ECON 110 EXAM 2 REVIEW ZIRLOTT
QUESTIONS AND ANSWERS 100% PASS
2026/2027
A price ceiling is BINDING when it is set - ANS Below the Equilibrium price, causing a
shortage.
Economist use the concept of price elasticity of demand to - ANS Measure how much buyers
respond to changes in the price of a good.
When demand is perfectly inelastic, the price elasticity of demand - ANS is zero and the
demand curve is vertical
Perfectly elastic demand implies that - ANS Any raise in price above that represented by the
demand curve will result in no output demand.
When the price of a good falls, - ANS Consumer surplus rises but existing buyers gain an extra
benefit and new buyers will now purchase the product.
An excise tax of $11 placed on bikes will shift the demand curve - ANS Not at all, but the
supply curve will shift to the left.
@2026 ALLRIGHTS RESERVED 1
, We can say that the allocation of resources is efficient when - ANS The sum of producer
surplus and consumer surplus is maximized
Tax incidence is the - ANS Division of a tax burden between the buyer and sellers
Consumer surplus is - ANS The amount the consumer was willing to pay minus the amount
the consumer paid.
A price floor is - ANS The lowest legal price that can be charged for a particular good or
service
The price elasticity of supply measures how much - ANS The quantity supplied responds to
changes in the price of a good
Suppose good X has a positive income elasticity of demand. This implies that good X is -
ANS a Normal Good.
Suppose there is a 5% increase in the price of good X and there is a resulting 9% decrease in the
quantity good X demanded. Price elasticity of demand for X is - ANS 1.8
In general a relatively vertical demand curve is more likely to be - ANS Price inelastic
All of the following statements about marginal benefit are correct Except the marginal benefit
of a good - ANS is equal to zero when resource use is efficient.
Consumer surplus is the___________summed over the quantity bought. - ANS Value of a
good or service minus the price paid for the good or service
@2026 ALLRIGHTS RESERVED 2
QUESTIONS AND ANSWERS 100% PASS
2026/2027
A price ceiling is BINDING when it is set - ANS Below the Equilibrium price, causing a
shortage.
Economist use the concept of price elasticity of demand to - ANS Measure how much buyers
respond to changes in the price of a good.
When demand is perfectly inelastic, the price elasticity of demand - ANS is zero and the
demand curve is vertical
Perfectly elastic demand implies that - ANS Any raise in price above that represented by the
demand curve will result in no output demand.
When the price of a good falls, - ANS Consumer surplus rises but existing buyers gain an extra
benefit and new buyers will now purchase the product.
An excise tax of $11 placed on bikes will shift the demand curve - ANS Not at all, but the
supply curve will shift to the left.
@2026 ALLRIGHTS RESERVED 1
, We can say that the allocation of resources is efficient when - ANS The sum of producer
surplus and consumer surplus is maximized
Tax incidence is the - ANS Division of a tax burden between the buyer and sellers
Consumer surplus is - ANS The amount the consumer was willing to pay minus the amount
the consumer paid.
A price floor is - ANS The lowest legal price that can be charged for a particular good or
service
The price elasticity of supply measures how much - ANS The quantity supplied responds to
changes in the price of a good
Suppose good X has a positive income elasticity of demand. This implies that good X is -
ANS a Normal Good.
Suppose there is a 5% increase in the price of good X and there is a resulting 9% decrease in the
quantity good X demanded. Price elasticity of demand for X is - ANS 1.8
In general a relatively vertical demand curve is more likely to be - ANS Price inelastic
All of the following statements about marginal benefit are correct Except the marginal benefit
of a good - ANS is equal to zero when resource use is efficient.
Consumer surplus is the___________summed over the quantity bought. - ANS Value of a
good or service minus the price paid for the good or service
@2026 ALLRIGHTS RESERVED 2
