Question 1

Figure 7-3  
-Refer to Figure 7-3.The absolute value of the price elasticity of demand at points a and b is 1.What is the value of Pb?

Accepted Answer

A) $50 
B) $40 
C) $30 
D) $20 
A) $50 
B) $40 
C) $30 
D) $20

Question 2

Economists have shown that when the ultimatum game experiment is carried out,both allocators and recipients act as if fairness is important.

Accepted Answer

A) True 
 B)False

Question 3

Figure 7-4  
-Refer to Figure 7-4.Using the midpoint formula,calculate the absolute value of the price elasticity of demand between e and f.

Accepted Answer

A) 0.32 
B) 0.4 
C) 2.5 
D) 3.125 
A) 0.32 
B) 0.4 
C) 2.5 
D) 3.125

Question 4

When Audrina raised the price of her homemade cookies,her total revenue increased.This suggests that the demand for Audrina's cookies is elastic.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following statements about price elasticity of demand is false?

Accepted Answer

A) The value of the price elasticity of demand is the reciprocal of the value of the demand curve's slope. 
B) If quantity demanded changes by a larger percentage than the percentage change in price,demand is elastic. 
C) The value of the price elasticity of demand along a downward-sloping demand curve is always negative. 
D) A linear downward-sloping demand curve has a varying price elasticity coefficient. 
A) The value of the price elasticity of demand is the reciprocal of the value of the demand curve's slope. 
B) If quantity demanded changes by a larger percentage than the percentage change in price,demand is elastic. 
C) The value of the price elasticity of demand along a downward-sloping demand curve is always negative. 
D) A linear downward-sloping demand curve has a varying price elasticity coefficient.

Question 6

If the price of steel increases drastically,the quantity of steel demanded by the building industry will fall significantly over the long run because

Accepted Answer

A) buyers of steel are more sensitive to a price change if they have more time to adjust to the price change. 
B) buyers of steel are less sensitive to a price change if they have more time to adjust to the price change 
C) sales revenue in the building industry will fall sharply. 
D) profits will fall by a greater amount in the long run than in the short run. 
A) buyers of steel are more sensitive to a price change if they have more time to adjust to the price change. 
B) buyers of steel are less sensitive to a price change if they have more time to adjust to the price change 
C) sales revenue in the building industry will fall sharply. 
D) profits will fall by a greater amount in the long run than in the short run.

Question 7

Which of the following is likely to occur as the result of the law of diminishing marginal utility?

Accepted Answer

A) Petra's utility from her second apple was less than her satisfaction from her first orange. 
B) Hudson enjoyed his second slice of pizza more than his first. 
C) Sabine's utility from her first granola bar is greater than Rachel's utility from her second granola bar. 
D) Wesley enjoyed his second bottle of iced tea less than his first bottle,other things constant. 
A) Petra's utility from her second apple was less than her satisfaction from her first orange. 
B) Hudson enjoyed his second slice of pizza more than his first. 
C) Sabine's utility from her first granola bar is greater than Rachel's utility from her second granola bar. 
D) Wesley enjoyed his second bottle of iced tea less than his first bottle,other things constant.

Question 8

The law of diminishing marginal utility states that

Accepted Answer

A) eventually total utility falls as more of a good is consumed,other things constant. 
B) the extra satisfaction from consuming a good decreases as more of a good is consumed,other things constant. 
C) the extra satisfaction from consuming a good increases slowly as more of a good is consumed,other things constant. 
D) when the extra satisfaction from consuming a good becomes negative,total utility starts falling,other things constant. 
A) eventually total utility falls as more of a good is consumed,other things constant. 
B) the extra satisfaction from consuming a good decreases as more of a good is consumed,other things constant. 
C) the extra satisfaction from consuming a good increases slowly as more of a good is consumed,other things constant. 
D) when the extra satisfaction from consuming a good becomes negative,total utility starts falling,other things constant.

Question 9

Which of the following is used to explain why a consumer's willingness to buy Microsoft Office increases as the number of other people who use Microsoft Office increases?

Accepted Answer

A) network externalities 
B) market failure 
C) diminishing marginal utility 
D) the income effect of a price change 
A) network externalities 
B) market failure 
C) diminishing marginal utility 
D) the income effect of a price change

Question 10

Figure 7-5  
-Refer to Figure 7-5.The inelastic segment of the demand curve

Accepted Answer

A) is coincident with the horizontal axis. 
B) is coincident with the vertical axis. 
C) lies below the midpoint of the curve. 
D) lies above the midpoint of the curve. 
A) is coincident with the horizontal axis. 
B) is coincident with the vertical axis. 
C) lies below the midpoint of the curve. 
D) lies above the midpoint of the curve.

