Deck 9: Demand

Question 1

Which has the least elastic demand curve?

A) oranges
B) fruit
C) food
D) apples

Answer 1

C

Question 2

If the price of fuel increases, this will result in the following changes for food:

A) an increase in price and increase in quantity
B) a decrease in price and an increase in quantity
C) an increase in price and decrease in quantity
D) a decrease in price and an decrease in quantity

Answer 2

C

Question 3

An increase in income will result in the following changes for food:

A) an increase in price and increase in quantity
B) a decrease in price and an increase in quantity
C) an increase in price and a decrease in quantity
D) an decrease in price and a decrease in quantity

Answer 3

A

Question 4

As income increases, we will expect:

A) an increase in the demand for golf courses
B) an increase in quantity demanded of golf courses
C) no change in the quantity of golf courses
D) a decrease in the supply of golf courses

Question 5

If the price of movie tickets decreases, this could be caused by:

A) a decrease in the demand for movies
B) a decrease in the quantity demanded for movies
C) higher fuel prices
D) decreased supply of movie theaters

Question 6

Elasticities are:

A) in units of quantity
B) in units of price
C) unitless
D) in units of quantity/price

Question 7

If the price of chicken increases, then:

A) the demand for beef is unaffected
B) consumers will substitute out of chicken and into beef and pork
C) the Law of Demand states that consumers will eat more chicken
D) not enough information provided to answer this

Question 8

The market demand curve for wheat is derived by:

A) the global supply and demand for wheat
B) the horizontal summation of all individual wheat demand curves
C) the Chicago Board of Trade
D) the physical location of wheat trades

Question 9

An elasticity measures:

A) how prices affect inflation
B) the Law of Demand
C) how economic variables influence the stock market
D) how responsive one variable is to another

Question 10

If Asian economies continue to increase their standard of living:

A) the supply of US agricultural products will increase
B) the demand for US agricultural products will increase
C) the quantity demanded of agricultural products will increase
D) the demand for US agricultural products will shift to the left

Question 11

If income increases, then:

A) there is a change in the demand for beef and a change in the demand for chicken
B) there is a change in the demand for beef and a change in quantity demanded of chicken
C) there is a change in quantity demanded of beef and a change in the demand for chicken
D) there is a change in the quantity demanded for beef and a change in the quantity demanded of chicken

Question 12

An increase in the price of pork results in:

A) a decrease in the demand for pork and an increase in demand for beef
B) a decrease in quantity demanded of pork and an increase in demand for chicken
C) a decrease in the quantity demanded of pork and a decrease in the demand of chicken
D) a decrease in demand for pork and an increase in the quantity demanded of chicken

Question 13

Blue jeans are _________ elastic than all pants.

A) more
B) less
C) equally
D) supply

Question 14

Which good is an example of a luxury good:

A) Ferrari
B) coffee
C) food
D) books

Question 15

The income elasticity of golf course memberships is:

A) less than 0
B) between 0 and 1
C) equal to 1
D) greater than 1

Question 16

An increase in the price of textbooks could be caused by

A) an increase in the demand for college degrees
B) a decrease in the demand for college degrees
C) a decrease in paper costs
D) none of the other answers

Question 17

If the demand for pineapples increases:

A) the price of pineapples increases
B) the price of pineapples decreases
C) the price of pineapples stays the same
D) the quantity of pineapples decreases

Question 18

If the price of cut flowers increases five percent, and the quantity demanded of cut flowers falls four per cent, then:

A) cut flowers are a complementary good
B) cut flowers are a luxury good
C) cut flowers are price inelastic
D) none of the other answers

Question 19

If income increases ten percent, and the demand of hamburger decreases five per cent:

A) hamburger is a necessity good
B) hamburger is an inferior good
C) hamburger is a normal good
D) not enough information to know

Question 20

A good example of complements in consumption includes:

A) ice cream and chocolate sauce
B) ice cream and frozen yogurt
C) ice cream and cream
D) ice cream and bicycles

Question 21

If the price of shirts increases:

