Question 1

Use the figure to calculate the income elasticity of demand when income increases from $25,000 to $30,000:

Accepted Answer

A) -0.10 
B) -1.10 
C) 0.1818 
D) 0.20 
E) 1.10 
A) -0.10 
B) -1.10 
C) 0.1818 
D) 0.20 
E) 1.10

Question 2

Refer to the following figure.When price is $15 and quantity demanded is 1,000,what is the point elasticity of demand?

Accepted Answer

A) -3 
B) -1/3 
C) -1 
D) -5 
E) -2/3 
A) -3 
B) -1/3 
C) -1 
D) -5 
E) -2/3

Question 3

To answer the question,refer to the following table showing a demand schedule: $\begin{array}{llcc}
\underline{  \text {Price  } }&\underline{ \text { Ouantity } } \
 &\underline{\text {demanded  }} \
\$200 &1000\
150&1400\
100 &1800\
\end{array}$  If price falls from $150 to $100,

Accepted Answer

A) arrows representing the price and quantity effects both point down. 
B) an arrow representing the price effect points down and is shorter than an arrow for the quantity effect. 
C) total revenue moves in the same direction as the arrow representing the price effect. 
D) the arrow representing the price effect points down and the arrow representing the quantity effect points up. 
E) both c and d 
A) arrows representing the price and quantity effects both point down. 
B) an arrow representing the price effect points down and is shorter than an arrow for the quantity effect. 
C) total revenue moves in the same direction as the arrow representing the price effect. 
D) the arrow representing the price effect points down and the arrow representing the quantity effect points up. 
E) both c and d

Question 4

Refer to the following graph to answer the question:   Suppose price rises from $90 to $110.Total revenue moves in the ________ (same,opposite)direction as the dominant effect.In this case,total revenue ____________ (increases,decreases,stays the same)because the quantity effect is _________ (larger than,smaller than,the same as)the price effect.

Accepted Answer

A) same; increases; larger than 
B) same; decreases; smaller than 
C) same; decreases; larger than 
D) opposite; increases; larger than 
E) opposite; decreases; smaller than 
A) same; increases; larger than 
B) same; decreases; smaller than 
C) same; decreases; larger than 
D) opposite; increases; larger than 
E) opposite; decreases; smaller than

Question 5

Refer to the following graph to answer the question:   The price elasticity of demand over the price interval $90 to $110 is

Accepted Answer

A) -0.5 
B) -1.0 
C) -1.5 
D) -2.0 
E) -0.4 
A) -0.5 
B) -1.0 
C) -1.5 
D) -2.0 
E) -0.4

Question 6

To answer the question,refer to the following table showing a demand schedule: $\begin{array}{llcc}
\underline{  \text {Price  } }&\underline{ \text { Ouantity } } \
 &\underline{\text {demanded  }} \
\$200 &1000\
150&1400\
100 &1800\
\end{array}$  If price rises from $100 to $150,

Accepted Answer

A) arrows representing the price and quantity effects both point upward. 
B) an arrow representing the price effect points upward and is shorter than an arrow for the quantity effect,which points downward. 
C) total revenue moves up as indicated by the direction of the arrow representing the price effect. 
D) the arrow representing the price effect points down and the arrow representing the quantity effect points up. 
E) both c and d 
A) arrows representing the price and quantity effects both point upward. 
B) an arrow representing the price effect points upward and is shorter than an arrow for the quantity effect,which points downward. 
C) total revenue moves up as indicated by the direction of the arrow representing the price effect. 
D) the arrow representing the price effect points down and the arrow representing the quantity effect points up. 
E) both c and d

Question 7

Marginal revenue

Accepted Answer

A) is the change in total revenue when output increases by one unit. 
B) is always greater than zero. 
C) measures the slope of the total revenue curve. 
D) both a and c 
E) all of the above 
A) is the change in total revenue when output increases by one unit. 
B) is always greater than zero. 
C) measures the slope of the total revenue curve. 
D) both a and c 
E) all of the above

Question 8

Refer to the following figure.When price is $5 and quantity demanded is 3,000,what is the point elasticity of demand?

Accepted Answer

A) -3 
B) -1/3 
C) -1 
D) -5 
E) -2/3 
A) -3 
B) -1/3 
C) -1 
D) -5 
E) -2/3

Question 9

Refer to the following figure.When quantity demanded is 3,000,what is marginal revenue?

Accepted Answer

A) $12 
B) $15 
C) 0 
D) $10 
E) -$10 
A) $12 
B) $15 
C) 0 
D) $10 
E) -$10

Question 10

Total revenue increased for a firm operating in the elastic range of its demand curve.Which of the following statements is correct?

