ECON 2030 MIDTERM EXAM 2 LSU
QUESTIONS AND DETAILED ANSWERS.
EXPERT VERIFIED FOR GUARANTEED
PASS.
Inelastic; smaller - ANS The shorter the period of time that a buyer has to make a purchasing
decision, everything else held constant, the more price __ demand will be for the good. The __
proportion of a consumer's budget a good makes up, everything else held constant, the more
price inelastic demand will be for the good.
- inelastic; smaller
- elastic; greater
- elastic; smaller
- inelastic; greater
$1195 - ANS Suppose the rational and chic Amber saw a beautiful pair of Christian Louboutin
loafers priced at $995 and she bought them. Suppose further that her consumer surplus from
the purchase was $200. It can be concluded with certainty that her reservation price for buying
the loafers was...
- $0
- $200
- $795
- $995
- $1195
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
,remain in business - ANS At a given point in time, suppose a monopolist is producing its
profit-maximizing level of output and is earning an economic profit equal to zero. Everything
else held constant, what will the monopolist do in the long run?
- shut down
- remain in business
A. increase
B. increase - ANS Suppose books are a normal good. Suppose further that national income in
increasing.
A. In the situation above, producer surplus in the book market will __, everything else held
constant.
- remain unchanged
- increase
- be ambiguous
- decrease
B. In the situation above, economic surplus in the book market will __, everything else held
constant.
- remain unchanged
- increase
- be ambiguous
- decrease
A. the demand for bicycles is relatively more price inelastic than the supply is
B. $6.50 lower - ANS Suppose the government imposes an excise tax of $10 per unit on
bicycles. Suppose further that buyers bear 65 percent of the burden of the tax.
A. In the situation above, which of the following can be concluded with certainty?
- the demand for bicycles is price elastic
- the demand for bicycles is relatively more price elastic than the supply is
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
, - the demand for bicycles is price inelastic
- the demand for bicycles is relatively more price inelastic than the supply is
B. After the tax is imposed, the price the sellers receive for selling a bicycle will be __ than it
was before the tax, everything else held constant.
- $6.50 lower
- $6.50 higher
- $10.00 hgiher
- $3.50 higher
- $3.50 lower
decrease output and increase price? - ANS Suppose the price at which a monopolist is selling
its output is $10 and the marginal revenue associated with the last unit of output sold is $8.
Suppose further that the marginal cost of producing the last unit of output sold is $6. Which of
the following actions should the non-price discriminating monopolist take to increase its
profits?
- decrease output and decrease price
- increase output and increase price
- increase output and decrease price
- decrease output and increase price
greater than? - ANS Suppose Rachel is the only person in her town who performs weddings
and she is producing her profit-maximizing level of output. Suppose further that at this level of
production, Rachel's average fixed cost of performing a wedding is $75, her average variable
cost is $100, and the marginal revenue from performing a wedding is $175. Everything else held
constant, Rachel's profit from performing weddings is __ zero.
average total; decreasing - ANS When marginal cost is less than average total cost at a
particular level of output, __ cost MUST be __.
- marginal; increasing
- average fixed; increasing
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
QUESTIONS AND DETAILED ANSWERS.
EXPERT VERIFIED FOR GUARANTEED
PASS.
Inelastic; smaller - ANS The shorter the period of time that a buyer has to make a purchasing
decision, everything else held constant, the more price __ demand will be for the good. The __
proportion of a consumer's budget a good makes up, everything else held constant, the more
price inelastic demand will be for the good.
- inelastic; smaller
- elastic; greater
- elastic; smaller
- inelastic; greater
$1195 - ANS Suppose the rational and chic Amber saw a beautiful pair of Christian Louboutin
loafers priced at $995 and she bought them. Suppose further that her consumer surplus from
the purchase was $200. It can be concluded with certainty that her reservation price for buying
the loafers was...
- $0
- $200
- $795
- $995
- $1195
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
,remain in business - ANS At a given point in time, suppose a monopolist is producing its
profit-maximizing level of output and is earning an economic profit equal to zero. Everything
else held constant, what will the monopolist do in the long run?
- shut down
- remain in business
A. increase
B. increase - ANS Suppose books are a normal good. Suppose further that national income in
increasing.
A. In the situation above, producer surplus in the book market will __, everything else held
constant.
- remain unchanged
- increase
- be ambiguous
- decrease
B. In the situation above, economic surplus in the book market will __, everything else held
constant.
- remain unchanged
- increase
- be ambiguous
- decrease
A. the demand for bicycles is relatively more price inelastic than the supply is
B. $6.50 lower - ANS Suppose the government imposes an excise tax of $10 per unit on
bicycles. Suppose further that buyers bear 65 percent of the burden of the tax.
A. In the situation above, which of the following can be concluded with certainty?
- the demand for bicycles is price elastic
- the demand for bicycles is relatively more price elastic than the supply is
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
, - the demand for bicycles is price inelastic
- the demand for bicycles is relatively more price inelastic than the supply is
B. After the tax is imposed, the price the sellers receive for selling a bicycle will be __ than it
was before the tax, everything else held constant.
- $6.50 lower
- $6.50 higher
- $10.00 hgiher
- $3.50 higher
- $3.50 lower
decrease output and increase price? - ANS Suppose the price at which a monopolist is selling
its output is $10 and the marginal revenue associated with the last unit of output sold is $8.
Suppose further that the marginal cost of producing the last unit of output sold is $6. Which of
the following actions should the non-price discriminating monopolist take to increase its
profits?
- decrease output and decrease price
- increase output and increase price
- increase output and decrease price
- decrease output and increase price
greater than? - ANS Suppose Rachel is the only person in her town who performs weddings
and she is producing her profit-maximizing level of output. Suppose further that at this level of
production, Rachel's average fixed cost of performing a wedding is $75, her average variable
cost is $100, and the marginal revenue from performing a wedding is $175. Everything else held
constant, Rachel's profit from performing weddings is __ zero.
average total; decreasing - ANS When marginal cost is less than average total cost at a
particular level of output, __ cost MUST be __.
- marginal; increasing
- average fixed; increasing
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED
