Question 1

If the absolute value of the percentage change in quantity demanded is smaller than the absolute value of the percentage change in price,demand is classified as being

Accepted Answer

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

Question 2

-Refer to the table above.When the price of Good B decreases from $2 to $1,the extra utility from spending an extra dollar on Good B associated with 1 unit of consumption

Accepted Answer

A)  falls from 33 to 16.5. 
B)  rises from 20 to 40. 
C)  rises from 33 to 40. 
D)  falls from 20 to 13.3. 
E)  remains constant.

Question 3

If the slope of the demand curve is -1.4,price is $5 per unit,and quantity demanded is 13 units,the price elasticity of demand is

Accepted Answer

A)  0.27. 
B)  0.38. 
C)  1.4. 
D)  1.8. 
E)  2.6.

Question 4

Which of the following statements is NOT an example of the law of demand?

Accepted Answer

A)  "I think I'll wait to leave for work at 9:30 a.m.so that traffic is not so heavy." 
B)  "The local record store has all their CDs on sale;I'm going to buy some right now." 
C)  "With unemployment so high,I can't find a job.I think I'll enrol at the local college." 
D)  "The increase in apartment rents is causing me to consider renting out our spare bedroom." 
E)  "The Internet has increased the amount of information I collect before making a purchase."

Question 5

The total utility values for the first five hamburgers consumed are 4,10,15,18,and 19,respectively.The marginal utility of the third hamburger is

Accepted Answer

A)  15. 
B)  10. 
C)  5. 
D)  3. 
E)  -3.

Question 6

A university observes that when it raises the price of hockey tickets,total revenue from hockey games increases and when it lowers the ticket price,total revenue falls.This suggests that

Accepted Answer

A)  hockey fans act irrationally. 
B)  the demand for tickets to hockey games must be elastic. 
C)  there are many good substitutes for university hockey games. 
D)  the demand for tickets to hockey games must be inelastic. 
E)  the demand for tickets to hockey games must be unit-elastic.

Question 7

The introduction of the AMD Athlon microprocessor has ______ the price elasticity of demand for Intel Celeron microprocessors,and hence ______ Intel's ability to raise revenue through price increases.

Accepted Answer

A)  increased;reduced 
B)  increased;increased 
C)  lower;reduced 
D)  lower;increased 
E)  had no effect on;reduced

Question 8

From 1981,when IBM introduced the PC standard computer,to 2012 the price elasticity of demand for IBM computers has

Accepted Answer

A)  fallen due to the increase in the number of substitutes. 
B)  increased due to the lower price of IBM computers. 
C)  increased due to the increase in the number of substitutes. 
D)  fallen because the time frame is now long. 
E)  increased due to greater consumer acceptance of computers.

Question 9

-Refer to the table above.The marginal utility of the third music CD is

Accepted Answer

A)  60. 
B)  75. 
C)  135. 
D)  160. 
E)  175.

Question 10

-Refer to the table above.If the price of Good A is $5 and the price of Good B is $4,then the rational spending rule predicts that _____ units of Good A and ______ units of Good B will be purchased.

Accepted Answer

A)  3;3 
B)  1;3 
C)  4;2 
D)  3;2 
E)  2;1

Question 11

The relationship between the cost of an activity and the amount of the activity consumers want is

Accepted Answer

A)  positive. 
B)  negative. 
C)  direct. 
D)  upward-sloping. 
E)  non-existent.

Question 12

The cross-price elasticity for cable TV and satellite TV is estimated to be 0.3.This implies that cable TV and satellite TV are

Accepted Answer

A)  normal goods. 
B)  substitutes. 
C)  elastic goods. 
D)  complements. 
E)  unrelated.

Question 13

Assume that Tina has $30 in income.If the price of a loaf of bread is $1.50 and the price of a jar of peanut butter is $3,Tina can buy a maximum of _____ loaves of bread or a maximum of _____ jars of peanut butter.

Accepted Answer

A)  20;10 
B)  15;15 
C)  10;20 
D)  10;5 
E)  5;10

Question 14

A perfectly elastic demand curve has a slope of ______,while a perfectly inelastic demand curve has a slope of ______.

Accepted Answer

A)  infinity;0 
B)  1;infinity 
C)  0;1 
D)  0;infinity 
E)  infinity;1

Question 15

Suppose that the demand curve for coffee is given by the equation P = 10 - 2Q.Calculate the price elasticity of demand when the price,P,is $6.

Accepted Answer

A)  6.0. 
B)  1.5. 
C)  1.0. 
D)  0.66. 
E)  0.16.

Question 16

The market demand curve is

Accepted Answer

A)  the vertical summation of all the demand curves of individuals. 
B)  positively sloped for some goods. 
C)  the horizontal summation of all the demand curves of individuals. 
D)  found by adding up all the different prices consumers would pay for a given quantity. 
E)  unaffected by changes in consumers' incomes.

Question 17

If demand for socks is given by the equation P = 32 - 5Q,the price elasticity of demand when P = $2 is

Accepted Answer

A)  5. 
B)  2. 
C)  0.5. 
D)  0.2. 
E)  0.067.

Question 18

-The slope of the demand curve shown in the diagram above is

Accepted Answer

A)  the same as the price elasticity of demand from point N to point M. 
B)  the same as the price elasticity of demand from point M to point K. 
C)  the same as the price elasticity of demand of the whole demand curve. 
D)  equal to -1. 
E)  equal to 1.

Question 19

-Refer to the table above.At a price of $1.50,the total revenue of hamburger producers will be

Accepted Answer

A)  $36. 
B)  $47.50. 
C)  $49.50. 
D)  $56. 
E)  $60.

Question 20

-Refer to the table above.The marginal utility of the fourth music CD is

Accepted Answer

A)  75. 
B)  60. 
C)  295. 
D)  15. 
E)  250.

Exam 4: Demand: the Benefit Side of the Market