Chapters 4-5 Practice Quiz

If the price of milk rises, when is the price elasticity of demand likely to be the lowest? a. Immediately after the price increase. b. One month after the price increase. c. Three months after the price increase. d. One year after the price increase.

a. Immediately after the price increase.

The flatter the demand curve through a given point, the a. greater the price elasticity of demand at that point. b. smaller the price elasticity of demand at that point. c. closer the price elasticity of demand will be to the slope of the curve. d. greater the absolute value of the change in total revenue when there is a movement from that point upward to the left along the demand curve.

a. greater the price elasticity of demand at that point.

Elasticity is a. measure of how much buyers and sellers respond to the changes in market conditions. b. the study of how the allocation of resources affects economic well-being. c. the maximum amount that a buyer will pay for a good. d. the value of everything a seller must give up to produce a good.

a. measure of how much buyers and sellers respond to the changes in market conditions.

A decrease in quantity supplied a. results in a movement downward and to the left along a fixed supply curve. b. results in a movement upward and to the right along a fixed supply curve. c. shifts the supply curve to the left. d. shifts the supply curve to the right.

a. results in a movement downward and to the left along a fixed supply curve.

If American cheese and cheddar cheese are substitutes, then which of the following would increase the demand for cheddar cheese? a. A decrease in the price of cheddar cheese. b. An increase in the price of American cheese. c. A decrease in the price of American cheese. d. Both A and B are correct.

b. An increase in the price of American cheese.

A leftward shift of a demand curve is called a(n) a. increase in demand. b. decrease in demand. c. decrease in quantity demanded. d. increase in quantity demanded.

b. decrease in demand.

When quantity demanded responds strongly to changes in price, demand is said to be a. fluid. b. elastic. c. dynamic. d. highly variable.

b. elastic.

If an increase in income decreases the demand for a good, then the good is a(n) a. substitute good, b. complementary good. c. normal good. d. inferior good.

d. inferior good.

Total revenue a. always increases as price increases. b. increases as price increases, as long as demand is elastic. c. decreases as price increases, as long as demand is inelastic. d. remains unchanged as price increases when demand is unit elastic.

d. remains unchanged as price increases when demand is unit elastic.