ECON 251 EXAM 3 STUDY GUIDE
2026/2027 COMPLETE QUESTIONS WITH
VERIFIED CORRECT ANSWERS ||
100% GUARANTEED PASS
<NEWEST VERSION>
1. Max profit - ANSWER ✔ MR = MC
2. substitution effect - ANSWER ✔ Px/Py
effect of change in "relative price"
3. Profit - ANSWER ✔ Tr-Tc
or
(mc)(q)-TC
or
q(p-ATC)
4. MPl - ANSWER ✔ change in Q / change in L
5. Marginal utility per dollar - ANSWER ✔ Mu/p
Mu= change in U/ change in Q
6. P ( for natural) - ANSWER ✔ MC, but MC<Atc
, So P<ATC
7. Max Utility - ANSWER ✔ MUx/Px = MUy/Py
8. ATC - ANSWER ✔ TC/Q
or
AFC + ATC
9. The Firm's Goal - ANSWER ✔ - To maximize profit
- If the firm fails to do this it is either eliminated or bought out
10.Explicit Cost - ANSWER ✔ Costs paid directly in money
11.Implicit Costs - ANSWER ✔ 1. Uses its own capital.
•Economic depreciation is the change in the market value of capital over a
given period.
•Interest forgone is the return on the funds used to acquire the capital.
2. Uses its owners' time or financial resources.
12.Normal Profit - ANSWER ✔ The return to entrepreneurship is profit and the
return that an entrepreneur can expect to receive on the average
13.Economic Profit - ANSWER ✔ total revenue minus total cost,
14.To maximize profit, a firm must make five decisions: - ANSWER ✔ What
goods and services to produce and in what quantities
2. How to produce—the production technology to use
3. How to organize and compensate its managers and workers
, 4. How to market and price its products
5. What to produce itself and what to buy from other firms
15.Firm's Constraints - ANSWER ✔ Technology, Information, and Market
16.Commands System - ANSWER ✔ A Managerial hierarchy
- Commands pass downwards through the hierarchy (feedback) passes
upward
- Use when it's easy to monitor (perfect information)
1) Which of the following is likely to happen when the interest
rate falls?
A) The nominal GDP will decrease.B) Economic activity
will reduce.C) The equilibrium wage rate will fall.
D) The labor demand curve will shift to the right. - ANSWER ✔ D. The
labor demand curve will shift to the right.
17.Which of the following statements is true? 2) A) One of the limitations of
using money is that it does not allow for the transfer of purchasing
power into the future.
B) The hours of labor that go into producing a product are a better unit of
account than paper
money.
C) The necessary condition required for money to function as a medium of
exchange is that it
also needs to be a store of value.
D) When money is used as a yardstick to describe the price of various goods
and services, it
serves as a store of value. - ANSWER ✔ C. The necessary condition
required for money to function as a medium of exchange is that it
also needs to be a store of value.
, 18.Zimbabwe decided to fund deficit spending in the early 2000s by printing
more and more currency. 3) This method of obtaining revenue is called
________, and it resulted in ________ for Zimbabwe.
A) hyperinflation; seigniorage B) seigniorage; deflation C)
seigniorage; hyperinflation D) hyperinflation; deflation -
ANSWER ✔ C. seigniorage; hyperinflation
19.Which is the Federal Reserve more concerned about, the inflation rate or the
money supply? 4) A) The Fed is more concerned about the money supply.
B) The Fed is more concerned about the inflation rate during expansions and
the money supply during recessions.
C) The Fed is more concerned about the inflation rate.
D) The Fed is equally concerned about the inflation rate and the money
supply. - ANSWER ✔ C. The Fed is more concerned about the inflation
rate.
20.Which of the following methods for influencing the federal funds rate was
first approved by Congress for use by the Federal Reserve during the
20072009 recession?
A) Changing the interest rate paid on reserves B) Changing
the quantity of reserves supplied C) Changing the reserve
requirement
D) None of the above - ANSWER ✔ A. Changing the interest rate paid on
reserves
21.A researcher finds that, for an economy, the nominal GDP in the year 2015
equaled the nominal 6) GDP in the year 2016. She also finds that the output
of the economy was the same over the twoyears. A situation like this is
possible only if ________.
A) the annual interest rate in the economy is negative B) the
annual inflation rate in the economy is negative C) the
annual interest rate in the economy is 0 percent
2026/2027 COMPLETE QUESTIONS WITH
VERIFIED CORRECT ANSWERS ||
100% GUARANTEED PASS
<NEWEST VERSION>
1. Max profit - ANSWER ✔ MR = MC
2. substitution effect - ANSWER ✔ Px/Py
effect of change in "relative price"
3. Profit - ANSWER ✔ Tr-Tc
or
(mc)(q)-TC
or
q(p-ATC)
4. MPl - ANSWER ✔ change in Q / change in L
5. Marginal utility per dollar - ANSWER ✔ Mu/p
Mu= change in U/ change in Q
6. P ( for natural) - ANSWER ✔ MC, but MC<Atc
, So P<ATC
7. Max Utility - ANSWER ✔ MUx/Px = MUy/Py
8. ATC - ANSWER ✔ TC/Q
or
AFC + ATC
9. The Firm's Goal - ANSWER ✔ - To maximize profit
- If the firm fails to do this it is either eliminated or bought out
10.Explicit Cost - ANSWER ✔ Costs paid directly in money
11.Implicit Costs - ANSWER ✔ 1. Uses its own capital.
•Economic depreciation is the change in the market value of capital over a
given period.
•Interest forgone is the return on the funds used to acquire the capital.
2. Uses its owners' time or financial resources.
12.Normal Profit - ANSWER ✔ The return to entrepreneurship is profit and the
return that an entrepreneur can expect to receive on the average
13.Economic Profit - ANSWER ✔ total revenue minus total cost,
14.To maximize profit, a firm must make five decisions: - ANSWER ✔ What
goods and services to produce and in what quantities
2. How to produce—the production technology to use
3. How to organize and compensate its managers and workers
, 4. How to market and price its products
5. What to produce itself and what to buy from other firms
15.Firm's Constraints - ANSWER ✔ Technology, Information, and Market
16.Commands System - ANSWER ✔ A Managerial hierarchy
- Commands pass downwards through the hierarchy (feedback) passes
upward
- Use when it's easy to monitor (perfect information)
1) Which of the following is likely to happen when the interest
rate falls?
A) The nominal GDP will decrease.B) Economic activity
will reduce.C) The equilibrium wage rate will fall.
D) The labor demand curve will shift to the right. - ANSWER ✔ D. The
labor demand curve will shift to the right.
17.Which of the following statements is true? 2) A) One of the limitations of
using money is that it does not allow for the transfer of purchasing
power into the future.
B) The hours of labor that go into producing a product are a better unit of
account than paper
money.
C) The necessary condition required for money to function as a medium of
exchange is that it
also needs to be a store of value.
D) When money is used as a yardstick to describe the price of various goods
and services, it
serves as a store of value. - ANSWER ✔ C. The necessary condition
required for money to function as a medium of exchange is that it
also needs to be a store of value.
, 18.Zimbabwe decided to fund deficit spending in the early 2000s by printing
more and more currency. 3) This method of obtaining revenue is called
________, and it resulted in ________ for Zimbabwe.
A) hyperinflation; seigniorage B) seigniorage; deflation C)
seigniorage; hyperinflation D) hyperinflation; deflation -
ANSWER ✔ C. seigniorage; hyperinflation
19.Which is the Federal Reserve more concerned about, the inflation rate or the
money supply? 4) A) The Fed is more concerned about the money supply.
B) The Fed is more concerned about the inflation rate during expansions and
the money supply during recessions.
C) The Fed is more concerned about the inflation rate.
D) The Fed is equally concerned about the inflation rate and the money
supply. - ANSWER ✔ C. The Fed is more concerned about the inflation
rate.
20.Which of the following methods for influencing the federal funds rate was
first approved by Congress for use by the Federal Reserve during the
20072009 recession?
A) Changing the interest rate paid on reserves B) Changing
the quantity of reserves supplied C) Changing the reserve
requirement
D) None of the above - ANSWER ✔ A. Changing the interest rate paid on
reserves
21.A researcher finds that, for an economy, the nominal GDP in the year 2015
equaled the nominal 6) GDP in the year 2016. She also finds that the output
of the economy was the same over the twoyears. A situation like this is
possible only if ________.
A) the annual interest rate in the economy is negative B) the
annual inflation rate in the economy is negative C) the
annual interest rate in the economy is 0 percent
