ECP 6705 MODULE 2 EXAM QUESTIONS WITH VERIFIED SOLUTIONS LATEST UPDATE 2026
Due to the complexities of human thought process: - Answers behavior models are abstractions
of the way we make decisions.
behavior models are simplifications of real-world human decision-making.
All affordable goods and services can be represented by which of the following? - Answers
Consumer opportunities
Bundle A has at least as much of every good as bundle B and more of at least one good. If
bundle A is preferred to bundle B, - Answers the more is better property is met
Points on an indifference curve: - Answers show consumption bundles that generate the same
amount of satisfaction.
The marginal rate of substitution (MRS) is - Answers the absolute value of the slope of the
indifference curve.
The budget set defines combinations of goods and services - Answers that are affordable.
Given the following budget constraint, PxX + PyY = M, what is the maximum affordable quantity
of good Y? - Answers Y = M/PY
An increase in the price of good X rotates the budget line, alters the equilibrium bundle, and -
Answers indicates different quantities demanded at different prices.
provides two points on a demand curve.
The market demand curve is the ____________ summation of all the individual demand curves.
- Answers horizontal
The budget constraint can be given by which of the following expressions? - Answers PxX + PyY
=M
Y = M/Py - Px/Py⋅X
page 108
Economists - Answers are able to model human behavior.
Consumer ______ represent the possible goods and services consumers can afford to consume
and consumer ______ determine which of these goods will be consumed. - Answers
opportunities; preferences
, For any two bundles of goods and/or services, A and B, if A is preferred to B, or B is preferred to
A, or the consumer is indifferent between A and B, then: - Answers preferences are complete
- Px/Py equals - Answers the slope of the budget line
Moving along an indifference curve from one bundle to another, a consumer gains 1 unit of X
and gives up 3 units of Y. The marginal rate of substitution is ___ between goods X and Y. -
Answers 3
If a consumer spends all of his or her income on either good X or good Y or a combination of
both, then the budget line is given by which of the following? - Answers PxX + PyY = M
Indifference curve analysis is a helpful tool used to derive - Answers the demand curve.
Market demand indicates the __________ quantity all consumers would purchase at each
possible price - Answers total
Y = M/Py - Px/Py X, represents - Answers an affordable combination of goods X and Y.
- (PXPY) represents the___ rate of substitution. - Answers market
True or false: It is generally the case that indifference curves have the same shape across all
consumers - Answers false
The budget set can be defined as which of the following? - Answers PxX + PyY ≤ M
The budget constraint can be given by which of the following expressions? - Answers Y = M/Py -
Px/Py⋅X
PxX + PyY = M
Bundle A is preferred to bundle B. Bundle B is preferred to bundle C. If preferences are
transitive, then - Answers bundle A is preferred to bundle C.
In a production function, the input that refers to machinery is called - Answers capital
Which of the following describes the maximum output that can be produced with a fixed set of
inputs? - Answers Q = F{K,L}, where K is capital and L is labor
The ________ run is a period of time during which a manager can change all factors of
production. - Answers long
If, in the short run, capital is fixed equal to K*, what is the short-run production
function? - Answers Q = f(L) = F(K*, L)
The measure of output per unit of input is called _____. - Answers average product
Due to the complexities of human thought process: - Answers behavior models are abstractions
of the way we make decisions.
behavior models are simplifications of real-world human decision-making.
All affordable goods and services can be represented by which of the following? - Answers
Consumer opportunities
Bundle A has at least as much of every good as bundle B and more of at least one good. If
bundle A is preferred to bundle B, - Answers the more is better property is met
Points on an indifference curve: - Answers show consumption bundles that generate the same
amount of satisfaction.
The marginal rate of substitution (MRS) is - Answers the absolute value of the slope of the
indifference curve.
The budget set defines combinations of goods and services - Answers that are affordable.
Given the following budget constraint, PxX + PyY = M, what is the maximum affordable quantity
of good Y? - Answers Y = M/PY
An increase in the price of good X rotates the budget line, alters the equilibrium bundle, and -
Answers indicates different quantities demanded at different prices.
provides two points on a demand curve.
The market demand curve is the ____________ summation of all the individual demand curves.
- Answers horizontal
The budget constraint can be given by which of the following expressions? - Answers PxX + PyY
=M
Y = M/Py - Px/Py⋅X
page 108
Economists - Answers are able to model human behavior.
Consumer ______ represent the possible goods and services consumers can afford to consume
and consumer ______ determine which of these goods will be consumed. - Answers
opportunities; preferences
, For any two bundles of goods and/or services, A and B, if A is preferred to B, or B is preferred to
A, or the consumer is indifferent between A and B, then: - Answers preferences are complete
- Px/Py equals - Answers the slope of the budget line
Moving along an indifference curve from one bundle to another, a consumer gains 1 unit of X
and gives up 3 units of Y. The marginal rate of substitution is ___ between goods X and Y. -
Answers 3
If a consumer spends all of his or her income on either good X or good Y or a combination of
both, then the budget line is given by which of the following? - Answers PxX + PyY = M
Indifference curve analysis is a helpful tool used to derive - Answers the demand curve.
Market demand indicates the __________ quantity all consumers would purchase at each
possible price - Answers total
Y = M/Py - Px/Py X, represents - Answers an affordable combination of goods X and Y.
- (PXPY) represents the___ rate of substitution. - Answers market
True or false: It is generally the case that indifference curves have the same shape across all
consumers - Answers false
The budget set can be defined as which of the following? - Answers PxX + PyY ≤ M
The budget constraint can be given by which of the following expressions? - Answers Y = M/Py -
Px/Py⋅X
PxX + PyY = M
Bundle A is preferred to bundle B. Bundle B is preferred to bundle C. If preferences are
transitive, then - Answers bundle A is preferred to bundle C.
In a production function, the input that refers to machinery is called - Answers capital
Which of the following describes the maximum output that can be produced with a fixed set of
inputs? - Answers Q = F{K,L}, where K is capital and L is labor
The ________ run is a period of time during which a manager can change all factors of
production. - Answers long
If, in the short run, capital is fixed equal to K*, what is the short-run production
function? - Answers Q = f(L) = F(K*, L)
The measure of output per unit of input is called _____. - Answers average product
