AGEC 105 Final Exam Study Guide 2026 | Complete Review, Practice
Questions & Exam Prep
Which of the following will lead to an increase in the quantity demanded for LG phones? -
correct answer ✔✔The retailers of LG cell phones discount price.
Firms experience diminishing marginal physical product (MPP). Diminishing MPP causes the -
correct answer ✔✔firm's soppy curve to be upward sloping
When there is a price change, consumers have an incentive to consume less of the good with a
relatively higher price and more of the good with a relatively lower price, this is known as -
correct answer ✔✔Substitution Effect
Given current U.S. policies, market analysts are predicting world oil supplies will decrease in
2017. This announcement of decreasing oil supplies should - correct answer ✔✔shift the supply
curve of gasoline upward, decrease supply of gasoline.
The different combinations of goods a consumer can afford with a given amount of money, at
set prices is known as - correct answer ✔✔Budget Constraint
The Law of Diminishing Marginal Utility states - correct answer ✔✔as consumption per unit of
time increases, marginal utility decreases
(Refer to the following table for Q. 7-9)
What is the MPP for the 80 pounds of fertilizer? - correct answer ✔✔6
Stage III of production occurs between what two levels of applied fertilizer? - correct answer
✔✔100-120
,As shown MPP is decreasing along with APP. It appears APP will become negative - correct
answer ✔✔never, APP is always postive
Assume you have $36 to spend at the Texas Aggie Football game between your date and
yourself. You can buy either nachos at $12 per plate or Pepsi at $6 per drink. Assume Pepsi is
the y-axis and nachos are on the x-axis. Relative price ratio as defined in class is - correct answer
✔✔All are correct
- equal the slope of the budget constraint
- the price of nachos divided by the price of Pepsi
- equal to the slope of the indifference curve at the consumer equilibrium.
- equal to the marginal utility of nachos divided by the marginal utility of Pepsi
The effect of a price increase is the buying power of income has been reduced, even though
actual income has not changed. This is known as - correct answer ✔✔income effect
President Trump was to overturn Obama Care. President Trump's plan will decrease the price of
health care in the U.S. while at the same time increasing revenues to doctors. This can occur if
(assuming a competitive market) - correct answer ✔✔the own price elasticity of health care
demand is elastic
If Texas A&M students' incomes have decreased by 5% how does the number of students' using
4.0 and Go review classes change - correct answer ✔✔decreases by 30%
If Texas A&M increases the price of its classes by 10%, how would this affect 4.0 and Go student
number - correct answer ✔✔increase by 15%
What type of good is 4.0 and Go relative to TAMU classes? - correct answer ✔✔Substitute
The marketing bill in the U.S. has been - correct answer ✔✔increasing in the U.S. because of the
trend toward more processed foods
, If the income elasticity of demand for a good is -0.5, then the good is - correct answer
✔✔inferior good
Short run is best characterized by - correct answer ✔✔having at least one input fixed
The marginal utility to price ratio for raincoats is 1.8, whereas, the marginal utility to price for
umbrellas is 1.2. As a rational consumer you should - correct answer ✔✔shift consumption from
umbrellas to raincoats as the utility from the last dollar spent is higher for raincoats.
The profit maximizing point for a producer is - correct answer ✔✔where marginal revenue
equals marginal cost, MR=MC
When we refer to indifference curves as ____, we mean that ____. - correct answer ✔✔a
downward sloping; if you consume more of one good you must consume less of the other to
keep utility constant.
Suppose your friends take you out for dinner on your birthday and you have a much better time
than you would have had doing anything else. There is still an opportunity cost, even though
they will not let you pay for anything. - correct answer ✔✔True
The marginal rate of substitution describes - correct answer ✔✔- the rate at which a consumer
is willing to trade consumption of one good for another good while keeping utility constant
- the slope of a consumer's indifference curve over a given region.
Which of the following statements "best" illustrates the concept of consumer surplus associated
with ground beef? - correct answer ✔✔You enter HEB with $4.50 to purchase pound of ground
beef, but beause of the special today you only pay $4.
Questions & Exam Prep
Which of the following will lead to an increase in the quantity demanded for LG phones? -
correct answer ✔✔The retailers of LG cell phones discount price.
Firms experience diminishing marginal physical product (MPP). Diminishing MPP causes the -
correct answer ✔✔firm's soppy curve to be upward sloping
When there is a price change, consumers have an incentive to consume less of the good with a
relatively higher price and more of the good with a relatively lower price, this is known as -
correct answer ✔✔Substitution Effect
Given current U.S. policies, market analysts are predicting world oil supplies will decrease in
2017. This announcement of decreasing oil supplies should - correct answer ✔✔shift the supply
curve of gasoline upward, decrease supply of gasoline.
The different combinations of goods a consumer can afford with a given amount of money, at
set prices is known as - correct answer ✔✔Budget Constraint
The Law of Diminishing Marginal Utility states - correct answer ✔✔as consumption per unit of
time increases, marginal utility decreases
(Refer to the following table for Q. 7-9)
What is the MPP for the 80 pounds of fertilizer? - correct answer ✔✔6
Stage III of production occurs between what two levels of applied fertilizer? - correct answer
✔✔100-120
,As shown MPP is decreasing along with APP. It appears APP will become negative - correct
answer ✔✔never, APP is always postive
Assume you have $36 to spend at the Texas Aggie Football game between your date and
yourself. You can buy either nachos at $12 per plate or Pepsi at $6 per drink. Assume Pepsi is
the y-axis and nachos are on the x-axis. Relative price ratio as defined in class is - correct answer
✔✔All are correct
- equal the slope of the budget constraint
- the price of nachos divided by the price of Pepsi
- equal to the slope of the indifference curve at the consumer equilibrium.
- equal to the marginal utility of nachos divided by the marginal utility of Pepsi
The effect of a price increase is the buying power of income has been reduced, even though
actual income has not changed. This is known as - correct answer ✔✔income effect
President Trump was to overturn Obama Care. President Trump's plan will decrease the price of
health care in the U.S. while at the same time increasing revenues to doctors. This can occur if
(assuming a competitive market) - correct answer ✔✔the own price elasticity of health care
demand is elastic
If Texas A&M students' incomes have decreased by 5% how does the number of students' using
4.0 and Go review classes change - correct answer ✔✔decreases by 30%
If Texas A&M increases the price of its classes by 10%, how would this affect 4.0 and Go student
number - correct answer ✔✔increase by 15%
What type of good is 4.0 and Go relative to TAMU classes? - correct answer ✔✔Substitute
The marketing bill in the U.S. has been - correct answer ✔✔increasing in the U.S. because of the
trend toward more processed foods
, If the income elasticity of demand for a good is -0.5, then the good is - correct answer
✔✔inferior good
Short run is best characterized by - correct answer ✔✔having at least one input fixed
The marginal utility to price ratio for raincoats is 1.8, whereas, the marginal utility to price for
umbrellas is 1.2. As a rational consumer you should - correct answer ✔✔shift consumption from
umbrellas to raincoats as the utility from the last dollar spent is higher for raincoats.
The profit maximizing point for a producer is - correct answer ✔✔where marginal revenue
equals marginal cost, MR=MC
When we refer to indifference curves as ____, we mean that ____. - correct answer ✔✔a
downward sloping; if you consume more of one good you must consume less of the other to
keep utility constant.
Suppose your friends take you out for dinner on your birthday and you have a much better time
than you would have had doing anything else. There is still an opportunity cost, even though
they will not let you pay for anything. - correct answer ✔✔True
The marginal rate of substitution describes - correct answer ✔✔- the rate at which a consumer
is willing to trade consumption of one good for another good while keeping utility constant
- the slope of a consumer's indifference curve over a given region.
Which of the following statements "best" illustrates the concept of consumer surplus associated
with ground beef? - correct answer ✔✔You enter HEB with $4.50 to purchase pound of ground
beef, but beause of the special today you only pay $4.
