Question 1

A price cut will increase 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 2

Figure 4-E  
-As the price of DVD players has fallen over the last two years, more DVD players have been sold by consumer electronics firms.Is this a violation of the law of supply?

Accepted Answer

No. Very likely the reduction in price i

Question 3

Along a supply curve, a decrease in price will increase total revenue:

Accepted Answer

A) only if supply is elastic. 
B) only if supply is inelastic. 
C) only if supply is unit elastic. 
D) under no circumstances. 
E) in none of the above situations. 
A) only if supply is elastic. 
B) only if supply is inelastic. 
C) only if supply is unit elastic. 
D) under no circumstances. 
E) in none of the above situations.

Question 4

Taxes on goods with ____ demand curves will tend to raise more tax revenue for the government than taxes on goods with ____ demand curves.

Accepted Answer

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

Question 5

Figure 4-E  
-Increasing government taxation or regulation of an industry generally increases the supply of goods.

Accepted Answer

A) True 
 B)False

Question 6

If Stephanie buys a laptop for $700 and the maximum she would have paid was $1,000, which of the following is true?

Accepted Answer

A) Stephanie received consumer surplus of $1,000. 
B) Stephanie received producer surplus of $700. 
C) Stephanie received a consumer surplus of $700. 
D) Stephanie received a consumer surplus of $300. 
A) Stephanie received consumer surplus of $1,000. 
B) Stephanie received producer surplus of $700. 
C) Stephanie received a consumer surplus of $700. 
D) Stephanie received a consumer surplus of $300.

Question 7

Which of the following is false?

Accepted Answer

A) The price elasticity of demand measures the responsiveness of quantity demanded to a change in price. 
B) The price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price. 
C) If demand is elastic, it means the quantity demanded changes by a relatively larger amount than the price change. 
D) If demand is inelastic, it means the quantity demanded changes by a relatively smaller amount than the price change. 
E) All of the above are true. 
A) The price elasticity of demand measures the responsiveness of quantity demanded to a change in price. 
B) The price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price. 
C) If demand is elastic, it means the quantity demanded changes by a relatively larger amount than the price change. 
D) If demand is inelastic, it means the quantity demanded changes by a relatively smaller amount than the price change. 
E) All of the above are true.

Question 8

Lydia enjoys going to the theater to see Broadway musicals.The following demand schedule shows Lydia's willingness to pay for theater tickets in a year. $\begin{array} { c c } 
\text { Tickrot Price } & \text { Number af Tickets } \
\$ 90 & 1 \
\$ 80 & 2 \
\$ 70 & 3 \
\$ 60 & 4 \
\$ 50 & 5 \
\$ 40 & 6
\end{array}$ If the price of tickets to Broadway musicals equals $50, Lydia's consumer surplus will be:

Accepted Answer

A) $350. 
B) $300. 
C) $250. 
D) $100. 
E) $50. 
A) $350. 
B) $300. 
C) $250. 
D) $100. 
E) $50.

Question 9

Total welfare gains from trade to the economy can be measured:

Accepted Answer

A) as the sum of consumer and producer surpluses. 
B) as the difference between producer surplus and consumer surplus. 
C) as the sum of consumer and producer surpluses minus taxes 
D) as the net gain in consumer surplus that results from an action that alters a market equilibrium. 
A) as the sum of consumer and producer surpluses. 
B) as the difference between producer surplus and consumer surplus. 
C) as the sum of consumer and producer surpluses minus taxes 
D) as the net gain in consumer surplus that results from an action that alters a market equilibrium.

Question 10

Exhibit 4-C  
-Refer to Exhibit 4-C.With reference to Graph A, at a price of $10, total revenue equals:

Accepted Answer

A) $200. 
B) $400. 
C) $500. 
D) $1,000. 
A) $200. 
B) $400. 
C) $500. 
D) $1,000.

Question 11

If the short run elasticity of demand for a good was greater than 1, an increase in the price of the good would tend to:

Accepted Answer

A) increase total revenue in both the short run and the long run. 
B) increase total revenue in the short run but not the long run. 
C) decrease total revenue in the short run and the long run, but by more in the short run. 
D) decrease total revenue in the short run and the long run, but by more in the long run. 
A) increase total revenue in both the short run and the long run. 
B) increase total revenue in the short run but not the long run. 
C) decrease total revenue in the short run and the long run, but by more in the short run. 
D) decrease total revenue in the short run and the long run, but by more in the long run.

