Question 1

The cross price elasticity for coffee for a change in the price of tea 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 2

If the price rises and the total amount consumers spend on the good rises, 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 3

If the price of a good decreases by 5% and the quantity demanded increases by 10%, 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 4

Suppose a firm can not figure out whether the demand for the good it sells is elastic or inelastic but discovers that every time it raises its price, its total revenue declines. Their

Accepted Answer

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

Question 5

The elasticity of demand is related to the slope of the demand curve

Accepted Answer

A) and only the slope of the demand curve. 
B) but also the (price, quantity)position on the demand curve. 
C) but also the slope of the supply curve. 
D) and whether the good is normal or inferior. 
A) and only the slope of the demand curve. 
B) but also the (price, quantity)position on the demand curve. 
C) but also the slope of the supply curve. 
D) and whether the good is normal or inferior.

Question 6

When a satellite television company gains a subscriber there is no impact on existing subscribers. That is there is no rivalry in the consumption for their service. This is an example of a

Accepted Answer

A) purely private good. 
B) congestible public good. 
C) purely public good. 
D) excludable public good. 
A) purely private good. 
B) congestible public good. 
C) purely public good. 
D) excludable public good.

Question 7

If a given reduction in market demand causes the market equilibrium price to decrease by a very large percentage while equilibrium quantity purchased decreases by a very small percentage,

Accepted Answer

A) market supply is inelastic (but not perfectly inelastic.) 
B) market supply is elastic (but not perfectly elastic.) 
C) market supply is perfectly inelastic. 
D) market supply is perfectly elastic. 
A) market supply is inelastic (but not perfectly inelastic.) 
B) market supply is elastic (but not perfectly elastic.) 
C) market supply is perfectly inelastic. 
D) market supply is perfectly elastic.

Question 8

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

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 9

If the price of a good falls 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 10

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 11

-In Figure 3.2, what is the variable cost to the producer?

Accepted Answer

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

Question 12

For a linear and upward sloping supply curve and a linear downward sloping demand curve, when the consumer has to pay a positive price for the good, the producer surplus is a

Accepted Answer

A) Rectangle. 
B) Triangle. 
C) Four-sided figure that is a rectangle on the bottom and a right triangle on the top whose hypotenuse is the demand curve. 
D) Four-sided figure that is a rectangle on the bottom and a right triangle on the top whose hypotenuse is the supply curve. 
A) Rectangle. 
B) Triangle. 
C) Four-sided figure that is a rectangle on the bottom and a right triangle on the top whose hypotenuse is the demand curve. 
D) Four-sided figure that is a rectangle on the bottom and a right triangle on the top whose hypotenuse is the supply curve.

Question 13

An increase in demand will increase prices most when supply 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 14

Economists suggest that a market can fail if

Accepted Answer

A) consumers have to pay more than they want to. 
B) no market for the product exists. 
C) producers get smaller profits than they desire. 
D) governments dictate prices. 
A) consumers have to pay more than they want to. 
B) no market for the product exists. 
C) producers get smaller profits than they desire. 
D) governments dictate prices.

Question 15

Name brand apparel have many substitutes and can get very expensive, as a result their demand is likely to be

Accepted Answer

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

Question 16

If the percentage change in price is 10% and the percentage change in quantity supplied is 0% 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 value of the market to society 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 demand curve but above the supply curve 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 demand curve but above the supply curve from the origin to the quantity purchased.

Question 18

The cross price elasticity for Papa John's pizza for a change in the price of Pizza Hut pizza 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 19

The fact that the demand for luxury cars is elastic is not surprising because

Accepted Answer

A) the supply of luxury cars is inelastic. 
B) there are few substitutes for true luxury cars. 
C) luxury cars are primarily a "status symbol". 
D) luxury cars are relatively expensive. 
A) the supply of luxury cars is inelastic. 
B) there are few substitutes for true luxury cars. 
C) luxury cars are primarily a "status symbol". 
D) luxury cars are relatively expensive.

Question 20

If the price of a good falls by 10% and the percentage increase 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.

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

The cross price elasticity for coffee for a change in the price of tea is likely to be

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

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

Suppose a firm can not figure out whether the demand for the good it sells is elastic or inelastic but discovers that every time it raises its price, its total revenue declines. Their

The elasticity of demand is related to the slope of the demand curve

When a satellite television company gains a subscriber there is no impact on existing subscribers. That is there is no rivalry in the consumption for their service. This is an example of a

If a given reduction in market demand causes the market equilibrium price to decrease by a very large percentage while equilibrium quantity purchased decreases by a very small percentage,

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

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

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

-In Figure 3.2, what is the variable cost to the producer?

For a linear and upward sloping supply curve and a linear downward sloping demand curve, when the consumer has to pay a positive price for the good, the producer surplus is a

An increase in demand will increase prices most when supply is

Economists suggest that a market can fail if

Name brand apparel have many substitutes and can get very expensive, as a result their demand is likely to be

If the percentage change in price is 10% and the percentage change in quantity supplied is 0% then the supply for the good is

The value of the market to society is

The cross price elasticity for Papa John's pizza for a change in the price of Pizza Hut pizza is likely to be

The fact that the demand for luxury cars is elastic is not surprising because

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

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

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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

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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