ECN 212 PRACTICE EXAMINATION
2026 QUESTIONS WITH ANSWERS
GRADED A+
◍ Tom quit his $65,000 a year corporate lawyer job to open up his own law
practice. In Tom's first year in business his total revenue equaled $150,000.
Tom's explicit cost during the year totaled $85,000. What is Tom's
economic profit for his first year in business?.
Answer: $0
◍ incentives.
Answer: rewards and penalties that motivate behavior-focus on what will
entice them to do something (cause and effect)
◍ Which of the following statements is correct?.
Answer: Assuming that implicit costs are positive, accounting profit is
greater than economic
◍ formula for accounting profit.
Answer: revenue - explicit costs
◍ Formula for economic profit.
Answer: revenue - explicit costs - implicit costs
◍ good institutions align __ with __.
Answer: self-interests with social interest
◍ we cannot buy everything, which forces us to.
Answer: ration our spending
◍ we cannot do everything we want, which forces us to.
Answer: ration our time
◍ Kelly wants to do Uber and offered $ 5,000 for renting Mark's car for a
, month. Mark declined her offer and used it to deliver the flowers he sold in
his shop. During that month the revenue of his flower business was $ 15,000
and its cost was $ 8,000.What were Mark's economic profits during that
month?.
Answer: $ 2,000
◍ Katherine gives piano lessons for $15 per hour. She also grows flowers,
which she arranges and sells at the local farmer's One day she spends 5
hours planting $50 worth of seeds in her garden. Once the seeds have grown
into flowers, she can sell them for $150 at the farmer's market. Katherine's
accounting profits are.
Answer: $100, and her economic profits are $25.
◍ When the marginal product of an input declines as the quantity of that input
increases, the production function exhibits.
Answer: diminishing marginal product.
◍ scarcity.
Answer: the availability of resources is insufficient for individuals to satisfy
all desires at zero price*forces us to make decisions and choose among
available alternatives
◍ absence of scarcity.
Answer: implies that all of our desires for goods are fully satisfied
◍ price.
Answer: used to ration goods and resources in a market setting
◍ what happens when the marginal product of an input remains constant.
Answer: the production function exhibits constant marginal product.
◍ market organization (capitalism).
Answer: a method of organization that allows for unregulated prices and the
decentralized decisions of private property owners to resolve the basic
economic problems
◍ market.
, Answer: the interaction between all of the potential buyers and sellers of
good or service
◍ economize.
Answer: individuals _______, meaning they gain a specific benefit at the
least possible cost
◍ rational behavior.
Answer: behavior is based on a careful, deliberate process thatweighs
expected benefits and costs.People do not make decisions thatmake
themselves worse of.
◍ subjective.
Answer: the value of goods is _____, meaning that goods (and services) are
appreciated in very different ways by different people
◍ what happens when the marginal product of an input increases.
Answer: the production function exhibits increasing marginal product
◍ If marginal product is 4 units and average product is 8 units, the next worker
will cause.
Answer: average product to decrease
◍ Kate is a florist. Kate can arrange 20 bouquets per day. She is considering
hiring her husband William to work for her. Together Kate and William can
arrange 35 bouquets per day. What is William's marginal product?.
Answer: 15 bouquets
◍ The Wacky Widget company has total fixed costs of $100,000 per year. The
firm's average variable cost is $5 for 10,000 widgets. At that level of output,
the firm's average total costs equal.
Answer: $15
◍ Information.
Answer: ______ is helpful but not freethe process of gathering it is not
costless;it is scarce
◍ opportunity cost.
2026 QUESTIONS WITH ANSWERS
GRADED A+
◍ Tom quit his $65,000 a year corporate lawyer job to open up his own law
practice. In Tom's first year in business his total revenue equaled $150,000.
Tom's explicit cost during the year totaled $85,000. What is Tom's
economic profit for his first year in business?.
Answer: $0
◍ incentives.
Answer: rewards and penalties that motivate behavior-focus on what will
entice them to do something (cause and effect)
◍ Which of the following statements is correct?.
Answer: Assuming that implicit costs are positive, accounting profit is
greater than economic
◍ formula for accounting profit.
Answer: revenue - explicit costs
◍ Formula for economic profit.
Answer: revenue - explicit costs - implicit costs
◍ good institutions align __ with __.
Answer: self-interests with social interest
◍ we cannot buy everything, which forces us to.
Answer: ration our spending
◍ we cannot do everything we want, which forces us to.
Answer: ration our time
◍ Kelly wants to do Uber and offered $ 5,000 for renting Mark's car for a
, month. Mark declined her offer and used it to deliver the flowers he sold in
his shop. During that month the revenue of his flower business was $ 15,000
and its cost was $ 8,000.What were Mark's economic profits during that
month?.
Answer: $ 2,000
◍ Katherine gives piano lessons for $15 per hour. She also grows flowers,
which she arranges and sells at the local farmer's One day she spends 5
hours planting $50 worth of seeds in her garden. Once the seeds have grown
into flowers, she can sell them for $150 at the farmer's market. Katherine's
accounting profits are.
Answer: $100, and her economic profits are $25.
◍ When the marginal product of an input declines as the quantity of that input
increases, the production function exhibits.
Answer: diminishing marginal product.
◍ scarcity.
Answer: the availability of resources is insufficient for individuals to satisfy
all desires at zero price*forces us to make decisions and choose among
available alternatives
◍ absence of scarcity.
Answer: implies that all of our desires for goods are fully satisfied
◍ price.
Answer: used to ration goods and resources in a market setting
◍ what happens when the marginal product of an input remains constant.
Answer: the production function exhibits constant marginal product.
◍ market organization (capitalism).
Answer: a method of organization that allows for unregulated prices and the
decentralized decisions of private property owners to resolve the basic
economic problems
◍ market.
, Answer: the interaction between all of the potential buyers and sellers of
good or service
◍ economize.
Answer: individuals _______, meaning they gain a specific benefit at the
least possible cost
◍ rational behavior.
Answer: behavior is based on a careful, deliberate process thatweighs
expected benefits and costs.People do not make decisions thatmake
themselves worse of.
◍ subjective.
Answer: the value of goods is _____, meaning that goods (and services) are
appreciated in very different ways by different people
◍ what happens when the marginal product of an input increases.
Answer: the production function exhibits increasing marginal product
◍ If marginal product is 4 units and average product is 8 units, the next worker
will cause.
Answer: average product to decrease
◍ Kate is a florist. Kate can arrange 20 bouquets per day. She is considering
hiring her husband William to work for her. Together Kate and William can
arrange 35 bouquets per day. What is William's marginal product?.
Answer: 15 bouquets
◍ The Wacky Widget company has total fixed costs of $100,000 per year. The
firm's average variable cost is $5 for 10,000 widgets. At that level of output,
the firm's average total costs equal.
Answer: $15
◍ Information.
Answer: ______ is helpful but not freethe process of gathering it is not
costless;it is scarce
◍ opportunity cost.
