Question 1

Which of the following is not a major determinant of the price elasticity of demand?

Accepted Answer

A) availability of close substitutes 
B) proportion of income spent on the good 
C) quantity of goods available 
D) amount of time that has elapsed since the price change 
A) availability of close substitutes 
B) proportion of income spent on the good 
C) quantity of goods available 
D) amount of time that has elapsed since the price change

Question 2

The area between the market price and the demand curve provides a measure of:

Accepted Answer

A) consumer surplus. 
B) producer surplus. 
C) consumer surplus plus producer surplus. 
D) marginal utility. 
E) the deadweight loss arising from free trade. 
A) consumer surplus. 
B) producer surplus. 
C) consumer surplus plus producer surplus. 
D) marginal utility. 
E) the deadweight loss arising from free trade.

Question 3

If the government increased taxes on soft drinks, the result would be:

Accepted Answer

A) an increase in equilibrium price and an increase in equilibrium quantity assuming demand is relatively inelastic. 
B) an increase in equilibrium price and a decrease in equilibrium quantity assuming demand is relatively inelastic. 
C) an increase in equilibrium price and an increase in equilibrium quantity assuming demand is perfectly inelastic. 
D) an increase in equilibrium price and a decrease in equilibrium quantity assuming demand is perfectly inelastic. 
E) no change in equilibrium price and a decrease in equilibrium quantity assuming demand is relatively inelastic. 
A) an increase in equilibrium price and an increase in equilibrium quantity assuming demand is relatively inelastic. 
B) an increase in equilibrium price and a decrease in equilibrium quantity assuming demand is relatively inelastic. 
C) an increase in equilibrium price and an increase in equilibrium quantity assuming demand is perfectly inelastic. 
D) an increase in equilibrium price and a decrease in equilibrium quantity assuming demand is perfectly inelastic. 
E) no change in equilibrium price and a decrease in equilibrium quantity assuming demand is relatively inelastic.

Question 4

Which of the following best explains the source of consumer surplus for Good A?

Accepted Answer

A) Many consumers pay prices that are greater than the equilibrium price of Good A. 
B) Many consumers would be willing to pay more than the market price for some units of Good A. 
C) Many consumers think the market price of Good A is greater than its cost. 
D) Many consumers of Good A place a value on it that is less than the market price. 
A) Many consumers pay prices that are greater than the equilibrium price of Good A. 
B) Many consumers would be willing to pay more than the market price for some units of Good A. 
C) Many consumers think the market price of Good A is greater than its cost. 
D) Many consumers of Good A place a value on it that is less than the market price.

Question 5

Consumer surplus measures:

Accepted Answer

A) the total benefits received from consuming a given quantity of a good. 
B) the marginal benefit received from consuming the last unit of a good. 
C) the net benefits received by consumers after deducting the cost of purchasing a good. 
D) the dollar amount spent on units of a particular good. 
E) the excess supply of goods in a market. 
A) the total benefits received from consuming a given quantity of a good. 
B) the marginal benefit received from consuming the last unit of a good. 
C) the net benefits received by consumers after deducting the cost of purchasing a good. 
D) the dollar amount spent on units of a particular good. 
E) the excess supply of goods in a market.

Question 6

Table 4-D
Miles demands jazz CDs according to the following demand schedule:
 $$\begin{array} { c c } 
\text { Price af jazz CDs } & \text { Qurantity of jazz CDs } \
\$ 30 & 1 \
\$ 25 & 2 \
\$ 20 & 3 \
\$ 15 & 4 \
\$ 10 & 5
\end{array}$$
-Refer to Table 4-D.If the price of jazz CDs equals $15, the consumer surplus Miles receives from purchasing jazz CDs is:

Accepted Answer

A) $15. 
B) $25. 
C) $30. 
D) $55. 
E) $90. 
A) $15. 
B) $25. 
C) $30. 
D) $55. 
E) $90.

Question 7

Figure 4-E  
-Refer to Figure 4-E.When the price is P2, the producer surplus is equal to area:

Accepted Answer

A) A. 
B) B. 
C) A + B. 
D) A + B + C. 
A) A. 
B) B. 
C) A + B. 
D) A + B + C.

Question 8

Exhibit 4-C  
-Refer to Exhibit 4-C.Graph A represents a demand curve that is relatively ____.Total revenue ____ as the price decreases from $10 to $5.

Accepted Answer

A) inelastic; decreases 
B) elastic; decreases 
C) elastic; increases 
D) inelastic; increases 
A) inelastic; decreases 
B) elastic; decreases 
C) elastic; increases 
D) inelastic; increases

Question 9

Figure 4-E  
-Either an increase in the number of buyers or an increase in tastes or preferences for a good or service will increase the market demand for that good or service.

Accepted Answer

A) True 
 B)False

Question 10

Ceteris paribus, if a 4% increase in price leads to a 6% increase in the quantity supplied, then:

Accepted Answer

A) supply is elastic. 
B) supply is unit elastic. 
C) supply is inelastic. 
D) the supply curve is perfectly vertical. 
E) the supply curve is perfectly horizontal. 
A) supply is elastic. 
B) supply is unit elastic. 
C) supply is inelastic. 
D) the supply curve is perfectly vertical. 
E) the supply curve is perfectly horizontal.

Question 11

Figure 4-E  
-Two goods are complements if an increase in the price of one causes an increase in the demand for the other good.

Accepted Answer

A) True 
 B)False

Question 12

If the supply curve is perfectly inelastic, then an increase in demand will:

Accepted Answer

A) increase both the price and the quantity exchanged. 
B) increase the price but result in no change in the quantity exchanged. 
C) increase the quantity exchanged but result in no change in the price. 
D) decrease the price but not change the quantity exchanged. 
E) do none of the above. 
A) increase both the price and the quantity exchanged. 
B) increase the price but result in no change in the quantity exchanged. 
C) increase the quantity exchanged but result in no change in the price. 
D) decrease the price but not change the quantity exchanged. 
E) do none of the above.

Question 13

Unlike its competitors, one glass producer can use its equipment to make either windows for houses or windows for cars.Other things equal, compared to its competitors, its supply curve of windows for cars would be:

Accepted Answer

A) more elastic than the supply curves of competitors 
B) more elastic than the supply curves of competitors . 
C) greater than the supply curves of competitors. 
D) less than the supply curves of competitors. 
A) more elastic than the supply curves of competitors 
B) more elastic than the supply curves of competitors . 
C) greater than the supply curves of competitors. 
D) less than the supply curves of competitors.

Question 14

Exhibit 4-B  
-Refer to Exhibit 4-B.The graph that best illustrates a perfectly inelastic demand curve is:

Accepted Answer

A) Graph A. 
B) Graph B. 
C) Graph C. 
D) Graph D. 
A) Graph A. 
B) Graph B. 
C) Graph C. 
D) Graph D.

Question 15

A price cut will decrease the total revenue a firm receives if the demand for its product is:

Accepted Answer

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

Question 16

Which of the following is true about producer surplus?

Accepted Answer

A) Producer surplus is how much more it costs sellers than they are paid. 
B) Producer surplus is shown graphically as the area under the demand curve but above the supply curve. 
C) An increase in the market price due to an increase in demand will increase producer surplus. 
D) All of the above are true about producer surplus. 
A) Producer surplus is how much more it costs sellers than they are paid. 
B) Producer surplus is shown graphically as the area under the demand curve but above the supply curve. 
C) An increase in the market price due to an increase in demand will increase producer surplus. 
D) All of the above are true about producer surplus.

Question 17

Figure 4-C  
-Refer to Figure 4-C.If the market price equals P2, consumer surplus can be identified in the diagram as area:

Accepted Answer

A) A + B + E. 
B) B + E. 
C) A. 
D) C + D + F. 
E) C + F. 
A) A + B + E. 
B) B + E. 
C) A. 
D) C + D + F. 
E) C + F.

Question 18

Which of the following is false?

Accepted Answer

A) The price elasticity of supply measures the sensitivity of the quantity supplied to the changes in the price of the good. 
B) The price elasticity of supply is defined at the percentage change in the quantity supplied divided by the percentage change in price. 
C) Goods with a supply elasticity that is greater than 1 are called relatively elastic in supply. 
D) When supply is inelastic, a 1 percent change in the price of a good will induce a more than 1 percent change in the quantity supplied. 
E) Time is usually critical in supply elasticities, because it is more costly for producers to bring forth and release resources in a shorter period of time. 
A) The price elasticity of supply measures the sensitivity of the quantity supplied to the changes in the price of the good. 
B) The price elasticity of supply is defined at the percentage change in the quantity supplied divided by the percentage change in price. 
C) Goods with a supply elasticity that is greater than 1 are called relatively elastic in supply. 
D) When supply is inelastic, a 1 percent change in the price of a good will induce a more than 1 percent change in the quantity supplied. 
E) Time is usually critical in supply elasticities, because it is more costly for producers to bring forth and release resources in a shorter period of time.

Question 19

If the demand curve is perfectly inelastic, then an increase in supply will:

Accepted Answer

A) increase both the price and the quantity exchanged. 
B) increase the price but result in no change in the quantity exchanged. 
C) increase the quantity exchanged but result in no change in the price. 
D) decrease the price but result in no change in the quantity exchanged. 
E) do none of the above. 
A) increase both the price and the quantity exchanged. 
B) increase the price but result in no change in the quantity exchanged. 
C) increase the quantity exchanged but result in no change in the price. 
D) decrease the price but result in no change in the quantity exchanged. 
E) do none of the above.

Question 20

The difference between the value of a good to sellers and its price is known as:

Accepted Answer

A) consumer surplus. 
B) producer surplus. 
C) total utility. 
D) demand. 
E) supply. 
A) consumer surplus. 
B) producer surplus. 
C) total utility. 
D) demand. 
E) supply.

Which of the following is not a major determinant of the price elasticity of demand?

The area between the market price and the demand curve provides a measure of:

If the government increased taxes on soft drinks, the result would be:

Which of the following best explains the source of consumer surplus for Good A?

Consumer surplus measures:

Table 4-D Miles demands jazz CDs according to the following demand schedule: Price af jazz CDs Qurantity of jazz CDs \ 30 1 \ 25 2 \ 20 3 \ 15 4 \ 10 5 -Refer to Table 4-D.If the price of jazz CDs equals $15, the consumer surplus Miles receives from purchasing jazz CDs is:

Figure 4-E -Refer to Figure 4-E.When the price is P₂, the producer surplus is equal to area:

Exhibit 4-C -Refer to Exhibit 4-C.Graph A represents a demand curve that is relatively .Total revenue as the price decreases from $10 to $5.

Figure 4-E -Either an increase in the number of buyers or an increase in tastes or preferences for a good or service will increase the market demand for that good or service.

Ceteris paribus, if a 4% increase in price leads to a 6% increase in the quantity supplied, then:

Figure 4-E -Two goods are complements if an increase in the price of one causes an increase in the demand for the other good.

If the supply curve is perfectly inelastic, then an increase in demand will:

Unlike its competitors, one glass producer can use its equipment to make either windows for houses or windows for cars.Other things equal, compared to its competitors, its supply curve of windows for cars would be:

Exhibit 4-B -Refer to Exhibit 4-B.The graph that best illustrates a perfectly inelastic demand curve is:

A price cut will decrease the total revenue a firm receives if the demand for its product is:

Which of the following is true about producer surplus?

Figure 4-C -Refer to Figure 4-C.If the market price equals P₂, consumer surplus can be identified in the diagram as area:

Which of the following is false?

If the demand curve is perfectly inelastic, then an increase in supply will:

The difference between the value of a good to sellers and its price is known as:

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters

Exam 4: Using Supply and Demand

Which of the following is not a major determinant of the price elasticity of demand?

The area between the market price and the demand curve provides a measure of:

If the government increased taxes on soft drinks, the result would be:

Which of the following best explains the source of consumer surplus for Good A?

Consumer surplus measures:

Table 4-D Miles demands jazz CDs according to the following demand schedule: Price af jazz CDs Qurantity of jazz CDs \ 30 1 \ 25 2 \ 20 3 \ 15 4 \ 10 5 -Refer to Table 4-D.If the price of jazz CDs equals $15, the consumer surplus Miles receives from purchasing jazz CDs is:

Figure 4-E -Refer to Figure 4-E.When the price is P2, the producer surplus is equal to area:

Exhibit 4-C -Refer to Exhibit 4-C.Graph A represents a demand curve that is relatively ____.Total revenue ____ as the price decreases from $10 to $5.

Figure 4-E -Either an increase in the number of buyers or an increase in tastes or preferences for a good or service will increase the market demand for that good or service.

Ceteris paribus, if a 4% increase in price leads to a 6% increase in the quantity supplied, then:

Figure 4-E -Two goods are complements if an increase in the price of one causes an increase in the demand for the other good.

If the supply curve is perfectly inelastic, then an increase in demand will:

Unlike its competitors, one glass producer can use its equipment to make either windows for houses or windows for cars.Other things equal, compared to its competitors, its supply curve of windows for cars would be:

Exhibit 4-B -Refer to Exhibit 4-B.The graph that best illustrates a perfectly inelastic demand curve is:

A price cut will decrease the total revenue a firm receives if the demand for its product is:

Which of the following is true about producer surplus?

Figure 4-C -Refer to Figure 4-C.If the market price equals P2, consumer surplus can be identified in the diagram as area:

Which of the following is false?

If the demand curve is perfectly inelastic, then an increase in supply will:

The difference between the value of a good to sellers and its price is known as:

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve System and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters

Figure 4-E -Refer to Figure 4-E.When the price is P₂, the producer surplus is equal to area:

Exhibit 4-C -Refer to Exhibit 4-C.Graph A represents a demand curve that is relatively .Total revenue as the price decreases from $10 to $5.

Figure 4-C -Refer to Figure 4-C.If the market price equals P₂, consumer surplus can be identified in the diagram as area: