Concordia ECON 201 (ECON201): Introduction to Microeconomics – Midterm Exam | Questions & Answers | Latest 2026–2027.

ECON 201 Introduction to Microeconomics Midterm – Concordia University | Complete Questions & Answers | Updated 2026–2027 In mixed economies, economic behaviour is... A. Directed only by self-interest. B. Largely determined by a central authority. C. Random and unpredictable. D. Based primarily on custom and habit. E. Affected by elements of tradition, government command and market incentives. In general (and in the absence of market failures), economic efficiency occurs... A. When the government is able to impose an equilibrium price. B. When resources are allocated such that production of the good is maximized. C. When the government successfully determines what is best for society as a whole. D. When consumers and producers can agree on the most advantageous division of economic surplus. E. In a competitive market where price is free to reach its market-clearing level. What is meant by the phrase “economically efficient”? A. There are no price controls in place in the market. B. The quantity of the product produced maximises producer surplus. C. The quantity of the product produced and consumed maximises economic surplus. D. Production techniques employ resources in the most technologically efficient manner. E. The quantity of the product consumed maximises consumer surplus. The key decision makers in a market economy are... A. Individuals, non-profit organisations and the Bank of Canada. B. Individuals, firms and government. C. Corporations and governments. D. Governments and all institutions under government control. E. Large corporations and labour unions. Society’s resources are often divided into the broad categories of... A. Tangible commodities and intangible commodities. B. Population and natural resources. C. Land, labour and capital. D. Factors of consumption. E. Goods and services. Katie and Hugh each produce pies and jars of pickles. Katie can produce either 200 jars of pickles or 100 pies per month. Hugh can produce either 800 jars of pickles or 200 pies per month. Which of the following statements is correct? A. Hugh’s opportunity cost of producing 1 jar of pickles is 4 pies. B. Katie’s opportunity cost of producing 1 jar of pickles is 2 pies. C. Hugh’s and Katie’s opportunity costs of producing are the same. D. Hugh’s opportunity cost of producing 1 pie is 1/4 jar of pickles. E. Katie’s opportunity cost of producing 1 jar of pickles is 1/2 of a pie. A straight-line production possibilities boundary differs from a concave boundary in that the straight-line one illustrates _____ whereas the concave one illustrates _____. A. Decreasing opportunity costs; constant opportunity costs. B. No scarcity exists; limited scarcity exists. C. Constant opportunity costs; increasing opportunity costs. D. A command economy; a free-market economy. E. Constant opportunity costs; diminishing opportunity costs. Madeleine allows herself $100 per month for purchasing coffee. The diagram below illustrates the choices available to her in each month. What is the price of a regular coffee in this example? A. $5.00 B. $8.00 C. $0.80 D. $2.00 E. $1.25 Economists build models that abstract from the complexities of reality primarily because... A. The complexities of reality are unimportant. B. This allows economists to conduct controlled experiments to test their theories. C. Economists are not interested in reality. D. Economics deals only in the abstract. E. They believe they gain a greater understanding of reality. An endogenous variable is _____ and an exogenous variable is _____. A. A flow variable; a flow variable. B. A stock variable; a stock variable. C. Explained within the theory; influencing the endogenous variables but is determined outside the theory. D. A flow variable; a stock variable. E. Explained outside the theory and influences an exogenous variable; explained within the theory. Suppose Ahmoud would spend $1200 per year on travel, even if his annual income were zero. As his income rises, he would spend 20% of each additional dollar of income on travel. Choose the correct mathematical equation that describes the functional relation between his travel spending (T) and his income (Y). A. Y = 1200 + 0.2T B. T = 0.2 + 1200Y C. T = 1200 + 0.2Y D. Y = 1200 − 0.2T E. T = 1200 + 0.8Y Consider the graph below. The slope of the non-linear function changes as we move along the curve. The slope is _____, indicating _____ marginal response. A. Positive and increasing; an increasing. B. Constant at all points; a constant. C. Positive and decreasing; a diminishing. D. Negative and increasing; an increasing. E. Negative and decreasing; a diminishing. At the minimum or the maximum of the graph of a non-linear function (with x on the horizontal axis, y on the vertical axis and a non-corner solution), the marginal response of y to a small change in x is... A. Infinite. B. −1. C. 0. D. Undefined. E. 1. What is the approximate slope of this non-linear