Question 1

Total revenue represents the amount that:

Accepted Answer

A) sellers receive for a good or service which is computed as P÷Q. 
B) sellers receive for a good or service which is computed as PxQ. 
C) one buyer spends on a good or service which is computed as PxQ. 
D) one buyer spends on a good or service which is computed as P÷Q. 
E) one buyer spends on a good or service which is computed as Q÷P. 
A) sellers receive for a good or service which is computed as P÷Q. 
B) sellers receive for a good or service which is computed as PxQ. 
C) one buyer spends on a good or service which is computed as PxQ. 
D) one buyer spends on a good or service which is computed as P÷Q. 
E) one buyer spends on a good or service which is computed as Q÷P.

Question 2

Which of the following is true of perfectly elastic supply?

Accepted Answer

A) An increase in price will not change the quantity supplied. 
B) The supply price remains constant. 
C) Elasticity of supply is zero. 
D) The supply curve is vertical. 
A) An increase in price will not change the quantity supplied. 
B) The supply price remains constant. 
C) Elasticity of supply is zero. 
D) The supply curve is vertical.

Question 3

Figure 4-E  
-When both supply and demand shift in the same direction, the change in the equilibrium quantity traded will be in the same direction as the shifting curves.

Accepted Answer

A) True 
 B)False

Question 4

Exhibit 4-A  
-Refer to Exhibit 4-A.Elasticity varies along a linear demand curve.Graph A represents the section of the curve where:

Accepted Answer

A) the curve is inelastic. 
B) Ed is 2, a decrease in price will lead to a decrease in total revenue. 
D) all of the above are correct. 
E) none of the above are correct. 
A) the curve is inelastic. 
B) Ed is 2, a decrease in price will lead to a decrease in total revenue. 
D) all of the above are correct. 
E) none of the above are correct.

Question 5

Which of the following is an example of an unintended consequence?

Accepted Answer

A) government sponsored ad campaigns that lead to an increase in vaccinations 
B) rent controls that lead to a decline in the quality of rental properties 
C) higher property taxes that allow for better public schools 
D) increased airport security measures that result in safer travel 
A) government sponsored ad campaigns that lead to an increase in vaccinations 
B) rent controls that lead to a decline in the quality of rental properties 
C) higher property taxes that allow for better public schools 
D) increased airport security measures that result in safer travel

Question 6

If the elasticity of supply of a good was 2, how much would the price have to increase to lead to an increase in output of 6 percent?

Accepted Answer

A) 3 percent. 
B) 4 percent. 
C) 8 percent. 
D) 12 percent. 
A) 3 percent. 
B) 4 percent. 
C) 8 percent. 
D) 12 percent.

Question 7

A movie theatre raises its admission prices by 10%, which results in a 10% reduction in the quantity of tickets 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 8

Beach resorts raise their prices during the summer months and yet more people book rooms at those times.Is this a violation of the law of demand?

Accepted Answer

No. During summer months, the demand for

Question 9

If the elasticity of demand for mothballs is 0.50, then moving along the demand for mothballs:

Accepted Answer

A) A 20% rise in the price of mothballs will lead to a 10% fall in the quantity of mothballs demanded. 
B) A 10% rise in the price of mothballs will lead to a 20% fall in the quantity of mothballs demanded. 
C) A 20% rise in the price of mothballs will lead to a 10% rise in the quantity of mothballs demanded. 
D) A 10% rise in the price of mothballs will lead to a 20% rise in the quantity of mothballs demanded. 
A) A 20% rise in the price of mothballs will lead to a 10% fall in the quantity of mothballs demanded. 
B) A 10% rise in the price of mothballs will lead to a 20% fall in the quantity of mothballs demanded. 
C) A 20% rise in the price of mothballs will lead to a 10% rise in the quantity of mothballs demanded. 
D) A 10% rise in the price of mothballs will lead to a 20% rise in the quantity of mothballs demanded.

Question 10

Figure 4-B  
-Refer to Figure 4-B.At price PR, what quantity of gasoline will be sold?

