Question 1

For a given increase in price, the greater is the elasticity of supply, the greater is the resulting

Accepted Answer

A) decrease in quantity supplied. 
B) decrease in supply. 
C) increase in quantity supplied. 
D) increase in supply. 
A) decrease in quantity supplied. 
B) decrease in supply. 
C) increase in quantity supplied. 
D) increase in supply.

Question 2

Consumer surplus is:

Accepted Answer

A) the area underneath the demand curve. 
B) the total utility derived from consuming a good. 
C) the marginal utility of the last unit consumed multiplied by the number of units consumed. 
D) the difference between what consumers are willing to pay and what they are required to pay for a good. 
E) the dollar amount spent acquiring a good. 
A) the area underneath the demand curve. 
B) the total utility derived from consuming a good. 
C) the marginal utility of the last unit consumed multiplied by the number of units consumed. 
D) the difference between what consumers are willing to pay and what they are required to pay for a good. 
E) the dollar amount spent acquiring a good.

Question 3

The Shoe Emporium reduces the price of its shoes by 50% and finds that the quantity demanded for its shoes more than doubles.The demand for shoes from The Shoe Emporium appears to be:

Accepted Answer

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

Question 4

Graphically, consumer surplus is measured by:

Accepted Answer

A) the area below the demand curve. 
B) the area below the demand curve, but above the upward-sloping supply curve. 
C) the area below the demand curve, but above the market price. 
D) the area below the market demand curve, but above the supply curve. 
A) the area below the demand curve. 
B) the area below the demand curve, but above the upward-sloping supply curve. 
C) the area below the demand curve, but above the market price. 
D) the area below the market demand curve, but above the supply curve.

Question 5

If the supply curve for a product is horizontal, then the elasticity of supply 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 6

Figure 4-E  
-If the market for Rolex watches is in equilibrium, the quantity of Rolex watches demanded will equal the quantity of Rolex watches supplied.

Accepted Answer

A) True 
 B)False

Question 7

The difference between the amount a consumer is willing to pay and the amount they actually must pay for a good is called the:

Accepted Answer

A) price elasticity of demand. 
B) substitution effect. 
C) consumer surplus. 
D) income elasticity of demand. 
E) marginal utility. 
A) price elasticity of demand. 
B) substitution effect. 
C) consumer surplus. 
D) income elasticity of demand. 
E) marginal utility.

Question 8

A 25% decrease in the price of breakfast cereal leads to a 20% increase in the quantity of cereal demanded.As a result:

Accepted Answer

A) total revenue will decrease. 
B) total revenue will increase. 
C) total revenue will remain constant. 
D) the elasticity of demand will increase. 
A) total revenue will decrease. 
B) total revenue will increase. 
C) total revenue will remain constant. 
D) the elasticity of demand will increase.

Question 9

If a university charged a lower price for tuition during summer school than during the regular session, in search of added total revenue,

Accepted Answer

A) administrators likely believe that demand is more elastic during summer school than during the regular session. 
B) administrators likely believe that demand is less elastic during summer school than during the regular session. 
C) it indicates nothing about likely differences in the elasticity of demand during summer school than during the regular session. 
D) administrators likely believe that demand is both lower and less elastic during summer school than during the regular session. 
A) administrators likely believe that demand is more elastic during summer school than during the regular session. 
B) administrators likely believe that demand is less elastic during summer school than during the regular session. 
C) it indicates nothing about likely differences in the elasticity of demand during summer school than during the regular session. 
D) administrators likely believe that demand is both lower and less elastic during summer school than during the regular session.

Question 10

If the supply curve for housing has the normal positive slope, rent controls are likely to:

Accepted Answer

A) increase the quantity of available housing. 
B) improve the quality of available housing. 
C) create a larger shortage than if the supply curve were vertical. 
D) help low-income families find suitable housing. 
E) increase the demand for housing. 
A) increase the quantity of available housing. 
B) improve the quality of available housing. 
C) create a larger shortage than if the supply curve were vertical. 
D) help low-income families find suitable housing. 
E) increase the demand for housing.

Question 11

The current supply of Rembrandt paintings:

Accepted Answer

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

Question 12

As the market price of a good falls due to an increase in supply, consumer surplus:

Accepted Answer

A) falls. 
B) rises. 
C) does not change. 
D) can either fall, rise, or stay the same. 
A) falls. 
B) rises. 
C) does not change. 
D) can either fall, rise, or stay the same.

Question 13

If the elasticity of demand coefficient for a good is 6 (in absolute terms), 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 14

Price elasticity of demand is defined as:

Accepted Answer

A) the slope of the demand curve. 
B) the slope of the demand curve divided by the price. 
C) the percentage change in price divided by the percentage change in quantity demanded. 
D) the percentage change in quantity demanded divided by the percentage change in price. 
E) the inverse of the price elasticity of supply. 
A) the slope of the demand curve. 
B) the slope of the demand curve divided by the price. 
C) the percentage change in price divided by the percentage change in quantity demanded. 
D) the percentage change in quantity demanded divided by the percentage change in price. 
E) the inverse of the price elasticity of supply.

Question 15

Evaluate the following statements: (I) The slope of the demand curve is always equal to the elasticity of demand.
(II) Moving down alone a downward-sloping straight-line demand curve, the elasticity of demand fallf.

Accepted Answer

A) (I) and (II) are both true. 
B) (I) is true and (II) is false. 
C) (I) is false and (II) is true. 
D) (I) and (II) are both false. 
A) (I) and (II) are both true. 
B) (I) is true and (II) is false. 
C) (I) is false and (II) is true. 
D) (I) and (II) are both false.

Question 16

Figure 4-E  
-When a supply curve shifts, the equilibrium price will change in the opposite direction from the shift in supply and the quantity traded will change in the same direction as the shift in supply.

Accepted Answer

A) True 
 B)False

Question 17

Figure 4-E  
-Refer to Figure 4-E.When the price falls from P2 to P1, producer surplus:

Accepted Answer

A) increases by area B 
B) increases by area A + B 
C) decreases by area A 
D) decreases by area A + B 
A) increases by area B 
B) increases by area A + B 
C) decreases by area A 
D) decreases by area A + B

Question 18

If the supply curve for aspirin is perfectly elastic, 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 19

When demand is elastic:

Accepted Answer

A) price elasticity of demand is greater than one. 
B) consumers are relatively responsive to changes in price. 
C) the percentage change in quantity demanded resulting from a price change is greater than the percentage change in price. 
D) all of the above are correct. 
A) price elasticity of demand is greater than one. 
B) consumers are relatively responsive to changes in price. 
C) the percentage change in quantity demanded resulting from a price change is greater than the percentage change in price. 
D) all of the above are correct.

Question 20

Figure 4-A
The diagram below represents the market for butter.  
-Refer to Figure 4-A.If a price floor of $4 is imposed, ____ units of butter will be sold.

Accepted Answer

A) 7,000 
B) 5,000 
C) 4,000 
D) 3,000 
E) 2,000 
A) 7,000 
B) 5,000 
C) 4,000 
D) 3,000 
E) 2,000

For a given increase in price, the greater is the elasticity of supply, the greater is the resulting

Consumer surplus is:

The Shoe Emporium reduces the price of its shoes by 50% and finds that the quantity demanded for its shoes more than doubles.The demand for shoes from The Shoe Emporium appears to be:

Graphically, consumer surplus is measured by:

If the supply curve for a product is horizontal, then the elasticity of supply is:

Figure 4-E -If the market for Rolex watches is in equilibrium, the quantity of Rolex watches demanded will equal the quantity of Rolex watches supplied.

The difference between the amount a consumer is willing to pay and the amount they actually must pay for a good is called the:

A 25% decrease in the price of breakfast cereal leads to a 20% increase in the quantity of cereal demanded.As a result:

If a university charged a lower price for tuition during summer school than during the regular session, in search of added total revenue,

If the supply curve for housing has the normal positive slope, rent controls are likely to:

The current supply of Rembrandt paintings:

As the market price of a good falls due to an increase in supply, consumer surplus:

If the elasticity of demand coefficient for a good is 6 (in absolute terms), we know:

Price elasticity of demand is defined as:

Evaluate the following statements: (I) The slope of the demand curve is always equal to the elasticity of demand. (II) Moving down alone a downward-sloping straight-line demand curve, the elasticity of demand fallf.

Figure 4-E -When a supply curve shifts, the equilibrium price will change in the opposite direction from the shift in supply and the quantity traded will change in the same direction as the shift in supply.

Figure 4-E -Refer to Figure 4-E.When the price falls from P₂ to P₁, producer surplus:

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

When demand is elastic:

Figure 4-A The diagram below represents the market for butter. -Refer to Figure 4-A.If a price floor of $4 is imposed, ____ units of butter will be sold.

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

For a given increase in price, the greater is the elasticity of supply, the greater is the resulting

Consumer surplus is:

The Shoe Emporium reduces the price of its shoes by 50% and finds that the quantity demanded for its shoes more than doubles.The demand for shoes from The Shoe Emporium appears to be:

Graphically, consumer surplus is measured by:

If the supply curve for a product is horizontal, then the elasticity of supply is:

Figure 4-E -If the market for Rolex watches is in equilibrium, the quantity of Rolex watches demanded will equal the quantity of Rolex watches supplied.

The difference between the amount a consumer is willing to pay and the amount they actually must pay for a good is called the:

A 25% decrease in the price of breakfast cereal leads to a 20% increase in the quantity of cereal demanded.As a result:

If a university charged a lower price for tuition during summer school than during the regular session, in search of added total revenue,

If the supply curve for housing has the normal positive slope, rent controls are likely to:

The current supply of Rembrandt paintings:

As the market price of a good falls due to an increase in supply, consumer surplus:

If the elasticity of demand coefficient for a good is 6 (in absolute terms), we know:

Price elasticity of demand is defined as:

Evaluate the following statements: (I) The slope of the demand curve is always equal to the elasticity of demand. (II) Moving down alone a downward-sloping straight-line demand curve, the elasticity of demand fallf.

Figure 4-E -When a supply curve shifts, the equilibrium price will change in the opposite direction from the shift in supply and the quantity traded will change in the same direction as the shift in supply.

Figure 4-E -Refer to Figure 4-E.When the price falls from P2 to P1, producer surplus:

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

When demand is elastic:

Figure 4-A The diagram below represents the market for butter. -Refer to Figure 4-A.If a price floor of $4 is imposed, ____ units of butter will be sold.

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 falls from P₂ to P₁, producer surplus: