Economics Final Exam Questions and
Answers Graded A+
Economics - Correct answer-the study of how people seek to satisfy their needs
and wants by making choices
Horizontal Merger - Correct answer-the combination of two or more firms
competing in the same market with the same good or service
Vertical Merger - Correct answer-the combination of two or more firms involved in
different stages of producing the same good or service
Shortage - Correct answer-a situation in which a good or service is unavailable
Scarcity - Correct answer-limited quantities of resources to meet unlimited wants
Factors of Production - Correct answer-land, labor, and capital; the three groups of
resources that are used to make all goods and services
Entrepreneur - Correct answer-ambitious leader who combines land, labor, and
capital to create and market new goods or services
Trade-Off - Correct answer-the alternative we sacrifice when we make a decision
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, Opportunity Cost - Correct answer-the most desirable alternative given up as the
result of a decision
Human Capital - Correct answer-the skills and knowledge gained by a worker
through education and experience
Physical Capital - Correct answer-all human-made goods that are used to produce
other goods and services; tools and buildings
Thinking at the Margin - Correct answer-deciding whether to do or use one
additional unit of some resource
Production Possibility Graph - Correct answer-a graph that shows alternative ways
to use an economy's resources
Production Possibility Frontier - Correct answer-the line on a production
possibilities graph that shows the maximum possible output for a specific economy
Adam Smith - Correct answer-classic economist that believed the market could
regulate itself
Classical Economics - Correct answer-the idea that free markets can regulate
themselves
Free Market - Correct answer-individuals and privately owned businesses own the
factors of production and therefore, make what they want and buy what they want
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
Answers Graded A+
Economics - Correct answer-the study of how people seek to satisfy their needs
and wants by making choices
Horizontal Merger - Correct answer-the combination of two or more firms
competing in the same market with the same good or service
Vertical Merger - Correct answer-the combination of two or more firms involved in
different stages of producing the same good or service
Shortage - Correct answer-a situation in which a good or service is unavailable
Scarcity - Correct answer-limited quantities of resources to meet unlimited wants
Factors of Production - Correct answer-land, labor, and capital; the three groups of
resources that are used to make all goods and services
Entrepreneur - Correct answer-ambitious leader who combines land, labor, and
capital to create and market new goods or services
Trade-Off - Correct answer-the alternative we sacrifice when we make a decision
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
, Opportunity Cost - Correct answer-the most desirable alternative given up as the
result of a decision
Human Capital - Correct answer-the skills and knowledge gained by a worker
through education and experience
Physical Capital - Correct answer-all human-made goods that are used to produce
other goods and services; tools and buildings
Thinking at the Margin - Correct answer-deciding whether to do or use one
additional unit of some resource
Production Possibility Graph - Correct answer-a graph that shows alternative ways
to use an economy's resources
Production Possibility Frontier - Correct answer-the line on a production
possibilities graph that shows the maximum possible output for a specific economy
Adam Smith - Correct answer-classic economist that believed the market could
regulate itself
Classical Economics - Correct answer-the idea that free markets can regulate
themselves
Free Market - Correct answer-individuals and privately owned businesses own the
factors of production and therefore, make what they want and buy what they want
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
