ECON 101: INTRODUCTION TO ECONOMICS
Mini Practice Final Exam - Spring 2026
Instructions: This mini-final consists of 20 multiple-choice questions designed to mirror the topics
and difficulty of your practice exam. Choose the one alternative that best completes the statement or
answers the question.
1. The natural rate of unemployment is defined as the sum of:
A. Frictional and cyclical unemployment
B. Cyclical and structural unemployment
C. Frictional and structural unemployment
D. Frictional and seasonal unemployment
2. When the market price of a good is set below the equilibrium price:
A. A surplus exists in the market
B. A shortage exists because quantity demanded exceeds quantity supplied
C. There is excess supply
D. The price elasticity of demand becomes positive
3. If consumers expect the future price of a product to increase significantly next month, what
happens to the equilibrium price and quantity today?
A. P* rises and Q* falls
B. P* rises and Q* rises
C. P* falls and Q* rises
D. P* falls and Q* falls
4. Which entity is responsible for acting as the U.S. Central Bank?
A. The Department of the Treasury
B. The U.S. Congress
C. The Federal Reserve
D. The U.S. Economic Council
5. Buyers will bear a larger share of the burden of a tax, regardless of who the tax is levied on, if:
A. Supply is more elastic than demand
B. Demand is more elastic than supply
C. The tax is specifically levied on the sellers
D. The good is an inferior good
6. If the Federal Reserve (the Fed) wants to fight high inflation, which policy action is most
appropriate?
A. Engage in quantitative easing
B. Raise interest rates
C. Decrease the interest rate paid on reserves
D. Lower federal income taxes
7. When an unregulated market fails to account for the external benefits of education, the market
will likely produce:
A. Too much education (over-consumption)
B. The socially optimal amount of education
C. Too little education (under-consumption)
D. Education at the lowest possible marginal cost
8. If the demand for a good is unit elastic and the price of the good increases by 10 percent, then:
A. Total expenditure by consumers will increase by 10%
B. Total expenditure by consumers will decrease by 10%
C. Total expenditure by consumers will not change
D. Quantity demanded will remain constant
9. In the short run, a perfectly competitive firm will continue to operate even if it is making a loss,
provided that:
A. Total revenue exceeds fixed costs
B. Total revenue exceeds variable costs
C. Marginal cost is decreasing
D. It can cover its implicit costs
10. Which of the following is considered a macroeconomic question?
A. How does a specific firm determine its profit-maximizing price?
B. What factors determine the national unemployment rate?
C. What determines the wages of flight attendants in the airline industry?
D. How does a tax on cigarettes affect the quantity of tobacco sold?
11. Which of the following is NOT classified as a factor of production?
A. Land
B. Labor
C. Money
D. Capital
12. A perfectly competitive firm produces 3,000 units at a total cost of \$36,000. If the market price
is \$10 per unit, the firm is experiencing a:
A. Profit of \$6,000
B. Loss of \$6,000
C. Profit of \$30,000
D. Loss of \$30,000
13. Why does a monopoly create a deadweight loss for society?
A. It charges a price where marginal benefit equals marginal cost
B. It restricts output to a level where marginal benefit exceeds marginal cost
C. It earns too much producer surplus
D. It produces at the minimum of the Average Total Cost curve
14. Oligopoly markets are uniquely characterized by:
A. Large numbers of small firms selling identical products
B. A single firm with total market power
C. Strategic interdependence between a few large firms
D. No barriers to entry or exit
15. If the U.S. Dollar depreciates against the Euro, what is the likely impact on a U.S. traveler in
France?
A. The traveler will find that their dollars buy more Euros than before
B. The traveler will find that French goods have become effectively more expensive
C. The traveler's purchasing power has increased
D. There is no impact on the traveler's budget
16. The concept of comparative advantage is best defined as:
A. The ability to produce more of a good than anyone else
B. The ability to produce a good at a lower opportunity cost than others
C. The ability to set prices in a competitive market
D. Having access to superior production technology
17. Which of the following would be directly included in the calculation of U.S. GDP?
A. The sale of a used car from one neighbor to another
B. The value of housework performed by a stay-at-home parent
C. A student's purchase of a new textbook from the university bookstore
D. The purchase of 100 shares of stock in a technology company
18. In the presence of a negative externality (like pollution), an excise tax can:
A. Always increase deadweight loss
B. Move the market closer to the socially optimal level of production
C. Lead to an over-allocation of resources to that good
D. Eliminate the need for any government regulation
19. If an economy is in long-run equilibrium and experiences an advancement in production
technology, the most likely result is:
A. A decrease in real GDP
B. An increase in real GDP
C. No change in real GDP
D. A permanent increase in the inflation rate
20. If the inflation rate for the year was 5% and your nominal wage remained the same, your real
wage (purchasing power) has:
A. Increased
B. Decreased
C. Remained constant
D. Doubled