Question 11

If the price elasticity of demand for canned soup is estimated at -1.62.What happens to sales revenue if the price of canned soup rises?

Accepted Answer

A) It falls by 162 percent. 
B) It rises by 1.62 percent. 
C) It falls. 
D) It rises. 
A) It falls by 162 percent. 
B) It rises by 1.62 percent. 
C) It falls. 
D) It rises.

Question 12

What must be true in terms of the income effect,the substitution effect,and the type of good for the good's demand curve to be upward sloping?

Accepted Answer

The income effect would have t

Question 13

Economists Robert Jensen and Nolan Miller reasoned that to be a Giffen good,with an income effect larger than its substitution effect,a good must be ________ and make up a ________ portion of a consumer's budget.

Accepted Answer

A) a normal good;very small 
B) an inferior good;very small 
C) a normal good;very large 
D) an inferior good;very large 
A) a normal good;very small 
B) an inferior good;very small 
C) a normal good;very large 
D) an inferior good;very large

Figure 7-3 -Refer to Figure 7-3.The absolute value of the price elasticity of demand at points a and b is 1.What is the value of Pb?

Economists have shown that when the ultimatum game experiment is carried out,both allocators and recipients act as if fairness is important.

Figure 7-4 -Refer to Figure 7-4.Using the midpoint formula,calculate the absolute value of the price elasticity of demand between e and f.

When Audrina raised the price of her homemade cookies,her total revenue increased.This suggests that the demand for Audrina's cookies is elastic.

Which of the following statements about price elasticity of demand is false?

If the price of steel increases drastically,the quantity of steel demanded by the building industry will fall significantly over the long run because

Which of the following is likely to occur as the result of the law of diminishing marginal utility?

The law of diminishing marginal utility states that

Which of the following is used to explain why a consumer's willingness to buy Microsoft Office increases as the number of other people who use Microsoft Office increases?

Figure 7-5 -Refer to Figure 7-5.The inelastic segment of the demand curve

If the price elasticity of demand for canned soup is estimated at -1.62.What happens to sales revenue if the price of canned soup rises?

What must be true in terms of the income effect,the substitution effect,and the type of good for the good's demand curve to be upward sloping?

Economists Robert Jensen and Nolan Miller reasoned that to be a Giffen good,with an income effect larger than its substitution effect,a good must be and make up a portion of a consumer's budget.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

Exam 7: Consumer Choice and Elasticity

Figure 7-3 -Refer to Figure 7-3.The absolute value of the price elasticity of demand at points a and b is 1.What is the value of Pb?

Economists have shown that when the ultimatum game experiment is carried out,both allocators and recipients act as if fairness is important.

Figure 7-4 -Refer to Figure 7-4.Using the midpoint formula,calculate the absolute value of the price elasticity of demand between e and f.

When Audrina raised the price of her homemade cookies,her total revenue increased.This suggests that the demand for Audrina's cookies is elastic.

Which of the following statements about price elasticity of demand is false?

If the price of steel increases drastically,the quantity of steel demanded by the building industry will fall significantly over the long run because

Which of the following is likely to occur as the result of the law of diminishing marginal utility?

The law of diminishing marginal utility states that

Which of the following is used to explain why a consumer's willingness to buy Microsoft Office increases as the number of other people who use Microsoft Office increases?

Figure 7-5 -Refer to Figure 7-5.The inelastic segment of the demand curve

If the price elasticity of demand for canned soup is estimated at -1.62.What happens to sales revenue if the price of canned soup rises?

What must be true in terms of the income effect,the substitution effect,and the type of good for the good's demand curve to be upward sloping?

Economists Robert Jensen and Nolan Miller reasoned that to be a Giffen good,with an income effect larger than its substitution effect,a good must be ________ and make up a ________ portion of a consumer's budget.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Market Efficiency and Market Failure

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust Policy

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage,international Trade,and Exchange Rates

Filters

Economists Robert Jensen and Nolan Miller reasoned that to be a Giffen good,with an income effect larger than its substitution effect,a good must be and make up a portion of a consumer's budget.