ECON 528 MIDTERM EXAM | QUESTIONS
1–100 AND ANSWERS | 2026/2027
UPDATED | DETAILED RATIONALES
Important note: This is an original ECON 528-style practice bank, not an official
University of Limerick examination or reproduced answer key. Because the course
title alone does not identify the exact ECON 528 syllabus, the questions below use a
broad intermediate economics foundation: microeconomics, macroeconomics, market
structures, policy, incentives, welfare, and quantitative economic reasoning.
INTRODUCTION
This practice examination is designed to develop the analytical reasoning expected in
a university-level economics midterm. The questions emphasize application,
interpretation, and multi-step reasoning rather than simple definition recall. Students
should be prepared to evaluate changes in equilibrium, distinguish shifts from
movements along curves, interpret elasticity and marginal analysis, assess market
efficiency, analyze government intervention, and connect microeconomic decisions
with broader macroeconomic outcomes. Several questions use short scenarios
requiring identification of the relevant economic mechanism before selecting the best
answer. Particular attention should be given to opportunity cost, comparative
advantage, consumer and producer surplus, externalities, market power, fiscal and
monetary policy, inflation, unemployment, GDP, and economic growth. Numerical
questions are structured so that the economic logic matters as much as the calculation.
Each answer includes a rationale explaining why the correct option follows from the
underlying economic principle.
CORE DOMAINS
Demand, supply, and equilibrium
Elasticity and revenue
Consumer and producer behaviour
1
,Opportunity cost and comparative advantage
Consumer and producer surplus
Taxes, subsidies, and price controls
Externalities and public goods
Market structures and strategic behaviour
GDP, inflation, and unemployment
Aggregate demand and aggregate supply
Fiscal and monetary policy
Economic growth and productivity
International trade and exchange rates
Economic decision-making and marginal analysis
2
,
QUESTIONS 1–100
Question 1
A market for coffee is initially in equilibrium. A major improvement in coffee-
growing technology substantially reduces production costs while consumer
preferences remain unchanged. What is the most likely short-run effect?
A. Demand increases and price rises
B. Supply increases, equilibrium price falls, and equilibrium quantity rises
C. Supply decreases and equilibrium price rises
D. Demand decreases and equilibrium quantity falls
Rationale: Lower production costs make suppliers willing to offer more coffee at each
price, shifting the supply curve rightward. With demand unchanged, equilibrium price
falls while equilibrium quantity increases.
Question 2
Suppose the price of a product rises by 10% and quantity demanded falls by only 4%.
What can be inferred?
A. Demand is perfectly elastic
B. Demand is unit elastic
C. Demand is relatively inelastic
D. Demand is perfectly inelastic
Rationale: Price elasticity of demand is approximately −4%/10% = −0.4. Since the
absolute value is below one, quantity demanded responds proportionally less than
price.
Question 3
A firm raises the price of its product and discovers that total revenue increases. Which
condition most likely describes demand over the relevant range?
A. Elastic demand
B. Inelastic demand
C. Unit-elastic demand
D. Perfectly elastic demand
3
, Rationale: With inelastic demand, the percentage decrease in quantity demanded is
smaller than the percentage increase in price. Therefore, the higher price more than
offsets the reduction in quantity sold, increasing total revenue.
Question 4
A student spends an evening studying economics instead of working a job that would
have paid €60. What is the opportunity cost of studying for that evening?
A. The student's tuition fees
B. The value of the economics textbook
C. €60 of forgone earnings
D. The amount spent on transportation
Rationale: Opportunity cost is the value of the next-best alternative forgone. Here, the
relevant sacrificed alternative is the €60 the student could have earned.
Question 5
Country A can produce either 100 units of food or 50 units of clothing using a given
amount of resources. Country B can produce either 80 units of food or 80 units of
clothing. Which country has the comparative advantage in food?
A. Country B because it produces more clothing
B. Country A because its opportunity cost of food is lower
C. Country A because it has an absolute advantage in both goods
D. Country B because its production possibility frontier is flatter
Rationale: In A, producing one unit of food costs 0.5 units of clothing. In B, one unit
of food costs one unit of clothing. A therefore has the lower opportunity cost of food
and the comparative advantage.
Question 6
A production possibility frontier is bowed outward from the origin. What does this
generally indicate?
