Question 1

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

-The maximum possible total revenue is $_________.

Accepted Answer

A)  10,500 
B)  11,000 
C)  11,500 
D)  12,000 
E)  12,500 
A)  10,500 
B)  11,000 
C)  11,500 
D)  12,000 
E)  12,500

Question 2

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 3

-If price DECREASES from $80 to $60, an arrow representing the QUANTITY effect

Accepted Answer

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

Question 4

Refer to the following figure:
  
-The equation for marginal revenue is

Accepted Answer

A)  MR = 50 -0.025Q. 
B)  MR = 4,000 - 2,000Q. 
C)  MR = 4,000 - 100Q. 
D)  MR = 50-160Q. 
E)  none of the above 
A)  MR = 50 -0.025Q. 
B)  MR = 4,000 - 2,000Q. 
C)  MR = 4,000 - 100Q. 
D)  MR = 50-160Q. 
E)  none of the above

Question 5

-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 6

Suppose that the Houston Rockets' management is considering a plan in which fans who donate blood can attend games for $35 instead of the usual $40. If both ticket revenues and blood donations rise with this plan, which of the following is true?

Accepted Answer

A)  The demand for Houston Rockets' tickets is price elastic. 
B)  The demand for Houston Rockets' tickets is price inelastic. 
C)  The demand for blood donations is price elastic. 
D)  The demand for blood donations is price inelastic. 
A)  The demand for Houston Rockets' tickets is price elastic. 
B)  The demand for Houston Rockets' tickets is price inelastic. 
C)  The demand for blood donations is price elastic. 
D)  The demand for blood donations is price inelastic.

Question 7

-In the figure above, what is the point price elasticity of demand when price is $80?

Accepted Answer

A)  -0.50 
B)  -0.75 
C)  -1.00 
D)  -1.60 
E)  -2.00 
A)  -0.50 
B)  -0.75 
C)  -1.00 
D)  -1.60 
E)  -2.00

Question 8

When demand is elastic,

Accepted Answer

A)  marginal revenue is negative. 
B)  the percentage change in price exceeds the percentage change in quantity. 
C)  an increase in price causes total revenue to rise. 
D)  both b and c 
E)  none of the above 
A)  marginal revenue is negative. 
B)  the percentage change in price exceeds the percentage change in quantity. 
C)  an increase in price causes total revenue to rise. 
D)  both b and c 
E)  none of the above

Question 9

The cross-price elasticity of demand between goods X and Y

Accepted Answer

A)  measures the responsiveness of the quantity of X demanded to changes in the price of Y. 
B)  is the percentage change in the price of Y divided by the percentage change in the quantity of X demanded. 
C)  is greater than zero if X and Y are substitutes. 
D)  both a and c 
E)  all of the above 
A)  measures the responsiveness of the quantity of X demanded to changes in the price of Y. 
B)  is the percentage change in the price of Y divided by the percentage change in the quantity of X demanded. 
C)  is greater than zero if X and Y are substitutes. 
D)  both a and c 
E)  all of the above

Question 10

If the demand for umbrellas is price inelastic,

Accepted Answer

A)  changes in price do not affect the number of umbrellas demanded. 
B)  if more umbrellas are sold as the result of a price decrease, total expenditures by consumers on umbrellas will decrease. 
C)  the percentage change in price is less than the percentage change in quantity demanded. 
D)  the percentage change in quantity demanded is greater than the percentage change in price. 
E)  none of the above 
A)  changes in price do not affect the number of umbrellas demanded. 
B)  if more umbrellas are sold as the result of a price decrease, total expenditures by consumers on umbrellas will decrease. 
C)  the percentage change in price is less than the percentage change in quantity demanded. 
D)  the percentage change in quantity demanded is greater than the percentage change in price. 
E)  none of the above

Question 11

If the price elasticity of DVD recorders is -0.3 and price increases 20%, what happens to the quantity of DVD recorders demanded?

Accepted Answer

A)  quantity decreases by 26% 
B)  quantity decreases by 6% 
C)  quantity increases by 15% 
D)  quantity increases by 21% 
A)  quantity decreases by 26% 
B)  quantity decreases by 6% 
C)  quantity increases by 15% 
D)  quantity increases by 21%

Question 12

Refer to the following figure:
  
-At a price of $6, the point elasticity of demand for D1 is ________ and marginal revenue is _______.

