ECON 252 exam2 Questions with Correct Answers (Grade A+)
Question 1: There are several close substitutes for Bayer aspirin but fewer substitutes for a complete
medical examination. Therefore, you would expect the demand for:
Answer: Bayer aspirin to be more price elastic
Question 2: An important determinant of the price elasticity of demand is the:
Answer: importance in household budgets.
Question 3: If the income elasticity of demand for a good is positive, the good is said to be a(n):
Answer: normal good.
Question 4: If your income increases and your consumption of bagels increases, bales are considered a
Answer: normal good
Question 5: If the income elasticity of demand for a good is negative the good is said to be a
Answer: inferior good
Question 6: Income elasticity of demand measures
Answer: how demand for a good changes in response to changes in income
Question 7: The price elasticity of supply for milk in the short run has been estimated to be .36, while
the elasticity of supply for milk in the long run is estimated to be.51. That means the supply of milk is
Answer: relatively more elastic in the long run than in the short run
Question 8: the total benefit of an activity minus its total cost is
Answer: net benefit
Question 9: the ______ is the amount by which an additional unit of an activity increase its total benefit
Answer: Marginal benefit
Question 10: According to the marginal decision rule, if marginal benefit
Answer: is less than marginal cost an activity should be reduced
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, Question 11: Suppose that the expected exam scores from studying economics for 0, 1, 2, or 3 hours are
65, 80, 90, and 95 points, while the expect exam scores for studying the same hours for accounting are
50, 65, 70,70 points. With 3 total hours of study time the marginal benefit in terms of your economics
score of spending the first hour studying economics is
Answer: 15 points
Question 12: When ever MB < MC the decision maker should do_____ of the activity
Answer: less
Question 13: When the net benefits of all economic activites are maximized, economists say the
allocation of resources is
Answer: efficient
Question 14: the market for apples achieves an efficient allocation of resources when prices respond
and send signals to producers and consumers. That set of interactions requires that producers possess
Answer: property rights to the apples they grow
Question 15: To be effective, property rights must be
Answer: exclusive and transferable
Question 16: When price signals reflect ____ benefits and ___ costs of choices, we expect that the
allocation of resources will be____
Answer: marginal; marginal; efficient
Question 17: Regardless of whether they pay for them people cannot be excluded from receiving the
benefits of
Answer: public goods
Question 18: people or firms who consume a public good without paying for them are called____by
economists
Answer: free riders
Question 19: Economic theory suggests that market failure is a result of
Answer: markets not reflecting and revealing the full costs and benefits of choices
Page 2
Question 1: There are several close substitutes for Bayer aspirin but fewer substitutes for a complete
medical examination. Therefore, you would expect the demand for:
Answer: Bayer aspirin to be more price elastic
Question 2: An important determinant of the price elasticity of demand is the:
Answer: importance in household budgets.
Question 3: If the income elasticity of demand for a good is positive, the good is said to be a(n):
Answer: normal good.
Question 4: If your income increases and your consumption of bagels increases, bales are considered a
Answer: normal good
Question 5: If the income elasticity of demand for a good is negative the good is said to be a
Answer: inferior good
Question 6: Income elasticity of demand measures
Answer: how demand for a good changes in response to changes in income
Question 7: The price elasticity of supply for milk in the short run has been estimated to be .36, while
the elasticity of supply for milk in the long run is estimated to be.51. That means the supply of milk is
Answer: relatively more elastic in the long run than in the short run
Question 8: the total benefit of an activity minus its total cost is
Answer: net benefit
Question 9: the ______ is the amount by which an additional unit of an activity increase its total benefit
Answer: Marginal benefit
Question 10: According to the marginal decision rule, if marginal benefit
Answer: is less than marginal cost an activity should be reduced
Page 1
, Question 11: Suppose that the expected exam scores from studying economics for 0, 1, 2, or 3 hours are
65, 80, 90, and 95 points, while the expect exam scores for studying the same hours for accounting are
50, 65, 70,70 points. With 3 total hours of study time the marginal benefit in terms of your economics
score of spending the first hour studying economics is
Answer: 15 points
Question 12: When ever MB < MC the decision maker should do_____ of the activity
Answer: less
Question 13: When the net benefits of all economic activites are maximized, economists say the
allocation of resources is
Answer: efficient
Question 14: the market for apples achieves an efficient allocation of resources when prices respond
and send signals to producers and consumers. That set of interactions requires that producers possess
Answer: property rights to the apples they grow
Question 15: To be effective, property rights must be
Answer: exclusive and transferable
Question 16: When price signals reflect ____ benefits and ___ costs of choices, we expect that the
allocation of resources will be____
Answer: marginal; marginal; efficient
Question 17: Regardless of whether they pay for them people cannot be excluded from receiving the
benefits of
Answer: public goods
Question 18: people or firms who consume a public good without paying for them are called____by
economists
Answer: free riders
Question 19: Economic theory suggests that market failure is a result of
Answer: markets not reflecting and revealing the full costs and benefits of choices
Page 2
