Econ Quizzes 2

What is the difference between buying stocks and buying bonds?

- The future growth of a stock is more uncertain than the payments of a bond. - A stock can possibly pay dividends forever, but bonds have a fixed number of payments. - Differences of opinion about a stock's future may vary considerably but there is less difference about a bond's future.

Which of the following statements is true? A. The demand curve for a necessity is more elastic than the demand curve for a luxury. B. The more narrowly we define a market, the more elastic the demand for a product will be. C. In general, if a product has few substitutes it will have an elastic demand. D. The more time that passes the more inelastic the demand for a product becomes.

B.

If the price elasticity of demand for insulin is equal to zero, then the demand curve for insulin is A. downward sloping. B. curvilinear. C. vertical. D. horizontal.

C

Rank these three items in terms of the elasticity of the demand for them at any given price, from most elastic to least elastic: hot beverages, coffee and Peet's Coffee.

Peet's Coffee, coffee, hot beverages

At a price of $100, Beachside Canoe Rentals rented 11 canoes. When it increased its rental price to $125, 9 canoes were rented. Calculate the absolute value of the price elasticity of demand for canoe rentals using the midpoint formula.

.9

If the demand for cell phone service is inelastic, then A. the percentage change in quantity demanded is less than the percentage change in price (in absolute value). B. the percentage change in quantity demanded is greater than the percentage change in price (in absolute value). C. the quantity demanded does not change in response to changes in price. D. the percentage change in quantity demanded is equal to the percentage change in price.

A.

The price elasticity of demand for beef is estimated to be 0.60 (in absolute value). This means that a 20 percent increase in the price of beef, holding everything else constant, will cause the quantity of beef demanded to A. decrease by 12 percent. B. decrease by 26 percent. C. decrease by 32 percent. D. decrease by 60 percent.

A.

Which of the following takes place in the direct finance market? A. Ownership in corporations is sold in the form of stock. B. Deposits from savers are accumulated and loans made to borrowers. C. Banks offer savings accounts to customers. D. Firms borrow funds from banks.

A.

When the price of tortilla chips rose by 10 percent, the quantity of tortilla chips sold fell 4 percent. This indicates that the demand for tortilla chips is A. perfectly inelastic. B. unit elastic. C. inelastic. D. elastic.

C.

Carrie Bradshaw claims that when it comes to buying shoes, "price is no object." If this is true, then her demand for shoes is A. unit elastic. B. horizontal. C. perfectly elastic. D. perfectly inelastic.

D.

How are corporate profits taxed in the United States?

Earnings are taxed first as corporate profits then as personal income after dividends are paid.

The owners of a ________ have a separate legal distinction from the business.

corporation