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1 | |
If supply is elastic, |
| | A) | supply changes more than demand. |
| | B) | quantity supplied changes more than price. |
| | C) | the percentage change in quantity supplied is greater than the percentage change in price. |
| | D) | price changes more than quantity supplied. |
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2 | |
If lowering the price of movie tickets from $9 to $7 causes average weekly sales to increase from 1900 to 2100 tickets, then , according to the midpoint formula, the price elasticity of demand is |
| | A) | .01 |
| | B) | .25 |
| | C) | .4 |
| | D) | 2.5 |
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3 | |
A perfectly elastic demand curve would be |
| | A) | vertical. |
| | B) | horizontal. |
| | C) | a straight, downward sloping line. |
| | D) | a straight, upward sloping line. |
| | E) | a curved, downward sloping line. |
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4 | |
The demand curve below would be perfectly inelastic at point
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| | A) | A |
| | B) | C |
| | C) | D |
| | D) | each of the labeled points are elastic. |
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5 | |
A business can lower prices and increase its total revenue if demand for its good is |
| | A) | inelastic. |
| | B) | elastic. |
| | C) | unit elastic. |
| | D) | somewhat spastic. |
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6 | |
Generally speaking the demand for a good will be more inelastic |
| | A) | the greater the time period being considered. |
| | B) | if the good is a luxury. |
| | C) | if the good is very specific and narrowly defined. |
| | D) | if the good makes up a small part of an individual's budget. |
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7 | |
At State University, a 10% increase in tuition is expected to decrease enrollments by 2%. President Miser claims this means higher tuition will decrease the University's total revenue. President Miser is |
| | A) | correct, demand is inelastic and total revenue would fall. |
| | B) | correct, demand is elastic and total revenue would fall. |
| | C) | incorrect, demand is elastic and total revenue would rise. |
| | D) | incorrect, demand is inelastic and total revenue would rise. |
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8 | |
Which of the following scenarios is consistent with a large increase in quantity with only a small change in price? |
| | A) | A shift in supply along a highly elastic demand curve |
| | B) | A shift in supply along a highly inelastic demand curve |
| | C) | A shift in demand along a highly inelastic supply curve |
| | D) | An increase in demand and a simultaneous decrease in supply |
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9 | |
Which of the following income elasticities of demand would be most consistent with the hypothesis that DVD players are a luxury? |
| | A) | – 1.9 |
| | B) | – 0.8 |
| | C) | 0.6 |
| | D) | 2.1 |
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10 | |
If beer and pretzels have a cross price elasticity of negative one, then beer and pretzels are |
| | A) | both inferior goods. |
| | B) | both normal goods. |
| | C) | complements. |
| | D) | substitutes. |
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