Question 1

Consider the demand curve P = 100 - 5Q for a specialty baseball card.What is the price the highest bidder is willing to pay for such a card?

Accepted Answer

A)  $100. 
B)  $95. 
C)  $50. 
D)  $5 
E)  An infinite amount. 
A)  $100. 
B)  $95. 
C)  $50. 
D)  $5 
E)  An infinite amount. B

Question 2

An important non-monetary cost of university is

Accepted Answer

A)  the cost of parking tickets. 
B)  the cost of textbooks and study guides. 
C)  the cost of tickets to university athletic events. 
D)  the time spent researching the quality of different universities. 
E)  the cost of a new notebook computer. 
A)  the cost of parking tickets. 
B)  the cost of textbooks and study guides. 
C)  the cost of tickets to university athletic events. 
D)  the time spent researching the quality of different universities. 
E)  the cost of a new notebook computer. D

Question 3

Which one of the following goods or services should have the lowest price elasticity of demand based on the share of income devoted to the good or service?

Accepted Answer

A)  Owning a home. 
B)  Renting an apartment. 
C)  A new car. 
D)  Hamburger meat. 
E)  Toothpicks. 
A)  Owning a home. 
B)  Renting an apartment. 
C)  A new car. 
D)  Hamburger meat. 
E)  Toothpicks. E

Question 4

GreenTree Corporation sells live Christmas trees.It observes that when it decreases the price of Christmas trees by 10%,revenue rises by 25%.The demand for Christmas trees must be

Accepted Answer

A)  inelastic. 
B)  elastic. 
C)  unit-elastic. 
D)  perfectly elastic. 
E)  perfectly inelastic. 
A)  inelastic. 
B)  elastic. 
C)  unit-elastic. 
D)  perfectly elastic. 
E)  perfectly inelastic.

Question 5

For most goods,as the number of units consumed increases,total utility ______,while marginal utility ______.

Accepted Answer

A)  increases;decreases 
B)  decreases;increases 
C)  increases;increases 
D)  decreases;decreases 
E)  peaks;bottoms out 
A)  increases;decreases 
B)  decreases;increases 
C)  increases;increases 
D)  decreases;decreases 
E)  peaks;bottoms out

Question 6

The cross-price elasticity for bread and butter is estimated to be - 0.5.This implies that bread and butter are

Accepted Answer

A)  normal goods. 
B)  substitutes. 
C)  elastic goods. 
D)  complements. 
E)  unrelated. 
A)  normal goods. 
B)  substitutes. 
C)  elastic goods. 
D)  complements. 
E)  unrelated.

Question 7

If most consumer goods and services are ______,then most income elasticities are ______.

Accepted Answer

A)  normal;negative 
B)  inferior;positive 
C)  normal;greater than one 
D)  inferior;between zero and one 
E)  normal;positive 
A)  normal;negative 
B)  inferior;positive 
C)  normal;greater than one 
D)  inferior;between zero and one 
E)  normal;positive

Question 8

The ratio of the percentage change in the quantity of tea demanded to the percentage change in the price of lemons is

Accepted Answer

A)  the price elasticity of demand for tea. 
B)  a measure of the responsiveness of demand for lemons to a change in the price of tea. 
C)  a measure of the responsiveness of the price of tea to a change in the price of lemons. 
D)  a measure of the responsiveness of demand for tea to a change in the price of lemons. 
E)  the price elasticity of demand for lemons. 
A)  the price elasticity of demand for tea. 
B)  a measure of the responsiveness of demand for lemons to a change in the price of tea. 
C)  a measure of the responsiveness of the price of tea to a change in the price of lemons. 
D)  a measure of the responsiveness of demand for tea to a change in the price of lemons. 
E)  the price elasticity of demand for lemons.

Question 9

-Refer to the diagram above.When the price is $50,the price elasticity of demand is

Accepted Answer

A)  equal to 0. 
B)  equal to 0.53. 
C)  equal to 1. 
D)  unable to be calculated since we need to have a price range to calculate price elasticity of demand. 
E)  equal to infinity. 
A)  equal to 0. 
B)  equal to 0.53. 
C)  equal to 1. 
D)  unable to be calculated since we need to have a price range to calculate price elasticity of demand. 
E)  equal to infinity.

Question 10

Assume that Sandra has $30 in income,and that the price of a loaf of bread is $1.50 and the price of a jar of peanut butter is $3.If Sandra's income increases to $45,she can buy a maximum of _____ loaves of bread or a maximum of _____ jars of peanut butter.

Accepted Answer

A)  5;25 
B)  10;40 
C)  15;30 
D)  20;20 
E)  30;15 
A)  5;25 
B)  10;40 
C)  15;30 
D)  20;20 
E)  30;15

Question 11

A single producer,whose objective is to raise total revenue,would raise the price of its product if it is operating in the portion of the demand curve with price elasticity of demand equal to

Accepted Answer

A)  0. 
B)  0.5. 
C)  1. 
D)  2. 
E)  any value;prices should be raised regardless of the price elasticity of demand. 
A)  0. 
B)  0.5. 
C)  1. 
D)  2. 
E)  any value;prices should be raised regardless of the price elasticity of demand.

