the limited resources available
to fulfill those wants
Eight Guideposts to Economic Thinking - Answer 1. The use of scarce resources is costly; trade-
offs must always be made
2. Individuals choose purposefully; they try to get the most from their limited resources
3. Incentives matter: choice is influenced in a predictable way by changes in incentives
4. Individuals make decisions at the margin
5. Information is costly but very helpful
6. Beware of secondary effects: economic actions often generate indirect as well as direct
effects
7. The value of goods and services is subjective
8. The test of a theory is its ability to predict
Positive Economics - Answer concerned with "what is," can be tested, and is objective
Normative Economics - Answer concerned with what "should be," can NOT be tested, and is
subjective.
Pitfalls to avoid in economic thinking - Answer 1. Violation of the ceterus paribus condition can
lead to the wrong conclusion
2. Good intentions do not guarantee desirable outcomes
3. Association is causation
, 4. Fallacy of composition: what is true for one person might not be true for all.
Microeconomics vs. Macroeconomics - Answer Microeconomics is the study of economics at
an individual, group or company level. Macroeconomics, on the other hand, is the study of a
national economy as a whole.
Opportunity Cost - Answer The highest valued alternative that must be given up to engage in
an activity
Trade Creates Value - Answer participants in markets are able to specialize in the production of
goods and services that they have a comparative advantage in making. The values of goods are
also subjective.
Private Property Rights - Answer the concept that people have the right and privilege to
control their possessions as they wish
Incentives of Private Property Rights - Answer 1. Cause owners to bear the opportunity costs
of ignoring the wishes of others
2. Provide incentives for good stewardship
3. Create incentives for conservation or environmental quality
4. Hold owners accountable for their actions
5. Can align incentives so as to promote conservation versus extinction
Production Possibilities Curve - Answer A curve showing the maximum attainable
combinations of two products that can be produced.
Assumptions of the PPC (Production Possibilities Curve) - Answer (1) a fixed amount of
productive resources
(2) a given amount of technical knowledge, and
(3) full and efficient use of those resources. The slope of the curve indicates the amount of one
product that must be given up to produce the other.
What is an efficient point on the PPC? - Answer All points directly on the curve