Accepted Answer

A) The firm must have raised price. 
B) The firm must have lowered price. 
C) Quantity demanded must have increased. 
D) both a and c 
E) both b and c 
A) The firm must have raised price. 
B) The firm must have lowered price. 
C) Quantity demanded must have increased. 
D) both a and c 
E) both b and c

Question 11

The demand for heart surgery is price inelastic.So it follows that

Accepted Answer

A) the percentage change in price is less than the resulting percentage change in quantity demanded. 
B) if the price of heart surgery increases,total expenditure by consumers on heart surgery will rise. 
C) changes in price do not affect the number of operations demanded. 
D) both a and b 
E) all of the above 
A) the percentage change in price is less than the resulting percentage change in quantity demanded. 
B) if the price of heart surgery increases,total expenditure by consumers on heart surgery will rise. 
C) changes in price do not affect the number of operations demanded. 
D) both a and b 
E) all of the above

Question 12

To answer the question,refer to the following table showing a demand schedule: $\begin{array}{llcc}
\underline{  \text {Price  } }&\underline{ \text { Ouantity } } \
 &\underline{\text {demanded  }} \
\$200 &1000\
150&1400\
100 &1800\
\end{array}$  If price falls from $200 to $150,

Accepted Answer

A) arrows representing the price and quantity effects both point down. 
B) an arrow representing the price effect points down and is longer than an arrow for the quantity effect. 
C) an arrow representing the quantity effect points up and is shorter than an arrow for the price effect. 
D) arrows representing the price and quantity effects both point up. 
E) total revenue moves in the same direction as the arrow representing the quantity effect. 
A) arrows representing the price and quantity effects both point down. 
B) an arrow representing the price effect points down and is longer than an arrow for the quantity effect. 
C) an arrow representing the quantity effect points up and is shorter than an arrow for the price effect. 
D) arrows representing the price and quantity effects both point up. 
E) total revenue moves in the same direction as the arrow representing the quantity effect.

Question 13

The fact that the cross-price elasticity of natural gas with respect to the price of fuel oil is 0.4 implies that

Accepted Answer

A) natural gas and fuel oil are substitutes. 
B) natural gas is a normal good. 
C) the quantity of natural gas demanded will decrease by 1.6% when the price of fuel oil decreases by 4%. 
D) both a and c 
A) natural gas and fuel oil are substitutes. 
B) natural gas is a normal good. 
C) the quantity of natural gas demanded will decrease by 1.6% when the price of fuel oil decreases by 4%. 
D) both a and c

Question 14

Refer to the following figure.When quantity demanded is 2,000,what is marginal revenue?

Accepted Answer

A) $12 
B) $15 
C) 0 
D) $10 
E) -$10 
A) $12 
B) $15 
C) 0 
D) $10 
E) -$10

Question 15

Perfume industry statistics show that over the past five years,the number of bottles of perfume sold decreased by 30%,but the total dollar amount spent by consumers was unchanged.This means that

Accepted Answer

A) consumers were unresponsive to changes in price,i.e.,the percentage change in quantity demanded was less than the percentage change in price. 
B) demand was elastic. 
C) demand was inelastic. 
D) demand was unitary elastic. 
E) both a and c 
A) consumers were unresponsive to changes in price,i.e.,the percentage change in quantity demanded was less than the percentage change in price. 
B) demand was elastic. 
C) demand was inelastic. 
D) demand was unitary elastic. 
E) both a and c

Question 16

Interior Department recently announced that it will increase the entrance fees at Yellowstone National Park in order to increase park revenues.The Interior Department must believe that

Accepted Answer

A) park goers are very responsive to price changes. 
B) the demand for park services is elastic. 
C) the percentage increase in fees will be greater than the percentage decrease in the number of park visitors. 
D) demand is unitary elastic,and thus the number of visitors will NOT decrease. 
A) park goers are very responsive to price changes. 
B) the demand for park services is elastic. 
C) the percentage increase in fees will be greater than the percentage decrease in the number of park visitors. 
D) demand is unitary elastic,and thus the number of visitors will NOT decrease.

Question 17

In the figure above,what is the point price elasticity of demand when price is $40?

Accepted Answer

A) -0.50 
B) -0.75 
C) -1.00 
D) -1.50 
E) -2.00 
A) -0.50 
B) -0.75 
C) -1.00 
D) -1.50 
E) -2.00

Question 18

According to the following figure,demand is unitary elastic at P = $________.

Accepted Answer

A) 5 
B) 10 
C) 15 
D) 20 
E) 25 
A) 5 
B) 10 
C) 15 
D) 20 
E) 25

Question 19

In the figure above,what is demand elasticity over the price range $40 to $60?

Accepted Answer

A) -2.00 
B) -1.00 
C) -0.50 
D) -0.95 
E) -0.71 
A) -2.00 
B) -1.00 
C) -0.50 
D) -0.95 
E) -0.71

Question 20

the figure below,which shows a linear demand curve and the associated total revenue curve,to answer the question.   The price for which 100 units can be sold is $_____.

