Page 1 of 175
LSUS MHA 710 ECONOMICS EXAM 1 LATEST
UPDATE THIS YEAR (2026-2027) ALL 300
QUESTIONS AND CORRECT ANSWERS WITH
RATIONALES
1. Which of the following is the best definition of economics?
A) The study of how to make money in the stock market
B) The study of how society manages its scarce resources
C) The study of how governments allocate unlimited resources
D) The study of how to eliminate scarcity
Answer: B
Economics is the study of how society manages its scarce resources because scarcity forces
choices. Resources are limited; wants are unlimited.
Q2. The principle that "people face trade-offs" means that:
A) There is no such thing as a free lunch
B) To get one thing, you must give up another
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C) Efficiency and equity are the only two goals
D) People always make rational decisions
Answer: B
Trade-offs exist because resources are scarce. Choosing more of one thing means choosing less
of another.
Q3. The term "opportunity cost" refers to:
A) The monetary cost of a good
B) The value of the next best alternative given up when making a choice
C) The total cost of production
D) The price paid for a good
Answer: B
Opportunity cost includes both explicit costs and the value of the forgone alternative. It is what
you give up to get something.
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Q4. Which of the following best defines opportunity cost?
A) The monetary cost of purchasing a good or service
B) The total cost of all resources used in production
C) The value of the next best alternative forgone when a decision is made
D) The price paid for a good or service
Answer: C
Opportunity cost is the value of the next best alternative that must be given up when a choice is
made.
Q5. Economists use the term "marginal changes" to describe:
A) Large, significant adjustments
B) Small, incremental adjustments to an existing plan
C) Changes that affect only the poor
D) Changes that have no effect on decision-making
Answer: B
Marginal changes are small, incremental adjustments to an existing plan of action.
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, Page 4 of 175
Q6. In health economics, scarcity refers to:
A) Limited healthcare resources relative to unlimited wants
B) Unlimited healthcare resources
C) Excess supply of physicians
D) High patient satisfaction
Answer: A
Scarcity is the fundamental economic problem where resources (e.g., hospital beds, staff) are
finite, but health needs are infinite.
Q7. Trade between countries tends to:
A) Reduce specialization and make everyone better off
B) Reduce specialization and make everyone worse off
C) Raise specialization and make everyone better off
D) Raise specialization but make everyone worse off
Answer: C
Trade allows countries to specialize in producing goods and services where they have a
4
LSUS MHA 710 ECONOMICS EXAM 1 LATEST
UPDATE THIS YEAR (2026-2027) ALL 300
QUESTIONS AND CORRECT ANSWERS WITH
RATIONALES
1. Which of the following is the best definition of economics?
A) The study of how to make money in the stock market
B) The study of how society manages its scarce resources
C) The study of how governments allocate unlimited resources
D) The study of how to eliminate scarcity
Answer: B
Economics is the study of how society manages its scarce resources because scarcity forces
choices. Resources are limited; wants are unlimited.
Q2. The principle that "people face trade-offs" means that:
A) There is no such thing as a free lunch
B) To get one thing, you must give up another
1
, Page 2 of 175
C) Efficiency and equity are the only two goals
D) People always make rational decisions
Answer: B
Trade-offs exist because resources are scarce. Choosing more of one thing means choosing less
of another.
Q3. The term "opportunity cost" refers to:
A) The monetary cost of a good
B) The value of the next best alternative given up when making a choice
C) The total cost of production
D) The price paid for a good
Answer: B
Opportunity cost includes both explicit costs and the value of the forgone alternative. It is what
you give up to get something.
2
, Page 3 of 175
Q4. Which of the following best defines opportunity cost?
A) The monetary cost of purchasing a good or service
B) The total cost of all resources used in production
C) The value of the next best alternative forgone when a decision is made
D) The price paid for a good or service
Answer: C
Opportunity cost is the value of the next best alternative that must be given up when a choice is
made.
Q5. Economists use the term "marginal changes" to describe:
A) Large, significant adjustments
B) Small, incremental adjustments to an existing plan
C) Changes that affect only the poor
D) Changes that have no effect on decision-making
Answer: B
Marginal changes are small, incremental adjustments to an existing plan of action.
3
, Page 4 of 175
Q6. In health economics, scarcity refers to:
A) Limited healthcare resources relative to unlimited wants
B) Unlimited healthcare resources
C) Excess supply of physicians
D) High patient satisfaction
Answer: A
Scarcity is the fundamental economic problem where resources (e.g., hospital beds, staff) are
finite, but health needs are infinite.
Q7. Trade between countries tends to:
A) Reduce specialization and make everyone better off
B) Reduce specialization and make everyone worse off
C) Raise specialization and make everyone better off
D) Raise specialization but make everyone worse off
Answer: C
Trade allows countries to specialize in producing goods and services where they have a
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