University of Mississippi
Department of Economics
ECON 202 — Principles of Microeconomics
Final Examination — 2026/2027
Score Summary
Section Points Earned Points Available
Part I: Supply & Demand 20
Fundamentals (Q1–10)
Part II: Elasticity (Q11–17) 14
Part III: Consumer Choice & 16
Production/Costs (Q18–25)
Part IV: Market Structures (Q26– 24
37)
Part V: Factor Markets (Q38–41) 8
Part VI: Market Failure & 10
Government Intervention (Q42–
46)
Part VII: International Trade & 8
Scenario Analysis (Q47–50)
Total 100
, Part I: Supply & Demand Fundamentals
1. If the price of coffee increases, what is the most likely effect on the demand for tea,
a substitute good?
A)) Demand for tea decreases
B)) Demand for tea increases
C)) Demand for tea remains unchanged
D)) Supply of tea decreases
Correct: B) Demand for tea increases
Rationale: Coffee and tea are substitute goods. When the price of coffee rises, consumers
substitute toward the relatively cheaper alternative (tea), shifting the demand curve for tea to the
right. This is a change in demand, not quantity demanded.
2. Which of the following would cause the supply curve for smartphones to shift to
the left?
A)) A decrease in the cost of microchip production
B)) An increase in the number of smartphone manufacturers
C)) An increase in the price of lithium, a key input in battery production
D)) Technological improvement in smartphone assembly
Correct: C) An increase in the price of lithium, a key input in battery production
Rationale: An increase in input prices raises production costs, causing producers to supply less at
each price level. This shifts the supply curve leftward. Options A, B, and D would shift supply to
the right by reducing costs or increasing productive capacity.
3. At the market equilibrium price:
A)) Quantity demanded exceeds quantity supplied
B)) Quantity supplied exceeds quantity demanded
C)) Quantity demanded equals quantity supplied, and there is no tendency for change
D)) The market experiences persistent shortages
Correct: C) Quantity demanded equals quantity supplied, and there is no tendency
for change
Rationale: Market equilibrium occurs at the intersection of supply and demand curves, where the
quantity consumers wish to purchase exactly equals the quantity producers wish to sell. At this
price, there is neither surplus nor shortage, and the market clears.
4. A government-imposed price ceiling set below the equilibrium price will result in:
A)) A surplus of the good
B)) A shortage of the good
C)) No change in the market
D)) An increase in both quantity supplied and quantity demanded
Correct: B) A shortage of the good
1
Department of Economics
ECON 202 — Principles of Microeconomics
Final Examination — 2026/2027
Score Summary
Section Points Earned Points Available
Part I: Supply & Demand 20
Fundamentals (Q1–10)
Part II: Elasticity (Q11–17) 14
Part III: Consumer Choice & 16
Production/Costs (Q18–25)
Part IV: Market Structures (Q26– 24
37)
Part V: Factor Markets (Q38–41) 8
Part VI: Market Failure & 10
Government Intervention (Q42–
46)
Part VII: International Trade & 8
Scenario Analysis (Q47–50)
Total 100
, Part I: Supply & Demand Fundamentals
1. If the price of coffee increases, what is the most likely effect on the demand for tea,
a substitute good?
A)) Demand for tea decreases
B)) Demand for tea increases
C)) Demand for tea remains unchanged
D)) Supply of tea decreases
Correct: B) Demand for tea increases
Rationale: Coffee and tea are substitute goods. When the price of coffee rises, consumers
substitute toward the relatively cheaper alternative (tea), shifting the demand curve for tea to the
right. This is a change in demand, not quantity demanded.
2. Which of the following would cause the supply curve for smartphones to shift to
the left?
A)) A decrease in the cost of microchip production
B)) An increase in the number of smartphone manufacturers
C)) An increase in the price of lithium, a key input in battery production
D)) Technological improvement in smartphone assembly
Correct: C) An increase in the price of lithium, a key input in battery production
Rationale: An increase in input prices raises production costs, causing producers to supply less at
each price level. This shifts the supply curve leftward. Options A, B, and D would shift supply to
the right by reducing costs or increasing productive capacity.
3. At the market equilibrium price:
A)) Quantity demanded exceeds quantity supplied
B)) Quantity supplied exceeds quantity demanded
C)) Quantity demanded equals quantity supplied, and there is no tendency for change
D)) The market experiences persistent shortages
Correct: C) Quantity demanded equals quantity supplied, and there is no tendency
for change
Rationale: Market equilibrium occurs at the intersection of supply and demand curves, where the
quantity consumers wish to purchase exactly equals the quantity producers wish to sell. At this
price, there is neither surplus nor shortage, and the market clears.
4. A government-imposed price ceiling set below the equilibrium price will result in:
A)) A surplus of the good
B)) A shortage of the good
C)) No change in the market
D)) An increase in both quantity supplied and quantity demanded
Correct: B) A shortage of the good
1
