Economics Practice Exam
ECN 104 Final Exam
December 9th 2011
104F11FE
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____
1. An increase in income will cause a shift in the budget constraint
a. outward.
b. towards the good most consumed.
c. inward.
d. towards the good least consumed.
____
2. If the consumption of one good is reduced, how must a consumer alter his consumption of another good in order to remain indifferent between two bundles?
a. He must not change his consumption of another good.
b. He can reduce, increase or not change his consumption of another good.
c. He must reduce his consumption of another good.
d. He must increase his consumption of another good.
____
3. What happens to consumer surplus if the price of a good increases?
a. It increases.
b. It may increase, decrease, or remain unchanged.
c. It is unchanged.
d. It decreases.
____
4. When the price of pizza falls, the substitution effect, for normal goods Pepsi and pizza, causes
a. Pepsi to be relatively less expensive, so the consumer buys less Pepsi.
b. the consumer to feel richer, so the consumer buys more Pepsi.
c. the consumer to feel richer, so the consumer buys less Pepsi.
d. Pepsi to be relatively more expensive, so the consumer buys less Pepsi.
____
5. When, for a firm, long-run average total cost decreases as the quantity of output increases, we have a situation of a. fixed costs greatly exceeding variable costs.
b. coordination problems arising from the large size of the firm.
c. economies of scale.
d. diseconomies of scale.
____
6. The complete description of a competitive firm's supply curve is as follows: The competitive firm's short-run supply curve is that portion of the
a. average total cost curve that lies above marginal cost.
b. average variable cost curve that lies above marginal cost.
c. marginal cost curve that lies above average total cost.
d. marginal cost curve that lies above average variable cost.
2
Name: ________________________
December 9th 2011
104F11FE
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____
1. An increase in income will cause a shift in the budget constraint
a. outward.
b. towards the good most consumed.
c. inward.
d. towards the good least consumed.
____
2. If the consumption of one good is reduced, how must a consumer alter his consumption of another good in order to remain indifferent between two bundles?
a. He must not change his consumption of another good.
b. He can reduce, increase or not change his consumption of another good.
c. He must reduce his consumption of another good.
d. He must increase his consumption of another good.
____
3. What happens to consumer surplus if the price of a good increases?
a. It increases.
b. It may increase, decrease, or remain unchanged.
c. It is unchanged.
d. It decreases.
____
4. When the price of pizza falls, the substitution effect, for normal goods Pepsi and pizza, causes
a. Pepsi to be relatively less expensive, so the consumer buys less Pepsi.
b. the consumer to feel richer, so the consumer buys more Pepsi.
c. the consumer to feel richer, so the consumer buys less Pepsi.
d. Pepsi to be relatively more expensive, so the consumer buys less Pepsi.
____
5. When, for a firm, long-run average total cost decreases as the quantity of output increases, we have a situation of a. fixed costs greatly exceeding variable costs.
b. coordination problems arising from the large size of the firm.
c. economies of scale.
d. diseconomies of scale.
____
6. The complete description of a competitive firm's supply curve is as follows: The competitive firm's short-run supply curve is that portion of the
a. average total cost curve that lies above marginal cost.
b. average variable cost curve that lies above marginal cost.
c. marginal cost curve that lies above average total cost.
d. marginal cost curve that lies above average variable cost.
2
Name: ________________________