ECON 202 OLE MISS HAYES FINAL EXAM ACTUAL EXAM 2026 | ALL
QUESTIONS AND CORRECT ANSWERS | VERIFIED ANSWERS | BRAND
NEW VERSION!
Question 1
In a market economy, what is the primary function of prices?
A) To ensure everyone can afford essential goods.
B) To send signals to buyers and sellers.
C) To generate revenue for the government.
D) To limit the production of certain goods.
E) To be set by a central planning authority.
Correct Answer: B) To send signals to buyers and sellers.
Rationale: Prices act as a crucial communication mechanism. A high price signals to producers
to supply more and to consumers to buy less. A low price signals the opposite. This
coordinates the actions of buyers and sellers.
Question 2
The allocation of resources in a market economy is determined by:
A) The government
B) A vote of the consumers
C) The decisions of a few large corporations
D) Prices
E) The amount of resources available
Correct Answer: D) Prices
Rationale: Prices guide the allocation of scarce resources. Resources flow towards the
production of goods and services that have higher prices (indicating higher demand), and
away from those with lower prices.
Question 3
In a market economy, the actions of buyers and sellers collectively establish a product's:
A) Quality
B) Price
,C) Utility
D) Production cost
E) Supply schedule
Correct Answer: B) Price
Rationale: The interaction of supply (from sellers) and demand (from buyers) in a market is
what determines the equilibrium price of a product.
Question 4
Which of the following is NOT a characteristic of a market economy?
A) Buyers and sellers interact to determine prices.
B) Prices allocate scarce resources.
C) The government prescribes market prices for most goods and services.
D) Individuals and firms pursue their own self-interest.
E) Competition exists among sellers.
Correct Answer: C) The government prescribes market prices for most goods and services.
Rationale: A key feature of a market economy is that prices are determined by the forces of
supply and demand, not by government decree. Government price-setting is a characteristic
of a command economy.
Question 5
What does a demand curve show?
A) The relationship between income and quantity demanded.
B) The relationship between price and quantity supplied.
C) The relationship between price and quantity demanded.
D) The total quantity of a good available in the market.
E) The cost of producing a certain quantity of a good.
Correct Answer: C) The relationship between price and quantity demanded.
Rationale: A demand curve is a graphical representation of the law of demand, illustrating
how the quantity of a good that consumers are willing and able to buy changes as its price
changes, holding other factors constant.
,Question 6
The concept that the more of a good a consumer buys, the less the additional unit is worth to
them is known as:
A) The Law of Supply
B) The Concept of Diminishing Marginal Utility
C) The Law of Increasing Costs
D) Consumer Equilibrium
E) The Price Elasticity of Demand
Correct Answer: B) The Concept of Diminishing Marginal Utility
Rationale: This principle states that as a consumer consumes more and more units of a
specific good, the extra satisfaction (marginal utility) they get from each additional unit will
eventually decrease.
Question 7
Consumers will purchase more of a good when its price falls because:
A) The marginal benefit of additional units outweighs the marginal cost.
B) Their income has increased.
C) The supply of the good has decreased.
D) The good is now considered a luxury item.
E) The law of diminishing returns no longer applies.
Correct Answer: A) The marginal benefit of additional units outweighs the marginal cost.
Rationale: A lower price (marginal cost) means that the consumer can now purchase
additional units for which the marginal benefit (utility) is still greater than or equal to the
price they have to pay.
Question 8
A movement along a single demand curve, caused by a change in the product's price, is called a:
A) Change in demand
B) Change in preferences
C) Change in quantity demanded
, D) Shift in demand
E) Change in utility
Correct Answer: C) Change in quantity demanded
Rationale: This is a specific term to describe movement from one point to another on the
same demand curve, which is caused only by a change in the price of the good itself.
Question 9
A shift in the entire demand curve to the left or right is called a:
A) Change in quantity demanded
B) Change in demand
C) Change in price
D) Change in supply
E) Movement along the curve
Correct Answer: B) Change in demand
Rationale: A "change in demand" refers to a shift of the entire curve, caused by a change in
one of the underlying determinants of demand (like income or preferences), meaning
consumers want to buy more or less at every price.
Question 10
Which of the following is an underlying determinant of demand (a factor that can shift the
demand curve)?
A) The cost of resources used to produce the good.
B) The technology used in production.
C) A change in the price of related goods.
D) The number of sellers in the market.
E) A tax on the producers of the good.
Correct Answer: C) A change in the price of related goods.
Rationale: The price of related goods (substitutes and complements) is a key determinant of
demand. The other options are all determinants of supply.
QUESTIONS AND CORRECT ANSWERS | VERIFIED ANSWERS | BRAND
NEW VERSION!
Question 1
In a market economy, what is the primary function of prices?
A) To ensure everyone can afford essential goods.
B) To send signals to buyers and sellers.
C) To generate revenue for the government.
D) To limit the production of certain goods.
E) To be set by a central planning authority.
Correct Answer: B) To send signals to buyers and sellers.
Rationale: Prices act as a crucial communication mechanism. A high price signals to producers
to supply more and to consumers to buy less. A low price signals the opposite. This
coordinates the actions of buyers and sellers.
Question 2
The allocation of resources in a market economy is determined by:
A) The government
B) A vote of the consumers
C) The decisions of a few large corporations
D) Prices
E) The amount of resources available
Correct Answer: D) Prices
Rationale: Prices guide the allocation of scarce resources. Resources flow towards the
production of goods and services that have higher prices (indicating higher demand), and
away from those with lower prices.
Question 3
In a market economy, the actions of buyers and sellers collectively establish a product's:
A) Quality
B) Price
,C) Utility
D) Production cost
E) Supply schedule
Correct Answer: B) Price
Rationale: The interaction of supply (from sellers) and demand (from buyers) in a market is
what determines the equilibrium price of a product.
Question 4
Which of the following is NOT a characteristic of a market economy?
A) Buyers and sellers interact to determine prices.
B) Prices allocate scarce resources.
C) The government prescribes market prices for most goods and services.
D) Individuals and firms pursue their own self-interest.
E) Competition exists among sellers.
Correct Answer: C) The government prescribes market prices for most goods and services.
Rationale: A key feature of a market economy is that prices are determined by the forces of
supply and demand, not by government decree. Government price-setting is a characteristic
of a command economy.
Question 5
What does a demand curve show?
A) The relationship between income and quantity demanded.
B) The relationship between price and quantity supplied.
C) The relationship between price and quantity demanded.
D) The total quantity of a good available in the market.
E) The cost of producing a certain quantity of a good.
Correct Answer: C) The relationship between price and quantity demanded.
Rationale: A demand curve is a graphical representation of the law of demand, illustrating
how the quantity of a good that consumers are willing and able to buy changes as its price
changes, holding other factors constant.
,Question 6
The concept that the more of a good a consumer buys, the less the additional unit is worth to
them is known as:
A) The Law of Supply
B) The Concept of Diminishing Marginal Utility
C) The Law of Increasing Costs
D) Consumer Equilibrium
E) The Price Elasticity of Demand
Correct Answer: B) The Concept of Diminishing Marginal Utility
Rationale: This principle states that as a consumer consumes more and more units of a
specific good, the extra satisfaction (marginal utility) they get from each additional unit will
eventually decrease.
Question 7
Consumers will purchase more of a good when its price falls because:
A) The marginal benefit of additional units outweighs the marginal cost.
B) Their income has increased.
C) The supply of the good has decreased.
D) The good is now considered a luxury item.
E) The law of diminishing returns no longer applies.
Correct Answer: A) The marginal benefit of additional units outweighs the marginal cost.
Rationale: A lower price (marginal cost) means that the consumer can now purchase
additional units for which the marginal benefit (utility) is still greater than or equal to the
price they have to pay.
Question 8
A movement along a single demand curve, caused by a change in the product's price, is called a:
A) Change in demand
B) Change in preferences
C) Change in quantity demanded
, D) Shift in demand
E) Change in utility
Correct Answer: C) Change in quantity demanded
Rationale: This is a specific term to describe movement from one point to another on the
same demand curve, which is caused only by a change in the price of the good itself.
Question 9
A shift in the entire demand curve to the left or right is called a:
A) Change in quantity demanded
B) Change in demand
C) Change in price
D) Change in supply
E) Movement along the curve
Correct Answer: B) Change in demand
Rationale: A "change in demand" refers to a shift of the entire curve, caused by a change in
one of the underlying determinants of demand (like income or preferences), meaning
consumers want to buy more or less at every price.
Question 10
Which of the following is an underlying determinant of demand (a factor that can shift the
demand curve)?
A) The cost of resources used to produce the good.
B) The technology used in production.
C) A change in the price of related goods.
D) The number of sellers in the market.
E) A tax on the producers of the good.
Correct Answer: C) A change in the price of related goods.
Rationale: The price of related goods (substitutes and complements) is a key determinant of
demand. The other options are all determinants of supply.
