Question 1

Which of these represents a market period?

Accepted Answer

A)  spring peach harvest in central Texas 
B)  three years in the oil industry 
C)  two years in the honey industry 
D)  one year in the laptop computer industry 
A)  spring peach harvest in central Texas 
B)  three years in the oil industry 
C)  two years in the honey industry 
D)  one year in the laptop computer industry

Question 2

If the demand curve for pet prescription medicine is vertical, the economic burden of an excise tax on pet medicines would be borne

Accepted Answer

A)  evenly by consumers and producers 
B)  mostly by producers 
C)  entirely by consumers 
D)  entirely by producers 
A)  evenly by consumers and producers 
B)  mostly by producers 
C)  entirely by consumers 
D)  entirely by producers

Question 3

Products with many close substitutes have highly inelastic demand curves.

Accepted Answer

A) True 
 B)False

Question 4

A flat tax is a tax that

Accepted Answer

A)  rises in percentage of income as income increases. 
B)  is a constant proportion of one's income. 
C)  falls in percentage of income as income increases. 
D)  is a fixed amount of tax regardless of income. 
A)  rises in percentage of income as income increases. 
B)  is a constant proportion of one's income. 
C)  falls in percentage of income as income increases. 
D)  is a fixed amount of tax regardless of income.

Question 5

Which of these is MOST likely to have a perfectly inelastic demand curve?

Accepted Answer

A)  surgical supplies 
B)  preventive medical services 
C)  cosmetic surgery 
D)  heart transplant surgery 
A)  surgical supplies 
B)  preventive medical services 
C)  cosmetic surgery 
D)  heart transplant surgery

Question 6

Raising prices has no effect on total revenue if a product's demand curve is unitary elastic.

Accepted Answer

A) True 
 B)False

Question 7

A normal good has a(n)

Accepted Answer

A)  income elasticity greater than 0 but less than 1. 
B)  income elasticity greater than 1. 
C)  negative income elasticity. 
D)  income elasticity equal to zero. 
A)  income elasticity greater than 0 but less than 1. 
B)  income elasticity greater than 1. 
C)  negative income elasticity. 
D)  income elasticity equal to zero.

Question 8

(Figure: Effects of Excise Tax) Based on the graph, after the excise tax is placed on the product, tax revenue is

Accepted Answer

A)  AEB. 
B)  BEFC. 
C)  ECF. 
D)  EFG. 
A)  AEB. 
B)  BEFC. 
C)  ECF. 
D)  EFG.

Question 9

Elastic supply could be indicated by a value of

Accepted Answer

A)  -0.21. 
B)  0.7. 
C)  1.0. 
D)  1.7. 
A)  -0.21. 
B)  0.7. 
C)  1.0. 
D)  1.7.

Question 10

All of these determine price elasticity of demand EXCEPT

Accepted Answer

A)  the availability of substitutes. 
B)  a change in the price of the resources used to produce the product. 
C)  the adjustment time for buyers. 
D)  the proportion of a person's budget spent on the good. 
A)  the availability of substitutes. 
B)  a change in the price of the resources used to produce the product. 
C)  the adjustment time for buyers. 
D)  the proportion of a person's budget spent on the good.

Question 11

What is the difference between slope and the calculation of elasticity for a linear demand curve?

Accepted Answer

All linear demand curves have an upper p

Question 12

Suppose that the price of African safaris fell from $4,000 to $3,200 per person, and, as a result, tour operators reduced the number of trips offered by 25%. Using the midpoint method, the price elasticity of supply for African safaris is

Accepted Answer

A)  0.80. 
B)  0.89. 
C)  1.13. 
D)  1.25. 
A)  0.80. 
B)  0.89. 
C)  1.13. 
D)  1.25.

Question 13

A flat tax is a type of progressive tax.

Accepted Answer

A) True 
 B)False

Question 14

The price elasticity of demand for a good with a vertical demand curve

Accepted Answer

A)  depends on where a point is on the demand curve. 
B)  is infinite. 
C)  is 0. 
D)  is 1. 
A)  depends on where a point is on the demand curve. 
B)  is infinite. 
C)  is 0. 
D)  is 1.

Question 15

A product's price changes from $2 to $6 and its quantity demanded changes from 10 to 4 units. This is an example of price

Accepted Answer

A)  inelastic demand. 
B)  elastic demand. 
C)  unitary elastic demand. 
D)  inelastic supply. 
A)  inelastic demand. 
B)  elastic demand. 
C)  unitary elastic demand. 
D)  inelastic supply.

Question 16

If the price rises from $2 to $3 and the quantity demanded falls from 500 to 300 units, the price elasticity of demand using the midpoint method is

Accepted Answer

A)  1.25. 
B)  0.80. 
C)  1.50. 
D)  0.08. 
A)  1.25. 
B)  0.80. 
C)  1.50. 
D)  0.08.

Question 17

If a worker who earns $30,000 per year pays $6,000 in taxes, while a worker who earns $50,000 per year pays $9,000 in taxes, this income tax would represent a _____ tax.

