ECON 1100 FINAL EXAM REVIEW UPDATED QUESTIONS AND
ANSWERS
Buyers Gain Consumer Surplus When the market price is? - CORRECT ANSWER✅✅✅Less than the
highest price buyers are willing to pay.
A decrease in the supply of cars, ceteris paribus, leads to a ______ in the equilibrium price of cars and a
______ in the consumer surplus to buyers of cars? - CORRECT ANSWER✅✅✅Increase; Decrease
Which of the following is true regarding an effective (binding) price floor? - CORRECT
ANSWER✅✅✅A deadweight loss results from a price change
which of the following is true about a firm in the short run? - CORRECT ANSWER✅✅✅AFC = ATC -
AVC
If marginal product is above the average product? - CORRECT ANSWER✅✅✅Average product is
rising
If government wants to minimize the deadweight loss associated with a tax, it should impose the tax in a
market in which: - CORRECT ANSWER✅✅✅Demand and supply are both inelastic
4 Basic Resources - CORRECT ANSWER✅✅✅land, labor, capital, entrepreneurship
Law of Supply - CORRECT ANSWER✅✅✅as price goes up supply goes up; as price goes down supply
goes down
Law of Demand - CORRECT ANSWER✅✅✅as price goes down demand goes up; as price goes up,
demand goes down
Factors of Production - CORRECT ANSWER✅✅✅Land, Labor, Capital, and Entrepreneurial ability
, Opportunity Cost - CORRECT ANSWER✅✅✅Alternative that is given up when a choice is made
A market economy is characterized by? - CORRECT ANSWER✅✅✅Buyers and Sellers
Absolute Advantage - CORRECT ANSWER✅✅✅Producing more output than another country
Comparative Advantage - CORRECT ANSWER✅✅✅Producing an output at a lower cost than another
country
Trade Surplus - CORRECT ANSWER✅✅✅Exports exceed imports
Trade Deficit - CORRECT ANSWER✅✅✅Imports exceed exports
Normal Good - CORRECT ANSWER✅✅✅Increase in income leads to increase in demand; vice-versa
Inferior Good - CORRECT ANSWER✅✅✅Demand decreases when income increases; vice versa
Events that shift supply - CORRECT ANSWER✅✅✅-Cost of production
-Improved Technology
-Act of Nature
-Taxes & Subsidies
Changes in Equilibrium price and quantity: - CORRECT ANSWER✅✅✅Increase in demand: leads to
increase in equilibrium price and quantity
Decrease in demand: leads to decrease in equilibrium price and quantity
Increase in supply: leads to decrease in equilibrium price and increase in quantity
ANSWERS
Buyers Gain Consumer Surplus When the market price is? - CORRECT ANSWER✅✅✅Less than the
highest price buyers are willing to pay.
A decrease in the supply of cars, ceteris paribus, leads to a ______ in the equilibrium price of cars and a
______ in the consumer surplus to buyers of cars? - CORRECT ANSWER✅✅✅Increase; Decrease
Which of the following is true regarding an effective (binding) price floor? - CORRECT
ANSWER✅✅✅A deadweight loss results from a price change
which of the following is true about a firm in the short run? - CORRECT ANSWER✅✅✅AFC = ATC -
AVC
If marginal product is above the average product? - CORRECT ANSWER✅✅✅Average product is
rising
If government wants to minimize the deadweight loss associated with a tax, it should impose the tax in a
market in which: - CORRECT ANSWER✅✅✅Demand and supply are both inelastic
4 Basic Resources - CORRECT ANSWER✅✅✅land, labor, capital, entrepreneurship
Law of Supply - CORRECT ANSWER✅✅✅as price goes up supply goes up; as price goes down supply
goes down
Law of Demand - CORRECT ANSWER✅✅✅as price goes down demand goes up; as price goes up,
demand goes down
Factors of Production - CORRECT ANSWER✅✅✅Land, Labor, Capital, and Entrepreneurial ability
, Opportunity Cost - CORRECT ANSWER✅✅✅Alternative that is given up when a choice is made
A market economy is characterized by? - CORRECT ANSWER✅✅✅Buyers and Sellers
Absolute Advantage - CORRECT ANSWER✅✅✅Producing more output than another country
Comparative Advantage - CORRECT ANSWER✅✅✅Producing an output at a lower cost than another
country
Trade Surplus - CORRECT ANSWER✅✅✅Exports exceed imports
Trade Deficit - CORRECT ANSWER✅✅✅Imports exceed exports
Normal Good - CORRECT ANSWER✅✅✅Increase in income leads to increase in demand; vice-versa
Inferior Good - CORRECT ANSWER✅✅✅Demand decreases when income increases; vice versa
Events that shift supply - CORRECT ANSWER✅✅✅-Cost of production
-Improved Technology
-Act of Nature
-Taxes & Subsidies
Changes in Equilibrium price and quantity: - CORRECT ANSWER✅✅✅Increase in demand: leads to
increase in equilibrium price and quantity
Decrease in demand: leads to decrease in equilibrium price and quantity
Increase in supply: leads to decrease in equilibrium price and increase in quantity
