Question 1

Farm programs in many countries reflect the disproportionate amount of political power that farmers possess.In part,this power drives from the fact that

Accepted Answer

A)  in most countries, farmers constitute more than one-half of the population. 
B)  technological advances in agriculture have given farmers more time to serve as elected representatives. 
C)  governments raise more income from taxes on agricultural production, processing, and distribution than they do from other sectors of the economy. 
D)  agricultural programs are likely to be more cost-effective and efficient than free market alternatives. 
E)  countries do not want to be dependent on foreign sources of food, or be ill-prepared in the event of droughts. 
A)  in most countries, farmers constitute more than one-half of the population. 
B)  technological advances in agriculture have given farmers more time to serve as elected representatives. 
C)  governments raise more income from taxes on agricultural production, processing, and distribution than they do from other sectors of the economy. 
D)  agricultural programs are likely to be more cost-effective and efficient than free market alternatives. 
E)  countries do not want to be dependent on foreign sources of food, or be ill-prepared in the event of droughts.

Question 2

If the demand curve for agricultural products is price inelastic,bumper crops would cause farm prices

Accepted Answer

A)  and incomes to rise. 
B)  and incomes to fall. 
C)  to fall and incomes to rise. 
D)  to rise and incomes to fall. 
E)  and incomes to remain unchanged. 
A)  and incomes to rise. 
B)  and incomes to fall. 
C)  to fall and incomes to rise. 
D)  to rise and incomes to fall. 
E)  and incomes to remain unchanged.

Question 3

One problem with using historical data to estimate demand is the

Accepted Answer

A)  fact that people do not always buy what they need. 
B)  large number of interviews that must be conducted to gather information on buyers' intentions. 
C)  many variations in price necessary to measure changes in demand. 
D)  likelihood that the demand curve has shifted over the time period covered by the data. 
E)  need to have both price and quantity data to estimate demand. 
A)  fact that people do not always buy what they need. 
B)  large number of interviews that must be conducted to gather information on buyers' intentions. 
C)  many variations in price necessary to measure changes in demand. 
D)  likelihood that the demand curve has shifted over the time period covered by the data. 
E)  need to have both price and quantity data to estimate demand.

Question 4

The sensitivity of the quantity demanded to the total money income of consumers in a market is measured by the ________ elasticity of demand.

Accepted Answer

A)  income 
B)  price 
C)  cross 
D)  equilibrium 
E)  arc 
A)  income 
B)  price 
C)  cross 
D)  equilibrium 
E)  arc

Question 5

If I spend $50 per week on gasoline,regardless of the price per gallon,my price elasticity of demand for gasoline is

Accepted Answer

A)  0. 
B)  1. 
C)  2. 
D)  infinite. 
E)  indeterminable. 
A)  0. 
B)  1. 
C)  2. 
D)  infinite. 
E)  indeterminable.

Question 6

A price reduction from $3.60 to $3.30 for a bushel of wheat will cause the total amount spent on wheat to

Accepted Answer

A)  fall. 
B)  rise. 
C)  not change. 
D)  rise initially and then fall. 
E)  be indeterminate. 
A)  fall. 
B)  rise. 
C)  not change. 
D)  rise initially and then fall. 
E)  be indeterminate.

Question 7

Luxuries are distinguished from necessities by the

Accepted Answer

A)  high cross elasticity of demand of the former and the low cross elasticity of the latter. 
B)  high income elasticity of the former and the low income elasticity of the latter. 
C)  fact that luxuries have high prices and necessities have low ones. 
D)  sign of the cross elasticity of demand. 
E)  number of substitutes available for each. 
A)  high cross elasticity of demand of the former and the low cross elasticity of the latter. 
B)  high income elasticity of the former and the low income elasticity of the latter. 
C)  fact that luxuries have high prices and necessities have low ones. 
D)  sign of the cross elasticity of demand. 
E)  number of substitutes available for each.

Question 8

The nation's farm problem follows from

Accepted Answer

A)  a price inelastic demand curve for farm goods coupled with changes in the supply curve, leading to great variations in price. 
B)  market demand curves derived by summing across individual demand curves. 
C)  the lack of good substitutes creating price elastic demand curves. 
D)  shifts in the demand curve that are greater than shifts in the supply curve over time. 
E)  too few farmers to permit the efficient operation of free markets. 
A)  a price inelastic demand curve for farm goods coupled with changes in the supply curve, leading to great variations in price. 
B)  market demand curves derived by summing across individual demand curves. 
C)  the lack of good substitutes creating price elastic demand curves. 
D)  shifts in the demand curve that are greater than shifts in the supply curve over time. 
E)  too few farmers to permit the efficient operation of free markets.

Question 9

The following question are based on the following graph. The curves D and S represent the market demand and supply curves for farm products in 1960. The curves D₁ and S₁ represent the market demand and supply curves for farm products in 2000. It is supposed that there were no support programs in either year.
  
-The relatively small shift of the demand curve over the 40 years can be attributed to the fact that

Accepted Answer

A)  the quantity of food demanded does not vary much with the price of food because food is a necessity. 
B)  consumption of food per capita faces natural limits and hence responds by only a small amount to changes in per capita income. 
C)  farmers have only limited control over their outputs. 
D)  there has been rapid technological change in agriculture. 
E)  poor climatological conditions led to decreasing harvests. 
A)  the quantity of food demanded does not vary much with the price of food because food is a necessity. 
B)  consumption of food per capita faces natural limits and hence responds by only a small amount to changes in per capita income. 
C)  farmers have only limited control over their outputs. 
D)  there has been rapid technological change in agriculture. 
E)  poor climatological conditions led to decreasing harvests.

Question 10

The percentage change in the quantity demanded of one commodity resulting from a 1 percent change in the price of a substitute commodity is called the ________ elasticity of demand.

Accepted Answer

A)  income 
B)  price 
C)  cross 
D)  equilibrium 
E)  arc 
A)  income 
B)  price 
C)  cross 
D)  equilibrium 
E)  arc

Question 11

The following question are based on the following information.
On June 1, 2014, the Pennsylvania Turnpike Commission voted to raise tolls by 30 percent.
They anticipated that traffic might initially fall by 5 percent.
-The Turnpike Commission estimates that the price elasticity of demand for travel on the highway is

Accepted Answer

A)  0.17. 
B)  0.30. 
C)  0.50. 
D)  1. 
E)  6. 
A)  0.17. 
B)  0.30. 
C)  0.50. 
D)  1. 
E)  6.

Question 12

If a 1 percent increase in price causes a firm's sales to decline by one-half of 1 percent,the price elasticity of demand is

Accepted Answer

A)  0.005. 
B)  0.05. 
C)  0.5. 
D)  2.0. 
E)  5. 
A)  0.005. 
B)  0.05. 
C)  0.5. 
D)  2.0. 
E)  5.

Question 13

The following question are based on the following information regarding the gross monthly receipts of a miniature golf course in a resort community at the shore.
  
-When the price per game is decreased from $4.50 to $4.00

Accepted Answer

A)  the number of games played remains the same. 
B)  demand becomes price elastic. 
C)  the number of games played must have fallen, but there is not enough information to tell by how much. 
D)  the percentage increase in the number of games is equal to the percentage decrease in price. 
E)  the profits of the golf course rise significantly. 
A)  the number of games played remains the same. 
B)  demand becomes price elastic. 
C)  the number of games played must have fallen, but there is not enough information to tell by how much. 
D)  the percentage increase in the number of games is equal to the percentage decrease in price. 
E)  the profits of the golf course rise significantly.

Question 14

Under which of the following price elasticities will a decrease in price lead to the greatest increase in expenditures by consumers?

Accepted Answer

A)  0 
B)  0.3 
C)  1.0 
D)  1.8 
E)  2.3 
A)  0 
B)  0.3 
C)  1.0 
D)  1.8 
E)  2.3

Question 15

When significant changes in the output of a single firm have no perceptible effect on the industry price or output,the demand curve facing the firm is

Accepted Answer

A)  of unitary elasticity. 
B)  horizontal. 
C)  perfectly price inelastic. 
D)  downward sloping. 
E)  subelastic. 
A)  of unitary elasticity. 
B)  horizontal. 
C)  perfectly price inelastic. 
D)  downward sloping. 
E)  subelastic.

Question 16

When Pester University,with an annual enrollment of 3,600 students,raised its tuition from $18,000 to $19,500,its enrollment fell by 200 students.What is the school's arc elasticity of demand?

Accepted Answer

A)  0.13 
B)  0.67 
C)  0.71 
D)  1.4 
E)  1.5 
A)  0.13 
B)  0.67 
C)  0.71 
D)  1.4 
E)  1.5

Question 17

The following question are based on the following information regarding the gross monthly receipts of a miniature golf course in a resort community at the shore.
  
-Demand is clearly price elastic between

Accepted Answer

A)  $4.50 and $5.00. 
B)  $4.00 and $4.50. 
C)  $3.50 and $4.00. 
D)  $3.00 and $3.50. 
E)  There is not enough information to tell. 
A)  $4.50 and $5.00. 
B)  $4.00 and $4.50. 
C)  $3.50 and $4.00. 
D)  $3.00 and $3.50. 
E)  There is not enough information to tell.

Question 18

Which of the following demand curves would probably be least price elastic?

Accepted Answer

A)  automobiles 
B)  DaimlerChrysler automobiles 
C)  Jeep Cherokees 
D)  Dodge Neons 
E)  Chrysler Concordes 
A)  automobiles 
B)  DaimlerChrysler automobiles 
C)  Jeep Cherokees 
D)  Dodge Neons 
E)  Chrysler Concordes

Question 19

The following question are based on the following graph. The curves D and S represent the market demand and supply curves for farm products in 1960. The curves D₁ and S₁ represent the market demand and supply curves for farm products in 2000. It is supposed that there were no support programs in either year.
  
-The relative insensitivity of the supply curve to price can best be explained by the fact that

Accepted Answer

A)  the quantity of food demanded does not vary much with the price of food because food is a necessity. 
B)  consumption of food per capita faces natural limits and hence responds by only a small amount to changes in per capita income. 
C)  farmers have only limited control over their outputs in the short run. 
D)  there has been rapid technological change in agriculture. 
E)  poor climatological conditions led to decreasing harvests. 
A)  the quantity of food demanded does not vary much with the price of food because food is a necessity. 
B)  consumption of food per capita faces natural limits and hence responds by only a small amount to changes in per capita income. 
C)  farmers have only limited control over their outputs in the short run. 
D)  there has been rapid technological change in agriculture. 
E)  poor climatological conditions led to decreasing harvests.

Question 20

The executive director of New Jersey Transit was quoted as saying,"We have a rule of thumb-for each 1 percent fare hike,we lose 0.2 percent of our ridership." From his statement we could assume that

Accepted Answer

A)  fare increases will increase New Jersey Transit's operating revenue. 
B)  demand for transit service will go up as fares increase. 
C)  demand is price elastic. 
D)  a 10 percent fare hike will produce a 20 percent reduction in ridership. 
E)  the price elasticity coefficient is 5. 
A)  fare increases will increase New Jersey Transit's operating revenue. 
B)  demand for transit service will go up as fares increase. 
C)  demand is price elastic. 
D)  a 10 percent fare hike will produce a 20 percent reduction in ridership. 
E)  the price elasticity coefficient is 5.

Exam 5: Market Demand and Price Elasticity

Farm programs in many countries reflect the disproportionate amount of political power that farmers possess.In part,this power drives from the fact that

If the demand curve for agricultural products is price inelastic,bumper crops would cause farm prices

One problem with using historical data to estimate demand is the

The sensitivity of the quantity demanded to the total money income of consumers in a market is measured by the ________ elasticity of demand.

If I spend $50 per week on gasoline,regardless of the price per gallon,my price elasticity of demand for gasoline is

A price reduction from $3.60 to $3.30 for a bushel of wheat will cause the total amount spent on wheat to

Luxuries are distinguished from necessities by the

The nation's farm problem follows from

The percentage change in the quantity demanded of one commodity resulting from a 1 percent change in the price of a substitute commodity is called the ________ elasticity of demand.

If a 1 percent increase in price causes a firm's sales to decline by one-half of 1 percent,the price elasticity of demand is

The following question are based on the following information regarding the gross monthly receipts of a miniature golf course in a resort community at the shore. -When the price per game is decreased from $4.50 to $4.00

Under which of the following price elasticities will a decrease in price lead to the greatest increase in expenditures by consumers?

When significant changes in the output of a single firm have no perceptible effect on the industry price or output,the demand curve facing the firm is

When Pester University,with an annual enrollment of 3,600 students,raised its tuition from $18,000 to $19,500,its enrollment fell by 200 students.What is the school's arc elasticity of demand?

The following question are based on the following information regarding the gross monthly receipts of a miniature golf course in a resort community at the shore. -Demand is clearly price elastic between

Which of the following demand curves would probably be least price elastic?

The executive director of New Jersey Transit was quoted as saying,"We have a rule of thumb-for each 1 percent fare hike,we lose 0.2 percent of our ridership." From his statement we could assume that

What is Economics

Markets and Prices

The Business Firm: Organization,motivation,and Optimal Input Decisions

Getting Behind the Demand and Supply Curves

Economic Efficiency,market Supply,and Perfect Competition

Monopoly and Its Regulation

Monopolistic Competition,oligopoly,and Antitrust Policy

Pollution and the Environment

The Supply and Demand for Labor

Interest,rent,and Profit

Poverty,income Inequality,and Discrimination

Economic Growth

Public Goods and the Role of the Government

National Income and Product

Business Fluctuations and Unemployment

The Determination of National Output and the Keynesian Multiplier

Fiscal Policy and National Output

Inflation

Money and the Banking System

The Federal Reserve and Monetary Policy

Supply Shocks and Inflation

Productivity,growth,and Technology Policy

Surpluses,deficits,public Debt,and the Federal Budget

Monetary Policy,interest Rates,and Economic Activity

Controversies Over Stabilization Policy

International Trade

Exchange Rates and the Balance of Payments

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