ECN 361
Microeconomics
LATEST FINAL EXAM REVIEW
Q&S
©2024/2025
,1. Which of the following describes the concept of "price elasticity
of demand"?
- A) It measures the change in quantity supplied with a change in
price.
- B) It is the degree to which the quantity demanded of a good
changes as its price changes.
- C) It refers to the slope of the supply curve.
- D) It is determined by the elasticity of supply.
> Answer: B
> Rationale: Price elasticity of demand measures the
responsiveness of the quantity demanded to a change in price.
2. In monopolistic competition, firms differentiate their products
in order to:
- A) Capture a greater share of market power.
- B) Engage in price-fixing.
- C) Eliminate consumer choice.
- D) Ensure maximum efficiency.
> Answer: A
©2024/2025
, > Rationale: Product differentiation allows firms in monopolistic
competition to capture a greater share of market power and earn
higher profits.
3. Which of the following is an example of a perfectly competitive
market?
- A) Automobile market
- B) Wheat market
- C) Smartphone market
- D) Airline industry
> Answer: B
> Rationale: The wheat market is often cited as an example of
perfect competition due to numerous producers and a
homogeneous product.
4. The substitution effect occurs when:
- A) Consumers replace cheaper goods with more costly ones.
- B) A rise in the price of a good causes consumers to switch to a
cheaper substitute.
- C) A drop in income causes a shift in consumption preferences.
- D) Consumers ignore price changes and maintain their current
level of consumption.
> Answer: B
©2024/2025
Microeconomics
LATEST FINAL EXAM REVIEW
Q&S
©2024/2025
,1. Which of the following describes the concept of "price elasticity
of demand"?
- A) It measures the change in quantity supplied with a change in
price.
- B) It is the degree to which the quantity demanded of a good
changes as its price changes.
- C) It refers to the slope of the supply curve.
- D) It is determined by the elasticity of supply.
> Answer: B
> Rationale: Price elasticity of demand measures the
responsiveness of the quantity demanded to a change in price.
2. In monopolistic competition, firms differentiate their products
in order to:
- A) Capture a greater share of market power.
- B) Engage in price-fixing.
- C) Eliminate consumer choice.
- D) Ensure maximum efficiency.
> Answer: A
©2024/2025
, > Rationale: Product differentiation allows firms in monopolistic
competition to capture a greater share of market power and earn
higher profits.
3. Which of the following is an example of a perfectly competitive
market?
- A) Automobile market
- B) Wheat market
- C) Smartphone market
- D) Airline industry
> Answer: B
> Rationale: The wheat market is often cited as an example of
perfect competition due to numerous producers and a
homogeneous product.
4. The substitution effect occurs when:
- A) Consumers replace cheaper goods with more costly ones.
- B) A rise in the price of a good causes consumers to switch to a
cheaper substitute.
- C) A drop in income causes a shift in consumption preferences.
- D) Consumers ignore price changes and maintain their current
level of consumption.
> Answer: B
©2024/2025