Accepted Answer

A) 10 
B) 15 
C) 25 
D) 45 
E) 50 
A) 10 
B) 15 
C) 25 
D) 45 
E) 50

Use the figure to calculate the income elasticity of demand when income increases from $25,000 to $30,000:

Refer to the following figure.When price is $15 and quantity demanded is 1,000,what is the point elasticity of demand?

To answer the question,refer to the following table showing a demand schedule: \2 00 1000 150 1400 100 1800 If price falls from $150 to $100,

Refer to the following graph to answer the question: The price elasticity of demand over the price interval $90 to $110 is

To answer the question,refer to the following table showing a demand schedule: \2 00 1000 150 1400 100 1800 If price rises from $100 to $150,

Marginal revenue

Refer to the following figure.When price is $5 and quantity demanded is 3,000,what is the point elasticity of demand?

Refer to the following figure.When quantity demanded is 3,000,what is marginal revenue?

Total revenue increased for a firm operating in the elastic range of its demand curve.Which of the following statements is correct?

The demand for heart surgery is price inelastic.So it follows that

To answer the question,refer to the following table showing a demand schedule: \2 00 1000 150 1400 100 1800 If price falls from $200 to $150,

The fact that the cross-price elasticity of natural gas with respect to the price of fuel oil is 0.4 implies that

Refer to the following figure.When quantity demanded is 2,000,what is marginal revenue?

Perfume industry statistics show that over the past five years,the number of bottles of perfume sold decreased by 30%,but the total dollar amount spent by consumers was unchanged.This means that

Interior Department recently announced that it will increase the entrance fees at Yellowstone National Park in order to increase park revenues.The Interior Department must believe that

In the figure above,what is the point price elasticity of demand when price is $40?

According to the following figure,demand is unitary elastic at P = $________.

In the figure above,what is demand elasticity over the price range $40 to $60?

the figure below,which shows a linear demand curve and the associated total revenue curve,to answer the question. The price for which 100 units can be sold is $_____.

Managers,profits,and Markets

Demand,supply,and Market Equilibrium

Marginal Analysis for Optimal Decisions

Basic Estimation Techniques

Theory of Consumer Behavior

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost in the Long Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters

Exam 6: Elasticity and Demand

Use the figure to calculate the income elasticity of demand when income increases from $25,000 to $30,000:

Refer to the following figure.When price is $15 and quantity demanded is 1,000,what is the point elasticity of demand?

To answer the question,refer to the following table showing a demand schedule: \2 00 1000 150 1400 100 1800 If price falls from $150 to $100,

Refer to the following graph to answer the question: The price elasticity of demand over the price interval $90 to $110 is

To answer the question,refer to the following table showing a demand schedule: \2 00 1000 150 1400 100 1800 If price rises from $100 to $150,

Marginal revenue

Refer to the following figure.When price is $5 and quantity demanded is 3,000,what is the point elasticity of demand?

Refer to the following figure.When quantity demanded is 3,000,what is marginal revenue?

Total revenue increased for a firm operating in the elastic range of its demand curve.Which of the following statements is correct?

The demand for heart surgery is price inelastic.So it follows that

To answer the question,refer to the following table showing a demand schedule: \2 00 1000 150 1400 100 1800 If price falls from $200 to $150,

The fact that the cross-price elasticity of natural gas with respect to the price of fuel oil is 0.4 implies that

Refer to the following figure.When quantity demanded is 2,000,what is marginal revenue?

Perfume industry statistics show that over the past five years,the number of bottles of perfume sold decreased by 30%,but the total dollar amount spent by consumers was unchanged.This means that

Interior Department recently announced that it will increase the entrance fees at Yellowstone National Park in order to increase park revenues.The Interior Department must believe that

In the figure above,what is the point price elasticity of demand when price is $40?

According to the following figure,demand is unitary elastic at P = $________.

In the figure above,what is demand elasticity over the price range $40 to $60?

the figure below,which shows a linear demand curve and the associated total revenue curve,to answer the question. The price for which 100 units can be sold is $_____.

Managers,profits,and Markets

Demand,supply,and Market Equilibrium

Marginal Analysis for Optimal Decisions

Basic Estimation Techniques

Theory of Consumer Behavior

Demand Estimation and Forecasting

Production and Cost in the Short Run

Production and Cost in the Long Run

Production and Cost Estimation

Managerial Decisions in Competitive Markets

Managerial Decisions for Firms With Market Power

Strategic Decision Making in Oligopoly Markets

Advanced Pricing Techniques

Decisions Under Risk and Uncertainty

Government Regulation of Business

Filters