function when 200 units per month are being produced? A. −4 B. −1 C. −0.25 D. −5.2 E. −2 The “law of demand” describes... A. An inverse relationship between the price of a good and the quantity of the good demanded per unit of time, ceteris paribus. B. A direct relationship between the price of a good and the demand for the good. C. An inverse relationship between the price of a good and the demand for the good, per unit of time. D. A positive relationship between the price of a good and the quantity of the good demanded per unit of time, ceteris paribus. E. Any relationship between quantity demanded and demand for a good. Each point on a supply curve shows the _____ acceptable price to firms for selling that unit; this price reflects _____ to firms from producing that unit. A. Minimum; the additional cost. B. Maximum; the additional value. C. Minimum; the equilibrium price. D. Maximum; the additional cost. E. Minimum; the additional value. Consider Canada’s east coast lobster fishery. Suppose the government sets a production quota that is below the equilibrium quantity. Relative to the free-market equilibrium, we can expect... A. A decrease in price. B. An increase in price and a decrease in deadweight loss. C. An increase in price and the introduction of a deadweight loss. D. A decrease in price and a decrease in deadweight loss. E. The free-market equilibrium price and quantity because the quota is not binding. An increase in the number of firms wanting to provide accounting services causes a _____ for accounting services. A. Leftward shift in the supply curve. B. Leftward shift in the demand curve. C. Rightward shift in the demand curve. D. Simultaneous shift of both the demand and supply curves. E. Rightward shift in the supply curve. Steel is a major input in car production. Consumers use tires and cars together. If the price of steel increases, the price of tires _____ and the quantity of tires _____. A. Remains constant; falls. B. Falls; falls. C. Rises; falls. D. Falls; rises. E. Rises; rises. Goods X and Y are defined to be substitutes in consumption if the... A. Demand for Y varies inversely with the price of X. B. Supply of Y varies inversely with the price of X. C. Demand for Y varies directly with the price of X. D. Supply of Y varies directly with the price of X. E. Two goods are virtually the same. When the percentage change in quantity demanded is greater than the percentage change in price that brought it about, demand is said to be... A. Perfectly inelastic. B. Inelastic. C. Unit elastic. D. Perfectly elastic. E. Elastic. Originally, the equilibrium price of an all-day parking space downtown was $15 and 100 cars parked there each day. Then, the city government imposes a tax of $3 per space. After the tax is imposed, the equilibrium price and quantity adjust to $16 and 95, respectively. We can say that supply is _____ elastic relative to demand and therefore _____. A. More; more of the tax burden falls on the consumer. B. Less; more of the burden falls on the producer. C. Less; more of the burden falls on the consumer. D. Equally; the burden is shared equally by consumers and producers. E. More; more of the burden falls on the producer. The elasticity of supply for some product tends to be larger... A. The higher is the elasticity of demand for the product. B. The less time firms have to adjust to price changes. C. The harder it is for firms to shift from the production of this product to another. D. The lower is the elasticity of demand for the product. E. The easier it is for firms to shift from the production of this product to another. If Vicky’s income increases by eight percent and she increases her consumption of take-out meals by four percent, then her income elasticity of demand for take-out meals is... A. 2.0 B. −2.0 C. 4.0 D. −0.5 E. 0.5 Assuming that the long-run supply of housing is more _____ than the short-run supply, the imposition of binding rent controls will generally lead to _____. A. Inelastic; a reduction in the housing shortage over time. B. Elastic; a worsening of the housing shortage over time. C. Inelastic; no significant change in the housing shortage. D. Elastic; only a temporary housing shortage. E. Elastic; the price of rental housing reverting back to its equilibrium level. Suppose the government decides to eliminate a binding price ceiling that it had previously imposed on a particular good. It can be expected that the price would _____, the quantity demanded would _____ and the quantity supplied would _____. A. Increase; decrease; increase. B. Decrease; increase; decrease. C. Decrease; decrease; increase. D. Increase; decrease; decrease. E. Increase; increase; decrease. If a binding price ceiling is in place and if the demand curve for the product shifts right, one consequence would be... A. A decrease in the amount of excess demand. B. The quantity exchanged would decrease. C. The quantity exchanged would remain constant. D. An increase in the amount of excess supply. E. The quantity exchanged would increase.