ECP3704 Exam 2 Questions & Verified Answers – A Grade | Budget Lines, Isoquants & Production Functions

ECP3704 EXAM 2 QUESTIONS
AND CORRECT ANSWERS
(VERIFIED ANSWERS); A GRADE

A cash gift causes the budget line to
Shift to the right in a parallel fashion
Shift to the left in a parallel fashion
Rotate clockwise
None of the statements associated with this question are
correct - correct answer- Shift to the right in a
parallel fashion


A price increase causes a consumer's "real" income to:
Decrease
Increase
Remain unchanged
Vary along the budget line - correct answer-
Decrease

,A situation where a consumer says he does not know his
preference ordering for bundles X and Y would violate the
property of:
More is be better
Completeness
Substitutability
Complementarity - correct answer-
Completeness


A≻B means
Bundle A is not preferred to bundle B
Bundle A is preferred to bundle B
Bundle A is equally preferred to bundle B
Bundle A is greater than bundle B - correct
answer- Bundle A is preferred to bundle B


An isocost line
Represents the combinations of w and K that cost the
firm the same amount of moey

, Represents the combinations of K and L that cost the firm
the same amount of money
Represents the combinations of r and w that cost the firm
the same amount of money
Has a convex shape - correct answer-
Represents the combinations of K and L that cost the firm
the same amount of money


Cobb-Douglas Production Function - correct
answer- Inputs have a degree of substitutability.


Completeness Property - correct answer-
Consumer is capable of expressing their preferences
between bundles.


Economies of scale exist whenever long-run average costs
Increase as output is increased
Decrease as output is increased
Remain constant as output is increased