Question 12

Fred's demand schedule for movie DVDs is as follows: At $60, he would buy 1; at $50, he would buy two; at $30, he would buy 3; and at $20, he would buy 4.If the price of movie DVDs equals $40, the consumer surplus Fred receives from purchasing movie DVDs would be:

Accepted Answer

A) $20. 
B) $30. 
C) $40. 
D) $110. 
E) $180. 
A) $20. 
B) $30. 
C) $40. 
D) $110. 
E) $180.

Question 13

The following schedule represents a portion of Tim's demand for video rentals each month. $\begin{array}{cc}
\text { Price } & \text { Quantity Demanded } \
&\text { per Month }\
\$4&8\
\$3&9\
\$2&10
\end{array}$

Along this portion of Tim's demand curve for video rentals, 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.

Question 14

Based on the table below, what is the consumer surplus of the 2nd unit consumed assuming this market reaches equilibrium? $\begin{array}{lcc}
\underline{\text { Price } }&\underline{ \text { Quantity Demanded }} & \underline{\text { Quantity Supplied }} \
\$ 1.00 & 7 & 1 \
\$ 2.00 & 6 & 2 \
\$ 3.00 & 5 & 3 \
\$ 4.00 & 4 & 4 \
\$ 5.00 & 3 & 5 \
\$6.00 & 2 & 6 \
\$ 7.00 & 1 & 7
\end{array}$

Accepted Answer

A) $1.00 
B) $2.00 
C) $3.00 
D) $7.00 
E) $10.00 
A) $1.00 
B) $2.00 
C) $3.00 
D) $7.00 
E) $10.00

Question 15

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

Accepted Answer

A) first time tax credits that cause more home sales 
B) a price ceiling on gasoline that causes a gas shortage 
C) increased parking fines that lead to fewer violators 
D) all of the above 
E) none of the above 
A) first time tax credits that cause more home sales 
B) a price ceiling on gasoline that causes a gas shortage 
C) increased parking fines that lead to fewer violators 
D) all of the above 
E) none of the above

Question 16

If 400 apple pies are sold at $4 per pie, but 500 apple pies are sold at $3 per pie, we know from the total revenue rule:

Accepted Answer

A) that the demand for pies is elastic over that price range. 
B) that the demand for pies is inelastic over that price range. 
C) that the demand for pies is unit elastic over that price range. 
D) nothing about the elasticity of demand. 
A) that the demand for pies is elastic over that price range. 
B) that the demand for pies is inelastic over that price range. 
C) that the demand for pies is unit elastic over that price range. 
D) nothing about the elasticity of demand.

Question 17

"Rent Control," a form of price control in which the government sets a limit to what apartment owners can charge a tenant, is a mechanism of:

Accepted Answer

A) cost cutting. 
B) price ceiling. 
C) price floor. 
D) non-equilibrium pricing. 
A) cost cutting. 
B) price ceiling. 
C) price floor. 
D) non-equilibrium pricing.

Question 18

If the estimated elasticity of supply coefficient equals 0.85, then:

Accepted Answer

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

Question 19

Figure 4-E  
-If the soccer ball market is in equilibrium at a price of $22 per ball, an increase in the supply of soccer balls will cause a shortage at that price.

Accepted Answer

A) True 
 B)False

Question 20

If the measured elasticity of supply coefficient equals 1.3, then supply is:

Accepted Answer

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

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

Figure 4-E -As the price of DVD players has fallen over the last two years, more DVD players have been sold by consumer electronics firms.Is this a violation of the law of supply?

Along a supply curve, a decrease in price will increase total revenue:

Taxes on goods with demand curves will tend to raise more tax revenue for the government than taxes on goods with demand curves.

Figure 4-E -Increasing government taxation or regulation of an industry generally increases the supply of goods.

If Stephanie buys a laptop for $700 and the maximum she would have paid was $1,000, which of the following is true?

