ECON1100 Final Review

Question 1

If demand is very inelastic, a decrease in supply will cause the price to...

Accepted Answer

Increase by a lot

Question 2

The area between the price and the demand curve is...

Accepted Answer

Consumer surplus

Question 3

Which of the following leads to market power for a firm?

Accepted Answer

A highly differentiated product

Question 4

If a firm's fixed costs increase, the marginal cost will...

Accepted Answer

Not change

Question 5

Which of the following is NOT a potential outcome of a price ceiling?

Accepted Answer

Market surplus

Question 6

Country X can produce goods A and B. It decides to specialize in good A and import good B. Who in Country X is HURT?

Accepted Answer

Producers of good B, Consumers of good A

Question 7

Which of the following is NOT an outcome of monopoly relative to competitive markets?

Accepted Answer

Lower average cost

Question 8

A country has the comparative advantage when...

Accepted Answer

It can produce a good at a lower opportunity cost than the other country

Question 9

Deadweight loss happens when...

Accepted Answer

The number of goods sold is less than the equilibrium quantity

Question 10

When a country can produce more of a good than another country, it has the...

Accepted Answer

Absolute advantage

Question 11

Which of the following is NOT a criteria economists use to evaluate a market outcome?

Accepted Answer

Morality

Question 12

A good with a positive externality gets ___ in the free market.

Accepted Answer

Underproduced

Question 13

Which of the following goods is a club good?

Accepted Answer

Spotify Premium

Question 14

What is the sum of total surplus for goods not sold?

Accepted Answer

Deadweight loss

Question 15

Which of the following is meant to help struggling firms when the market price is too low?

Accepted Answer

Price floor

Question 16

Which of the following policies do most economists prefer for solving climate change?

Accepted Answer

Pigouvian tax on fossil fuels

Question 17

Why does the supply curve shift up in the short run?

Accepted Answer

Overcrowding

Question 18

Two countries are better off when they both...

Accepted Answer

Specialize in the good they have the comparative advantage in, and trade

Question 19

What explains why the demand curve slopes down?

Accepted Answer

Law of decreasing marginal benefit

Question 20

Someone living by an airport is bothered by the sound of planes flying nearby. This is an example of a...

Accepted Answer

Marginal external cost

Question 21

Which of the following taxes would generate zero DWL?

Accepted Answer

A fixed-amount monthly tax on a business

Question 22

What pushes the market to equilibrium?

Accepted Answer

Invisible hand

Question 23

Pareto efficiency is achieved when...

Accepted Answer

No one can be helped without hurting someone else

Question 24

Which of the following consumer experiences is NOT associated with a price ceiling?

Accepted Answer

Increased quality of the good

Question 25

What is it called when a firm can raise its price without losing all its customers to competitors?

Accepted Answer

Market power

ECON1100 Final Review

Questions 25

ECON1100 Final Review

Questions 25