Econ301 Exam 2025 Questions and
Answers
What is consumer surplus? - --CORRECT ANSWER--the value consumers get
from a good but do not have to pay for. It provides a measure of how much extra
consumers would be willing to pay for a given quantity of the good. Geometrically,
consumer surplus is the area above the price paid for a good but below the
demand curve
What are the 5 supply shifters? - --CORRECT ANSWER--Input prices,
Technology or gov. regulations, # of firms, Excise and ad valorem taxes, and
producer expectations
Change in quantity supplied - --CORRECT ANSWER--a movement along a given
supply curve, and is caused by a change in the price of the good
Change in supply - --CORRECT ANSWER--a shift of the entire supply curve, and
is caused by a change in a supply shifter
Input prices - --CORRECT ANSWER---Higher input prices shift supply to the left
(IL)
-Lower input prices shift supply to the right (DR)
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, Technology/gov. regulations - --CORRECT ANSWER--- Advances in technology
or reductions in government regulations shift supply to the right (IR)
# of firms - --CORRECT ANSWER--- Increases in the number of firms servicing
a competitive market shifts supply to the right (IR)
-Decreases in the number of firms servicing a competitive market shifts supply to
the left (DL)
Excise and ad valorem taxes - --CORRECT ANSWER--- Increases in these taxes
reduce supply (IRS)
-Decreases in these taxes increase supply (DIS)
-Excise taxes are per unit taxes, and thus shift the supply curve upward by the
amount of the tax.
-Ad valorem taxes are percentage taxes, and therefore rotate the supply curve
leftward (making it steeper)
Producer expectations - --CORRECT ANSWER---If producers expect prices to
be higher in the future, current supply will decline (PHD)
- If producers expect prices to be lower in the future, current supply will increase
(PLI)
What determines the price and quantity of goods available in a free market? - --
CORRECT ANSWER--The price and quantity of goods available in a free market
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 2
Answers
What is consumer surplus? - --CORRECT ANSWER--the value consumers get
from a good but do not have to pay for. It provides a measure of how much extra
consumers would be willing to pay for a given quantity of the good. Geometrically,
consumer surplus is the area above the price paid for a good but below the
demand curve
What are the 5 supply shifters? - --CORRECT ANSWER--Input prices,
Technology or gov. regulations, # of firms, Excise and ad valorem taxes, and
producer expectations
Change in quantity supplied - --CORRECT ANSWER--a movement along a given
supply curve, and is caused by a change in the price of the good
Change in supply - --CORRECT ANSWER--a shift of the entire supply curve, and
is caused by a change in a supply shifter
Input prices - --CORRECT ANSWER---Higher input prices shift supply to the left
(IL)
-Lower input prices shift supply to the right (DR)
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 1
, Technology/gov. regulations - --CORRECT ANSWER--- Advances in technology
or reductions in government regulations shift supply to the right (IR)
# of firms - --CORRECT ANSWER--- Increases in the number of firms servicing
a competitive market shifts supply to the right (IR)
-Decreases in the number of firms servicing a competitive market shifts supply to
the left (DL)
Excise and ad valorem taxes - --CORRECT ANSWER--- Increases in these taxes
reduce supply (IRS)
-Decreases in these taxes increase supply (DIS)
-Excise taxes are per unit taxes, and thus shift the supply curve upward by the
amount of the tax.
-Ad valorem taxes are percentage taxes, and therefore rotate the supply curve
leftward (making it steeper)
Producer expectations - --CORRECT ANSWER---If producers expect prices to
be higher in the future, current supply will decline (PHD)
- If producers expect prices to be lower in the future, current supply will increase
(PLI)
What determines the price and quantity of goods available in a free market? - --
CORRECT ANSWER--The price and quantity of goods available in a free market
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 2
