Question 1

Economists estimate that the income elasticity of demand for women's hairstyling services is +3.5,suggesting that ________.

Accepted Answer

A)  hairstyling services are an inferior good and quantity demanded will decrease as incomes increase 
B)  hairstyling services are an inferior good and quantity demanded will increase as incomes increase 
C)  hairstyling services are a normal good and quantity demanded will decrease as incomes increase 
D)  hairstyling services are a normal good and quantity demanded will increase as incomes increase 
A)  hairstyling services are an inferior good and quantity demanded will decrease as incomes increase 
B)  hairstyling services are an inferior good and quantity demanded will increase as incomes increase 
C)  hairstyling services are a normal good and quantity demanded will decrease as incomes increase 
D)  hairstyling services are a normal good and quantity demanded will increase as incomes increase D

Question 2

The following figure illustrates the market demand curve for solar-powered lights.
  
-Refer to the figure above.What is the absolute value of the arc elasticity of demand for solar-powered lights when their price falls from $8 to $4?

Accepted Answer

A)  2 
B)  4 
C)  8 
D)  10 
A)  2 
B)  4 
C)  8 
D)  10 A

Question 3

The following table shows the total benefit that Jenny derives from consuming different quantities of chocolate.
  
-Refer to the table above.If the price of one chocolate is $2,the marginal benefit per dollar spent on the fourth unit of chocolate will equal ________.

Accepted Answer

A)  $4 
B)  $2 
C)  $2.5 
D)  $5 
A)  $4 
B)  $2 
C)  $2.5 
D)  $5 C

Question 4

Scenario: When the price of wine is $10 per bottle, Thomas purchases 30 bottles of wine per month. Suppose the government levies a 50 percent tax on all alcoholic beverages . The burden of this tax is to be completely borne by the consumers. This reduces Thomas's consumption to 20 bottles of wine per month.
-Refer to the scenario above.Thomas's arc elasticity of demand for wine is ________.

Accepted Answer

A)  −0.33 
B)  −0.67 
C)  −0.25 
D)  −1 
A)  −0.33 
B)  −0.67 
C)  −0.25 
D)  −1

Question 5

Dawn has preferences for minor league baseball games and NASCAR races.Minor league baseball tickets are $10 per game and NASCAR tickets are $20/race.Dawn's monthly budget of $90 allows her to buy five minor league baseball tickets and two NASCAR tickets.At this consumption bundle,her marginal benefit of the last baseball game is 30 and the marginal benefit of the last NASCAR ticket is 40.Dawn ________.

Accepted Answer

A)  could increase her total benefit by buying more minor league baseball tickets and fewer NASCAR race tickets 
B)  could increase her total benefit by buying NASCAR race tickets and fewer minor league baseball tickets 
C)  is maximizing her total benefit with her current consumption bundle 
D)  Cannot answer the question given the information provided 
A)  could increase her total benefit by buying more minor league baseball tickets and fewer NASCAR race tickets 
B)  could increase her total benefit by buying NASCAR race tickets and fewer minor league baseball tickets 
C)  is maximizing her total benefit with her current consumption bundle 
D)  Cannot answer the question given the information provided

Question 6

If a good has a price elasticity of demand equal to 0,________.

Accepted Answer

A)  the percentage change in the quantity demanded of the good will be greater than the percentage change in its price 
B)  the demand curve for the good will be upward-sloping 
C)  the smallest increase in its price will cause consumers to stop consuming it completely 
D)  the quantity demanded of the good will be completely unaffected by a change in its price 
A)  the percentage change in the quantity demanded of the good will be greater than the percentage change in its price 
B)  the demand curve for the good will be upward-sloping 
C)  the smallest increase in its price will cause consumers to stop consuming it completely 
D)  the quantity demanded of the good will be completely unaffected by a change in its price

Question 7

Which of the following pairs of goods is most likely to have a positive cross-price elasticity?

