PRINCIPLES OF ECONOMICS EXAM
QUESTIONS AND CORRECT ANSWERS.
VERIFIED 2025/2026.
At its core, Economics is about.. - ANS individuals (consumers, firms) and governments
making choices given scarce resources
Trade-Offs - ANS involve opportunity cost, the value of the best alternative given up
Productive efficiency: - ANS Productive efficiency: A situation in which a good or service is
produced at the lowest possible cost
a production possibilities frontier (PPF) - ANS A production possibilities frontier (PPF) is a
curve showing the maximum attainable combinations of two products that may be produced
with available resources (e.g. workers, materials, machinery...) and technology.
centrally planned economy - ANS an economy in which the government decides how
economic resources will be allocated
market economy - ANS the decisions of housholds, firms, and individuals interacting in the
market allocates resources.
mixed economy - ANS an economy in which most economic decisions are from the
interaction of buyers and sellers in a market but in which the government plays a significant roll
in the allocation of resources.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, microeconomics - ANS study of how households and firms make choices in the market, how
they interact. and how the government attempts to influence their interactions
macroeconomics - ANS the study of an economy as a whole, inflation, unemployment and
economic growth.
profit - ANS revenue-costs
factors of production/economic resources/input - ANS labor, capital, natural resources,
entrepreneurs.
human capital - ANS skills and training that workers posses
slope - ANS rise over run. change in y over change of x.
Percentage change forumla - ANS ((value in first period - value in second period)/value in the
first period) x 100
((V1-V2)/V1) x 100
-when calculating units don't matter
total revenue - ANS base x height, B x H (price times quantity demanded)
using a demand curve.
increasing marginal opportunity costs - ANS The more resources already devoted to an
economic activity, the smaller the payoff will be from devoting more resources to that activity
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
QUESTIONS AND CORRECT ANSWERS.
VERIFIED 2025/2026.
At its core, Economics is about.. - ANS individuals (consumers, firms) and governments
making choices given scarce resources
Trade-Offs - ANS involve opportunity cost, the value of the best alternative given up
Productive efficiency: - ANS Productive efficiency: A situation in which a good or service is
produced at the lowest possible cost
a production possibilities frontier (PPF) - ANS A production possibilities frontier (PPF) is a
curve showing the maximum attainable combinations of two products that may be produced
with available resources (e.g. workers, materials, machinery...) and technology.
centrally planned economy - ANS an economy in which the government decides how
economic resources will be allocated
market economy - ANS the decisions of housholds, firms, and individuals interacting in the
market allocates resources.
mixed economy - ANS an economy in which most economic decisions are from the
interaction of buyers and sellers in a market but in which the government plays a significant roll
in the allocation of resources.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, microeconomics - ANS study of how households and firms make choices in the market, how
they interact. and how the government attempts to influence their interactions
macroeconomics - ANS the study of an economy as a whole, inflation, unemployment and
economic growth.
profit - ANS revenue-costs
factors of production/economic resources/input - ANS labor, capital, natural resources,
entrepreneurs.
human capital - ANS skills and training that workers posses
slope - ANS rise over run. change in y over change of x.
Percentage change forumla - ANS ((value in first period - value in second period)/value in the
first period) x 100
((V1-V2)/V1) x 100
-when calculating units don't matter
total revenue - ANS base x height, B x H (price times quantity demanded)
using a demand curve.
increasing marginal opportunity costs - ANS The more resources already devoted to an
economic activity, the smaller the payoff will be from devoting more resources to that activity
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
