ECON 111 Final questions n answers
graded A+ 2025/2026
If a firm produces nothing, which of the following costs will be zero? - correct answer
✔✔Variable cost
Which of the following situations does a firm have when long-run average total cost decreases
as the quantity of output increases? - correct answer ✔✔Economies of Scale
What happens when there is a shortage in the market? - correct answer ✔✔There is upwards
pressure on price
Refer to figure 1, which of the graphs in the figure reflects a decrease in the price of good x
only? - correct answer ✔✔Graph B
What results when the minimum wage is above the equilibrium wage - correct answer ✔✔the
quantity demanded of labour will be less than the quantity supplied
If car manufacturers begin using new labor-saving technology on their assembly lines, we would
not expect - correct answer ✔✔the price of cars to be increased by the firm
What is the relationship between economic profit and accounting profit? - correct answer
✔✔Economic profit will never exceed accounting profit
When would one expect to observe diminishing product of labour? - correct answer ✔✔When
crowded office spaces reduce the productivity of new workers
, Refer to figure 2. Which of the curves is most likely to characterize the short run average total
cost curve of the smallest factory? - correct answer ✔✔ATC-A
Which of the following is NOT likely to result from the imposition of a price ceiling in the market
for rental cars? - correct answer ✔✔free gasoline given to people as an incentive to rent a car
Refer to figure 3. Which of the following curves is most likely to represent average fixed costs? -
correct answer ✔✔Curve D
If marginal costs is rising, what must be happening? - correct answer ✔✔Marginal product must
be rising
Which of the following describes the relationship between price and quantity supplied based on
the law of supply? - correct answer ✔✔Firms are willing to produce a greater quantity of a good
when the price of a good is higher.
Which of the following assumptions is often realistic for a firm in the short-run? - correct answer
✔✔The firm can vary the number of workers it employs, but not the size of the factory.
Which of the following determines a market supply curve but not an individual supply curve? -
correct answer ✔✔number of sellers.
Marginal cost increases as the quantity of output increases. What property does this reflect? -
correct answer ✔✔Diminishing marginal product
Refer to figure 4. In which panel in the figure shown would there be a shortage for the product?
- correct answer ✔✔Panel b
Consider two goods, pizza and cola. What is the slope of the consumers budget constraint
measured by? - correct answer ✔✔the relative price of pizza and cola
graded A+ 2025/2026
If a firm produces nothing, which of the following costs will be zero? - correct answer
✔✔Variable cost
Which of the following situations does a firm have when long-run average total cost decreases
as the quantity of output increases? - correct answer ✔✔Economies of Scale
What happens when there is a shortage in the market? - correct answer ✔✔There is upwards
pressure on price
Refer to figure 1, which of the graphs in the figure reflects a decrease in the price of good x
only? - correct answer ✔✔Graph B
What results when the minimum wage is above the equilibrium wage - correct answer ✔✔the
quantity demanded of labour will be less than the quantity supplied
If car manufacturers begin using new labor-saving technology on their assembly lines, we would
not expect - correct answer ✔✔the price of cars to be increased by the firm
What is the relationship between economic profit and accounting profit? - correct answer
✔✔Economic profit will never exceed accounting profit
When would one expect to observe diminishing product of labour? - correct answer ✔✔When
crowded office spaces reduce the productivity of new workers
, Refer to figure 2. Which of the curves is most likely to characterize the short run average total
cost curve of the smallest factory? - correct answer ✔✔ATC-A
Which of the following is NOT likely to result from the imposition of a price ceiling in the market
for rental cars? - correct answer ✔✔free gasoline given to people as an incentive to rent a car
Refer to figure 3. Which of the following curves is most likely to represent average fixed costs? -
correct answer ✔✔Curve D
If marginal costs is rising, what must be happening? - correct answer ✔✔Marginal product must
be rising
Which of the following describes the relationship between price and quantity supplied based on
the law of supply? - correct answer ✔✔Firms are willing to produce a greater quantity of a good
when the price of a good is higher.
Which of the following assumptions is often realistic for a firm in the short-run? - correct answer
✔✔The firm can vary the number of workers it employs, but not the size of the factory.
Which of the following determines a market supply curve but not an individual supply curve? -
correct answer ✔✔number of sellers.
Marginal cost increases as the quantity of output increases. What property does this reflect? -
correct answer ✔✔Diminishing marginal product
Refer to figure 4. In which panel in the figure shown would there be a shortage for the product?
- correct answer ✔✔Panel b
Consider two goods, pizza and cola. What is the slope of the consumers budget constraint
measured by? - correct answer ✔✔the relative price of pizza and cola
