ECON 101 EXAM (2026)
COMPREHENSIVE QUESTIONS
AND VERIFIED ANSWERS
(DETAILED & ELABORATED)
Which of the following defines profit maximization? - Answer-The sales level where
profits are highest
A renewable energy company has to pay the rent and salary of its employees in the PR
division. Why are such costs considered overhead? - Answer-Because these are costs
not directly related to production
Which of the following is FALSE regarding shortages? - Answer-Producers that sell
highly elastic goods are likely to impose shortages.
Identify which of the following is a situation where the government should act with price
ceilings: - Answer-When a company that has a large control over the market tries to
drastically increase prices on products such as food, water or electricity, especially
targeting underdeveloped areas.
Identify which of the following is an example of elastic supplies: - Answer-When you're
buying bagels and there is a two for one sale.
Why does market equilibrium cause stable prices? - Answer-Because the amount of
goods or services sought by buyers is equal to the amount of goods or services
produced by sellers.
Which of the following is an example of research and development? - Answer-All of the
answers are correct.
Stewart Electronics uses new scientific methods to try and stay ahead of their
competitors. They also use data on consumer needs to help them in the production of
new products, and often use various forms of scientific and statistic analysis to project
consumer trends. Which BEST describes the methods of Stewart Electronics? -
Answer-Business technology
Perhaps the most competitive sector today is the marketing industry. Everyone has the
same technology available, so what makes the biggest difference is how well they
operate as a whole, and the way they use technological innovations to allow their
, employees to work smarter for efficiency. Which concept is MOST relevant to the above
scenario? - Answer-Productivity
Which of the following is an example of the use of applied research? - Answer-When a
company used the knowledge gained from NASA to develop their own new products.
Bob likes enchiladas more than he likes tacos. He also likes tacos more than he likes
fajitas. When Bob goes to a Mexican restaurant that offers enchiladas and fajitas for the
same price, he will pick enchiladas over fajitas. How does Bob's situation illustrate the
consumer preference assumption of transitivity? - Answer-Bob prefers choice A
(enchiladas) over choice B (tacos), and choice B (tacos) over choice C (fajitas), so Bob
prefers A (enchiladas) over C (fajitas).
Consumer choice theory is concerned with analyzing how consumers achieve
equilibrium between preferences and expenditures by maximizing _____ in terms of
their _____. - Answer-utility or satisfaction; budget limits
Tara is disappointed to hear that all of the employees at the company where she works
are going to have to take a 2.5% pay cut in order to help the company survive through
lean times. Tara decides she better start packing her lunch instead of going out each
day with her coworkers. Tara's situation is an example of the _____ on consumer
spending. - Answer-income effect
Dynamic Foods is hoping to become the preferred brand of quick and easy frozen
meals for consumers. Which of the following represents a way in which Dynamic Foods
might approach their goal? - Answer-Offering prices slightly below their competitors and
holding a sweepstakes where purchasers of their product could win an exotic vacation
Which of the following is FALSE regarding financial resources? - Answer-They have a
value of their own, rather than deriving their value from social convention.
What is the role of households in the resource market? - Answer-They have a very
relevant role, as they can be both consumers and producers, such as when the
resource market requires input.
Which of the following BEST defines land? - Answer-The space to perform a given
economic activity.
Which of the following BEST reflects an example of entrepreneurship? - Answer-Sandra
started her startup company by using various forms of capital and taking risks in
managing them.
James owns a company where he has sole liability for the debts of his small
manufacturing company. A few licences were needed, but otherwise his startup costs
were low. One of the main things that James likes about such a form of ownership is
COMPREHENSIVE QUESTIONS
AND VERIFIED ANSWERS
(DETAILED & ELABORATED)
Which of the following defines profit maximization? - Answer-The sales level where
profits are highest
A renewable energy company has to pay the rent and salary of its employees in the PR
division. Why are such costs considered overhead? - Answer-Because these are costs
not directly related to production
Which of the following is FALSE regarding shortages? - Answer-Producers that sell
highly elastic goods are likely to impose shortages.
Identify which of the following is a situation where the government should act with price
ceilings: - Answer-When a company that has a large control over the market tries to
drastically increase prices on products such as food, water or electricity, especially
targeting underdeveloped areas.
Identify which of the following is an example of elastic supplies: - Answer-When you're
buying bagels and there is a two for one sale.
Why does market equilibrium cause stable prices? - Answer-Because the amount of
goods or services sought by buyers is equal to the amount of goods or services
produced by sellers.
Which of the following is an example of research and development? - Answer-All of the
answers are correct.
Stewart Electronics uses new scientific methods to try and stay ahead of their
competitors. They also use data on consumer needs to help them in the production of
new products, and often use various forms of scientific and statistic analysis to project
consumer trends. Which BEST describes the methods of Stewart Electronics? -
Answer-Business technology
Perhaps the most competitive sector today is the marketing industry. Everyone has the
same technology available, so what makes the biggest difference is how well they
operate as a whole, and the way they use technological innovations to allow their
, employees to work smarter for efficiency. Which concept is MOST relevant to the above
scenario? - Answer-Productivity
Which of the following is an example of the use of applied research? - Answer-When a
company used the knowledge gained from NASA to develop their own new products.
Bob likes enchiladas more than he likes tacos. He also likes tacos more than he likes
fajitas. When Bob goes to a Mexican restaurant that offers enchiladas and fajitas for the
same price, he will pick enchiladas over fajitas. How does Bob's situation illustrate the
consumer preference assumption of transitivity? - Answer-Bob prefers choice A
(enchiladas) over choice B (tacos), and choice B (tacos) over choice C (fajitas), so Bob
prefers A (enchiladas) over C (fajitas).
Consumer choice theory is concerned with analyzing how consumers achieve
equilibrium between preferences and expenditures by maximizing _____ in terms of
their _____. - Answer-utility or satisfaction; budget limits
Tara is disappointed to hear that all of the employees at the company where she works
are going to have to take a 2.5% pay cut in order to help the company survive through
lean times. Tara decides she better start packing her lunch instead of going out each
day with her coworkers. Tara's situation is an example of the _____ on consumer
spending. - Answer-income effect
Dynamic Foods is hoping to become the preferred brand of quick and easy frozen
meals for consumers. Which of the following represents a way in which Dynamic Foods
might approach their goal? - Answer-Offering prices slightly below their competitors and
holding a sweepstakes where purchasers of their product could win an exotic vacation
Which of the following is FALSE regarding financial resources? - Answer-They have a
value of their own, rather than deriving their value from social convention.
What is the role of households in the resource market? - Answer-They have a very
relevant role, as they can be both consumers and producers, such as when the
resource market requires input.
Which of the following BEST defines land? - Answer-The space to perform a given
economic activity.
Which of the following BEST reflects an example of entrepreneurship? - Answer-Sandra
started her startup company by using various forms of capital and taking risks in
managing them.
James owns a company where he has sole liability for the debts of his small
manufacturing company. A few licences were needed, but otherwise his startup costs
were low. One of the main things that James likes about such a form of ownership is