Accepted Answer

A)  Printers and ink cartridges 
B)  A privately-owned car and public transportation 
C)  Coffee and sugar 
D)  Motorcycles and typewriters 
A)  Printers and ink cartridges 
B)  A privately-owned car and public transportation 
C)  Coffee and sugar 
D)  Motorcycles and typewriters

Question 8

From the information provided in the following table,determine the optimal bundle that a consumer with an income of $34 must choose to maximize her well-being.

Accepted Answer

To estimate the optimal bundle for the c

Question 9

Jack has an income of $150 per month that he can spend on two goods: shoes and jeans.From the following table,estimate the bundle that maximizes Jack's well-being.

Accepted Answer

6 pairs of shoes and 6 pairs of jeans an

Question 10

Which of the following formulas is used to calculate the arc elasticity of demand?

Accepted Answer

A)  Arc elasticity of demand = [(Q₂ − Q₁)/(Q₂/2)]/[(P₂ − P₁)/(P₂/2)] 
B)  Arc elasticity of demand = [(Q₂ + Q₁)/(Q₂/2)]/[(P₂ + P₁)/(P₂/2)] 
C)  Arc elasticity of demand = [(Q₂ − Q₁)/(Q₂ + Q₁)/2]/[(P₂ − P₁)/(P₂ + P₁)/2] 
D)  Arc elasticity of demand = [(Q₁ − Q₂)/(Q₂ + Q₁)]/[(P₁ − P₂)/(P₂ + P₁)] 
A)  Arc elasticity of demand = [(Q₂ − Q₁)/(Q₂/2)]/[(P₂ − P₁)/(P₂/2)] 
B)  Arc elasticity of demand = [(Q₂ + Q₁)/(Q₂/2)]/[(P₂ + P₁)/(P₂/2)] 
C)  Arc elasticity of demand = [(Q₂ − Q₁)/(Q₂ + Q₁)/2]/[(P₂ − P₁)/(P₂ + P₁)/2] 
D)  Arc elasticity of demand = [(Q₁ − Q₂)/(Q₂ + Q₁)]/[(P₁ − P₂)/(P₂ + P₁)]

Question 11

The demand for a good is relatively elastic if the responsiveness of consumers to a change in the price of ________.

Accepted Answer

A)  the good is high 
B)  the good is low 
C)  a related good is low 
D)  a related good is high 
A)  the good is high 
B)  the good is low 
C)  a related good is low 
D)  a related good is high

Question 12

The demand curves for good A and B are depicted in the following graph.We can conclude that ________.

Accepted Answer

A)  the price elasticity of demand for good A is smaller than good B 
B)  the price elasticity of demand for good A is larger than good B 
C)  good A is perfectly elastic 
D)  good A is perfectly inelastic. 
A)  the price elasticity of demand for good A is smaller than good B 
B)  the price elasticity of demand for good A is larger than good B 
C)  good A is perfectly elastic 
D)  good A is perfectly inelastic.

Question 13

Which of the following is the best example of the Law of Demand?

Accepted Answer

A)  When Alex received a pay hike, his consumption of all goods increased. 
B)  When the price of gasoline increased, the demand for cars fell. 
C)  When the price of Nokia phones increased, the demand for Samsung phones increased. 
D)  When the price of tea increased, the quantity demanded of tea decreased. 
A)  When Alex received a pay hike, his consumption of all goods increased. 
B)  When the price of gasoline increased, the demand for cars fell. 
C)  When the price of Nokia phones increased, the demand for Samsung phones increased. 
D)  When the price of tea increased, the quantity demanded of tea decreased.

Question 14

If a consumer purchases any combination of goods on her budget constraint ________.

Accepted Answer

A)  she will minimize total utility 
B)  she will exhaust her entire income 
C)  she will maximize her marginal utility obtained from the consumption of each additional amount of both goods 
D)  she will maximize her marginal benefit obtained from the consumption of each additional amount of both goods 
A)  she will minimize total utility 
B)  she will exhaust her entire income 
C)  she will maximize her marginal utility obtained from the consumption of each additional amount of both goods 
D)  she will maximize her marginal benefit obtained from the consumption of each additional amount of both goods

Question 15

The following table shows the marginal benefit that Marcus derives by consuming different quantities of hotdog and soda. The price of a hotdog is $3, and the price of a soda is $1.
  
-Refer to the table above.If Marcus consumes 2 hotdogs and 2 sodas,not necessarily his optimal choice,how much consumer surplus is he enjoying?

Accepted Answer

A)  $43 
B)  $49 
C)  $8 
D)  $24 
A)  $43 
B)  $49 
C)  $8 
D)  $24

Question 16

The following figure displays John's budget constraint when he spends his income on tables and chairs.
  
-Refer to the figure above.If John spends his entire income on chairs,how many chairs can he purchase?

Accepted Answer

A)  3 
B)  8 
C)  20 
D)  40 
A)  3 
B)  8 
C)  20 
D)  40

Question 17

Which of the following pairs of goods is likely to have a negative cross-price elasticity?

Accepted Answer

A)  Pens and paper notebooks 
B)  Nokia and Samsung cell phones 
C)  Compact discs (CDs) and electronic music files 
D)  Motorcycles and typewriters 
A)  Pens and paper notebooks 
B)  Nokia and Samsung cell phones 
C)  Compact discs (CDs) and electronic music files 
D)  Motorcycles and typewriters

Question 18

The slope of a consumer's budget constraint equals ________.

Accepted Answer

A)  the ratio of the income of the consumer to the price of the good measured along the horizontal axis 
B)  the ratio of the price of the good measured along the vertical axis to the price of the good measured along the horizontal axis 
C)  the ratio of the price of the good measured along the horizontal axis to the price of the good measured along the vertical axis 
D)  the ratio of the income of the consumer to the price of the good measured along the vertical axis 
A)  the ratio of the income of the consumer to the price of the good measured along the horizontal axis 
B)  the ratio of the price of the good measured along the vertical axis to the price of the good measured along the horizontal axis 
C)  the ratio of the price of the good measured along the horizontal axis to the price of the good measured along the vertical axis 
D)  the ratio of the income of the consumer to the price of the good measured along the vertical axis

Question 19

For a given level of total utility,________.

Accepted Answer

A)  there is exactly one indifference curve 
B)  there are exactly two indifference curves 
C)  there are exactly three indifference curves 
D)  there are exactly four indifference curves 
A)  there is exactly one indifference curve 
B)  there are exactly two indifference curves 
C)  there are exactly three indifference curves 
D)  there are exactly four indifference curves

Question 20

In the graph above,which bundles of jeans and sweaters are on your budget constraint?

Accepted Answer

A)  Bundles A (5 pairs of jeans, 0 sweaters) and C (3 pairs of jeans and 6 sweaters) 
B)  Bundles A (5 pairs of jeans, 0 sweaters), B(4 pairs of jeans and 4 sweaters), and C(3 pairs of jeans and 6 sweaters) 
C)  Bundles A (5 pairs of jeans, 0 sweaters), C (3 pairs of jeans and 6 sweaters), and D (2 pairs of jeans and 8 sweaters) 
D)  Bundles B (4 pairs of jeans and 4 sweaters), C (3 pairs of jeans and 6 sweaters), and D (2 pairs of jeans and 8 sweaters) 
A)  Bundles A (5 pairs of jeans, 0 sweaters) and C (3 pairs of jeans and 6 sweaters) 
B)  Bundles A (5 pairs of jeans, 0 sweaters), B(4 pairs of jeans and 4 sweaters), and C(3 pairs of jeans and 6 sweaters) 
C)  Bundles A (5 pairs of jeans, 0 sweaters), C (3 pairs of jeans and 6 sweaters), and D (2 pairs of jeans and 8 sweaters) 
D)  Bundles B (4 pairs of jeans and 4 sweaters), C (3 pairs of jeans and 6 sweaters), and D (2 pairs of jeans and 8 sweaters)

Economists estimate that the income elasticity of demand for women's hairstyling services is +3.5,suggesting that ________.

