ECON 300 - Final Exam Questions and
Correct Answers with Complete Solution |
New 2026 Update
Jill has two choices: (1) $9 for sure and (2) a lottery with an expected value of $7.
If Jill chooses the lottery, she is: - ANSWERS Risk Seeking
If two goods are complements, the cross-price elasticity of demand must be -
ANSWERS Negative
The market supply function is: P= 10 + Q. The market demand function is: P = 70 -
2Q. What is the change in consumer surplus associated with a price floor
(minimum price) of $30? - ANSWERS 0
Suppose a small regional airport is served by one of the major airlines, and a new
low-cost airline enters the market. If the major airlines cuts air fares in this market
to levels that are below its marginal cost in response to the other firm's entry,
then the m ajor airline may be engaging in: - ANSWERS Predatory pricing
Suppose that dean and supply for a product are given by the following equations.
Further suppose the government imposes a tax of $2 per unit. What is ther
percentage of the tax borne by SELLERS? - ANSWERS Q(d) = 60- P(b)
Q(s) = -40 + 4P(s)
,Answer: 20
Suppose that dean and supply for a product are given by the following equations.
Further suppose the government imposes a tax of $2 per unit. What is the
deadweight loss asssociated with the tax? - ANSWERS Q(d) = 60- P(b)
Q(s) = -40 + 4P(s)
Answer: 1.6
Which of the following production functions exhibits constant returns to scale? -
ANSWERS q = K + 2L
The change in the quantity of a good resulting from a change in relative price with
the level of satisfaction held constant is called the: - ANSWERS Substitution
Effect
Marginal Revenue graphically is - ANSWERS The slope of the total revenue at a
given point
At the profit-maximizing level of output, what is the relationship between the
total revenue (TR) and total cost(TC)? - ANSWERS They must have the same
slope
Because of the relationship between a perfectly competitve firms demand surve
and its marginal revenue curve, the profit maximization condition for the firm can
be written as - ANSWERS P = MC
, In a constant-cost industry, an increase in demand will be followed by: -
ANSWERS An increase in supply that will bring price down to the level it was
before the demand shift
In an unregulated competitive market, producer surplus exists because some -
ANSWERS Producers are willing to sell at less than the equilibrium price
Consider a good whose own price elasticity of deman is -0.5 and price elasticity of
supply is 1.5. The fraction of a specific tax will be passed through to consumer is -
ANSWERS 0.75
The firms in a market have decided not to complete with one another and have
aggreed to limit output and raise price. - ANSWERS This practice is known as
collusion and is illegal inthe United States
A firm has two main products: WindSong is a program that can be used to edit
audio files and SunBurst is a program that can be used to edit digital photos. The
two major types of customers are small businesses and home users. The small
business customershave a reservation price of $300 for WindSong and $450 for
SunBurst. The home users have a reservation price of $100 for WindSong and
$125 for SunBurst. Which of the following statements is true? - ANSWERS
Bundling the two software products is not likely to be profitable because the
demands are positively correlated.
Ed, acar salesman,is an extremely talented negotiator. He spends a lot of time
getting to know his customers and he believes that he can determine each
customer's true value for a car. He sells each customer a car at a price equal to
Correct Answers with Complete Solution |
New 2026 Update
Jill has two choices: (1) $9 for sure and (2) a lottery with an expected value of $7.
If Jill chooses the lottery, she is: - ANSWERS Risk Seeking
If two goods are complements, the cross-price elasticity of demand must be -
ANSWERS Negative
The market supply function is: P= 10 + Q. The market demand function is: P = 70 -
2Q. What is the change in consumer surplus associated with a price floor
(minimum price) of $30? - ANSWERS 0
Suppose a small regional airport is served by one of the major airlines, and a new
low-cost airline enters the market. If the major airlines cuts air fares in this market
to levels that are below its marginal cost in response to the other firm's entry,
then the m ajor airline may be engaging in: - ANSWERS Predatory pricing
Suppose that dean and supply for a product are given by the following equations.
Further suppose the government imposes a tax of $2 per unit. What is ther
percentage of the tax borne by SELLERS? - ANSWERS Q(d) = 60- P(b)
Q(s) = -40 + 4P(s)
,Answer: 20
Suppose that dean and supply for a product are given by the following equations.
Further suppose the government imposes a tax of $2 per unit. What is the
deadweight loss asssociated with the tax? - ANSWERS Q(d) = 60- P(b)
Q(s) = -40 + 4P(s)
Answer: 1.6
Which of the following production functions exhibits constant returns to scale? -
ANSWERS q = K + 2L
The change in the quantity of a good resulting from a change in relative price with
the level of satisfaction held constant is called the: - ANSWERS Substitution
Effect
Marginal Revenue graphically is - ANSWERS The slope of the total revenue at a
given point
At the profit-maximizing level of output, what is the relationship between the
total revenue (TR) and total cost(TC)? - ANSWERS They must have the same
slope
Because of the relationship between a perfectly competitve firms demand surve
and its marginal revenue curve, the profit maximization condition for the firm can
be written as - ANSWERS P = MC
, In a constant-cost industry, an increase in demand will be followed by: -
ANSWERS An increase in supply that will bring price down to the level it was
before the demand shift
In an unregulated competitive market, producer surplus exists because some -
ANSWERS Producers are willing to sell at less than the equilibrium price
Consider a good whose own price elasticity of deman is -0.5 and price elasticity of
supply is 1.5. The fraction of a specific tax will be passed through to consumer is -
ANSWERS 0.75
The firms in a market have decided not to complete with one another and have
aggreed to limit output and raise price. - ANSWERS This practice is known as
collusion and is illegal inthe United States
A firm has two main products: WindSong is a program that can be used to edit
audio files and SunBurst is a program that can be used to edit digital photos. The
two major types of customers are small businesses and home users. The small
business customershave a reservation price of $300 for WindSong and $450 for
SunBurst. The home users have a reservation price of $100 for WindSong and
$125 for SunBurst. Which of the following statements is true? - ANSWERS
Bundling the two software products is not likely to be profitable because the
demands are positively correlated.
Ed, acar salesman,is an extremely talented negotiator. He spends a lot of time
getting to know his customers and he believes that he can determine each
customer's true value for a car. He sells each customer a car at a price equal to
