Question 1

An increase in supply will decrease prices most 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.

Question 2

Goods and services which have relatively inelastic supplies in the short run are

Accepted Answer

A) fresh produce at the farmer's market. 
B) gasoline and other refined petroleum products. 
C) lanes on a toll road. 
D) all of these options are correct. 
A) fresh produce at the farmer's market. 
B) gasoline and other refined petroleum products. 
C) lanes on a toll road. 
D) all of these options are correct.

Question 3

The cross price elasticity of demand helps determine, empirically, whether a good is

Accepted Answer

A) Normal or inferior 
B) A necessity or a luxury 
C) A complement or a substitute to another good 
D) Unit elastic or perfectly inelastic in its own demand. 
A) Normal or inferior 
B) A necessity or a luxury 
C) A complement or a substitute to another good 
D) Unit elastic or perfectly inelastic in its own demand.

Question 4

If the price of a good falls by 10% and the percentage decrease in the total amount consumers spend on the good is 15% then 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.

Question 5

-In Figure 3.1, if demand is considered perfectly elastic, then the appropriate figure is?

Accepted Answer

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

Question 6

The consumer surplus 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 area under the supply curve but below the price line from the origin to 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 area under the supply curve but below the price line from the origin to the quantity purchased.

Question 7

The fact that the demand for eggs is inelastic is not surprising because

Accepted Answer

A) there are many substitutes for eggs as breakfast food. 
B) the demand for food is inelastic. 
C) the supply of eggs is inelastic. 
D) they are so inexpensive. 
A) there are many substitutes for eggs as breakfast food. 
B) the demand for food is inelastic. 
C) the supply of eggs is inelastic. 
D) they are so inexpensive.

Question 8

If the price of a good increases 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 9

If supply and demand are both straight lines, then at equilibrium consumer and producer surplus are both

Accepted Answer

A) equal. 
B) shown as trapezoids. 
C) shown as squares. 
D) shown as triangles. 
A) equal. 
B) shown as trapezoids. 
C) shown as squares. 
D) shown as triangles.

Question 10

If the price of a good decreases by 5% 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 11

The cross price elasticity for Coke for a change in the price of Pepsi is likely to be

Accepted Answer

A) Negative and more negative than -1 
B) Negative but less negative than -1 
C) Zero 
D) Positive 
A) Negative and more negative than -1 
B) Negative but less negative than -1 
C) Zero 
D) Positive

Question 12

Suppose a long stretch of beach with many possible public and private entrances is such that it is impossible to control access and, as a result, gets very crowded on summer days. Which recognized characteristic of goods does not hold

Accepted Answer

A) rivalry. 
B) exclusivity. 
C) lucidity. 
D) morality. 
A) rivalry. 
B) exclusivity. 
C) lucidity. 
D) morality.

Question 13

If the percentage change in quantity supplied is 0% and the percentage change in price is 5% then 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.

Question 14

-In Figure 3.2, what is the value to the consumer?

Accepted Answer

A) 0PCQ* 
B) 0ACQ* 
C) P*AC 
D) BP*C 
A) 0PCQ* 
B) 0ACQ* 
C) P*AC 
D) BP*C

Question 15

If the price of a good rises by 10% and the percentage increase in the total amount consumers spend on the good is 10% then 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.

Question 16

If the percentage change in quantity supplied is 10% and the percentage change in price is 5% 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

Question 17

The income elasticity of demand helps determine, empirically, whether a good is

Accepted Answer

A) Normal or inferior 
B) A necessity or a luxury 
C) A complement or a substitute to another good 
D) Unit elastic or perfectly inelastic in its own demand. 
A) Normal or inferior 
B) A necessity or a luxury 
C) A complement or a substitute to another good 
D) Unit elastic or perfectly inelastic in its own demand.

Question 18

If good A and good B are substitutes, then the cross price elasticity of demand of good A for a change in the price of good B is

Accepted Answer

A) Negative and more negative than -1 
B) Negative but less negative than -1 
C) Zero 
D) Positive 
A) Negative and more negative than -1 
B) Negative but less negative than -1 
C) Zero 
D) Positive

Question 19

Combined the consumer surplus and producer surplus at equilibrium is

Accepted Answer

A) lower than it would be at prices below equilibrium. 
B) lower than it would be at prices above equilibrium. 
C) typically negative. 
D) as big as it can get. 
A) lower than it would be at prices below equilibrium. 
B) lower than it would be at prices above equilibrium. 
C) typically negative. 
D) as big as it can get.

Question 20

The variable cost to the producer

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 area above the supply curve but below the price line from the origin to 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 area above the supply curve but below the price line from the origin to the quantity purchased.

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

An increase in supply will decrease prices most when demand is

Goods and services which have relatively inelastic supplies in the short run are

The cross price elasticity of demand helps determine, empirically, whether a good is

If the price of a good falls by 10% and the percentage decrease in the total amount consumers spend on the good is 15% then the good is

-In Figure 3.1, if demand is considered perfectly elastic, then the appropriate figure is?

The consumer surplus is

The fact that the demand for eggs is inelastic is not surprising because

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

If supply and demand are both straight lines, then at equilibrium consumer and producer surplus are both

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

The cross price elasticity for Coke for a change in the price of Pepsi is likely to be

Suppose a long stretch of beach with many possible public and private entrances is such that it is impossible to control access and, as a result, gets very crowded on summer days. Which recognized characteristic of goods does not hold

If the percentage change in quantity supplied is 0% and the percentage change in price is 5% then the good is

-In Figure 3.2, what is the value to the consumer?

If the price of a good rises by 10% and the percentage increase in the total amount consumers spend on the good is 10% then the good is

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

The income elasticity of demand helps determine, empirically, whether a good is

If good A and good B are substitutes, then the cross price elasticity of demand of good A for a change in the price of good B is

Combined the consumer surplus and producer surplus at equilibrium is

The variable cost to the producer

Economics: the Study of Opportunity Cost

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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

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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

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Head Start

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Personal Income Taxes

Energy Prices

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The Stock Market Crashes

Unions

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The Economic Impact of Casino Gambling

The Economics of Terrorism

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