Accepted Answer

A)  flat 
B)  lump-sum 
C)  progressive 
D)  regressive 
A)  flat 
B)  lump-sum 
C)  progressive 
D)  regressive

Question 18

A gas station owner in a large city learned in his microeconomics class that buyers are relatively unresponsive to changes in the price of gasoline. If that assumption is correct, when he increases the price of gas at his station

Accepted Answer

A)  total revenue will increase. 
B)  total revenue will decrease. 
C)  total revenue will not change. 
D)  the sale of complementary goods at his station will increase. 
A)  total revenue will increase. 
B)  total revenue will decrease. 
C)  total revenue will not change. 
D)  the sale of complementary goods at his station will increase.

Question 19

The general manager of the local hockey team hires you to help maximize the team's total revenue. She explains that most costs are constant because the entire staff must always be available in case the arena reaches its maximum capacity. If your task is to maximize total revenue from ticket sales, then your advice to the manager would be to set the ticket price

Accepted Answer

A)  in the inelastic region of ticket demand in order to increase total revenue. 
B)  in the elastic region of ticket demand in order to increase total revenue. 
C)  as close as possible to the point where the price elasticity of demand equals 1. 
D)  very low to make sure that the arena is always full. 
A)  in the inelastic region of ticket demand in order to increase total revenue. 
B)  in the elastic region of ticket demand in order to increase total revenue. 
C)  as close as possible to the point where the price elasticity of demand equals 1. 
D)  very low to make sure that the arena is always full.

Question 20

The demand for a necessity is more elastic than the demand for a luxury good.

Accepted Answer

A) True 
 B)False

Which of these represents a market period?

If the demand curve for pet prescription medicine is vertical, the economic burden of an excise tax on pet medicines would be borne

Products with many close substitutes have highly inelastic demand curves.

A flat tax is a tax that

Which of these is MOST likely to have a perfectly inelastic demand curve?

Raising prices has no effect on total revenue if a product's demand curve is unitary elastic.

A normal good has a(n)

(Figure: Effects of Excise Tax) Based on the graph, after the excise tax is placed on the product, tax revenue is

Elastic supply could be indicated by a value of

All of these determine price elasticity of demand EXCEPT

What is the difference between slope and the calculation of elasticity for a linear demand curve?

Suppose that the price of African safaris fell from $4,000 to $3,200 per person, and, as a result, tour operators reduced the number of trips offered by 25%. Using the midpoint method, the price elasticity of supply for African safaris is

A flat tax is a type of progressive tax.

The price elasticity of demand for a good with a vertical demand curve

A product's price changes from $2 to $6 and its quantity demanded changes from 10 to 4 units. This is an example of price

If the price rises from $2 to $3 and the quantity demanded falls from 500 to 300 units, the price elasticity of demand using the midpoint method is

If a worker who earns $30,000 per year pays $6,000 in taxes, while a worker who earns $50,000 per year pays $9,000 in taxes, this income tax would represent a _____ tax.

A gas station owner in a large city learned in his microeconomics class that buyers are relatively unresponsive to changes in the price of gasoline. If that assumption is correct, when he increases the price of gas at his station

The demand for a necessity is more elastic than the demand for a luxury good.

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Exam 5: Elasticity

Which of these represents a market period?

If the demand curve for pet prescription medicine is vertical, the economic burden of an excise tax on pet medicines would be borne

Products with many close substitutes have highly inelastic demand curves.

A flat tax is a tax that

Which of these is MOST likely to have a perfectly inelastic demand curve?

Raising prices has no effect on total revenue if a product's demand curve is unitary elastic.

A normal good has a(n)

(Figure: Effects of Excise Tax) Based on the graph, after the excise tax is placed on the product, tax revenue is

Elastic supply could be indicated by a value of

All of these determine price elasticity of demand EXCEPT

What is the difference between slope and the calculation of elasticity for a linear demand curve?

Suppose that the price of African safaris fell from $4,000 to $3,200 per person, and, as a result, tour operators reduced the number of trips offered by 25%. Using the midpoint method, the price elasticity of supply for African safaris is

A flat tax is a type of progressive tax.

The price elasticity of demand for a good with a vertical demand curve

A product's price changes from $2 to $6 and its quantity demanded changes from 10 to 4 units. This is an example of price

If the price rises from $2 to $3 and the quantity demanded falls from 500 to 300 units, the price elasticity of demand using the midpoint method is

If a worker who earns $30,000 per year pays $6,000 in taxes, while a worker who earns $50,000 per year pays $9,000 in taxes, this income tax would represent a _____ tax.

A gas station owner in a large city learned in his microeconomics class that buyers are relatively unresponsive to changes in the price of gasoline. If that assumption is correct, when he increases the price of gas at his station

The demand for a necessity is more elastic than the demand for a luxury good.

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Consumer Choice and Demand

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

The Labor Market

Land, Capital Markets, and Innovation

Externalities and Public Goods

Network Goods

Poverty and Income Distribution

International Trade

Filters