A. Constant opportunity costs
B. Increasing opportunity costs
C. Zero opportunity costs
D. Unlimited productive resources
4
1–100 AND ANSWERS | 2026/2027
UPDATED | DETAILED RATIONALES
Important note: This is an original ECON 528-style practice bank, not an official
University of Limerick examination or reproduced answer key. Because the course
title alone does not identify the exact ECON 528 syllabus, the questions below use a
broad intermediate economics foundation: microeconomics, macroeconomics, market
structures, policy, incentives, welfare, and quantitative economic reasoning.
INTRODUCTION
This practice examination is designed to develop the analytical reasoning expected in
a university-level economics midterm. The questions emphasize application,
interpretation, and multi-step reasoning rather than simple definition recall. Students
should be prepared to evaluate changes in equilibrium, distinguish shifts from
movements along curves, interpret elasticity and marginal analysis, assess market
efficiency, analyze government intervention, and connect microeconomic decisions
with broader macroeconomic outcomes. Several questions use short scenarios
requiring identification of the relevant economic mechanism before selecting the best
answer. Particular attention should be given to opportunity cost, comparative
advantage, consumer and producer surplus, externalities, market power, fiscal and
monetary policy, inflation, unemployment, GDP, and economic growth. Numerical
questions are structured so that the economic logic matters as much as the calculation.
Each answer includes a rationale explaining why the correct option follows from the
underlying economic principle.
CORE DOMAINS
Demand, supply, and equilibrium
Elasticity and revenue
Consumer and producer behaviour
1
,Opportunity cost and comparative advantage
Consumer and producer surplus
Taxes, subsidies, and price controls
Externalities and public goods
Market structures and strategic behaviour
GDP, inflation, and unemployment
Aggregate demand and aggregate supply
Fiscal and monetary policy
Economic growth and productivity
International trade and exchange rates
Economic decision-making and marginal analysis
2
,
QUESTIONS 1–100
Question 1
A market for coffee is initially in equilibrium. A major improvement in coffee-
growing technology substantially reduces production costs while consumer
preferences remain unchanged. What is the most likely short-run effect?
A. Demand increases and price rises
B. Supply increases, equilibrium price falls, and equilibrium quantity rises
C. Supply decreases and equilibrium price rises
D. Demand decreases and equilibrium quantity falls
Rationale: Lower production costs make suppliers willing to offer more coffee at each
price, shifting the supply curve rightward. With demand unchanged, equilibrium price
falls while equilibrium quantity increases.
Question 2
Suppose the price of a product rises by 10% and quantity demanded falls by only 4%.
What can be inferred?
A. Demand is perfectly elastic
B. Demand is unit elastic
C. Demand is relatively inelastic
D. Demand is perfectly inelastic
Rationale: Price elasticity of demand is approximately −4%/10% = −0.4. Since the
absolute value is below one, quantity demanded responds proportionally less than
price.
Question 3
A firm raises the price of its product and discovers that total revenue increases. Which
condition most likely describes demand over the relevant range?
A. Elastic demand
B. Inelastic demand
C. Unit-elastic demand
D. Perfectly elastic demand
3
, Rationale: With inelastic demand, the percentage decrease in quantity demanded is
smaller than the percentage increase in price. Therefore, the higher price more than
offsets the reduction in quantity sold, increasing total revenue.
Question 4
A student spends an evening studying economics instead of working a job that would
have paid €60. What is the opportunity cost of studying for that evening?
A. The student's tuition fees
B. The value of the economics textbook
C. €60 of forgone earnings
D. The amount spent on transportation
Rationale: Opportunity cost is the value of the next-best alternative forgone. Here, the
relevant sacrificed alternative is the €60 the student could have earned.
Question 5
Country A can produce either 100 units of food or 50 units of clothing using a given
amount of resources. Country B can produce either 80 units of food or 80 units of
clothing. Which country has the comparative advantage in food?
A. Country B because it produces more clothing
B. Country A because its opportunity cost of food is lower
C. Country A because it has an absolute advantage in both goods
D. Country B because its production possibility frontier is flatter
Rationale: In A, producing one unit of food costs 0.5 units of clothing. In B, one unit
of food costs one unit of clothing. A therefore has the lower opportunity cost of food
and the comparative advantage.
Question 6
A production possibility frontier is bowed outward from the origin. What does this
generally indicate?
A. Constant opportunity costs
B. Increasing opportunity costs
C. Zero opportunity costs
D. Unlimited productive resources
4
