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 E

Question 2

Use the figure below, which shows a linear demand curve and the associated total revenue curve, to answer the  questions.

-The marginal revenue of the 100th unit is $_____.

Accepted Answer

A)  0 
B)  20 
C)  40 
D)  50 
E)  cannot tell from the information provided 
A)  0 
B)  20 
C)  40 
D)  50 
E)  cannot tell from the information provided C

Question 3

Refer to the following figure:
  
-When price is $10 and quantity demanded is 2,000, 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 C

Question 4

Refer to the following figure:
  
-At a price of $1, the point elasticity of demand for D2 is ________ and marginal revenue is _______.

Accepted Answer

A) -5; positive 
B)  -0.5; negative 
C) -0.2; negative 
D)  -1; zero 
A) -5; positive 
B)  -0.5; negative 
C) -0.2; negative 
D)  -1; zero

Question 5

If the price elasticity of demand for Harley-Davidson motorcycles is -1.2 and quantity demanded increases by 24%, price must have

Accepted Answer

A)  decreased by 20%. 
B)  increased by 20%. 
C)  decreased by 28.8%. 
D)  decreased by 0.05%. 
A)  decreased by 20%. 
B)  increased by 20%. 
C)  decreased by 28.8%. 
D)  decreased by 0.05%.

Question 6

-What is the interval elasticity of demand over the price range $60 to $80?

Accepted Answer

A)  -0.75 
B)  -1.10 
C)  -1.00 
D)  -1.40 
E)  -2.00 
A)  -0.75 
B)  -1.10 
C)  -1.00 
D)  -1.40 
E)  -2.00

Question 7

If the quantity of Harley-Davidson motorcycles demanded decreases by 10% when the price increases by 20%, the price elasticity of demand for Harley-Davidson motorcycles is:

Accepted Answer

A)  -0.50 
B)  -2.0 
C)  -10.0 
D)  -20.0 
A)  -0.50 
B)  -2.0 
C)  -10.0 
D)  -20.0

Question 8

E1 is demand elasticity for Minutemaid orange juice, E2 is demand elasticity for all orange juice, and E3 is demand elasticity for all fruit drinks. Then

Accepted Answer

A)  |E1| > |E2| > |E3| 
B)  |E2| > |E3| > |E1| 
C)  |E3| > |E1| > |E2| 
D)  |E3| > |E2| > |E1| 
A)  |E1| > |E2| > |E3| 
B)  |E2| > |E3| > |E1| 
C)  |E3| > |E1| > |E2| 
D)  |E3| > |E2| > |E1|

Question 9

Refer to the following graph:
  
-Over the price range $90 to $110, marginal revenue is ________ and demand is ________.

Accepted Answer

A)  greater than one; inelastic 
B)  positive; elastic 
C)  negative; inelastic 
D)  less than one; elastic 
E)  none of the above 
A)  greater than one; inelastic 
B)  positive; elastic 
C)  negative; inelastic 
D)  less than one; elastic 
E)  none of the above

Question 10

Refer to the following figure:
  
-The equation for demand is

Accepted Answer

A)  P = 4,000 -50Q. 
B)  P = 4,000 - 80Q. 
C)  Q = 4,000 - 50P. 
D)  Q = 50 -80P. 
E)  none of the above 
A)  P = 4,000 -50Q. 
B)  P = 4,000 - 80Q. 
C)  Q = 4,000 - 50P. 
D)  Q = 50 -80P. 
E)  none of the above

Question 11

Refer to the following table showing a demand schedule:

$\begin{array}{ll}
\text { Price } & \text { Quantity } \
 &\text { demanded } \
\$ 200 &1000\
150 & 1400 \
100 & 1800
\end{array}$
-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 12

Refer to the following graph:
  
-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 13

Refer to the following table showing a demand schedule:

$\begin{array}{ll}
\text { Price } & \text { Quantity } \
 &\text { demanded } \
\$ 200 &1000\
150 & 1400 \
100 & 1800
\end{array}$
-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 price effect points down and is shorter than an arrow for the quantity 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 price 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 price effect points down and is shorter than an arrow for the quantity 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 price effect.

Question 14

If the quantity of gidgets demanded increases when the price of gadgets decreases

Accepted Answer

A)  gidgets and gadgets are substitutes. 
B)  gidgets and gadgets are complements. 
C)  gidgets are normal goods, while gadgets are inferior goods. 
D)  gadgets are normal goods, while gidgets are inferior goods. 
A)  gidgets and gadgets are substitutes. 
B)  gidgets and gadgets are complements. 
C)  gidgets are normal goods, while gadgets are inferior goods. 
D)  gadgets are normal goods, while gidgets are inferior goods.

Question 15

Refer to the following figure:
  
-Marginal revenue is zero at Q = ________.

Accepted Answer

A)  1,000 units 
B)  2,000 units 
C)  3,000 units 
D)  4,000 units 
E)  none of the above 
A)  1,000 units 
B)  2,000 units 
C)  3,000 units 
D)  4,000 units 
E)  none of the above

Question 16

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 17

-If price DECREASES from $60 to $40, an arrow representing the QUANTITY effect

Accepted Answer

A)  will point downward. 
B)  will be shorter than (and in opposite direction of) the arrow representing the price effect. 
C)  will be shorter than (and in same direction of) the arrow representing the price effect. 
D)  will point in the direction in which total revenue will move. 
E)  both a and d 
A)  will point downward. 
B)  will be shorter than (and in opposite direction of) the arrow representing the price effect. 
C)  will be shorter than (and in same direction of) the arrow representing the price effect. 
D)  will point in the direction in which total revenue will move. 
E)  both a and d

Question 18

Which of the following would tend to INCREASE the elasticity of demand for good X?

Accepted Answer

A)  a new discovery allows firms to produce X at a much lower cost. 
B)  the percent of a consumer's income spent on good X declines. 
C)  a new product, Y, which can be used in place of X, is introduced. 
D)  both b and c 
E)  all of the above 
A)  a new discovery allows firms to produce X at a much lower cost. 
B)  the percent of a consumer's income spent on good X declines. 
C)  a new product, Y, which can be used in place of X, is introduced. 
D)  both b and c 
E)  all of the above

Question 19

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 20

Refer 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

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

Use the figure below, which shows a linear demand curve and the associated total revenue curve, to answer the questions. -The marginal revenue of the 100^th unit is $_____.

Refer to the following figure: -When price is $10 and quantity demanded is 2,000, what is the point elasticity of demand?

Refer to the following figure: -At a price of $1, the point elasticity of demand for D₂ is __ and marginal revenue is _.

If the price elasticity of demand for Harley-Davidson motorcycles is -1.2 and quantity demanded increases by 24%, price must have

-What is the interval elasticity of demand over the price range $60 to $80?

If the quantity of Harley-Davidson motorcycles demanded decreases by 10% when the price increases by 20%, the price elasticity of demand for Harley-Davidson motorcycles is:

E₁ is demand elasticity for Minutemaid orange juice, E₂ is demand elasticity for all orange juice, and E₃ is demand elasticity for all fruit drinks. Then

Refer to the following graph: -Over the price range $90 to $110, marginal revenue is and demand is .

Refer to the following figure: -The equation for demand is

Refer to the following table showing a demand schedule: Price Quantity demanded \ 200 1000 150 1400 100 1800 -If price falls from $200 to $150,

Refer to the following table showing a demand schedule: Price Quantity demanded \ 200 1000 150 1400 100 1800 -If price falls from $200 to $150,

If the quantity of gidgets demanded increases when the price of gadgets decreases

Refer to the following figure: -Marginal revenue is zero at Q = ________.

Marginal revenue

-If price DECREASES from $60 to $40, an arrow representing the QUANTITY effect

Which of the following would tend to INCREASE the elasticity of demand for good X?

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

Refer to the following figure: -Demand is unitary elastic at P = $________.

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:

Use the figure below, which shows a linear demand curve and the associated total revenue curve, to answer the questions. -The marginal revenue of the 100th unit is $_____.

Refer to the following figure: -When price is $10 and quantity demanded is 2,000, what is the point elasticity of demand?

Refer to the following figure: -At a price of $1, the point elasticity of demand for D2 is ________ and marginal revenue is _______.

If the price elasticity of demand for Harley-Davidson motorcycles is -1.2 and quantity demanded increases by 24%, price must have

-What is the interval elasticity of demand over the price range $60 to $80?

If the quantity of Harley-Davidson motorcycles demanded decreases by 10% when the price increases by 20%, the price elasticity of demand for Harley-Davidson motorcycles is:

E1 is demand elasticity for Minutemaid orange juice, E2 is demand elasticity for all orange juice, and E3 is demand elasticity for all fruit drinks. Then

Refer to the following graph: -Over the price range $90 to $110, marginal revenue is ________ and demand is ________.

Refer to the following figure: -The equation for demand is

Refer to the following table showing a demand schedule: Price Quantity demanded \ 200 1000 150 1400 100 1800 -If price falls from $200 to $150,

Refer to the following table showing a demand schedule: Price Quantity demanded \ 200 1000 150 1400 100 1800 -If price falls from $200 to $150,

If the quantity of gidgets demanded increases when the price of gadgets decreases

Refer to the following figure: -Marginal revenue is zero at Q = ________.

Marginal revenue

-If price DECREASES from $60 to $40, an arrow representing the QUANTITY effect

Which of the following would tend to INCREASE the elasticity of demand for good X?

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

Refer to the following figure: -Demand is unitary elastic at P = $________.

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

Use the figure below, which shows a linear demand curve and the associated total revenue curve, to answer the questions. -The marginal revenue of the 100^th unit is $_____.

Refer to the following figure: -At a price of $1, the point elasticity of demand for D₂ is __ and marginal revenue is _.

E₁ is demand elasticity for Minutemaid orange juice, E₂ is demand elasticity for all orange juice, and E₃ is demand elasticity for all fruit drinks. Then

Refer to the following graph: -Over the price range $90 to $110, marginal revenue is and demand is .