ECP3704 Final Exam Review UPDATED
ACTUAL Exam Questions and CORRECT
Answers
For most consumers, gasoline is a relatively inelastic good. In the very short-term, the demand
for gasoline tends to be - CORRECT ANSWER - more inelastic.
When the marginal cost curve is below an average total cost curve, average total cost is -
CORRECT ANSWER - declining with output.
The difference between average total costs and average variable costs is - CORRECT
ANSWER - average fixed cost.
Economies of scale exist whenever long-run average costs - CORRECT ANSWER -
decrease as output is increased.
For the cost function C(Q) = 100 + 4Q + 5Q2, the marginal cost of producing the 5th unit of
output is approximately - CORRECT ANSWER - 49
For given input prices, isocosts farther from the origin are associated with - CORRECT
ANSWER - higher costs.
When the own price elasticity of good X is -3.5 then total revenue can be increased by -
CORRECT ANSWER - decreasing the price.
For the cost function C(Q) = 100 + 2Q + 3Q2, the variable cost of producing 10 units of output is
- CORRECT ANSWER - 320
The own-price elasticity of demand for apples is -1.5. If the price of apples falls by 6%, what
will happen to the quantity of apples demanded? - CORRECT ANSWER - It will increase
9%
, Lemonade, a good with many close substitutes, should have an own-price elasticity that is: -
CORRECT ANSWER - relatively elastic.
A 25 percent decrease in the price of breakfast cereal leads to a 20 percent increase in the
quantity of cereal demanded. As a result: - CORRECT ANSWER - total revenue will
decrease.
If the cross-price elasticity between good A & B is negative, we know the goods are: -
CORRECT ANSWER - Complements
When the average total cost curve is increasing with increasing output, there exist - CORRECT
ANSWER - diseconomies of scale.
When the own price elasticity of good X is -0.1, then total revenue can be increased by -
CORRECT ANSWER - increasing the price.
The own-price elasticity of demand for apples is -1.5. If the price of apples falls by 6%, what
will happen to the quantity of apples demanded? - CORRECT ANSWER - It will increase
9%
The price elasticity of demand for tickets to local baseball games is estimated to be equal to -
0.89. In order to boost ticket revenues, an economist would advise: - CORRECT
ANSWER - not changing the price of game tickets because demand is inelastic.
A 10 percent decrease in the price of potato chips leads to a 30 percent increase in the quantity of
soda demanded. It appears that: - CORRECT ANSWER - cross-price elasticity of demand
for soda is -3.
The isoquants are normally drawn with a convex shape because inputs are - CORRECT
ANSWER - Not perfectly substitutable
ACTUAL Exam Questions and CORRECT
Answers
For most consumers, gasoline is a relatively inelastic good. In the very short-term, the demand
for gasoline tends to be - CORRECT ANSWER - more inelastic.
When the marginal cost curve is below an average total cost curve, average total cost is -
CORRECT ANSWER - declining with output.
The difference between average total costs and average variable costs is - CORRECT
ANSWER - average fixed cost.
Economies of scale exist whenever long-run average costs - CORRECT ANSWER -
decrease as output is increased.
For the cost function C(Q) = 100 + 4Q + 5Q2, the marginal cost of producing the 5th unit of
output is approximately - CORRECT ANSWER - 49
For given input prices, isocosts farther from the origin are associated with - CORRECT
ANSWER - higher costs.
When the own price elasticity of good X is -3.5 then total revenue can be increased by -
CORRECT ANSWER - decreasing the price.
For the cost function C(Q) = 100 + 2Q + 3Q2, the variable cost of producing 10 units of output is
- CORRECT ANSWER - 320
The own-price elasticity of demand for apples is -1.5. If the price of apples falls by 6%, what
will happen to the quantity of apples demanded? - CORRECT ANSWER - It will increase
9%
, Lemonade, a good with many close substitutes, should have an own-price elasticity that is: -
CORRECT ANSWER - relatively elastic.
A 25 percent decrease in the price of breakfast cereal leads to a 20 percent increase in the
quantity of cereal demanded. As a result: - CORRECT ANSWER - total revenue will
decrease.
If the cross-price elasticity between good A & B is negative, we know the goods are: -
CORRECT ANSWER - Complements
When the average total cost curve is increasing with increasing output, there exist - CORRECT
ANSWER - diseconomies of scale.
When the own price elasticity of good X is -0.1, then total revenue can be increased by -
CORRECT ANSWER - increasing the price.
The own-price elasticity of demand for apples is -1.5. If the price of apples falls by 6%, what
will happen to the quantity of apples demanded? - CORRECT ANSWER - It will increase
9%
The price elasticity of demand for tickets to local baseball games is estimated to be equal to -
0.89. In order to boost ticket revenues, an economist would advise: - CORRECT
ANSWER - not changing the price of game tickets because demand is inelastic.
A 10 percent decrease in the price of potato chips leads to a 30 percent increase in the quantity of
soda demanded. It appears that: - CORRECT ANSWER - cross-price elasticity of demand
for soda is -3.
The isoquants are normally drawn with a convex shape because inputs are - CORRECT
ANSWER - Not perfectly substitutable
