ECON 1100 Exam 2 Questions and Answers 100% Pass

ECON 1100 Exam 2 Questions and
Answers 100% Pass


Brett has agreed to sell a rare comic book to a collector who offered to

pay $125. Brett's producer surplus is -

CORRECT ANSWER: $50 if the minimum price he would have

accepted is actually $75




QUESTION: Government policies that interfere with the market

mechanism and cause price to be different from equilibrium are -

CORRECT ANSWER: inefficient because they reduce total surplus




QUESTION: The difference between the maximum price consumers

are willing to pay and the actual price consumers pay in the market

measure -

CORRECT ANSWER: consumer surplus

, QUESTION: A demand curve can be best be interpreted as a -

CORRECT ANSWER: marginal benefit curve




QUESTION: If haircuts are normal goods, then a decrease in consumer

income leads to a(n)________ equilibrium price of haircuts, and

producer surplus to barbers will _________ -

CORRECT ANSWER: decrease;decrease




QUESTION: The law of diminishing marginal returns suggests that

marginal cost -

CORRECT ANSWER: increases as output increases




QUESTION: The purpose of setting a price floor above the equilibrium

price is to -

CORRECT ANSWER: maintain a high price for the sellers in the

market