Accepted Answer

A) QS 
B) QD 
C) 0 
D) the equilibrium quantity 
A) QS 
B) QD 
C) 0 
D) the equilibrium quantity

Question 11

Table 4-F
The schedule below represents the willingness of a typical consumer to pay for wine in a year. Suppose there are 10,000 identical consumers in the community.
 $$\begin{array} { c c } 
\text { Price Per } & \text { bottles of Wine Consumed } \
\text { Bottle of Wine } & \text { Per Year } \
\$ 50 & 1 \
440 & 2 \
\$ 30 & 3 \
\$ 20 & 4 \
\$ 10 & 5
\end{array}$$
-Refer to Table 4-F.If the market price of wine is $30, the total consumer surplus for the community equals:

Accepted Answer

A) $20,000. 
B) $30,000. 
C) $50,000. 
D) $60,000. 
E) $80,000. 
A) $20,000. 
B) $30,000. 
C) $50,000. 
D) $60,000. 
E) $80,000.

Question 12

For a given decrease in demand, the effect on price is largest and the effect on quantity exchanged smallest when:

Accepted Answer

A) supply is perfectly elastic. 
B) supply is elastic. 
C) supply is unit elastic. 
D) supply is inelastic. 
E) supply is perfectly inelastic. 
A) supply is perfectly elastic. 
B) supply is elastic. 
C) supply is unit elastic. 
D) supply is inelastic. 
E) supply is perfectly inelastic.

Question 13

Fred's demand schedule for movie DVDs is as follows: At $30, he would buy 1; at $25, he would buy two; at $15, he would buy 3; and at $10, he would buy 4.If the price of movie DVDs equals $25, the consumer surplus Fred receives from purchasing movie DVDs would be:

Accepted Answer

A) zero. 
B) $5. 
C) $25. 
D) $55. 
E) $70. 
A) zero. 
B) $5. 
C) $25. 
D) $55. 
E) $70.

Question 14

Figure 4-E  
-Either technological progress or cost increasing new government regulations will increase supply.

Accepted Answer

A) True 
 B)False

Question 15

Figure 4-E  
-When the price of corn falls, the market supply of wheat (which can be grown using the same land) is likely to increase.

Accepted Answer

A) True 
 B)False

Question 16

If the demand curve for a product is vertical, then the elasticity of demand is:

Accepted Answer

A) equal to zero. 
B) equal to one. 
C) greater than one, but less than infinity. 
D) equal to infinity. 
A) equal to zero. 
B) equal to one. 
C) greater than one, but less than infinity. 
D) equal to infinity.

Question 17

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

Accepted Answer

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

Question 18

Exhibit 4-A  
-Refer to Exhibit 4-A.Along a linear demand curve, price elasticity of demand is:

Accepted Answer

A) constant. 
B) more elastic to the northwest than to the southeast. 
C) less elastic to the northwest than to the southeast. 
D) always equal to one. 
E) always equal to zero. 
A) constant. 
B) more elastic to the northwest than to the southeast. 
C) less elastic to the northwest than to the southeast. 
D) always equal to one. 
E) always equal to zero.

Question 19

When demand is relatively inelastic, a 5% increase in price will:

Accepted Answer

A) increase total revenue by more than 5% 
B) increase total revenue by less than 5% . 
C) decrease total revenue by more than 5 %. 
D) Decrease total revenue by more than 5%. 
E) decrease total revenue, but it is unknown whether it will be by more or less than 10%. 
A) increase total revenue by more than 5% 
B) increase total revenue by less than 5% . 
C) decrease total revenue by more than 5 %. 
D) Decrease total revenue by more than 5%. 
E) decrease total revenue, but it is unknown whether it will be by more or less than 10%.

Question 20

The following schedule represents a portion of Kate's demand for sub sandwiches. $\begin{array}{cc}
\text { Price } & \text { Quantity Demanded } \
&\text { per Month }\
\$6&3\
\$5&5\
\$4&8
\end{array}$
 Along this portion of Kate's demand curve for sub sandwiches, price elasticity of demand is:

Accepted Answer

A) equal to zero. 
B) less than one. 
C) equal to one. 
D) greater than one. 
E) infinite. 
A) equal to zero. 
B) less than one. 
C) equal to one. 
D) greater than one. 
E) infinite.

