EC260 All Quiz Questions & correct
answers rated A+ 2025/2026
C) it exceeds marginal product. - ANS✔✔ Average product will fall as long as
A) the number of workers is increasing.
B) it is less than marginal product.
C) it exceeds marginal product.
D) marginal product is falling. C) it exceeds marginal product.
b) leads to an indeterminant change in profits. - ANS✔✔ Raising the price of a good by one
dollar:
a) decreases profits.
b) leads to an indeterminant change in profits.
c) increases profits.
d) leaves profits unchanged.
d) maximize profit - ANS✔✔ Most private firms seek to:
a) minimize headcount.
b) maximize revenue.
c) maximize employee salaries.
d) maximize profit.
b) explaining outcomes resulting from management decisions. - ANS✔✔ Economic models are
most useful in:
a) predicting the direction of the stock market.
,b) explaining outcomes resulting from management decisions.
c) generating untestable hypotheses.
d) explaining the future with the past.
c) allows interactions between consumers and firms. - ANS✔✔ A market:
a) has no influence on prices.
b) always involves the personal exchange of goods for money.
c) allows interactions between consumers and firms.
d) always takes place at a physical location.
d) people and firms coordinate their activities, resulting in equilibrium in the market. - ANS✔✔
According to Adam Smith's invisible hand:
a) there is an invisible glove that restricts what markets can do.
b) forces are constantly pushing markets out of equilibrium
c) markets need the government to intervene.
d) people and firms coordinate their activities, resulting in equilibrium in the market.
b) in the absence of supply/demand shocks no one applies pressure to change the price. -
ANS✔✔ Once an equilibrium is achieved, it can persist indefinitely because:
a) the government never intervenes in markets at equilibrium.
b) in the absence of supply/demand shocks no one applies pressure to change the price.
c) shocks to the demand curve are always exactly offset by shocks to the supply curve.
d) shocks that shift the demand curve or the supply curve cannot occur.
a) movement up along the supply curve. - ANS✔✔ The expression "increase in quantity
supplied" is illustrated graphically as a:
a) movement up along the supply curve.
,b) movement down along the supply curve.
c) rightward shift in the supply curve.
d) leftward shift in the supply curve.
b) real estate market - ANS✔✔ It is appropriate to use the supply-and-demand model in which
of the following markets?
a) wine market
b) real estate market
c) beer market
d) market for gourmet pizza
d) 10 units - ANS✔✔ The above figure shows a graph of a market for pizzas in a large town. At a
price of $7, what is the amount of excess demand?
a) 0; there is excess supply at $7.
b) 20 units
c) 30 units
d) 10 units
a) excess demand. - ANS✔✔ The above figure shows a graph of the market for pizzas in a large
town. At a price of $5, there will be:
a) excess demand.
b) excess supply.
c) equilibrium.
d) zero demand.
d) increase doctors' fees. - ANS✔✔ A restriction on the number of people allowed to be medical
doctors in the United States would most likely:
, a) decrease the number of people who get sick.
b) decrease the demand for nurses.
c) decrease the demand for doctors.
d) increase doctors' fees.
d) All of these. - ANS✔✔ A leftward shift of the supply curve in a market with a downward-
sloping demand curve will lead to a(n):
a) increase in equilibrium price.
b) excess demand at the old equilibrium price.
c) decrease in quantity demanded.
d) All of these.
a) The price of the product. - ANS✔✔ Which of the following would NOT change demand?
a) The price of the product.
b) The income of the consumers.
c) Information about the product's health effects.
d) The price of related products.
d) All of these. - ANS✔✔ If pizza and tacos are substitutes, a decrease in the price of tacos
would lead to a:
a) decrease in the demand curve for pizza.
b) decrease in the quantity demanded of pizza.
c) decrease in the price of pizza.
d) All of these.
a) seasonal variation. - ANS✔✔ Sometimes distinct patterns around a trend line can be caused
by:
answers rated A+ 2025/2026
C) it exceeds marginal product. - ANS✔✔ Average product will fall as long as
A) the number of workers is increasing.
