Question 1

-In Figure 3.1, if demand is considered perfectly inelastic, 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 2

Demand for a good which comprises a relatively large share of the consumer's budget tends to be

Accepted Answer

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

Question 3

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 4

The cross price elasticity for Sprite for a change in the price of 7up 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 5

If the price of a good rises by 10% and the percentage decrease in the total amount consumers spend on the good 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 6

If the price of a good rises by 10% and the percentage decrease 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 7

The difference between the value of a product enjoyed by consumers and the total variable costs incurred by producers in a competitive market for that product is

Accepted Answer

A) producer surplus. 
B) consumer surplus. 
C) the sum of consumer surplus and producer surplus. 
D) the difference between consumer surplus and producer surplus. 
A) producer surplus. 
B) consumer surplus. 
C) the sum of consumer surplus and producer surplus. 
D) the difference between consumer surplus and producer surplus.

Question 8

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 less elastic on the steeper demand curve 
D) all 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 less elastic on the steeper demand curve 
D) all are true

Question 9

For a given increase in supply, the condition of demand that will result in the most significant change in quantity is when demand is

Accepted Answer

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

Question 10

If the price of a good rises by 10% and the total amount consumers spend on the good remains the same 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 11

If the price rises 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 12

For a given increase in supply, the condition of demand that will result in no change in price is when demand is

Accepted Answer

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

Question 13

The cross price elasticity for hot dogs for a change in the price of hot dog buns is likely to be

Accepted Answer

A) Negative 
B) Zero 
C) Positive and greater than 1 
D) Positive and less than 1 
A) Negative 
B) Zero 
C) Positive and greater than 1 
D) Positive and less than 1

Question 14

A decrease in supply will increase 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.

Question 15

If the price of a good falls by 10% and the percentage decrease in the total amount consumers spend on the good 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 16

For a given decrease in supply, the condition of demand that will result in no change in price is when demand is

Accepted Answer

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

Question 17

A congestible public good is such that

Accepted Answer

A) Rivalry holds but exclusivity does not. 
B) Both rivalry and exclusivity hold. 
C) Exclusivity holds but rivalry does not. 
D) Neither rivalry nor exclusivity hold. 
A) Rivalry holds but exclusivity does not. 
B) Both rivalry and exclusivity hold. 
C) Exclusivity holds but rivalry does not. 
D) Neither rivalry nor exclusivity hold.

Question 18

If there is no change in price that can alter the quantity supplied 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 19

Consumer surplus is defined as

Accepted Answer

A) the value that the consumer places on a good over the amount they pay for it. 
B) the money that the producer gets from a good over the amount they are willing to sell it for. 
C) when quantity supplied is greater than quantity demanded. 
D) when quantity demanded is greater than quantity supplied. 
A) the value that the consumer places on a good over the amount they pay for it. 
B) the money that the producer gets from a good over the amount they are willing to sell it for. 
C) when quantity supplied is greater than quantity demanded. 
D) when quantity demanded is greater than quantity supplied.

Question 20

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

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

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

Demand for a good which comprises a relatively large share of the consumer's budget tends to be

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

The cross price elasticity for Sprite for a change in the price of 7up is likely to be

If the price of a good rises by 10% and the percentage decrease in the total amount consumers spend on the good is 5% then the good is

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

The difference between the value of a product enjoyed by consumers and the total variable costs incurred by producers in a competitive market for that product is

Which of the following is true?

For a given increase in supply, the condition of demand that will result in the most significant change in quantity is when demand is

If the price of a good rises by 10% and the total amount consumers spend on the good remains the same then the good is

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

For a given increase in supply, the condition of demand that will result in no change in price is when demand is

The cross price elasticity for hot dogs for a change in the price of hot dog buns is likely to be

A decrease in supply will increase prices least when demand is

If the price of a good falls by 10% and the percentage decrease in the total amount consumers spend on the good is 5% then the good is

For a given decrease in supply, the condition of demand that will result in no change in price is when demand is

A congestible public good is such that

If there is no change in price that can alter the quantity supplied then the supply for the good is

Consumer surplus is defined as

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

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

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Fiscal Policy

Monetary Policy

Federal Spending

Federal Deficits, Surpluses, and the National Debt

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Is Economic Stagnation the New Normal

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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

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

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

The Economics of Crime

Antitrust

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Minimum Wage

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