ECON 2302
FINAL STUDY GUIDE 2026 EXAM
QUESTIONS WITH ACCURATE ANSWERS
Suppose the American Medical Association announces that men who shave their heads are less
likely to die of heart failure. We could expect the current demand for - ANSWER-razors to
increase.
This is due to the fact that there is an incentive to shaving your head, which would increase the
demand for items involved in shaving men's heads.
Whose demand does not obey the law of demand? - ANSWER-Grover's
This is because the law of demand states that as price increases, demand decreases.
A professor changes the penalty for cheating on exams from getting a 0 on the exam to getting an
F in the course. The professor has - ANSWER-increased the marginal cost of cheating.
If the cross-price elasticity of two goods is positive, then the two goods are - ANSWER-
Substitutes.
Cross-Price elasticity basically indicates whether the goods are substitutes or complements. If the
price of Good 1 increases then its demand will decrease. If the price of Good 2 increases in
response then it is a substitute good (hence why it has the same response).
Suppose researchers at the Sam Houston State University discover a new vitamin that increases
the milk production of dairy cows. If the demand for milk is relatively inelastic, the discovery
will - ANSWER-lower both price and total revenues.
Increased production increases supply so you shift the supply curve right. The demand doesn't
change but shifting the supply curve right decreases the price. Since the demand is relatively
inelastic the discovery will cause total revenue to fall with it.
*This is a problem you should draw out*
Scarcity exists because - ANSWER-human wants exceed the resources available to satisfy them.
For a horizontal demand curve,
, **Study this one** - ANSWER-the price elasticity of demand is infinity.
As price elasticity of supply increases, the supply curve - ANSWER-becomes flatter.
Elasticity of 1 equals perfectly elastic. An elasticity of 0 is perfectly Inelastic. Thus an increasing
elasticity is becoming flatter NOT steeper.
SHSU is contemplating an increase in tuition to enhance revenue. If SHSU feels that raising
tuition would enhance revenue, it is - ANSWER-assuming that the demand for university
education is inelastic.
Danita rescues dogs from her local animal shelter. When Danita's income rises by 7 percent, her
quantity demanded of dog biscuits increases by 12 percent. For Danita, the income elasticity of
demand for dog biscuits is - ANSWER-positive, and dog biscuits are a normal good.
A Normal Good is when the demand increases while the income increases.
An Inferior Good is when the demand decreases while the income increases.
If the demand for used cars decreases after the price of a new car falls, used cars and new cars
are - ANSWER-Substitute Goods.
If the Price of Good 1 increases and the Demand of Good 2 increases, then the goods are
substitutes.
Suppose you eat two hamburgers for lunch. The marginal benefit of the first burger is ________
of the second burger. - ANSWER-larger than the marginal benefit
The marginal benefit of the first item is always going to be larger than the next.
Two goods are complements when a decrease in the price of one good - ANSWER-increases the
demand for the other good.
Complementary goods have an inverse relationship with one another. Substitute goods have a
positive relationship.
Kumar says he would buy one cup of coffee per day regardless of the price. If this is true, then
Kumar's demand for coffee is - ANSWER-Perfectly inelastic
FINAL STUDY GUIDE 2026 EXAM
QUESTIONS WITH ACCURATE ANSWERS
Suppose the American Medical Association announces that men who shave their heads are less
likely to die of heart failure. We could expect the current demand for - ANSWER-razors to
increase.
This is due to the fact that there is an incentive to shaving your head, which would increase the
demand for items involved in shaving men's heads.
Whose demand does not obey the law of demand? - ANSWER-Grover's
This is because the law of demand states that as price increases, demand decreases.
A professor changes the penalty for cheating on exams from getting a 0 on the exam to getting an
F in the course. The professor has - ANSWER-increased the marginal cost of cheating.
If the cross-price elasticity of two goods is positive, then the two goods are - ANSWER-
Substitutes.
Cross-Price elasticity basically indicates whether the goods are substitutes or complements. If the
price of Good 1 increases then its demand will decrease. If the price of Good 2 increases in
response then it is a substitute good (hence why it has the same response).
Suppose researchers at the Sam Houston State University discover a new vitamin that increases
the milk production of dairy cows. If the demand for milk is relatively inelastic, the discovery
will - ANSWER-lower both price and total revenues.
Increased production increases supply so you shift the supply curve right. The demand doesn't
change but shifting the supply curve right decreases the price. Since the demand is relatively
inelastic the discovery will cause total revenue to fall with it.
*This is a problem you should draw out*
Scarcity exists because - ANSWER-human wants exceed the resources available to satisfy them.
For a horizontal demand curve,
, **Study this one** - ANSWER-the price elasticity of demand is infinity.
As price elasticity of supply increases, the supply curve - ANSWER-becomes flatter.
Elasticity of 1 equals perfectly elastic. An elasticity of 0 is perfectly Inelastic. Thus an increasing
elasticity is becoming flatter NOT steeper.
SHSU is contemplating an increase in tuition to enhance revenue. If SHSU feels that raising
tuition would enhance revenue, it is - ANSWER-assuming that the demand for university
education is inelastic.
Danita rescues dogs from her local animal shelter. When Danita's income rises by 7 percent, her
quantity demanded of dog biscuits increases by 12 percent. For Danita, the income elasticity of
demand for dog biscuits is - ANSWER-positive, and dog biscuits are a normal good.
A Normal Good is when the demand increases while the income increases.
An Inferior Good is when the demand decreases while the income increases.
If the demand for used cars decreases after the price of a new car falls, used cars and new cars
are - ANSWER-Substitute Goods.
If the Price of Good 1 increases and the Demand of Good 2 increases, then the goods are
substitutes.
Suppose you eat two hamburgers for lunch. The marginal benefit of the first burger is ________
of the second burger. - ANSWER-larger than the marginal benefit
The marginal benefit of the first item is always going to be larger than the next.
Two goods are complements when a decrease in the price of one good - ANSWER-increases the
demand for the other good.
Complementary goods have an inverse relationship with one another. Substitute goods have a
positive relationship.
Kumar says he would buy one cup of coffee per day regardless of the price. If this is true, then
Kumar's demand for coffee is - ANSWER-Perfectly inelastic
