ECON 101 UPDATED 2026 EXAMINERS SET
QUESTIONS AND ANSWERS SURE A+
✔✔44. Pareto improvements occur
a. through the tax system
b. rarely in the real world
c. when the economy has reached the point of economic efficiency
d. when market exchanges take place
e. when consumers are not perfectly informed - ✔✔d. when market exchanges take
place
✔✔45. The height of the demand curve at any quantity indicates a. total expenditure on
the good or service
b. total revenue to the seller of the good or service
c. whether the price is fair or not
d. how much that particular unit is worth to the person who buys it
e. how much the person who buys that unit actually pays for it - ✔✔d. how much that
particular unit is worth to the person who buys it
✔✔46. If 10 units of a good are sold at a market price of $40 each, then
a. the value to some individual of the tenth unit of output is $40
b. the economy is efficient
c. selling an 11th unit would be a Pareto improvement
d. a side payment of $40 is needed to ensure that the good is produced
, e. the market must be perfectly competitive - ✔✔a. the value to some individual of the
tenth unit of output is $40
✔✔47. if a firm's short-run total cost curve lies above its total revenue curve at all output
levels, the firm should,
a. always shut down in the short run
b. always operate in the short run
c. operate in the short run of the maximum operating loss is less than its total fixed cost
d. operate in the short run if total variable cost is less than its total revenue
e. operate in the short run if the average operating loss is less than its total fixed cost -
✔✔d. operate in the short run if total variable cost is less than its total revenue
✔✔48. Suppose that a perfectly competitive market is in equilibrium, and then market
supply decreases. which of the following would happen?
a. both producer and consumer surplus would increase
b. both producer and consumer surplus would decrease
c. producer surplus would decrease and consumer surplus would increase
d. producer surplus would increase and consumer surplus would decrease
e. producer and consumer surplus would remain unchanged - ✔✔b. both producer and
consumer surplus would decrease
✔✔1. Below is the prisoner's dilemma game. The name of this game comes from a
story about two suspects whose strategies are either to accuse the other in a crime that
the suspects may have committed together (i.e., Defect), or fully deny that suspects
were involved in the crime (i.e., Cooperate). Suspect 1 chooses the rows in the table,
while suspect 2 chooses the columns. Each of them has two possible actions to choose:
"Cooperate" or "Defect". Each of the four action combinations results in payoffs to each
suspect, in the form of prison time to be served. The outcomes are shown in the cells of
Table. What is the equilibrium of this game?
Suspect 1
Suspect 2
Cooperate
Defect
Cooperate
6 months, 6 months
10 years, None
Defect
None, 10 years
5 years, 5 years
a. (Cooperate, Defect)
b. (Defect, Cooperate)
c. (Defect, Defect)
d. (Cooperate, Cooperate) - ✔✔C. (Defect, Defect)
QUESTIONS AND ANSWERS SURE A+
✔✔44. Pareto improvements occur
a. through the tax system
b. rarely in the real world
c. when the economy has reached the point of economic efficiency
d. when market exchanges take place
e. when consumers are not perfectly informed - ✔✔d. when market exchanges take
place
✔✔45. The height of the demand curve at any quantity indicates a. total expenditure on
the good or service
b. total revenue to the seller of the good or service
c. whether the price is fair or not
d. how much that particular unit is worth to the person who buys it
e. how much the person who buys that unit actually pays for it - ✔✔d. how much that
particular unit is worth to the person who buys it
✔✔46. If 10 units of a good are sold at a market price of $40 each, then
a. the value to some individual of the tenth unit of output is $40
b. the economy is efficient
c. selling an 11th unit would be a Pareto improvement
d. a side payment of $40 is needed to ensure that the good is produced
, e. the market must be perfectly competitive - ✔✔a. the value to some individual of the
tenth unit of output is $40
✔✔47. if a firm's short-run total cost curve lies above its total revenue curve at all output
levels, the firm should,
a. always shut down in the short run
b. always operate in the short run
c. operate in the short run of the maximum operating loss is less than its total fixed cost
d. operate in the short run if total variable cost is less than its total revenue
e. operate in the short run if the average operating loss is less than its total fixed cost -
✔✔d. operate in the short run if total variable cost is less than its total revenue
✔✔48. Suppose that a perfectly competitive market is in equilibrium, and then market
supply decreases. which of the following would happen?
a. both producer and consumer surplus would increase
b. both producer and consumer surplus would decrease
c. producer surplus would decrease and consumer surplus would increase
d. producer surplus would increase and consumer surplus would decrease
e. producer and consumer surplus would remain unchanged - ✔✔b. both producer and
consumer surplus would decrease
✔✔1. Below is the prisoner's dilemma game. The name of this game comes from a
story about two suspects whose strategies are either to accuse the other in a crime that
the suspects may have committed together (i.e., Defect), or fully deny that suspects
were involved in the crime (i.e., Cooperate). Suspect 1 chooses the rows in the table,
while suspect 2 chooses the columns. Each of them has two possible actions to choose:
"Cooperate" or "Defect". Each of the four action combinations results in payoffs to each
suspect, in the form of prison time to be served. The outcomes are shown in the cells of
Table. What is the equilibrium of this game?
Suspect 1
Suspect 2
Cooperate
Defect
Cooperate
6 months, 6 months
10 years, None
Defect
None, 10 years
5 years, 5 years
a. (Cooperate, Defect)
b. (Defect, Cooperate)
c. (Defect, Defect)
d. (Cooperate, Cooperate) - ✔✔C. (Defect, Defect)