Accepted Answer

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

Question 13

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 14

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

-The 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 15

Refer to the following figure:
  
-The point elasticities of demand for D1, D2, and D3 at a price of $5 are ________, ________, and _______, respectively.

Accepted Answer

A)  -.4; -0.2; -1.4 
B)  -0.71;-5; -0.71 
C)  -1.4; -0.2; -5 
D) -12; -6; -12 
E)  -0.0833; -0.1667; -0.0833 
A)  -.4; -0.2; -1.4 
B)  -0.71;-5; -0.71 
C)  -1.4; -0.2; -5 
D) -12; -6; -12 
E)  -0.0833; -0.1667; -0.0833

Question 16

-In the figure above, what is the point price elasticity of demand when price is $60?

Accepted Answer

A)  -0.50 
B)  -0.75 
C)  -1.00 
D)  -1.60 
E)  -2.00 
A)  -0.50 
B)  -0.75 
C)  -1.00 
D)  -1.60 
E)  -2.00

Question 17

If the demand for plastic surgery is price inelastic,

Accepted Answer

A)  changes in price do not affect the number of operations. 
B)  then when more plastic surgery is performed, total expenditures on plastic surgery will decrease. 
C)  the percentage change in price is less than the percentage change in quantity. 
D)  both b and c 
E)  both a and b 
A)  changes in price do not affect the number of operations. 
B)  then when more plastic surgery is performed, total expenditures on plastic surgery will decrease. 
C)  the percentage change in price is less than the percentage change in quantity. 
D)  both b and c 
E)  both a and b

Use the figure below, which shows a linear demand curve and the associated total revenue curve, to answer the questions. -The maximum possible total revenue is $_________.

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

-If price DECREASES from $80 to $60, an arrow representing the QUANTITY effect

Refer to the following figure: -The equation for marginal revenue is

-What is demand elasticity over the price range $40 to $60?

Suppose that the Houston Rockets' management is considering a plan in which fans who donate blood can attend games for $35 instead of the usual $40. If both ticket revenues and blood donations rise with this plan, which of the following is true?

-In the figure above, what is the point price elasticity of demand when price is $80?

When demand is elastic,

The cross-price elasticity of demand between goods X and Y

If the demand for umbrellas is price inelastic,

If the price elasticity of DVD recorders is -0.3 and price increases 20%, what happens to the quantity of DVD recorders demanded?

Refer to the following figure: -At a price of $6, the point elasticity of demand for D₁ is __ and marginal revenue is _.

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

Refer to the following figure: -The point elasticities of demand for D₁, D₂, and D₃ at a price of $5 are __, , and _, respectively.

-In the figure above, what is the point price elasticity of demand when price is $60?

If the demand for plastic surgery is price inelastic,

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 below, which shows a linear demand curve and the associated total revenue curve, to answer the questions. -The maximum possible total revenue is $_________.

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

-If price DECREASES from $80 to $60, an arrow representing the QUANTITY effect

Refer to the following figure: -The equation for marginal revenue is

-What is demand elasticity over the price range $40 to $60?

Suppose that the Houston Rockets' management is considering a plan in which fans who donate blood can attend games for $35 instead of the usual $40. If both ticket revenues and blood donations rise with this plan, which of the following is true?

-In the figure above, what is the point price elasticity of demand when price is $80?

When demand is elastic,

The cross-price elasticity of demand between goods X and Y

If the demand for umbrellas is price inelastic,

If the price elasticity of DVD recorders is -0.3 and price increases 20%, what happens to the quantity of DVD recorders demanded?

Refer to the following figure: -At a price of $6, the point elasticity of demand for D1 is ________ and marginal revenue is _______.

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

Refer to the following figure: -The point elasticities of demand for D1, D2, and D3 at a price of $5 are ________, ________, and _______, respectively.

-In the figure above, what is the point price elasticity of demand when price is $60?

If the demand for plastic surgery is price inelastic,

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

Refer to the following figure: -At a price of $6, the point elasticity of demand for D₁ is __ and marginal revenue is _.

Refer to the following figure: -The point elasticities of demand for D₁, D₂, and D₃ at a price of $5 are __, , and _, respectively.