Question 1

An increase in supply will decrease prices least when demand is

Accepted Answer

A) elastic. 
B) unit elastic. 
C) inelastic (but not perfectly inelastic). 
D) perfectly inelastic. 
A) elastic. 
B) unit elastic. 
C) inelastic (but not perfectly inelastic). 
D) perfectly inelastic. A

Question 2

If the percentage change in quantity supplied is 5% and the percentage change in price is 10% then the supply for the good is

Accepted Answer

A) elastic. 
B) inelastic. 
C) unit elastic. 
D) perfectly inelastic. 
A) elastic. 
B) inelastic. 
C) unit elastic. 
D) perfectly inelastic. B

Question 3

Economists suggest that a market can fail if

Accepted Answer

A) consumers have to pay more than they want to. 
B) producers get smaller profits than they desire. 
C) the good or service is such that consumers are unable to make well-informed decisions about its consumption. 
D) governments dictate prices. 
A) consumers have to pay more than they want to. 
B) producers get smaller profits than they desire. 
C) the good or service is such that consumers are unable to make well-informed decisions about its consumption. 
D) governments dictate prices. C

Question 4

If there is no change in demand that will cause a change in the price then the supply for the good is

Accepted Answer

A) perfectly elastic. 
B) inelastic. 
C) perfectly unit elastic. 
D) perfectly inelastic. 
A) perfectly elastic. 
B) inelastic. 
C) perfectly unit elastic. 
D) perfectly inelastic.

Question 5

Which of the following is true?

Accepted Answer

A) on a linear demand curve, the higher the price the less elastic is demand 
B) on a linear demand curve, elasticity is constant 
C) at the same price demand is more elastic on the steeper demand curve 
D) none are true 
A) on a linear demand curve, the higher the price the less elastic is demand 
B) on a linear demand curve, elasticity is constant 
C) at the same price demand is more elastic on the steeper demand curve 
D) none are true

Question 6

If the price falls and the total amount consumers spend on the good remains unchanged, then demand must be

Accepted Answer

A) elastic. 
B) inelastic. 
C) perfectly inelastic. 
D) unit elastic. 
A) elastic. 
B) inelastic. 
C) perfectly inelastic. 
D) unit elastic.

Question 7

If the price of a good increases by 10% and the quantity demanded decreases by 10%, then at that price, the good is

Accepted Answer

A) elastic. 
B) inelastic. 
C) perfectly inelastic. 
D) unit elastic. 
A) elastic. 
B) inelastic. 
C) perfectly inelastic. 
D) unit elastic.

Question 8

The formula for elasticity of demand (in words)is

Accepted Answer

A) the change in price divided by the change in quantity. 
B) the percentage change in price divided by the percentage change in quantity. 
C) the change in quantity divided by the change in price. 
D) the percentage change in quantity divided by the percentage change in price. 
A) the change in price divided by the change in quantity. 
B) the percentage change in price divided by the percentage change in quantity. 
C) the change in quantity divided by the change in price. 
D) the percentage change in quantity divided by the percentage change in price.

Question 9

If the price of a good decreases by 10% and the quantity demanded remains unchanged, then at that price, the good is

Accepted Answer

A) elastic. 
B) inelastic. 
C) perfectly inelastic. 
D) perfectly elastic. 
A) elastic. 
B) inelastic. 
C) perfectly inelastic. 
D) perfectly elastic.

Question 10

If a good is inferior the income elasticity of demand must be

Accepted Answer

A) Positive and greater than 1 
B) Merely positive (not necessarily greater than 1) 
C) Zero 
D) Negative 
A) Positive and greater than 1 
B) Merely positive (not necessarily greater than 1) 
C) Zero 
D) Negative

Question 11

Suppose a new law makes illegal the sale of a good that had been legal. This will

Accepted Answer

A) increase consumer surplus. 
B) increase producer surplus. 
C) decrease producer surplus. 
D) eliminate deadweight loss. 
A) increase consumer surplus. 
B) increase producer surplus. 
C) decrease producer surplus. 
D) eliminate deadweight loss.

Question 12

The value to the consumer is based upon adding up

Accepted Answer

A) The most each consumer is willing to pay for a good. 
B) The least a firm is willing to sell the good for. 
C) The average of the most a consumer is willing to pay for a good and the least a firm is willing to sell the good for. 
D) The difference between most a consumer is willing to pay for a good and the least a firm is willing to sell the good for. 
A) The most each consumer is willing to pay for a good. 
B) The least a firm is willing to sell the good for. 
C) The average of the most a consumer is willing to pay for a good and the least a firm is willing to sell the good for. 
D) The difference between most a consumer is willing to pay for a good and the least a firm is willing to sell the good for.

Question 13

The elasticity of demand can change with

Accepted Answer

A) the number of close substitutes. 
B) the time available to shift to other alternatives. 
C) neither a nor b 
D) both a and b 
A) the number of close substitutes. 
B) the time available to shift to other alternatives. 
C) neither a nor b 
D) both a and b

Question 14

When looking at the impact of a change in trade policy economists use consumer and producer surplus to look at the winners and losers. Free trade economists insist that

Accepted Answer

A) no one loses. 
B) everyone loses. 
C) there are winners and losers but that the gain to the winners is greater than the loss to the losers. 
D) there are winners and losers but that the loss to the losers is greater than the gain to the winners. 
A) no one loses. 
B) everyone loses. 
C) there are winners and losers but that the gain to the winners is greater than the loss to the losers. 
D) there are winners and losers but that the loss to the losers is greater than the gain to the winners.

Question 15

If the price of a good decreases by 10% and the quantity demanded increases by 5%, then at that price, the good is

Accepted Answer

A) elastic. 
B) inelastic. 
C) perfectly inelastic. 
D) perfectly elastic. 
A) elastic. 
B) inelastic. 
C) perfectly inelastic. 
D) perfectly elastic.

Question 16

For an economist to say that too much of the good is produced, what must be true?

Accepted Answer

A) The consumer surplus plus the producer surplus must be smaller than it could be. 
B) The consumer surplus must be smaller than optimal. 
C) The consumer surplus must be larger than optimal. 
D) The producer surplus must be smaller than optimal. 
A) The consumer surplus plus the producer surplus must be smaller than it could be. 
B) The consumer surplus must be smaller than optimal. 
C) The consumer surplus must be larger than optimal. 
D) The producer surplus must be smaller than optimal.

Question 17

Suppose a new law makes illegal the sale of a good that had been legal. This will

Accepted Answer

A) decrease consumer surplus. 
B) increase consumer surplus. 
C) increase producer surplus. 
D) eliminate deadweight loss. 
A) decrease consumer surplus. 
B) increase consumer surplus. 
C) increase producer surplus. 
D) eliminate deadweight loss.

Question 18

If the price falls and the total amount consumers spend on the good falls, then demand must be

Accepted Answer

A) elastic. 
B) inelastic. 
C) perfectly inelastic. 
D) perfectly elastic 
A) elastic. 
B) inelastic. 
C) perfectly inelastic. 
D) perfectly elastic

Question 19

Deadweight Loss is defined as

Accepted Answer

A) the loss to society that results from production being too high or too low. 
B) the loss to society that results from incomes being too high or too low. 
C) the loss to society that results from items costing more than some can afford. 
D) none of these 
A) the loss to society that results from production being too high or too low. 
B) the loss to society that results from incomes being too high or too low. 
C) the loss to society that results from items costing more than some can afford. 
D) none of these

Question 20

The amount of money consumers pay producers is

Accepted Answer

A) The area under the demand curve form the origin to the quantity purchased. 
B) The area under the supply curve form the origin to the quantity produced. 
C) The area under the demand curve but above the price line from the origin to the quantity purchased. 
D) The price times the quantity or the rectangle whose height is the price and base is the quantity purchased. 
A) The area under the demand curve form the origin to the quantity purchased. 
B) The area under the supply curve form the origin to the quantity produced. 
C) The area under the demand curve but above the price line from the origin to the quantity purchased. 
D) The price times the quantity or the rectangle whose height is the price and base is the quantity purchased.

Exam 3: The Concept of Elasticity and Consumer and Producer Surplus

An increase in supply will decrease prices least when demand is

If the percentage change in quantity supplied is 5% and the percentage change in price is 10% then the supply for the good is

Economists suggest that a market can fail if

If there is no change in demand that will cause a change in the price then the supply for the good is

Which of the following is true?

If the price falls and the total amount consumers spend on the good remains unchanged, then demand must be

If the price of a good increases by 10% and the quantity demanded decreases by 10%, then at that price, the good is

The formula for elasticity of demand (in words)is

If the price of a good decreases by 10% and the quantity demanded remains unchanged, then at that price, the good is

If a good is inferior the income elasticity of demand must be

Suppose a new law makes illegal the sale of a good that had been legal. This will

The value to the consumer is based upon adding up

The elasticity of demand can change with

When looking at the impact of a change in trade policy economists use consumer and producer surplus to look at the winners and losers. Free trade economists insist that

If the price of a good decreases by 10% and the quantity demanded increases by 5%, then at that price, the good is

For an economist to say that too much of the good is produced, what must be true?

Suppose a new law makes illegal the sale of a good that had been legal. This will

If the price falls and the total amount consumers spend on the good falls, then demand must be

Deadweight Loss is defined as

The amount of money consumers pay producers is

Economics: the Study of Opportunity Cost

Supply and Demand

Firm Production, Cost, and Revenue

Perfect Competition, Monopoly, and Economic Versus Normal Profit

Every Macroeconomic Word You Ever Heard: Gross Domestic Product, Inflation, Unemployment, Recession, Depression

Interest Rates and Present Value

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Policy

Federal Spending

Federal Deficits, Surpluses, and the National Debt

The Housing Bubble

The Recession of 2007-2009: Causes and Policy Responses

Is Economic Stagnation the New Normal

Is the Fiscalsky Falling: An Examination of Unfunded Social Security, Medicare, and State and Local Pension Liabilities

International Trade: Does It Jeopardize American Jobs

International Finance and Exchange Rates

The European Debt Crisis

Economic Growth and Development

Nafta, Gatt, Wto: Are Trade Agreements Good for Us

The Line Between Legal and Illegal Goods

Natural Resources, the Environment, and Climate Change

Health Care

Government-Provided Health Insurance: Medicaid, Medicare, and the Child Health Insurance Program

The Economics of Prescription Drugs

So You Want to Be a Lawyer: Economics and the Law

The Economics of Crime

Antitrust

The Economics of Race and Discrimination

Income and Wealth Inequality

Farm Policy

Minimum Wage

Ticket Brokers and Ticket Scalping

Rent Control

Economics of K-12 Education

Economics of College and University Education

Poverty and Welfare

Head Start

Social Security

Personal Income Taxes

Energy Prices

If We Build It, Will They Come and Other Sports Questions

The Stock Market Crashes

Unions

Walmart: Always Low Prices and Low Wages- Always

The Economic Impact of Casino Gambling

The Economics of Terrorism

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