Total revenue represents the amount that:

Which of the following is true of perfectly elastic supply?

Figure 4-E -When both supply and demand shift in the same direction, the change in the equilibrium quantity traded will be in the same direction as the shifting curves.

Exhibit 4-A -Refer to Exhibit 4-A.Elasticity varies along a linear demand curve.Graph A represents the section of the curve where:

Which of the following is an example of an unintended consequence?

If the elasticity of supply of a good was 2, how much would the price have to increase to lead to an increase in output of 6 percent?

A movie theatre raises its admission prices by 10%, which results in a 10% reduction in the quantity of tickets demanded.The demand curve facing this firm is:

Beach resorts raise their prices during the summer months and yet more people book rooms at those times.Is this a violation of the law of demand?

If the elasticity of demand for mothballs is 0.50, then moving along the demand for mothballs:

Figure 4-B -Refer to Figure 4-B.At price P_R, what quantity of gasoline will be sold?

For a given decrease in demand, the effect on price is largest and the effect on quantity exchanged smallest when:

Fred's demand schedule for movie DVDs is as follows: At $30, he would buy 1; at $25, he would buy two; at $15, he would buy 3; and at $10, he would buy 4.If the price of movie DVDs equals $25, the consumer surplus Fred receives from purchasing movie DVDs would be:

Figure 4-E -Either technological progress or cost increasing new government regulations will increase supply.

Figure 4-E -When the price of corn falls, the market supply of wheat (which can be grown using the same land) is likely to increase.

If the demand curve for a product is vertical, then the elasticity of demand is:

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

Exhibit 4-A -Refer to Exhibit 4-A.Along a linear demand curve, price elasticity of demand is:

When demand is relatively inelastic, a 5% increase in price will:

The following schedule represents a portion of Kate's demand for sub sandwiches. Price Quantity Demanded per Month \6 3 \5 5 \4 8 Along this portion of Kate's demand curve for sub sandwiches, price elasticity of demand is:

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

Total revenue represents the amount that:

Which of the following is true of perfectly elastic supply?

Figure 4-E -When both supply and demand shift in the same direction, the change in the equilibrium quantity traded will be in the same direction as the shifting curves.

Exhibit 4-A -Refer to Exhibit 4-A.Elasticity varies along a linear demand curve.Graph A represents the section of the curve where:

Which of the following is an example of an unintended consequence?

If the elasticity of supply of a good was 2, how much would the price have to increase to lead to an increase in output of 6 percent?

A movie theatre raises its admission prices by 10%, which results in a 10% reduction in the quantity of tickets demanded.The demand curve facing this firm is:

Beach resorts raise their prices during the summer months and yet more people book rooms at those times.Is this a violation of the law of demand?

If the elasticity of demand for mothballs is 0.50, then moving along the demand for mothballs:

Figure 4-B -Refer to Figure 4-B.At price PR, what quantity of gasoline will be sold?

For a given decrease in demand, the effect on price is largest and the effect on quantity exchanged smallest when:

Fred's demand schedule for movie DVDs is as follows: At $30, he would buy 1; at $25, he would buy two; at $15, he would buy 3; and at $10, he would buy 4.If the price of movie DVDs equals $25, the consumer surplus Fred receives from purchasing movie DVDs would be:

Figure 4-E -Either technological progress or cost increasing new government regulations will increase supply.

Figure 4-E -When the price of corn falls, the market supply of wheat (which can be grown using the same land) is likely to increase.

If the demand curve for a product is vertical, then the elasticity of demand is:

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

Exhibit 4-A -Refer to Exhibit 4-A.Along a linear demand curve, price elasticity of demand is:

When demand is relatively inelastic, a 5% increase in price will:

The following schedule represents a portion of Kate's demand for sub sandwiches. Price Quantity Demanded per Month \6 3 \5 5 \4 8 Along this portion of Kate's demand curve for sub sandwiches, price elasticity of demand is:

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-B -Refer to Figure 4-B.At price P_R, what quantity of gasoline will be sold?

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