B) it is less than marginal product.
C) it exceeds marginal product.
D) marginal product is falling. C) it exceeds marginal product.
b) leads to an indeterminant change in profits. - ANS✔✔ Raising the price of a good by one
dollar:
a) decreases profits.
b) leads to an indeterminant change in profits.
c) increases profits.
d) leaves profits unchanged.
d) maximize profit - ANS✔✔ Most private firms seek to:
a) minimize headcount.
b) maximize revenue.
c) maximize employee salaries.
d) maximize profit.
b) explaining outcomes resulting from management decisions. - ANS✔✔ Economic models are
most useful in:
a) predicting the direction of the stock market.
,b) explaining outcomes resulting from management decisions.
c) generating untestable hypotheses.
d) explaining the future with the past.
c) allows interactions between consumers and firms. - ANS✔✔ A market:
a) has no influence on prices.
b) always involves the personal exchange of goods for money.
c) allows interactions between consumers and firms.
d) always takes place at a physical location.
d) people and firms coordinate their activities, resulting in equilibrium in the market. - ANS✔✔
According to Adam Smith's invisible hand:
a) there is an invisible glove that restricts what markets can do.
b) forces are constantly pushing markets out of equilibrium
c) markets need the government to intervene.
d) people and firms coordinate their activities, resulting in equilibrium in the market.
b) in the absence of supply/demand shocks no one applies pressure to change the price. -
ANS✔✔ Once an equilibrium is achieved, it can persist indefinitely because:
a) the government never intervenes in markets at equilibrium.
b) in the absence of supply/demand shocks no one applies pressure to change the price.
c) shocks to the demand curve are always exactly offset by shocks to the supply curve.
d) shocks that shift the demand curve or the supply curve cannot occur.
a) movement up along the supply curve. - ANS✔✔ The expression "increase in quantity
supplied" is illustrated graphically as a:
a) movement up along the supply curve.
,b) movement down along the supply curve.
c) rightward shift in the supply curve.
d) leftward shift in the supply curve.
b) real estate market - ANS✔✔ It is appropriate to use the supply-and-demand model in which
of the following markets?
a) wine market
b) real estate market
c) beer market
d) market for gourmet pizza
d) 10 units - ANS✔✔ The above figure shows a graph of a market for pizzas in a large town. At a
price of $7, what is the amount of excess demand?
a) 0; there is excess supply at $7.
b) 20 units
c) 30 units
d) 10 units
a) excess demand. - ANS✔✔ The above figure shows a graph of the market for pizzas in a large
town. At a price of $5, there will be:
a) excess demand.
b) excess supply.
c) equilibrium.
d) zero demand.
d) increase doctors' fees. - ANS✔✔ A restriction on the number of people allowed to be medical
doctors in the United States would most likely:
, a) decrease the number of people who get sick.
b) decrease the demand for nurses.
c) decrease the demand for doctors.
d) increase doctors' fees.
d) All of these. - ANS✔✔ A leftward shift of the supply curve in a market with a downward-
sloping demand curve will lead to a(n):
a) increase in equilibrium price.
b) excess demand at the old equilibrium price.
c) decrease in quantity demanded.
d) All of these.
a) The price of the product. - ANS✔✔ Which of the following would NOT change demand?
a) The price of the product.
b) The income of the consumers.
c) Information about the product's health effects.
d) The price of related products.
d) All of these. - ANS✔✔ If pizza and tacos are substitutes, a decrease in the price of tacos
would lead to a:
a) decrease in the demand curve for pizza.
b) decrease in the quantity demanded of pizza.
c) decrease in the price of pizza.
d) All of these.
a) seasonal variation. - ANS✔✔ Sometimes distinct patterns around a trend line can be caused
by:
