Question 1

The general consensus on minimum wage laws is that they:

Accepted Answer

A) do create some unemployment. 
B) affect workers at all skill levels. 
C) lead to extremely low rates of unemployment. 
D) increase employment possibilities for teenagers. 
A) do create some unemployment. 
B) affect workers at all skill levels. 
C) lead to extremely low rates of unemployment. 
D) increase employment possibilities for teenagers.

Question 2

If the supply curve for housing is perfectly inelastic, a reduction in demand will cause the equilibrium price to:

Accepted Answer

A) rise and the equilibrium quantity to fall. 
B) rise and the equilibrium quantity to stay the same. 
C) fall and the equilibrium quantity to fall. 
D) stay the same and the equilibrium quantity to fall. 
E) fall and the equilibrium quantity to stay the same. 
A) rise and the equilibrium quantity to fall. 
B) rise and the equilibrium quantity to stay the same. 
C) fall and the equilibrium quantity to fall. 
D) stay the same and the equilibrium quantity to fall. 
E) fall and the equilibrium quantity to stay the same.

Question 3

The elasticity of supply coefficient for lobster is estimated to be equal to 0.6.It is expected, therefore, that a 10% decrease in price would lead to:

Accepted Answer

A) a 6% decrease in the quantity of lobsters supplied. 
B) a 6% increase in the quantity of lobsters supplied. 
C) a 10% decrease in the quantity of lobsters supplied. 
D) a 10% increase in the quantity of lobsters supplied. 
E) a 0.6% increase in the quantity of lobsters supplied. 
A) a 6% decrease in the quantity of lobsters supplied. 
B) a 6% increase in the quantity of lobsters supplied. 
C) a 10% decrease in the quantity of lobsters supplied. 
D) a 10% increase in the quantity of lobsters supplied. 
E) a 0.6% increase in the quantity of lobsters supplied.

Question 4

A 10% decrease in the price of energy bars leads to a 20% increase in the quantity of energy bars demanded.It appears that:

Accepted Answer

A) demand is inelastic and total revenue will decrease. 
B) demand is inelastic and total revenue will increase. 
C) demand is unit elastic and total revenue will remain constant. 
D) demand is elastic and total revenue will decrease. 
E) demand is elastic and total revenue will increase. 
A) demand is inelastic and total revenue will decrease. 
B) demand is inelastic and total revenue will increase. 
C) demand is unit elastic and total revenue will remain constant. 
D) demand is elastic and total revenue will decrease. 
E) demand is elastic and total revenue will increase.

Question 5

If the elasticity of supply coefficient for a good is 6, we know:

Accepted Answer

A) that for every 1% increase in quantity, there will be a 6% increase in price. 
B) that for every 1% increase in quantity, there will be a 6% decrease in price. 
C) that for every 6% increase in quantity, there will be a 1% increase in price. 
D) that for every 6% increase in quantity, there will be a 1% decrease in price. 
A) that for every 1% increase in quantity, there will be a 6% increase in price. 
B) that for every 1% increase in quantity, there will be a 6% decrease in price. 
C) that for every 6% increase in quantity, there will be a 1% increase in price. 
D) that for every 6% increase in quantity, there will be a 1% decrease in price.

Question 6

The elasticity in the vicinity of five different points along a demand curve varies as follows: $\begin{array}{lcccc}
\text { Point } & \text { A } & \text { B } & \text { C } & \text { D }&\text {E} \
\text { Elasticity } & 1.25 & 0.3 & 1.0 & 0.2&2.1
\end{array}$  In the vicinity of which of these points would a price decrease be accompanied by an increase in total revenue?

Accepted Answer

A) B and D 
B) A and E 
C) A and D 
D) B, C, and D 
A) B and D 
B) A and E 
C) A and D 
D) B, C, and D

Question 7

The price elasticity of demand coefficient for gourmet coffee is estimated to be equal to 1.6.It is expected, therefore, that a 5% increase in price would lead to:

Accepted Answer

A) a 16% decrease in the quantity of gourmet coffee demanded. 
B) a 16% increase in the quantity of gourmet coffee demanded. 
C) an 8% decrease in the quantity of gourmet coffee demanded. 
D) an 8% increase in the quantity of gourmet coffee demanded. 
E) a 1.6% decrease in the quantity of gourmet coffee demanded. 
A) a 16% decrease in the quantity of gourmet coffee demanded. 
B) a 16% increase in the quantity of gourmet coffee demanded. 
C) an 8% decrease in the quantity of gourmet coffee demanded. 
D) an 8% increase in the quantity of gourmet coffee demanded. 
E) a 1.6% decrease in the quantity of gourmet coffee demanded.

Question 8

Which of the following is associated with inelastic demand?

Accepted Answer

A) a limited amount of time for consumers to respond to a price change 
B) availability of many close substitutes 
C) large percentage of income spent on the good in question 
D) all of the above 
A) a limited amount of time for consumers to respond to a price change 
B) availability of many close substitutes 
C) large percentage of income spent on the good in question 
D) all of the above

Question 9

Supply is said to be ____ when the quantity supplied is not very responsive to changes in price.

Accepted Answer

A) independent 
B) inelastic 
C) unit elastic 
D) elastic 
E) flexible 
A) independent 
B) inelastic 
C) unit elastic 
D) elastic 
E) flexible

Question 10

What type of demand curve is depicted by the graph below?

Accepted Answer

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

Question 11

A steel mill raises the price of steel by 7%, which results in a 20% reduction in the quantity of steel demanded.The demand curve facing this firm is:

Accepted Answer

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

Question 12

The longer the time period considered, the elasticity of supply tends to:

Accepted Answer

A) decrease. 
B) remain constant. 
C) increase. 
D) converge to zero. 
A) decrease. 
B) remain constant. 
C) increase. 
D) converge to zero.

Question 13

Assume a price floor is imposed at the current equilibrium price in the market for lettuce.If the demand for lettuce then increases:

Accepted Answer

A) a surplus of lettuce will be created. 
B) a shortage of lettuce will be created. 
C) the quantity of lettuce traded remains the same. 
D) the quantity of lettuce supplied will increase. 
E) the quantity of lettuce supplied will decrease. 
A) a surplus of lettuce will be created. 
B) a shortage of lettuce will be created. 
C) the quantity of lettuce traded remains the same. 
D) the quantity of lettuce supplied will increase. 
E) the quantity of lettuce supplied will decrease.

Question 14

A surplus will result whenever the:

Accepted Answer

A) government imposes a price floor below the equilibrium price. 
B) government imposes a price ceiling below the equilibrium price. 
C) government imposes a price floor above the equilibrium price. 
D) government imposes a price ceiling above the equilibrium price. 
E) quantity demanded exceeds the quantity supplied. 
A) government imposes a price floor below the equilibrium price. 
B) government imposes a price ceiling below the equilibrium price. 
C) government imposes a price floor above the equilibrium price. 
D) government imposes a price ceiling above the equilibrium price. 
E) quantity demanded exceeds the quantity supplied.

Question 15

If the price elasticity of demand was 4.0 (in absolute terms), a 10% off sale would lead to:

Accepted Answer

A) a 40% increase in purchases by customers. 
B) a 40% decrease in purchases by customers. 
C) a 2.5% increase in purchases by customers. 
D) a 2.5% decrease in purchases by customers. 
E) none of the above 
A) a 40% increase in purchases by customers. 
B) a 40% decrease in purchases by customers. 
C) a 2.5% increase in purchases by customers. 
D) a 2.5% decrease in purchases by customers. 
E) none of the above

Question 16

Phil and Lasca have always wanted to take a cruise.Although willing to pay $5,000 for a Caribbean cruise for two, they were able to purchase a cruise vacation for two for $3,500.Their total consumer surplus amounted to:

Accepted Answer

A) $750. 
B) $5,000. 
C) $1,500. 
D) $3,500. 
E) $0. 
A) $750. 
B) $5,000. 
C) $1,500. 
D) $3,500. 
E) $0.

Question 17

Suppose the equilibrium price of bread is $2.00 per loaf.If the government sets a price ceiling of $2.50 per loaf:

Accepted Answer

A) the price of wheat will rise and a shortage is created. 
B) the quantity supplied of wheat will increase. 
C) there will be no change in the quantity of bread demanded or supplied. 
D) there will be a shortage of bread. 
E) there will be a surplus of bread. 
A) the price of wheat will rise and a shortage is created. 
B) the quantity supplied of wheat will increase. 
C) there will be no change in the quantity of bread demanded or supplied. 
D) there will be a shortage of bread. 
E) there will be a surplus of bread.

Question 18

If the demand curve for a life-saving medicine is perfectly inelastic, a reduction in supply will cause the equilibrium price to:

Accepted Answer

A) rise and the equilibrium quantity to fall. 
B) rise and the equilibrium quantity to stay the same. 
C) rise and the equilibrium quantity to rise. 
D) stay the same and the equilibrium quantity to fall. 
E) fall and the equilibrium quantity to stay the same. 
A) rise and the equilibrium quantity to fall. 
B) rise and the equilibrium quantity to stay the same. 
C) rise and the equilibrium quantity to rise. 
D) stay the same and the equilibrium quantity to fall. 
E) fall and the equilibrium quantity to stay the same.

Question 19

Figure 4-E  
-The federal government's "Cash For Clunkers" program provided consumers up to $4,500 towards new, environmentally friendly automobiles when trading in a less fuel efficient vehicle.Discuss the effect of this move on the industry's demand curve.

Accepted Answer

The "Cash For Clunkers" program made con

Question 20

Figure 4-E  
-Refer to Figure 4-E.When the price is P1, 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

The general consensus on minimum wage laws is that they:

If the supply curve for housing is perfectly inelastic, a reduction in demand will cause the equilibrium price to:

The elasticity of supply coefficient for lobster is estimated to be equal to 0.6.It is expected, therefore, that a 10% decrease in price would lead to:

A 10% decrease in the price of energy bars leads to a 20% increase in the quantity of energy bars demanded.It appears that:

If the elasticity of supply coefficient for a good is 6, we know:

The elasticity in the vicinity of five different points along a demand curve varies as follows: Point A B C D E Elasticity 1.25 0.3 1.0 0.2 2.1 In the vicinity of which of these points would a price decrease be accompanied by an increase in total revenue?

The price elasticity of demand coefficient for gourmet coffee is estimated to be equal to 1.6.It is expected, therefore, that a 5% increase in price would lead to:

Which of the following is associated with inelastic demand?

Supply is said to be ____ when the quantity supplied is not very responsive to changes in price.

What type of demand curve is depicted by the graph below?

A steel mill raises the price of steel by 7%, which results in a 20% reduction in the quantity of steel demanded.The demand curve facing this firm is:

The longer the time period considered, the elasticity of supply tends to:

Assume a price floor is imposed at the current equilibrium price in the market for lettuce.If the demand for lettuce then increases:

A surplus will result whenever the:

If the price elasticity of demand was 4.0 (in absolute terms), a 10% off sale would lead to:

Phil and Lasca have always wanted to take a cruise.Although willing to pay $5,000 for a Caribbean cruise for two, they were able to purchase a cruise vacation for two for $3,500.Their total consumer surplus amounted to:

Suppose the equilibrium price of bread is $2.00 per loaf.If the government sets a price ceiling of $2.50 per loaf:

If the demand curve for a life-saving medicine is perfectly inelastic, a reduction in supply will cause the equilibrium price to:

Figure 4-E -The federal government's "Cash For Clunkers" program provided consumers up to $4,500 towards new, environmentally friendly automobiles when trading in a less fuel efficient vehicle.Discuss the effect of this move on the industry's demand curve.

Figure 4-E -Refer to Figure 4-E.When the price is P₁, the producer surplus is equal to area:

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

The general consensus on minimum wage laws is that they:

If the supply curve for housing is perfectly inelastic, a reduction in demand will cause the equilibrium price to:

The elasticity of supply coefficient for lobster is estimated to be equal to 0.6.It is expected, therefore, that a 10% decrease in price would lead to:

A 10% decrease in the price of energy bars leads to a 20% increase in the quantity of energy bars demanded.It appears that:

If the elasticity of supply coefficient for a good is 6, we know:

The elasticity in the vicinity of five different points along a demand curve varies as follows: Point A B C D E Elasticity 1.25 0.3 1.0 0.2 2.1 In the vicinity of which of these points would a price decrease be accompanied by an increase in total revenue?

The price elasticity of demand coefficient for gourmet coffee is estimated to be equal to 1.6.It is expected, therefore, that a 5% increase in price would lead to:

Which of the following is associated with inelastic demand?

Supply is said to be ____ when the quantity supplied is not very responsive to changes in price.

What type of demand curve is depicted by the graph below?

A steel mill raises the price of steel by 7%, which results in a 20% reduction in the quantity of steel demanded.The demand curve facing this firm is:

The longer the time period considered, the elasticity of supply tends to:

Assume a price floor is imposed at the current equilibrium price in the market for lettuce.If the demand for lettuce then increases:

A surplus will result whenever the:

If the price elasticity of demand was 4.0 (in absolute terms), a 10% off sale would lead to:

Phil and Lasca have always wanted to take a cruise.Although willing to pay $5,000 for a Caribbean cruise for two, they were able to purchase a cruise vacation for two for $3,500.Their total consumer surplus amounted to:

Suppose the equilibrium price of bread is $2.00 per loaf.If the government sets a price ceiling of $2.50 per loaf:

If the demand curve for a life-saving medicine is perfectly inelastic, a reduction in supply will cause the equilibrium price to:

Figure 4-E -The federal government's "Cash For Clunkers" program provided consumers up to $4,500 towards new, environmentally friendly automobiles when trading in a less fuel efficient vehicle.Discuss the effect of this move on the industry's demand curve.

Figure 4-E -Refer to Figure 4-E.When the price is P1, the producer surplus is equal to area:

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 P₁, the producer surplus is equal to area: