ECON 202- FINAL EXAM QUESTIONS AND CORRECT ANSWERS
|2026/2027 UPDATED |GUARANTEED PASS.
Demand is income elastic if - Answer -a small percentage increase in income will result in a large
percentage increase in quantity demanded.
The income elasticity of demand is largest for - Answer -luxuries.
Goods whose income elasticities are negative are called - Answer -inferior goods.
Supply is elastic if - Answer -a 1 percent change in price causes a larger percentage change in
quantity supplied.
The elasticity of supply is - Answer -positive and more elastic in the long run.
A determinant of the price elasticity of supply is - Answer -the extent to which production of the
good uses commonly available resources.
Toothpaste and toothbrushes are complements, so the ________ elasticity of demand is
________. - Answer -cross; negative
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,The budget line - Answer -identifies affordable bundles.
Marginal utility - Answer -is the additional utility derived from the last unit of a good consumed.
Diminishing marginal utility means that - Answer -Ralph will enjoy his second hamburger less
than the first.
As the quantity of a good consumed increases, its marginal utility ________ and its total utility
________. - Answer -decreases; increases
Total utility is maximized when - Answer -the marginal utility per dollar spent is equal for all
goods.
As long as the marginal utility per dollar spent on pizza is greater than the marginal utility per
dollar spent on soda, then to maximize utility a consumer will buy - Answer -more pizza so total
utility will increase.
To maximize total utility, a consumer equates - Answer -the marginal utility per dollar spent on
each good.
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, Kumiko is not at her consumer equilibrium. She sees too many movies and buys too few books.
As she moves toward her consumer equilibrium, her total utility from movies will - Answer -
decrease, but her total utility from books will increase.
In consumer equilibrium, Harold consumes pizza, sodas, and other goods. Pizza and soda are
complements for Harold. The price of a pizza rises while his income remains the same. Harold
then consumes - Answer -less pizza and less soda.
Marginal utility theory concludes that a decrease in the price of a good increases the quantity
demanded and - Answer -increases total utility.
The most important goal of the firm is to - Answer -maximize its profits.
Opportunity costs include - Answer -both implicit costs and explicit costs.
The costs of a firm that are paid directly in money are called its - Answer -explicit costs.
Explicit costs are ________ and implicit costs are ________. - Answer -paid in money; incurred
when a firm gives up an alternate action
3|Page
|2026/2027 UPDATED |GUARANTEED PASS.
Demand is income elastic if - Answer -a small percentage increase in income will result in a large
percentage increase in quantity demanded.
The income elasticity of demand is largest for - Answer -luxuries.
Goods whose income elasticities are negative are called - Answer -inferior goods.
Supply is elastic if - Answer -a 1 percent change in price causes a larger percentage change in
quantity supplied.
The elasticity of supply is - Answer -positive and more elastic in the long run.
A determinant of the price elasticity of supply is - Answer -the extent to which production of the
good uses commonly available resources.
Toothpaste and toothbrushes are complements, so the ________ elasticity of demand is
________. - Answer -cross; negative
1|Page
,The budget line - Answer -identifies affordable bundles.
Marginal utility - Answer -is the additional utility derived from the last unit of a good consumed.
Diminishing marginal utility means that - Answer -Ralph will enjoy his second hamburger less
than the first.
As the quantity of a good consumed increases, its marginal utility ________ and its total utility
________. - Answer -decreases; increases
Total utility is maximized when - Answer -the marginal utility per dollar spent is equal for all
goods.
As long as the marginal utility per dollar spent on pizza is greater than the marginal utility per
dollar spent on soda, then to maximize utility a consumer will buy - Answer -more pizza so total
utility will increase.
To maximize total utility, a consumer equates - Answer -the marginal utility per dollar spent on
each good.
2|Page
, Kumiko is not at her consumer equilibrium. She sees too many movies and buys too few books.
As she moves toward her consumer equilibrium, her total utility from movies will - Answer -
decrease, but her total utility from books will increase.
In consumer equilibrium, Harold consumes pizza, sodas, and other goods. Pizza and soda are
complements for Harold. The price of a pizza rises while his income remains the same. Harold
then consumes - Answer -less pizza and less soda.
Marginal utility theory concludes that a decrease in the price of a good increases the quantity
demanded and - Answer -increases total utility.
The most important goal of the firm is to - Answer -maximize its profits.
Opportunity costs include - Answer -both implicit costs and explicit costs.
The costs of a firm that are paid directly in money are called its - Answer -explicit costs.
Explicit costs are ________ and implicit costs are ________. - Answer -paid in money; incurred
when a firm gives up an alternate action
3|Page
