Question 1

Lack of good substitutes for a particular product affects its demand curve as follows:

Accepted Answer

A)  Makes it more elastic 
B)  Makes it less elastic 
C)  Makes it unitary elastic 
D)  Doesn't affect it at all 
E)  Cannot be determined without knowing the supply curve 
A)  Makes it more elastic 
B)  Makes it less elastic 
C)  Makes it unitary elastic 
D)  Doesn't affect it at all 
E)  Cannot be determined without knowing the supply curve B

Question 2

A demand curve cannot be both elastic and inelastic.

Accepted Answer

A) True 
 B)False  False

Question 3

Which of the following products would have the MOST ELASTIC demand?

Accepted Answer

A)  Water supplied by a local utility company 
B)  A Minolta automatic camera 
C)  A new home which has not yet been built 
D)  Mercedes automobile 
E)  An individual farmer's wheat 
A)  Water supplied by a local utility company 
B)  A Minolta automatic camera 
C)  A new home which has not yet been built 
D)  Mercedes automobile 
E)  An individual farmer's wheat E

Question 4

A demand schedule shows the relationship between price and quantity demanded in a market.

Accepted Answer

A) True 
 B)False

Question 5

A "demand schedule" for a television manufacturer would show how many new TVs are to be produced each month during the current production year.

Accepted Answer

A) True 
 B)False

Question 6

The "law of diminishing demand" says that if a firm raised the price of its product, a smaller quantity would be demanded.

Accepted Answer

A) True 
 B)False

Question 7

A single demand curve can have both elastic and inelastic parts over different price ranges.

Accepted Answer

A) True 
 B)False

Question 8

An oligopoly market situation has:

Accepted Answer

A)  relatively few sellers--or a few large firms and many smaller firms which follow the lead of the larger ones. 
B)  essentially homogeneous products. 
C)  fairly inelastic industry demand. 
D)  All of the above. 
E)  None of the above. 
A)  relatively few sellers--or a few large firms and many smaller firms which follow the lead of the larger ones. 
B)  essentially homogeneous products. 
C)  fairly inelastic industry demand. 
D)  All of the above. 
E)  None of the above.

Question 9

In pure competition, individual producers have perfectly flat demand curves while the industry demand curve is down-sloping at the equilibrium price.

Accepted Answer

A) True 
 B)False

Question 10

If a firm's total revenue INCREASES when the price of its product is reduced from $90 to $50, the demand for this product between these two points is:

Accepted Answer

A)  inelastic. 
B)  unitary elastic. 
C)  elastic. 
D)  Cannot tell from what is given. 
A)  inelastic. 
B)  unitary elastic. 
C)  elastic. 
D)  Cannot tell from what is given.

Question 11

When a large number of substitutes are available, demand will tend to be more elastic.

Accepted Answer

A) True 
 B)False

Question 12

Economists usually assume that customers have a fairly definite set of preferences.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following is the best example of a monopoly situation?

Accepted Answer

A)  A movie theater with one snack bar for popcorn and soft drinks. 
B)  Jewelry stores in Paris. 
C)  A farmers' market with many farmers selling sweet corn. 
D)  The only Domino's Pizza in a large university town. 
E)  A small town--some distance from any others--with only three drugstores. 
A)  A movie theater with one snack bar for popcorn and soft drinks. 
B)  Jewelry stores in Paris. 
C)  A farmers' market with many farmers selling sweet corn. 
D)  The only Domino's Pizza in a large university town. 
E)  A small town--some distance from any others--with only three drugstores.

Question 14

If demand is elastic, then total revenue would decrease if price were lowered.

Accepted Answer

A) True 
 B)False

Question 15

If a firm's total revenue DECREASES when the price of its product is reduced from $80 to $40, the demand for this product between these two prices is:

Accepted Answer

A)  unitary elastic. 
B)  inelastic. 
C)  elastic. 
D)  Cannot tell from what is given. 
A)  unitary elastic. 
B)  inelastic. 
C)  elastic. 
D)  Cannot tell from what is given.

Question 16

If a firm lowered the price of its product, the "law of diminishing demand" says that the quantity demanded would decrease.

Accepted Answer

A) True 
 B)False

Question 17

Tara Whitehall is responsible for price setting at her firm. The last time she raised her price, competitors left their prices at the lower level and she lost customers. Now she wants to increase her market share with a lower price, but she is concerned that her competitors will "follow" her to the lower price level. Whitehall is probably operating in an environment of:

Accepted Answer

A)  oligopoly. 
B)  pure competition. 
C)  monopoly. 
D)  monopolistic competition. 
A)  oligopoly. 
B)  pure competition. 
C)  monopoly. 
D)  monopolistic competition.

Question 18

Elasticity of demand is defined in terms of changes in total costs of production.

Accepted Answer

A) True 
 B)False

Question 19

Pure competition occurs when a market has:

Accepted Answer

A)  homogeneous (similar) products. 
B)  easy entry for new sellers. 
C)  many buyers and sellers. 
D)  informed buyers and sellers. 
E)  All of the above. 
A)  homogeneous (similar) products. 
B)  easy entry for new sellers. 
C)  many buyers and sellers. 
D)  informed buyers and sellers. 
E)  All of the above.

Question 20

Which of the following is the best example of an oligopoly situation?

Accepted Answer

A)  Grocery retailers in Miami. 
B)  A community in the mountains with one electric power company. 
C)  A farmers' market with many farmers selling peaches. 
D)  A small airport with two airlines going to different destinations. 
E)  Most of the aluminum in the U.S. is sold by three producers. 
A)  Grocery retailers in Miami. 
B)  A community in the mountains with one electric power company. 
C)  A farmers' market with many farmers selling peaches. 
D)  A small airport with two airlines going to different destinations. 
E)  Most of the aluminum in the U.S. is sold by three producers.

Exam 22: Economics Fundamentals

Lack of good substitutes for a particular product affects its demand curve as follows:

A demand curve cannot be both elastic and inelastic.

Which of the following products would have the MOST ELASTIC demand?

A demand schedule shows the relationship between price and quantity demanded in a market.

A "demand schedule" for a television manufacturer would show how many new TVs are to be produced each month during the current production year.

The "law of diminishing demand" says that if a firm raised the price of its product, a smaller quantity would be demanded.

A single demand curve can have both elastic and inelastic parts over different price ranges.

An oligopoly market situation has:

In pure competition, individual producers have perfectly flat demand curves while the industry demand curve is down-sloping at the equilibrium price.

If a firm's total revenue INCREASES when the price of its product is reduced from $90 to $50, the demand for this product between these two points is:

When a large number of substitutes are available, demand will tend to be more elastic.

Economists usually assume that customers have a fairly definite set of preferences.

Which of the following is the best example of a monopoly situation?

If demand is elastic, then total revenue would decrease if price were lowered.

If a firm's total revenue DECREASES when the price of its product is reduced from $80 to $40, the demand for this product between these two prices is:

If a firm lowered the price of its product, the "law of diminishing demand" says that the quantity demanded would decrease.

Elasticity of demand is defined in terms of changes in total costs of production.

Pure competition occurs when a market has:

Which of the following is the best example of an oligopoly situation?

Marketings Value to Consumers, Firms, and Society

Marketing Strategy Planning

Evaluating Opportunities in the Changing Marketing Environment

Focusing Marketing Strategy With Segmentation and Positioning

Demographic Dimensions of Global Consumer Markets

Final Consumers and Their Buying Behavior

Business and Organizational Customers and Their Buying Behavior

Improving Decisions With Marketing Information

Elements of Product Planning for Goods and Services

Product Management and New-Product Development

Place and Development of Channel Systems

Distribution Customer Service and Logistics

Retailers,wholesalers,and Their Strategy Planning

Promotion-Introduction to Integrated Marketing Communications

Personal Selling and Customer Service

Advertising, Publicity, and Sales Promotion

Pricing Objectives and Policies

Price Setting in the Business World

Implementing and Controlling Marketing Plans: Evolution and Revolution

Managing Marketings Link With Other Functional Areas

Ethical Marketing in a Consumer-Oriented World: Appraisal and Challenges

Marketing Arithmetic

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