Question 1

​As price increases,demand typically

Accepted Answer

A) ​becomes more elastic 
B) becomes less elastic 
C) does not change 
D) ​elasticity does not change 
A) ​becomes more elastic 
B) becomes less elastic 
C) does not change 
D) ​elasticity does not change B

Question 2

​Given that the own-price elasticity of demand for a brand of shoes is -2,the demand for this brand of shoes is

Accepted Answer

A) ​unitary elastic 
B) indeterminate. 
C) elastic. 
D) ​inelastic. 
A) ​unitary elastic 
B) indeterminate. 
C) elastic. 
D) ​inelastic. C

Question 3

​Ingrid's Ice cream Parlor has an own price elasticity of 5.It has an approximate share of 10% in the market for ice cream.What is the aggregate own price elasticity of the market?

Accepted Answer

A) ​0.1% 
B) 0.5% 
C) 0.7% 
D) ​1% 
A) ​0.1% 
B) 0.5% 
C) 0.7% 
D) ​1% B

Question 4

​The first law of demand states that

Accepted Answer

A) ​the quantity demanded increases as price falls 
B) the quantity demanded decreases as price falls 
C) the quantity demanded increases as price increases 
D) ​none of the above 
A) ​the quantity demanded increases as price falls 
B) the quantity demanded decreases as price falls 
C) the quantity demanded increases as price increases 
D) ​none of the above

Question 5

​Since demand is more inelastic for products that represent a smaller share of your income,which one of the following is true?

Accepted Answer

A) ​the demand for shoe laces is more elastic than the demand for shoes 
B) The demand for oil changes is more inelastic than the demand for cars 
C) the demand for ear buds is more elastic than the demand for ipods 
D) ​the demand for Salt has a more elastic than the demand than meat 
A) ​the demand for shoe laces is more elastic than the demand for shoes 
B) The demand for oil changes is more inelastic than the demand for cars 
C) the demand for ear buds is more elastic than the demand for ipods 
D) ​the demand for Salt has a more elastic than the demand than meat

Question 6

​If the price elasticity of demand is -0.8 and the firm decreases price,revenue will

Accepted Answer

A) ​Increase 
B) Decrease 
C) Stay constant 
D) ​become zero,they would lose all their customers 
A) ​Increase 
B) Decrease 
C) Stay constant 
D) ​become zero,they would lose all their customers

Question 7

​If MR>MC,then the firm should

Accepted Answer

A) ​increase production 
B) decrease production 
C) keep the prices constant 
D) ​keep the production level constant 
A) ​increase production 
B) decrease production 
C) keep the prices constant 
D) ​keep the production level constant

Question 8

​Based on the information above,video games have

Accepted Answer

A) ​A unitary elastic demand 
B) An inelastic demand 
C) An elastic demand 
D) ​A perfectly elastic demand 
A) ​A unitary elastic demand 
B) An inelastic demand 
C) An elastic demand 
D) ​A perfectly elastic demand

Question 9

​A price elasticity of demand of -0.67 implies

Accepted Answer

A) ​Demand is inelastic 
B) Demand is elastic 
C) Demand is unitary elastic 
D) ​Demand is perfectly elastic 
A) ​Demand is inelastic 
B) Demand is elastic 
C) Demand is unitary elastic 
D) ​Demand is perfectly elastic

Question 10

​If the current margin is greater than the desired margin,the firm should

Accepted Answer

A) ​Increase production 
B) Decrease production 
C) Not change production level 
D) ​Production ceases 
A) ​Increase production 
B) Decrease production 
C) Not change production level 
D) ​Production ceases

Question 11

As a consumer you believe yourself to act rationally,optimally and self-interestedly.You like ice cream and value a pint at $7.Usually you buy a pint each week at $4.This week however,the price jumped to $5 a pint.What would you do?

Accepted Answer

A) ​buy the ice cream since the price is still below your maximum willingness to pay 
B) buy the ice cream since even at the new price it gives you a positive amount of consumer surplus 
C) not buy the ice-cream since the price is now higher 
D) ​both A&B 
A) ​buy the ice cream since the price is still below your maximum willingness to pay 
B) buy the ice cream since even at the new price it gives you a positive amount of consumer surplus 
C) not buy the ice-cream since the price is now higher 
D) ​both A&B

Question 12

​You have the following demand schedule for cheeseburgers.Use the table for question
  
-​If the cheeseburger costs $2,how many cheeseburgers would you buy

Accepted Answer

A) ​1 
B) 2 
C) 3 
D) ​4 
A) ​1 
B) 2 
C) 3 
D) ​4

Question 13

​The owner of a bakery decides to drop the price of lemon cakes by 5%,how much does quantity sold have to rise to stop the revenue from decreasing

Accepted Answer

A) ​2% 
B) 3% 
C) 4% 
D) ​5% 
A) ​2% 
B) 3% 
C) 4% 
D) ​5%

Question 14

​For complements,cross price elasticity of demand is:

Accepted Answer

A) ​Negative 
B) Positive 
C) between zero and one only 
D) ​zero. 
A) ​Negative 
B) Positive 
C) between zero and one only 
D) ​zero.

Question 15

​If Dell and Toshiba computers are substitutes and the price of dell computers increases we would expect to see

Accepted Answer

A) ​An increase in demand for Toshiba computers 
B) An decrease in demand for Toshiba computers 
C) An increase in the quantity of Toshiba computers demanded 
D) ​An decrease in the quantity of Toshiba computers demanded 
A) ​An increase in demand for Toshiba computers 
B) An decrease in demand for Toshiba computers 
C) An increase in the quantity of Toshiba computers demanded 
D) ​An decrease in the quantity of Toshiba computers demanded

Question 16

​Which of the following goods is most likely to have a negative income elasticity of demand?

Accepted Answer

A) ​Automobiles 
B) Bargain brand noodles 
C) Shoes 
D) ​Fine Jewelry 
A) ​Automobiles 
B) Bargain brand noodles 
C) Shoes 
D) ​Fine Jewelry

Question 17

​If mortgages and houses are complements in consumption and interest rates decrease,we would expect to see

Accepted Answer

A) ​An increase in demand for houses 
B) An decrease in demand for houses 
C) An increase in the quantity of houses demanded 
D) ​An decrease in the quantity of houses demanded 
A) ​An increase in demand for houses 
B) An decrease in demand for houses 
C) An increase in the quantity of houses demanded 
D) ​An decrease in the quantity of houses demanded

Question 18

​Jim saw a decrease in the quantity demanded for his firm's product from 8000 to 6000 units a week when he raised the price of the product from $200 to $250.Based on this information,the price elasticity of demand for Jim's product is

Accepted Answer

A) >1 B) 1 C) <1 D) 0 A) >1 B) 1 C) <1 D) 0

Question 19

​Use the following table for question
  
-​If the government wants to decrease the quantity consumed of soda by 30%,what percentage of tax would they have to levy on soda consumption?

Accepted Answer

A) ​10% 
B) 20% 
C) 30% 
D) ​40% 
A) ​10% 
B) 20% 
C) 30% 
D) ​40%

Question 20

​As the price of dvds increases from $3 to $5,the quantity demanded falls from 220,000 to 180,000. The price elasticity of demand for dvds is:

Accepted Answer

A) ​-0.40 
B) -0.33 
C) -3.00 
D) ​-2.50 
A) ​-0.40 
B) -0.33 
C) -3.00 
D) ​-2.50

Exam 5: Simple Pricing

​As price increases,demand typically

​Given that the own-price elasticity of demand for a brand of shoes is -2,the demand for this brand of shoes is

​Ingrid's Ice cream Parlor has an own price elasticity of 5.It has an approximate share of 10% in the market for ice cream.What is the aggregate own price elasticity of the market?

​The first law of demand states that

​Since demand is more inelastic for products that represent a smaller share of your income,which one of the following is true?

​If the price elasticity of demand is -0.8 and the firm decreases price,revenue will

​If MR>MC,then the firm should

​Based on the information above,video games have

​A price elasticity of demand of -0.67 implies

​If the current margin is greater than the desired margin,the firm should

As a consumer you believe yourself to act rationally,optimally and self-interestedly.You like ice cream and value a pint at $7.Usually you buy a pint each week at $4.This week however,the price jumped to $5 a pint.What would you do?

​You have the following demand schedule for cheeseburgers.Use the table for question -​If the cheeseburger costs $2,how many cheeseburgers would you buy

​The owner of a bakery decides to drop the price of lemon cakes by 5%,how much does quantity sold have to rise to stop the revenue from decreasing

​For complements,cross price elasticity of demand is:

​If Dell and Toshiba computers are substitutes and the price of dell computers increases we would expect to see

​Which of the following goods is most likely to have a negative income elasticity of demand?

​If mortgages and houses are complements in consumption and interest rates decrease,we would expect to see

​Jim saw a decrease in the quantity demanded for his firm's product from 8000 to 6000 units a week when he raised the price of the product from $200 to $250.Based on this information,the price elasticity of demand for Jim's product is

​Use the following table for question -​If the government wants to decrease the quantity consumed of soda by 30%,what percentage of tax would they have to levy on soda consumption?

​As the price of dvds increases from $3 to $5,the quantity demanded falls from 220,000 to 180,000. The price elasticity of demand for dvds is:

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Much Decisions

Investment Decisions: Look Ahead and Reason Back

Economies of Scale and Scope

Understanding Markets and Industry Changes

Market Structure and Long Run Equilibrium

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, Trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination

Strategic Games

Bargaining

Making Decisions With Uncertainty

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Employees to Work in the Firms Best Interest

Getting Divisions to Work in the Firms Best Interest

Managing Vertical Relationships

Filters

As price increases,demand typically

Given that the own-price elasticity of demand for a brand of shoes is -2,the demand for this brand of shoes is

Ingrid's Ice cream Parlor has an own price elasticity of 5.It has an approximate share of 10% in the market for ice cream.What is the aggregate own price elasticity of the market?

The first law of demand states that

Since demand is more inelastic for products that represent a smaller share of your income,which one of the following is true?

If the price elasticity of demand is -0.8 and the firm decreases price,revenue will

If MR>MC,then the firm should

Based on the information above,video games have

A price elasticity of demand of -0.67 implies

If the current margin is greater than the desired margin,the firm should

You have the following demand schedule for cheeseburgers.Use the table for question -If the cheeseburger costs $2,how many cheeseburgers would you buy

The owner of a bakery decides to drop the price of lemon cakes by 5%,how much does quantity sold have to rise to stop the revenue from decreasing

For complements,cross price elasticity of demand is:

If Dell and Toshiba computers are substitutes and the price of dell computers increases we would expect to see

Which of the following goods is most likely to have a negative income elasticity of demand?

If mortgages and houses are complements in consumption and interest rates decrease,we would expect to see

Jim saw a decrease in the quantity demanded for his firm's product from 8000 to 6000 units a week when he raised the price of the product from $200 to $250.Based on this information,the price elasticity of demand for Jim's product is

Use the following table for question -If the government wants to decrease the quantity consumed of soda by 30%,what percentage of tax would they have to levy on soda consumption?

As the price of dvds increases from $3 to $5,the quantity demanded falls from 220,000 to 180,000. The price elasticity of demand for dvds is: