ECON 110 EXAM 2 REVIEW ZIRLOTT QUESTIONS
WITH CORRECT ANSWERS 2026/2027
A price ceiling is BINDING when it is set - CORRECT ANSWER -Below the Equilibrium price,
causing a shortage.
Economist use the concept of price elasticity of demand to - CORRECT ANSWER -Measure how
much buyers respond to changes in the price of a good.
When demand is perfectly inelastic, the price elasticity of demand - CORRECT ANSWER -is zero
and the demand curve is vertical
Perfectly elastic demand implies that - CORRECT ANSWER -Any raise in price above that
represented by the demand curve will result in no output demand.
When the price of a good falls, - CORRECT ANSWER -Consumer surplus rises but existing buyers
gain an extra benefit and new buyers will now purchase the product.
An excise tax of $11 placed on bikes will shift the demand curve - CORRECT ANSWER -Not at all,
but the supply curve will shift to the left.
We can say that the allocation of resources is efficient when - CORRECT ANSWER -The sum of
producer surplus and consumer surplus is maximized
Tax incidence is the - CORRECT ANSWER -Division of a tax burden between the buyer and sellers
Consumer surplus is - CORRECT ANSWER -The amount the consumer was willing to pay minus
the amount the consumer paid.
, A price floor is - CORRECT ANSWER -The lowest legal price that can be charged for a particular
good or service
The price elasticity of supply measures how much - CORRECT ANSWER -The quantity supplied
responds to changes in the price of a good
Suppose good X has a positive income elasticity of demand. This implies that good X is -
CORRECT ANSWER -a Normal Good.
Suppose there is a 5% increase in the price of good X and there is a resulting 9% decrease in the
quantity good X demanded. Price elasticity of demand for X is - CORRECT ANSWER -1.8
In general a relatively vertical demand curve is more likely to be - CORRECT ANSWER -Price
inelastic
All of the following statements about marginal benefit are correct Except the marginal benefit
of a good - CORRECT ANSWER -is equal to zero when resource use is efficient.
Consumer surplus is the___________summed over the quantity bought. - CORRECT ANSWER -
Value of a good or service minus the price paid for the good or service
Marginal cost is - CORRECT ANSWER -The opportunity cost of producing one more unit.
Nick can purchase a milkshake for 2$. For the first milkshake purchased nick is willing to pay 4$,
for the second milkshake 3$, for the third milkshake 2$ and the fourth milkshake 1$. What is the
value of Nick's consumer surplus for the milkshakes he buys? - CORRECT ANSWER -3$
WITH CORRECT ANSWERS 2026/2027
A price ceiling is BINDING when it is set - CORRECT ANSWER -Below the Equilibrium price,
causing a shortage.
Economist use the concept of price elasticity of demand to - CORRECT ANSWER -Measure how
much buyers respond to changes in the price of a good.
When demand is perfectly inelastic, the price elasticity of demand - CORRECT ANSWER -is zero
and the demand curve is vertical
Perfectly elastic demand implies that - CORRECT ANSWER -Any raise in price above that
represented by the demand curve will result in no output demand.
When the price of a good falls, - CORRECT ANSWER -Consumer surplus rises but existing buyers
gain an extra benefit and new buyers will now purchase the product.
An excise tax of $11 placed on bikes will shift the demand curve - CORRECT ANSWER -Not at all,
but the supply curve will shift to the left.
We can say that the allocation of resources is efficient when - CORRECT ANSWER -The sum of
producer surplus and consumer surplus is maximized
Tax incidence is the - CORRECT ANSWER -Division of a tax burden between the buyer and sellers
Consumer surplus is - CORRECT ANSWER -The amount the consumer was willing to pay minus
the amount the consumer paid.
, A price floor is - CORRECT ANSWER -The lowest legal price that can be charged for a particular
good or service
The price elasticity of supply measures how much - CORRECT ANSWER -The quantity supplied
responds to changes in the price of a good
Suppose good X has a positive income elasticity of demand. This implies that good X is -
CORRECT ANSWER -a Normal Good.
Suppose there is a 5% increase in the price of good X and there is a resulting 9% decrease in the
quantity good X demanded. Price elasticity of demand for X is - CORRECT ANSWER -1.8
In general a relatively vertical demand curve is more likely to be - CORRECT ANSWER -Price
inelastic
All of the following statements about marginal benefit are correct Except the marginal benefit
of a good - CORRECT ANSWER -is equal to zero when resource use is efficient.
Consumer surplus is the___________summed over the quantity bought. - CORRECT ANSWER -
Value of a good or service minus the price paid for the good or service
Marginal cost is - CORRECT ANSWER -The opportunity cost of producing one more unit.
Nick can purchase a milkshake for 2$. For the first milkshake purchased nick is willing to pay 4$,
for the second milkshake 3$, for the third milkshake 2$ and the fourth milkshake 1$. What is the
value of Nick's consumer surplus for the milkshakes he buys? - CORRECT ANSWER -3$
