ECON 251 FINAL – PURDUE
CORRECT 100%
Which of the following would increase demand for ice cream cones? - ANSWERAn
increase in the price of fruit smoothies, a substitute in consumption of ice cream cones
The fact that the quantity of ice cream cones demanded decreases as the price of ice
cream cones rises is called which of the following - ANSWERThe law of demand
If demand and supply decrease simultaneously in a market, how will equilibrium be
affected? - ANSWEREquilibrium price will be indeterminate and equilibrium quantity will
fall
When a market achieves allocative efficiency, which of the following is not true?
(assume there are no externalities present) - ANSWERRevenue is maximized.
What is true:
1. Marginal Benefit = Marginal Cost
2. Quantity Demanded = Quantity Supplied
3. Total surplus maximized
Which of the following best defines deadweight loss? - ANSWERThe decrease in total
surplus as a result of inefficiency
When the price of an inferior good increases, which of the following best described the
substitution and income effects of that increase in price? - ANSWERThe sub. effect of
the increase in price encourages a consumer to purchase less of the good, and the
income effect encourages a consumer to purchase more of the good
The average product of labor a company is currently 8 units of output per hour. If the
company hires a worker who can produce 10 units of output per hour, which of the
following is most likely to occur? - ANSWERHiring the new worker will increase the
average product of labor at the company
When a single-price monopolist is producing a level of output where marginal revenue is
above marginal cost and total revenue is above total cost, what should the firm do to
maximize profit? - ANSWERIncrease output
If a single-price monopolist is producing 10 units of output where demand has a price
elasticity equal to 2.3, which of the following must be true? - ANSWERMarginal revenue
is positive
CORRECT 100%
Which of the following would increase demand for ice cream cones? - ANSWERAn
increase in the price of fruit smoothies, a substitute in consumption of ice cream cones
The fact that the quantity of ice cream cones demanded decreases as the price of ice
cream cones rises is called which of the following - ANSWERThe law of demand
If demand and supply decrease simultaneously in a market, how will equilibrium be
affected? - ANSWEREquilibrium price will be indeterminate and equilibrium quantity will
fall
When a market achieves allocative efficiency, which of the following is not true?
(assume there are no externalities present) - ANSWERRevenue is maximized.
What is true:
1. Marginal Benefit = Marginal Cost
2. Quantity Demanded = Quantity Supplied
3. Total surplus maximized
Which of the following best defines deadweight loss? - ANSWERThe decrease in total
surplus as a result of inefficiency
When the price of an inferior good increases, which of the following best described the
substitution and income effects of that increase in price? - ANSWERThe sub. effect of
the increase in price encourages a consumer to purchase less of the good, and the
income effect encourages a consumer to purchase more of the good
The average product of labor a company is currently 8 units of output per hour. If the
company hires a worker who can produce 10 units of output per hour, which of the
following is most likely to occur? - ANSWERHiring the new worker will increase the
average product of labor at the company
When a single-price monopolist is producing a level of output where marginal revenue is
above marginal cost and total revenue is above total cost, what should the firm do to
maximize profit? - ANSWERIncrease output
If a single-price monopolist is producing 10 units of output where demand has a price
elasticity equal to 2.3, which of the following must be true? - ANSWERMarginal revenue
is positive