Which of the following is false?

Total welfare gains from trade to the economy can be measured:

Exhibit 4-C -Refer to Exhibit 4-C.With reference to Graph A, at a price of $10, total revenue equals:

If the short run elasticity of demand for a good was greater than 1, an increase in the price of the good would tend to:

Fred's demand schedule for movie DVDs is as follows: At $60, he would buy 1; at $50, he would buy two; at $30, he would buy 3; and at $20, he would buy 4.If the price of movie DVDs equals $40, the consumer surplus Fred receives from purchasing movie DVDs would be:

The following schedule represents a portion of Tim's demand for video rentals each month. Price Quantity Demanded per Month \4 8 \3 9 \2 10 Along this portion of Tim's demand curve for video rentals, price elasticity of demand is:

Based on the table below, what is the consumer surplus of the 2^nd unit consumed assuming this market reaches equilibrium? \ 1.00 7 1 \ 2.00 6 2 \ 3.00 5 3 \ 4.00 4 4 \ 5.00 3 5 \6 .00 2 6 \ 7.00 1 7

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

If 400 apple pies are sold at $4 per pie, but 500 apple pies are sold at $3 per pie, we know from the total revenue rule:

"Rent Control," a form of price control in which the government sets a limit to what apartment owners can charge a tenant, is a mechanism of:

If the estimated elasticity of supply coefficient equals 0.85, then:

Figure 4-E -If the soccer ball market is in equilibrium at a price of $22 per ball, an increase in the supply of soccer balls will cause a shortage at that price.

If the measured elasticity of supply coefficient equals 1.3, then supply 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

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

Figure 4-E -As the price of DVD players has fallen over the last two years, more DVD players have been sold by consumer electronics firms.Is this a violation of the law of supply?

Along a supply curve, a decrease in price will increase total revenue:

Taxes on goods with ____ demand curves will tend to raise more tax revenue for the government than taxes on goods with ____ demand curves.

Figure 4-E -Increasing government taxation or regulation of an industry generally increases the supply of goods.

If Stephanie buys a laptop for $700 and the maximum she would have paid was $1,000, which of the following is true?

Which of the following is false?

Total welfare gains from trade to the economy can be measured:

Exhibit 4-C -Refer to Exhibit 4-C.With reference to Graph A, at a price of $10, total revenue equals:

If the short run elasticity of demand for a good was greater than 1, an increase in the price of the good would tend to:

Fred's demand schedule for movie DVDs is as follows: At $60, he would buy 1; at $50, he would buy two; at $30, he would buy 3; and at $20, he would buy 4.If the price of movie DVDs equals $40, the consumer surplus Fred receives from purchasing movie DVDs would be:

The following schedule represents a portion of Tim's demand for video rentals each month. Price Quantity Demanded per Month \4 8 \3 9 \2 10 Along this portion of Tim's demand curve for video rentals, price elasticity of demand is:

Based on the table below, what is the consumer surplus of the 2nd unit consumed assuming this market reaches equilibrium? \ 1.00 7 1 \ 2.00 6 2 \ 3.00 5 3 \ 4.00 4 4 \ 5.00 3 5 \6 .00 2 6 \ 7.00 1 7

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

If 400 apple pies are sold at $4 per pie, but 500 apple pies are sold at $3 per pie, we know from the total revenue rule:

"Rent Control," a form of price control in which the government sets a limit to what apartment owners can charge a tenant, is a mechanism of:

If the estimated elasticity of supply coefficient equals 0.85, then:

Figure 4-E -If the soccer ball market is in equilibrium at a price of $22 per ball, an increase in the supply of soccer balls will cause a shortage at that price.

If the measured elasticity of supply coefficient equals 1.3, then supply 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

Taxes on goods with demand curves will tend to raise more tax revenue for the government than taxes on goods with demand curves.

Based on the table below, what is the consumer surplus of the 2^nd unit consumed assuming this market reaches equilibrium? \ 1.00 7 1 \ 2.00 6 2 \ 3.00 5 3 \ 4.00 4 4 \ 5.00 3 5 \6 .00 2 6 \ 7.00 1 7