Quiz 2 Set 1
Which of the following would you expect to have the least elastic demand? a. breakfast cereal. b. Kellogg's breakfast cereal c. Kellogg's breakfast cereal sold at Ingles. d. food. e. There is not enough information to determine
a
Which of the following would you expect to have the least elastic demand? a. penicillin. b. bananas. c. bananas from Columbia. d. bananas from Columbia sold at Albertsons. e. All would have equal elasticity of demand, because each would have a downward sloping demand curve
a
The recent drought in the Midwest has been severe, and experts say that roughly half the corn crop has been damaged. As a result, we would expect: a. the demand for corn to decrease. b. the supply of corn to decrease. c. the demand for corn to increase. d. the supply of corn to increase . e. Both a and b
b
What effect would a reduction in the U.S. selling price of Japanese-made cars have on the U.S. demand for American-made cars ? a. No effect, because price changes affect quantity demanded, not demand. b. The demand would decrease. c. The demand would increase. d. We cannot tell unless we know Japan's comparative advantage e. We cannot tell unless we know what happened to the price of American-made cars.
b
What is the elasticity of demand for an increase in the price of unicorns from $1 to $2? a. 0.01 b. 0.1 c. 1.0 d. 10
b
What would happen in the market for ramen noodles if the price of wheat (an input) falls while consumer income rises (ramen noodles are an inferior good)? a. The equilibrium price would increase, but the impact on quantity would be uncertain. b. The equilibrium price would decrease, but the impact on quantity would be uncertain. c. Both equilibrium price and quantity would decrease. d. The equilibrium quantity would increase but the impact on price would be uncertain. e. The equilibrium quantity would decrease but the impact on price would be uncertain
b
Which of the following will decrease the supply (i.e., shift the supply curve) of chocolate cakes? a. A rise in the price of chocolate. b. A rise in the price of flour. c. The news that eating chocolate cake causes cancer. d. All of the above. e. Just a and b.
e
Which of the following will increase the market price of chocolate eclairs? a. The discovery that chocolate causes cancer. b. A much larger than expected chocolate crop. c. A fall in the price of cupcakes (a substitute). d. A rise in the price of milk (a complement). e. None of the above.
e
If the demand for french bread is elastic and the baker holds a french bread sale a. he will sell a lot more bread. b. he may sell more bread, but not a lot more. c. he won't sell any more bread. d. demand will increase
a
As a result a. price has fallen and quantity has risen. b. price has risen and quantity has fallen. c. price and quantity have fallen. d. price and quantity have risen
c
Prices are important because they a. bring quantity demanded and quantity supplied into balance. b. help determine who obtains scarce goods. c. help determine how to allocate our scarce resources. d. coordinate the choices made by consumers and producers. e. All of the above.
e
The law of demand would lead you to expect that if the price of butter goes up, a. people will complain. b. people will no longer buy butter c. a butter surplus will occur. d. a butter shortage will occur. e. people will buy more margarine.
e
If a firm making widgets lowers its price by 10 percent and finds that it sells 8 percent more widgets, the elasticity of demand for its product equals a. 0.8 b. 1.2 c. 8 d. 10 e. there is not enough information to say
a
If a price rise of 9% leads to a rise in quantity supplied of 12%, we know that supply is a. elastic. b. inelastic. c. unit elastic. d. downward sloping
a
If demand is elastic, we would expect a. a big change in quantity when price changes. b. a small change in quantity when price changes. c. the demand curve to shift when price changes. d. supply to be elastic as well
a
If supply increases, we would expect that the quantity demanded at $50 a. will equal 150. b. will be greater than 150. c. will be less than 150. d. There is not enough information to say
a
If the demand for bread increases, what would we expect to happen to the quantity of wheat supplied? a. It to go up. b. It to go down. c. It to be unchanged, because demand has been affected, not supply. d. It to go up, but by less than the quantity demanded
a
If the firm charges a price of $16, its total revenue equals a. $800 b. $1000 c. $1600 d. $2000
a
If the supply of peanut butter increases, what would we expect to happen in the market for jelly (a complement)? a. Demand to increase. b. Demand to decrease. c. Supply to increase. d. Supply to decrease. e. Neither the demand nor the supply of jelly would be affected.
a
If you calculate the elasticity of demand for a cut in the price of unicorns from $6 to $5, you will find that demand is a. Inelastic b. elastic. c. unit elastic. d. There is not enough information to say. e. The elasticity of demand is unaffected by the supplier's choice of price
a
Supply and demand are always more elastic in the long-run because a. a greater range of actions can be taken in longer periods. b. price generally declines over time. c. price generally rises over time. d. people value wealth more in longer periods. e. incomes rise over time
a
Suppose the price of tea increases. As a result, we would expect to see a. an increase in the demand for coffee (a substitute). b. an increase in the demand for sugar (a complement). c. a decrease in the demand for tea. d. All of the above
a
Suppose you sell jewelry boxes, and a business consultant you have hired determines that demand for your product is elastic. If you want to increase your total revenue, you should therefore a. lower the price of your jewelry boxes. b. raise the price of your jewelry boxes. c. increase the supply of your jewelry boxes. d. lower your production costs.
a
The demand for potatoes tends to be less elastic than the demand for movies because a. potatoes have many good substitutes. b. many people don't like potatoes. c. movies have better and closer substitutes. d. given the choice, most people prefer potatoes to movies
a
The supply curve for pasta reflects a. the cost of the wheat from which pasta is made. b. the perceived health benefits of pasta. c. the price of spaghetti sauce, a complement. d. All of the above.
a
The two graphs above show (in order from top to bottom) a. An increase in demand, a decrease in supply b. An increase in supply, a decrease in demand c. A decrease in demand, a decrease in supply d. An increase in supply, an increase demand e. None of the above
a
What happens in the market for ink when the price of the lead used to make pencils rises? a. Demand increases. b. Demand decreases. c. Supply increases. d. Supply decreases. e. None of the above, because ink isn't used in lead
a
Which is most likely to be the long-run supply curve? a. S1 b. S3 c. Either is equally likely. d. There is not enough information to say
a
Which of the following is true? a. It takes a higher price to get 75 units supplied than to get 75 units demanded. b. It takes a higher price to get 75 units demanded than to get 75 units supplied. c. 75 units is the equilibrium quantity in this market. d. All of the above.
a
Which of the following will not decrease the supply of burritos. a. the discovery that eating burritos causes cancer. b. a rise in the price of the tortillas used to make burritos. c. a rise in the price of wages paid to burrito-making employees. d. All of the above will decrease the supply of burritos
a
Which of the following will not increase the demand for burritos? a. A big burritos sale. b. The discovery that eating burritos cures cancer. c. A rise in the price of burgers, a substitute. d. A fall in the price of guacamole, a complement. e. All of the above will increase the demand for burritos
a
"A doubling in gasoline prices has not reduced purchases at all." The speaker evidently believes that demand for gasoline is a. perfectly elastic. b. perfectly inelastic. c. greater than supply. d. less than supply. e. unit elastic.
b
A demand curve indicates the value consumers get from a good. It is measured as a. the benefits people receive less the cost. b. the quantity people will buy at various prices. c. the prices people prefer to pay. d. All of the above
b
A rational decision-maker takes action only if a. the average benefit is greater than the average cost. b. the marginal benefit is greater than the marginal cost. c. the total benefit is positive. d. society will be made better off. e. All of the above
b
At what which of the following prices will the most kumquats actually be sold (i.e., change hands from seller to buyer)? a. 1. b. 3. c. 5. d. 7.
b
If Clemson decides to increase tuition so as to raise its revenues, it must believe that a. the demand for education at Clemson is elastic. b. the demand for education at Clemson is inelastic. c. the demand for education at Clemson has increased. d. the supply of education at Clemson has increased
b
If equilibrium price in a market has risen from $10 to $25 and the equilibrium quantity has fallen from 50,000 to 35,000, we would know that a. demand has increased. b. supply has decreased. c. demand has decreased. d. supply has increased. e. both supply and demand have decreased
b
If price rises from 10 to 12 and quantity demanded falls by 12%, we know that demand is a. elastic. b. inelastic. c. unit elastic. d. downward sloping. e. There is not enough information to say
b
If supply increases, we would expect that the quantity supplied at $50 a. will equal 20. b. will be greater than 20. c. will be less than 20. d. There is not enough information to say
b
If the demand function is Q D = 40-2P and price rises by 10, what will happen to quantity demanded? a. It will fall by 10. b. It will fall by 20. c. It will fall, but in order to determine the precise amount, we would need a supply function. d. Demand will fall, but quantity demanded will not change
b
If the elasticity of demand of for camera film is 2.6, and the price of film is raised by 10 percent, a. the quantity demanded will fall by 2.6 percent. b. the quantity demanded will fall by 26 percent. c. the quantity demanded will fall by 260 percent. d. the quantity demanded must fall, but we need more information to determine by how much
b
If the supply of a good is absolutely fixed (like wine bottled in 1983) a. the supply curve will be horizontal. b. the supply will be vertical. c. the supply curve will slope downward. d. the good will have no supply curve
b
If the supply of peanut butter increases, what would we expect to happen in the market for tuna (a substitute for peanut butter on sandwiches)? a. Demand to increase. b. Demand to decrease. c. Supply to increase. d. Supply to decrease. e. Neither the demand nor the supply of tuna would be affected.
b
If the supply of snowboards increases, what would we expect to happen in the market for skis (a substitute)? a. Demand to increase. b. Demand to decrease c. Supply to increase. d. Supply to decrease. e. Neither the demand nor the supply of skis would be affected
b
If the supply of tea increases, what would we expect to happen in the market for coffee (a substitute)? a. Demand to increase. b. Demand to decrease. c. Supply to increase. d. Supply to decrease. e. Neither the demand nor the supply of tea would be affected
b
If you discover that the equilibrium price and quantity of soybeans has risen, you would conclude that a. demand has decreased. b. demand has increased. c. supply has decreased. d. supply has increased. e. None of the above
b
Which of the following will NOT increase the demand for porcelain tea sets? a. A rise in the price of china tea sets (a substitute). b. A fall in the price of tea (a complement). c. A rise in income, and porcelain tea sets are a normal good. d. A fall in the price of porcelain. e. All of the above will increase demand for porcelain tea sets
d
Which of the following will NOT increase the quantity of coffees demanded? a. The discovery that coffee cures cancer. b. A rise in income, and coffee is a normal good. c. A great coffee harvest d. All of the above will increase the quantity of coffee demanded.
d
A supply curve shows a. the relationship between price and quantity supplied. b. how many units of the good will be supplied at various prices. c. the cost of supplying the good. d. All of the above.
d
Buyers and sellers communicate primarily a. through surveys. b. through government agencies. c. through advertising. d. through their willingness to buy and sell at various prices. e. All of the above
d
Doug likes tomatoes now more than he did last year. Therefore a. Doug must have received an increase in income. b. tomatoes must be a necessity. c. the supply of tomatoes has increased. d. Doug is willing to pay more for tomatoes than last year.
d
If I tell you that the price of cameras has fallen and the number sold has fallen rather than risen, you would know that a. the law of demand has been violated. b. supply is greater than demand. c. demand is greater than supply. d. the demand for cameras has decreased.
d
If quantity demanded falls by 100,000 when price rises by 2 cents, we know that a. demand is elastic. b. demand is inelastic. c. demand is unit elastic. d. there is not enough information to calculate elasticity.
d
If the price of peanut butter increases and the demand for jelly increases as a result, then a. peanut butter is an inferior good and jelly is a normal good. b. peanut butter and jelly are complements. c. peanut butter is a normal good and jelly is an inferior good. d. peanut butter and jelly are substitutes. e. the law of demand has been violated
d
If we raise price by 10 cents and quantity demanded falls by 10,000 units, we would conclude that a. demand is elastic. b. demand is inelastic. c. demand is unit elastic. d. there is not enough information to determine whether demand is elastic or not.
d
In the market pictured above, at a price of $5 a. the quantity demanded is less than the quantity supplied. b. there is excess supply. c. the quantity demanded is less than 75. d. All of the above.
d
Suppose that the supply of root beer (a complement) increases and the price of cream (an input) falls. What would you expect to happen to the market price and quantity of ice cream? a. The equilibrium price would increase, but the impact on equilibrium quantity would be uncertain. b. The equilibrium price would decrease, but the impact on equilibrium quantity would be uncertain. c. Both equilibrium price and quantity would increase. d. Equilibrium quantity would increase, but the impact on equilibrium price would be uncertain. e. Equilibrium quantity would decrease, but the impact on equilibrium price would be uncertain
d
The demand curve represents _____ while the supply curve represents _____. a. increases, decreases. b. decreases, increases. c. prices, quantities. d. benefits, costs.
d
The demand for this product a. is elastic. b. is inelastic. c. is unit elastic. d. may be elastic or inelastic, depending on the price.
d
What does the graph show has happened in the market? a. Demand has increased; supply has decreased. b. Demand has decreased; supply has increased. c. Demand has increased; supply has increased. d. Demand has decreased; supply has decreased.
d
What would an increase in the price of diamonds do to the supply of diamond rings? a. Nothing; price changes quantity supplied, not supply. b. Nothing; the demand for diamond rings would change, not the supply. c. Supply would increase because diamond rings are a luxury good. d. Supply would decrease.
d
Which of the following will increase the quantity of photocopiers supplied? a. A fall in the price of photocopy paper (a complement). b. A rise in the price of scanners (a substitute). c. New technology that makes it possible to manufacture photocopiers much more cheaply. d. All of the above.
d
Which of the following would best explain the change in the strawberry market? a. The price of blueberries, a substitute, rose. b. There was a great strawberry crop. c. A drought killed half the strawberry plants. d. Strawberry allergies have killed 100 people.
d
A normal good is one for which a. demand increases when income increases. b. demand increases when price decreases. c. demand increases when tastes change. d. demand is elastic. e. demand is inelastic.
a
Anything that increases the value that potential buyers receive from a good may be expected to a. increase demand. b. increase supply. c. increase both demand and supply. d. increase demand but decrease supply.
a
Assume the two graphs refer to a single market, the market for widgets. As a result of the changes, we would expect a. Higher widget prices b. Lower widget prices c. No change in the price of widgets d. Not enough information to say
a
At what price is quantity demanded greatest? At what price is quantity supplied greatest? a. 1, 7 b. 3, 5 c. 5, 3 d. 7, 1
a
Demand for maple nut ice cream tends to be elastic because a. other flavors of ice cream are almost perfect substitutes. b. the market is very broadly defined. c. there are few close substitutes. d. it must be eaten quickly
a
Elasticity of demand depends on a. the closeness of substitutes. b. whether the good is normal or inferior. c. the law of demand. d. All of the above
a
Jon needs 200 cases of Cristal champagne to cater a wedding. First, Jon visits all the wine shops located within ten miles, but can't get enough cases. Then Jon visits all wine shops located between 10 and 50 miles, but still is short a few cases. Finally Jon visits all wine shops located within 50 and 100 miles, and gets the last few cases he needs. Jon's struggles illustrate a. the law of demand. b. the law of supply. c. the principal of absolute advantage d. that sometimes the gains from trade aren't worth it
b
The demand for Kellogg's Corn Flakes tends to be very elastic because a. there are very few close substitutes. b. many other cereals are almost perfect substitutes. c. if you leave them for too long, they become stale. d. the price of milk has been low in recent years
b
The elasticity of demand for a price cut from 10 to 9 is a. 4 b. 2.5 c. 2 d. 1.5 e. 0.5
b
The firm is currently charging a price of 8. If it wants to increase its sales revenue, it should a. raise price to 9. b. lower price to 7. c. leave the price at 8, because it will have excess demand at a lower price and excess supply at a higher price. d. either raising or lowering price will increase total revenue. e. neither raising or lowering price will increase total revenue
b
Which of the following is the most plausible explanation for the changes? a. The price of basketball players rose while the price of basketballs fell. b. The price of basketball players rose while the price of NHL hockey games (a substitute) fell. c. The price of basketball players fell while income increased, and NBA basketball is a normal good. d. The price of hockey players rose while the cost of basketball jerseys fell
b
Which of the following will increase the demand for frisbees? a. A fall in the cost of plastics (an input) b. A rise in the price of nerf footballs (a substitute). c. A fall in the price of frisbees. d. New technology that allows frisbees to be made more cheaply. e. All of the above.
b
Which of the following would make the demand for Pepsi more elastic? a. An improvement in the Pepsi formula. b. The launching of five new brands of cola by five different companies. c. Coca Cola going bankrupt. d. Cola is discovered to reduce the risk of colon cancer. e. Pepsi is discovered to reduce the risk of colon cancer
b
Which of the following would make the demand for education at Clemson more elastic? a. An improvement in the quality of Clemson education. b. The founding of four more universities in South Carolina. c. A fall in the price of textbooks. d. A rise in local land prices
b
Which of the following would you expect to have the least elastic demand? a. wheat bread made by Pepperidge Farm. b. headache medicine. c. wheat bread made by Pepperidge Farm and sold at Bi-Lo d. There is not enough information to determine.