The following figure illustrates the market demand curve for solar-powered lights. -Refer to the figure above.What is the absolute value of the arc elasticity of demand for solar-powered lights when their price falls from $8 to $4?

The following table shows the total benefit that Jenny derives from consuming different quantities of chocolate. -Refer to the table above.If the price of one chocolate is $2,the marginal benefit per dollar spent on the fourth unit of chocolate will equal ________.

If a good has a price elasticity of demand equal to 0,________.

Which of the following pairs of goods is most likely to have a positive cross-price elasticity?

From the information provided in the following table,determine the optimal bundle that a consumer with an income of $34 must choose to maximize her well-being.

Jack has an income of $150 per month that he can spend on two goods: shoes and jeans.From the following table,estimate the bundle that maximizes Jack's well-being.

Which of the following formulas is used to calculate the arc elasticity of demand?

The demand for a good is relatively elastic if the responsiveness of consumers to a change in the price of ________.

The demand curves for good A and B are depicted in the following graph.We can conclude that ________.

Which of the following is the best example of the Law of Demand?

If a consumer purchases any combination of goods on her budget constraint ________.

The following figure displays John's budget constraint when he spends his income on tables and chairs. -Refer to the figure above.If John spends his entire income on chairs,how many chairs can he purchase?

Which of the following pairs of goods is likely to have a negative cross-price elasticity?

The slope of a consumer's budget constraint equals ________.

For a given level of total utility,________.

In the graph above,which bundles of jeans and sweaters are on your budget constraint?

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, supply, and Equilibrium

Sellers and Incentives

Perfect Competition and the Invisible Hand

Trade

Externalities and Public Goods

The Government in the Economy: Taxation and Regulation

Markets for Factors of Production

Monopoly

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

Filters

Exam 5: Consumers and Incentives

Economists estimate that the income elasticity of demand for women's hairstyling services is +3.5,suggesting that ________.

The following figure illustrates the market demand curve for solar-powered lights. -Refer to the figure above.What is the absolute value of the arc elasticity of demand for solar-powered lights when their price falls from $8 to $4?

The following table shows the total benefit that Jenny derives from consuming different quantities of chocolate. -Refer to the table above.If the price of one chocolate is $2,the marginal benefit per dollar spent on the fourth unit of chocolate will equal ________.

If a good has a price elasticity of demand equal to 0,________.

Which of the following pairs of goods is most likely to have a positive cross-price elasticity?

From the information provided in the following table,determine the optimal bundle that a consumer with an income of $34 must choose to maximize her well-being.

Jack has an income of $150 per month that he can spend on two goods: shoes and jeans.From the following table,estimate the bundle that maximizes Jack's well-being.

Which of the following formulas is used to calculate the arc elasticity of demand?

The demand for a good is relatively elastic if the responsiveness of consumers to a change in the price of ________.

The demand curves for good A and B are depicted in the following graph.We can conclude that ________.

Which of the following is the best example of the Law of Demand?

If a consumer purchases any combination of goods on her budget constraint ________.

The following figure displays John's budget constraint when he spends his income on tables and chairs. -Refer to the figure above.If John spends his entire income on chairs,how many chairs can he purchase?

Which of the following pairs of goods is likely to have a negative cross-price elasticity?

The slope of a consumer's budget constraint equals ________.

For a given level of total utility,________.

In the graph above,which bundles of jeans and sweaters are on your budget constraint?

The Principles and Practice of Economics

Economic Methods and Economic Questions

Optimization: Doing the Best You Can

Demand, supply, and Equilibrium

Sellers and Incentives

Perfect Competition and the Invisible Hand

Trade

Externalities and Public Goods

The Government in the Economy: Taxation and Regulation

Markets for Factors of Production

Monopoly

Game Theory and Strategic Play

Oligopoly and Monopolistic Competition

Trade-Offs Involving Time and Risk

The Economics of Information

Auctions and Bargaining

Social Economics

Filters