Micro Ch 7 quiz
A good that takes up a very large percentage of the consumer's budget will tend to have A) an elastic demand. B) a perfectly elastic demand. C) an inelastic demand. D) an upward-sloping demand curve. E) very many substitutes.
A
If the price of apples decreases by 2 percent and causes apple consumption to increase by 4 percent, the price elasticity of demand is ____, indicating the demand is ____. A) 2; elastic B) 2; inelastic C) 0.5; elastic D) 0.5; inelastic
A
Rebel Records announces it is cutting the prices of its bluegrass album titles by 25 percent. If Rebel is seeking to increase revenues, it must believe that the elasticity of demand for bluegrass albums is A) elastic. B) inelastic. C) of unitary elasticity. D) perfectly inelastic.
A
Suppose Microsoft announces it is cutting the prices of some of its software titles (mainly games) by 25 percent. Assuming that Microsoft is seeking to increase revenues, it must believe that the elasticity of demand for these products is A) elastic. B) inelastic. C) of unitary elasticity. D) perfectly inelastic.
A
Suppose a city that operates local electric and natural gas companies wants to raise revenues by increasing its rates for electricity and natural gas. The price rise will increase city revenues if the elasticity of demand for electricity and natural gas is A) inelastic. B) elastic. C) negative. D) equal to −1.
A
A successful advertising campaign would likely A) increase price elasticity of demand by stressing the uniqueness of the product. B) reduce price elasticity of demand by stressing the uniqueness of the product. C) reduce price elasticity of demand by informing consumers of the availability of substitutes. D) not alter the demand curve. E) generally make the demand curve shift inward.
B
If Melanie's marginal benefit as a consumer in the jeans market is larger than the price of a pair of jeans, A) Melanie will not purchase any more jeans. B) Melanie can benefit by purchasing more jeans. C) the opportunity cost of a pair of jeans is lower than the price. D) Melanie will decrease her total utility by purchasing more jeans
B
If the board of regents of a major state university system plans to raise tuition in order to increase revenues, the regents must believe student demand is elastic. inelastic. of unitary elasticity. perfectly elastic.
B
In which of the following cases will the total spending on a good decrease? A) Demand is inelastic, and price increases. B) Demand is elastic, and price increases. C) Demand is elastic, and price decreases. D) Demand is of unit elasticity, and price decreases.
B
Other things constant, the price elasticity of demand for a product will tend to be smaller (more inelastic) if A) people spend a large share of their income on the product. B) people spend an insignificant share of their income on the product. C) the population in the market area is large. D) there are many good substitutes for the product.
B
If the demand for a good is elastic, then total revenue A) increases as price increases. B) remains constant as quantity demanded increases. C) increases as price decreases. D) decreases as quantity demanded increases. E) decreases as price decreases.
C
If the price elasticity of demand for opera tickets is estimated to be 4.5, then a 10 percent increase in opera ticket prices would be expected to cause a A) 4.5 percent decrease in quantity demanded. B) 4.5 percent increase in quantity demanded. C) 45 percent decrease in quantity demanded. D) 45 percent increase in quantity demanded. E) 450 percent increase in quantity demanded
C
Residents of Leon County have developed a strong liking for barbeque pork sandwiches. Residents of Bay County buy the same amount of barbeque pork sandwiches but believe beef sandwiches are just about as good. From this, we can infer that A) residents of Leon County will not care what the price of barbeque pork sandwiches is. B) compared to residents of Leon County, residents of Bay County will have a smaller price elasticity of demand for barbeque pork sandwiches. C) compared to residents of Leon County, residents of Bay County will have a larger price elasticity of demand for barbeque pork sandwiches. D) residents of Leon County will increase their purchases by a larger amount for beef sandwiches than residents of Bay County in response to a "50 cents off" sale on beef sandwiches.
C
The price elasticity of supply A) will be positive when supply is elastic and negative when it is inelastic. B) will be negative when supply is elastic and positive when it is inelastic. C) will always be positive. D) will be positive when demand for the good is inelastic. E) will be positive when demand for the good is elastic.
C
Assuming that bus travel is an inferior good, a decrease in consumer income, other things being equal, will cause A) a downward movement along the demand curve for bus travel. B) no change in the demand curve for bus travel. C) an upward movement along the demand curve for air travel. D) a rightward shift in the demand curve for bus travel.
D