b
Demand for a "necessity" is likely to be ______, while demand for a "luxury" is likely to be _____. a. elastic, elastic. b. elastic, inelastic. c. inelastic, either elastic or inelastic. d. elastic, either inelastic or elastic
c
For which of the following is demand likely to be the most elastic? a. Bread b. Sourdough bread c. BiLo's Wheat sourdough bread d. All will have equally elastic demand
c
If quantity supplied responds only slightly to a change in price, then a. supply is elastic b. an increase in price will not shift the supply curve much. c. supply is inelastic. d. supply is perfectly inelastic
c
If someone tells you that they "can't live without" something, you would assume, a. that they will die if they don't have it. b. that their demand is likely to be elastic. c. that their demand is likely to be inelastic. d. that the law of demand won't apply to them. e. that they have excess demand
c
If the supply of "roots" (an input) increases, what would we expect to happen in the market for root beer? a. Demand to increase. b. Demand to decrease. c. Supply to increase. d. Supply to decrease
c
If then you discover that you were mistaken, and that, although the price had risen, the equilibrium quantity of soybeans has actually fallen , you would know that a. demand has decreased. b. demand has increased. c. supply has decreased. d. supply has increased. e. None of the above
c
In the graph above, for which curve is supply the least elastic at price P 1 ? a. S1 b. S2 c. S3 d. It is impossible to tell without more information
c
It is considering raising its price to $17. If it does so a. its total revenue will increase, because the percent increase in price is greater than the percent decrease in quantity demanded. b. its total revenue will increase, because the percent increase in price is less than the percent decrease in quantity demanded. c. its total revenue will decrease, because the percent increase in price is less than the percent decrease in quantity demanded. d. its total revenue will decrease, because the percent increase in price is greater than the percent decrease in quantity demanded.
c
The "law of demand" a. determines the equilibrium price. b. doesn't hold for scarce goods. c. says that people buy less of a good when price rises. d. applies only to consumer goods
c
The fact that more teachers per student are employed now than 20 years ago (i.e., equilibrium quantity has increased) tells us that a. demand has increased. b. supply has increased. c. either demand or supply has increased. d. demand has decreased. e. supply has decreased
c
We therefore know that at the price of 8, demand for the product a. will increase if price falls. b. decrease if price rises. c. is elastic. d. is inelastic. e. All of the above.
c
What happens in the market for cream cheese when the price of cream (an input) falls? a. Demand increases. b. Demand decreases. c. Supply increases. d. Supply decreases e. Both b and d
c
What would happen in the market for interior house paint if the price of paintbrushes falls while the price of wallpaper (a substitute) rises? a. The equilibrium price would increase, but the impact on quantity would be uncertain. b. The equilibrium price would decrease, but the impact on quantity would be uncertain. c. Both equilibrium price and quantity would increase. d. The equilibrium quantity would increase but the impact on price would be uncertain. e. The equilibrium quantity would decrease but the impact on price would be uncertain
c
When the demand for something falls a. price rises and quantity falls. b. price falls and quantity rises. c. both price and quantity fall. d. price rises, but the effect on quantity is uncertain. e. quantity falls, but price stays the same
c
Which of the following is likely to have the least elastic supply? a. Coca Cola. b. soft drinks. c. paintings by Rembrandt. d. automobiles. e. Oil
c
Which of the following will NOT increase the demand (shift the demand curve) for coffee? a. The discovery that coffee cures cancer b. A rise in income, and coffee is a normal good. c. A great coffee harvest. d. All of the above will increase the demand for coffee
c
Which of the following will increase the supply of photocopiers? a. A fall in the price of photocopy paper (a complement). b. A rise in the price of scanners (a substitute). c. New technology that makes it possible to manufacture photocopiers much more cheaply. d. All of the above
c
Which of the following will lead to an increase in the demand for satellite TV? a. A fall in consumer income (satellite TV is a normal good). b. A big satellite TV sale. c. A rise in the price of Netflix (a substitute). d. All of the above
c
hich of the following will increase the demand for tea? a. A blight destroys 30% of the tea crop in India. b. Wonderful weather doubles the usual tea crop. c. A rise in the price of coffee. d. New technology allows tea to be made more cheaply. e. All of the above
c
If price is raised by $2 and quantity falls by 20 percent, the elasticity of demand a. equals 2. b. equals 10. c. equals 20. d. is greater than 1. e. can not be determined without more information.
e
In other words, going from a price of $16 to a price of $17, demand is a. upward sloping. b. equal to supply. c. going down. d. inelastic. e. elastic.
e
Which of the following is/are true? a. A reduction in the price of apricots will increase the demand for apricots. b. A reduction in the price of apricots will decrease the demand for apricots. c. An increase in consumer income will decrease the demand for apricots if apricots are a normal good. d. All of the above. e. None of the above.
e