A) there is a decrease in the demand for shirts and a decrease in the demand for neckties
B) there is a decrease in the quantity demanded for shirts and a decrease in the demand for neckties
C) there is a decrease in the demand for shirts and a decrease in the quantity demanded for necktie s
D) there is a decrease in the demand for shirts and an increase in the demand for neckties

Question 22

If the price of houses increases, and the quantity of swimming pools decreases:

A) houses and pools are luxury goods
B) houses and pools are complements in consumption
C) houses and pools are substitutes in production
D) house and pools are substitutes in consumption

Question 23

If the price of a good increases one percent and the quantity demanded of that good decreases one percent, then:

A) the Law of Demand does not hold
B) the price elasticity of demand is elastic
C) the price elasticity of demand is inelastic
D) none of the other answers

Question 24

Luxury goods are also:

A) inferior goods
B) expensive goods
C) normal goods
D) complementary goods

Question 25

An inferior good:

A) has a negative arc elasticity
B) is unitary elastic
C) has a negative income elasticity
D) has an income elasticity between zero and one

Question 26

Demand is about:

A) Consumers
B) Producers
C) Firms
D) the interaction of producers and consumers

Question 27

A demand curve:

A) Includes a change in income
B) Includes a change in tastes and preferences
C) Holds all else constant
D) Is upward sloping

Question 28

An individual consumer demand curve is derived by:

A) Changing income, ceteris paribus
B) Changing the price of one good, ceteris paribus
C) Changing the prices of two goods, ceteris paribus
D) Not changing income or prices, ceteris paribus

Question 29

A demand schedule:

A) Shows how consumer purchases change over time
B) Shows consumer preferences
C) Shows combinations of prices and quantities demanded
D) Shows combinations of prices and quantities supplied

Question 30

The market demand curve is:

A) Vertical
B) Horizontal
C) Downward sloping
D) Upward sloping

Question 31

The market demand curve is derived by:

A) Vertical summation of all individual consumer demand curves
B) Horizontal summation of all individual consumer demand curves
C) Vertical summation of all individual producer supply curves
D) Horizontal summation of all individual producer supply curves

Question 32

The Law of Demand

A) Always holds
B) Holds if ceteris paribus is assumed
C) Holds for normal goods
D) Holds of luxury goods

Question 33

A demand curve has:

A) Price as the independent variable and quantity as the independent variable
B) Price as the independent variable and quantity as the dependent variable
C) Price as the dependent variable and quantity as the independent variable
D) Price as the dependent variable and quantity as the dependent variable

Question 34

The elasticity of demand is determined by:

A) Product quality
B) Weather
C) Consumer tastes and preferences
D) The availability of substitutes

Question 35

Cigarettes are likely to be:

A) Price inelastic
B) Price elastic
C) Unitary price elastic
D) Not enough information to know

Question 36

Lucky Strike cigarettes are likely to be:

A) Price inelastic
B) Price elastic
C) Unitary price elastic
D) Not enough information to know

Question 37

If price changes are large, it is best to use:

A) Percentage change in income
B) Unitary price elasticity
C) Point elasticity of demand
D) Arc elasticity of demand

Question 38

If the price increases two percent and the quantity demanded decreases two percent, then the good is:

A) Inelastic
B) Elastic
C) Unitary elastic
D) Not enough information to know

Question 39

If income increases one percent, and demand increases five percent, then the price elasticity of the good is:

A) Inelastic
B) Elastic
C) Unitary elastic
D) Not enough information to know

Question 40

The cross-price elasticity of demand measures:

A) How responsive a good is to changes in another good's price
B) How responsive a good is to changes in income
C) How responsive a good is to changes in production methods
D) How responsive a good is to changes in the good's own price

Question 41

Steak and steak sauce are:

A) Complements in consumption
B) Substitutes in consumption
C) Unrelated
D) Not enough information to know

Question 42

Hamburgers and buns have a cross-price elasticity of demand that is:

A) One
B) Zero
C) Positive
D) Negative

Question 43

White wheat and whole wheat bread are:

A) Complements in consumption
B) Substitutes in consumption
C) Unrelated
D) Complements in production

Question 44

if the price of beef increases, then there is a:

A) Upward movement along the beef demand curve
B) Downward movement along the beef demand curve
C) Upward shift in beef demand
D) Downward shift in beef demand

Question 45

If income increases, then there is a:

A) Upward movement along the beef demand curve
B) Downward movement along the beef demand curve
C) Upward shift in beef demand
D) Downward shift in beef demand

Question 46

If the price of beef increases, then there is a:

A) Upward movement along the pork demand curve
B) Downward movement along the pork demand curve
C) Upward shift in pork demand
D) Downward shift in pork demand

Question 47

If the price of beef increases, then there is a:

A) Upward movement along the steak sauce demand curve
B) Downward movement along the steak sauce demand curve
C) Upward shift in steak sauce demand
D) Downward shift in steak sauce demand

Question 48

Why do we study supply and demand? Explain thoroughly and carefully.

Question 49

Demand Curve.
A. Define the term, "demand curve."
B. What does the demand curve represent, intuitively?
C. How is the market demand curve derived?
D. List the determinants of demand.
E. Carefully describe and explain the difference between the movement along and a shift in demand.

Question 50

Suppose that the price of bread increases from usd 1/loaf to usd 2/loaf, resulting in the quantity demanded of bread to decrease from 200 loaves to 160 loaves. What is the arc elasticity of demand for bread? Is bread elastic or inelastic? Why?

Question 51

Demonstrate the best strategy for maximizing profits for the bread company.

Question 52

Demonstrate and explain what will happen to the demand for air tickets over time.

Question 53

Use a graph and an explanation to explain what has happened to the demand for grocery store coupons in the past four to five years. Be sure to include proper economic terminology, elasticity description, and graphs.

Question 54

Use graphs to demonstrate the income elasticity of: A. Steaks, B. Hamburgers, and C. Ramen noodles. What is the economic significance of this for US agriculture? Explain.

Question 55

Suppose that a beef producer came to you (an economic consultant) and asked for advice on where to sell natural and organic beef in the future. Use your knowledge of income elasticities to explain and demonstrate the best course of action. Be sure to include proper economic terminology, elasticity description, and graphs.

Question 56

A. What is the equation of the cross-price elasticity of demand of beef and pork? B. What is the sign of the cross-price elasticity of demand of beef and pork? Explain.

Question 57

The large increase in US ethanol production has resulted in a large increase in the demand for corn.
A. What is the cause of the "large increase in ethanol production"? Explain.
B. Will increased ethanol production shift the demand curve of wheat in the US? Explain why or why not. (Hint: think about your answer to A. above… what happens to demand for feed grains?)

Question 58

What impact will animal rights laws that cause producers to change their production practices have on the price and quantity of meat? Hint: be careful here… think about both demand and supply.

Question 59

Own-Price Elasticity of Supply (E^s).
Suppose that the price of pizza increases from P₀=usd 6/pizza to P₁=usd 10/pizza, resulting in an increase in pizzas produced from Q₀= 10 pizzas to Q₁= 12 pizzas. A. Calculate ε at the initial values of P and Q. B. Is pizza supply elastic or inelastic? Demonstrate and explain. C. Is the pizza firm in the immediate run, short run, or long run? Explain.

Question 60

Cross-Price Elasticity of Supply (E^sxy).. A. What is the formula and sign of the cross-price elasticity of supply of pizza and bread sticks? Note: assume that the bread sticks are made from left-over pizza dough. B. What is the formula and sign of the cross-price elasticity of supply of pepperoni pizza and cheese pizza?

Question 61

Consider a competitive market for pork with the quantity demanded (per year) at various prices are given as follows:
A. Calculate the price elasticity of demand when the price is usd 80/kg. B. Calculate the price elasticity of demand when the price is usd 100/kg.

Question 62

Organic vegetables are traded in a competitive world market, and the world price is usd 9/lb. unlimited quantities are available for import into the United States at this price. The U.S. domestic demand for various price levels are shown as follows:
A. What is the equation for demand? B. At a price of usd 9/lb, what is the price elasticity of demand? C. At a price of usd 12/lb, what is the price elasticity of demand?