Question 12

Consider the demand curve P = 100 - 5Q for a specialty hockey card.When the cards are placed in a bin labelled "Free,please help yourself",what is the quantity demanded?

Accepted Answer

A)  100. 
B)  95. 
C)  20. 
D)  Unknown,we need more information. 
E)  An infinite quantity since they are free. 
A)  100. 
B)  95. 
C)  20. 
D)  Unknown,we need more information. 
E)  An infinite quantity since they are free.

Question 13

The responsiveness of quantity demanded of good M when the price of good N changes is measured by the

Accepted Answer

A)  price elasticity of demand. 
B)  income elasticity of demand. 
C)  price elasticity of supply. 
D)  preference elasticity of demand. 
E)  cross-price elasticity of demand. 
A)  price elasticity of demand. 
B)  income elasticity of demand. 
C)  price elasticity of supply. 
D)  preference elasticity of demand. 
E)  cross-price elasticity of demand.

Question 14

If the local electricity utility wants to raise revenue,it should _______ its price because demand for electricity is likely to be ________.

Accepted Answer

A)  lower;inelastic 
B)  raise;elastic 
C)  lower;elastic 
D)  raise;inelastic 
E)  lower;perfectly inelastic 
A)  lower;inelastic 
B)  raise;elastic 
C)  lower;elastic 
D)  raise;inelastic 
E)  lower;perfectly inelastic

Question 15

Consumers' ability to substitute among different goods explains

Accepted Answer

A)  the law of supply. 
B)  the law of demand. 
C)  the concept of economic equilibrium. 
D)  the relationship between income and demand. 
E)  the law of increasing opportunity costs. 
A)  the law of supply. 
B)  the law of demand. 
C)  the concept of economic equilibrium. 
D)  the relationship between income and demand. 
E)  the law of increasing opportunity costs.

Question 16

If the slope of the demand curve is infinity,demand will be

Accepted Answer

A)  perfectly inelastic. 
B)  inelastic. 
C)  unit-elastic. 
D)  elastic. 
E)  perfectly elastic. 
A)  perfectly inelastic. 
B)  inelastic. 
C)  unit-elastic. 
D)  elastic. 
E)  perfectly elastic.

Question 17

In general,demand for a good will be more elastic if

Accepted Answer

A)  few substitutes exist. 
B)  the time frame for adjustment is short. 
C)  the fraction of income spent on the good is small. 
D)  the good is a luxury. 
E)  the fraction of income spent on the good is large. 
A)  few substitutes exist. 
B)  the time frame for adjustment is short. 
C)  the fraction of income spent on the good is small. 
D)  the good is a luxury. 
E)  the fraction of income spent on the good is large.

Question 18

Suppose that the equilibrium price of a good is $7.50 and the equilibrium quantity is 20 units.Thus,

Accepted Answer

A)  total revenue is $150 and total expenditure is less than $150. 
B)  total revenue and total expenditure are equal at $150. 
C)  total expenditure is $150 and total revenue is less than $150. 
D)  total revenue is $150 but total expenditure cannot be calculated. 
E)  total expenditure is $150 but total revenue cannot be calculated. 
A)  total revenue is $150 and total expenditure is less than $150. 
B)  total revenue and total expenditure are equal at $150. 
C)  total expenditure is $150 and total revenue is less than $150. 
D)  total revenue is $150 but total expenditure cannot be calculated. 
E)  total expenditure is $150 but total revenue cannot be calculated.

Question 19

Which of the following goods or services is a "need," not a "want"?

Accepted Answer

A)  Electricity. 
B)  Gasoline. 
C)  Air conditioning. 
D)  A subsistence level of food. 
E)  Automobile. 
A)  Electricity. 
B)  Gasoline. 
C)  Air conditioning. 
D)  A subsistence level of food. 
E)  Automobile.

Question 20

The reason a brand name item (e.g. ,Molson)has a larger price elasticity than the item class (e.g. ,beer),is that

Accepted Answer

A)  there are fewer substitutes for Molson. 
B)  there is more time for adjustments to be made for Molson. 
C)  beer's share of income is larger than Molson's. 
D)  there are fewer substitutes for beer. 
E)  wine is a better substitute for beer than Labatt is for Molson. 
A)  there are fewer substitutes for Molson. 
B)  there is more time for adjustments to be made for Molson. 
C)  beer's share of income is larger than Molson's. 
D)  there are fewer substitutes for beer. 
E)  wine is a better substitute for beer than Labatt is for Molson.

Consider the demand curve P = 100 - 5Q for a specialty baseball card.What is the price the highest bidder is willing to pay for such a card?

An important non-monetary cost of university is

Which one of the following goods or services should have the lowest price elasticity of demand based on the share of income devoted to the good or service?

GreenTree Corporation sells live Christmas trees.It observes that when it decreases the price of Christmas trees by 10%,revenue rises by 25%.The demand for Christmas trees must be

For most goods,as the number of units consumed increases,total utility ,while marginal utility .

The cross-price elasticity for bread and butter is estimated to be - 0.5.This implies that bread and butter are

If most consumer goods and services are ,then most income elasticities are .

The ratio of the percentage change in the quantity of tea demanded to the percentage change in the price of lemons is

-Refer to the diagram above.When the price is $50,the price elasticity of demand is

Assume that Sandra has $30 in income,and that the price of a loaf of bread is $1.50 and the price of a jar of peanut butter is $3.If Sandra's income increases to $45,she can buy a maximum of _ loaves of bread or a maximum of _ jars of peanut butter.

A single producer,whose objective is to raise total revenue,would raise the price of its product if it is operating in the portion of the demand curve with price elasticity of demand equal to

Consider the demand curve P = 100 - 5Q for a specialty hockey card.When the cards are placed in a bin labelled "Free,please help yourself",what is the quantity demanded?

The responsiveness of quantity demanded of good M when the price of good N changes is measured by the

If the local electricity utility wants to raise revenue,it should _ its price because demand for electricity is likely to be __.

Consumers' ability to substitute among different goods explains

If the slope of the demand curve is infinity,demand will be

In general,demand for a good will be more elastic if

Suppose that the equilibrium price of a good is $7.50 and the equilibrium quantity is 20 units.Thus,

Which of the following goods or services is a "need," not a "want"?

The reason a brand name item (e.g. ,Molson)has a larger price elasticity than the item class (e.g. ,beer),is that

Thinking Like an Economist

Comparative Advantage: the Basis for Exchange

Supply and Demand: an Introduction

Perfectly Competitive Supply: the Cost Side of the Market

Efficiency and Exchange

The Quest for Profit and the Invisible Hand

Monopoly and Other Forms of Imperfect Competition

Thinking Strategically

Externalities and Property Rights

The Economics of Information

Labour Markets

The Economics of Public Policy

Public Goods and Taxation

Income Distribution

Filters

Exam 4: Demand: the Benefit Side of the Market

Consider the demand curve P = 100 - 5Q for a specialty baseball card.What is the price the highest bidder is willing to pay for such a card?

An important non-monetary cost of university is

Which one of the following goods or services should have the lowest price elasticity of demand based on the share of income devoted to the good or service?

GreenTree Corporation sells live Christmas trees.It observes that when it decreases the price of Christmas trees by 10%,revenue rises by 25%.The demand for Christmas trees must be

For most goods,as the number of units consumed increases,total utility ______,while marginal utility ______.

The cross-price elasticity for bread and butter is estimated to be - 0.5.This implies that bread and butter are

If most consumer goods and services are ______,then most income elasticities are ______.

The ratio of the percentage change in the quantity of tea demanded to the percentage change in the price of lemons is

-Refer to the diagram above.When the price is $50,the price elasticity of demand is

Assume that Sandra has $30 in income,and that the price of a loaf of bread is $1.50 and the price of a jar of peanut butter is $3.If Sandra's income increases to $45,she can buy a maximum of _____ loaves of bread or a maximum of _____ jars of peanut butter.

A single producer,whose objective is to raise total revenue,would raise the price of its product if it is operating in the portion of the demand curve with price elasticity of demand equal to

Consider the demand curve P = 100 - 5Q for a specialty hockey card.When the cards are placed in a bin labelled "Free,please help yourself",what is the quantity demanded?

The responsiveness of quantity demanded of good M when the price of good N changes is measured by the

If the local electricity utility wants to raise revenue,it should _______ its price because demand for electricity is likely to be ________.

Consumers' ability to substitute among different goods explains

If the slope of the demand curve is infinity,demand will be

In general,demand for a good will be more elastic if

Suppose that the equilibrium price of a good is $7.50 and the equilibrium quantity is 20 units.Thus,

Which of the following goods or services is a "need," not a "want"?

The reason a brand name item (e.g. ,Molson)has a larger price elasticity than the item class (e.g. ,beer),is that

Thinking Like an Economist

Comparative Advantage: the Basis for Exchange

Supply and Demand: an Introduction

Perfectly Competitive Supply: the Cost Side of the Market

Efficiency and Exchange

The Quest for Profit and the Invisible Hand

Monopoly and Other Forms of Imperfect Competition

Thinking Strategically

Externalities and Property Rights

The Economics of Information

Labour Markets

The Economics of Public Policy

Public Goods and Taxation

Income Distribution

Filters

For most goods,as the number of units consumed increases,total utility ,while marginal utility .

If most consumer goods and services are ,then most income elasticities are .

Assume that Sandra has $30 in income,and that the price of a loaf of bread is $1.50 and the price of a jar of peanut butter is $3.If Sandra's income increases to $45,she can buy a maximum of _ loaves of bread or a maximum of _ jars of peanut butter.

If the local electricity utility wants to raise revenue,it should _ its price because demand for electricity is likely to be __.