ECP3704 Final UPDATED ACTUAL Exam
Questions and CORRECT Answers
The income effect means that when the price of a good rises.... - CORRECT ANSWER -
the buying power of your income falls.
The substitution effect - CORRECT ANSWER - reduces the quantity demanded of a good
when its price increases.
The ______ of an uncertain payoff is defined as the weighted average of all possible outcomes,
where the probability of each outcome is used as the weights - CORRECT ANSWER -
Expected value
If employees' activities follow the economists' view of behavior, managers will be most effective
if they can - CORRECT ANSWER - influence the costs and benefits of employee actions.
Assume that the quantity of apples is measured on the horizontal axis and the quantity of oranges
is measured on the vertical axis. If the budget line rotates upward while keeping the same
horizontal intercept, it implies that - CORRECT ANSWER - the price of oranges has
decreased.
The budget line - CORRECT ANSWER - shows all the combinations of goods that require
the same total expenditure.
If available income decreases, then - CORRECT ANSWER - the budget line will shift
inward.
Marginal costs - CORRECT ANSWER -
If supply increases, then the - CORRECT ANSWER - Equilibrium price goes down
, A decrease in demand means that quantity demanded falls - CORRECT ANSWER - at all
prices
If supply increases and demand remains unchanged, equilibrium quantity will _______ and
equilibrium price will ______________. - CORRECT ANSWER - rise, fall
The law of demand indicates that as the price of a good increases, the quantity that - CORRECT
ANSWER - Buyers are able to purchase decreases
All else held constant, as additional firms enter an industry - CORRECT ANSWER - More
output is available at each given price
Changes in the price of other goods lead to - CORRECT ANSWER - A change in demand
According to Ronald Coase, for a free-market economy to work efficiently, there needs to be -
CORRECT ANSWER - allocation of private property rights with low transactions cost.
What is an implicit cost of going to college? - CORRECT ANSWER - Lost work
experience
You paid $4 each for two 20 ounce water bottles ($25.60 per gallon), he - CORRECT
ANSWER - got some consumer surplus from transaction
Supply increases, what effect will this have on equilibrium price and quantity? - CORRECT
ANSWER - Price will decrease and quantity will increase
Supply increases and demand decreases. What effect will this have on equilibrium price and
quantity? - CORRECT ANSWER - Price will decrease and quantity may rise or fall
Consumer surplus is - CORRECT ANSWER - the value consumers get from a supplier
Questions and CORRECT Answers
The income effect means that when the price of a good rises.... - CORRECT ANSWER -
the buying power of your income falls.
The substitution effect - CORRECT ANSWER - reduces the quantity demanded of a good
when its price increases.
The ______ of an uncertain payoff is defined as the weighted average of all possible outcomes,
where the probability of each outcome is used as the weights - CORRECT ANSWER -
Expected value
If employees' activities follow the economists' view of behavior, managers will be most effective
if they can - CORRECT ANSWER - influence the costs and benefits of employee actions.
Assume that the quantity of apples is measured on the horizontal axis and the quantity of oranges
is measured on the vertical axis. If the budget line rotates upward while keeping the same
horizontal intercept, it implies that - CORRECT ANSWER - the price of oranges has
decreased.
The budget line - CORRECT ANSWER - shows all the combinations of goods that require
the same total expenditure.
If available income decreases, then - CORRECT ANSWER - the budget line will shift
inward.
Marginal costs - CORRECT ANSWER -
If supply increases, then the - CORRECT ANSWER - Equilibrium price goes down
, A decrease in demand means that quantity demanded falls - CORRECT ANSWER - at all
prices
If supply increases and demand remains unchanged, equilibrium quantity will _______ and
equilibrium price will ______________. - CORRECT ANSWER - rise, fall
The law of demand indicates that as the price of a good increases, the quantity that - CORRECT
ANSWER - Buyers are able to purchase decreases
All else held constant, as additional firms enter an industry - CORRECT ANSWER - More
output is available at each given price
Changes in the price of other goods lead to - CORRECT ANSWER - A change in demand
According to Ronald Coase, for a free-market economy to work efficiently, there needs to be -
CORRECT ANSWER - allocation of private property rights with low transactions cost.
What is an implicit cost of going to college? - CORRECT ANSWER - Lost work
experience
You paid $4 each for two 20 ounce water bottles ($25.60 per gallon), he - CORRECT
ANSWER - got some consumer surplus from transaction
Supply increases, what effect will this have on equilibrium price and quantity? - CORRECT
ANSWER - Price will decrease and quantity will increase
Supply increases and demand decreases. What effect will this have on equilibrium price and
quantity? - CORRECT ANSWER - Price will decrease and quantity may rise or fall
Consumer surplus is - CORRECT ANSWER - the value consumers get from a supplier
