Economics - Chapter 4
An increase in demand will cause the demand curve to: a) move to the right, b) move to the left, c) become more vertical, d) become more horizontal
A
Demand for luxuries, tends to be: a) elastic, b) inelastic, c) indeterminate, d) unit elastic
A
For demand to exist, there must be: A) a desire and ability to buy, B) a supply of the product in the market, C) a price that is low enough to permit all consumers to afford the product, D) all of these
A
In accordance with the law of supply, if the price doubled, the quantity supplied would generally: a) rise, b) fall, c) double, d) drop by half
A
Which of the following is not a determinant of demand? A) production costs, B) consumer expectations, C) prices of related goods, D) tastes and preferences of consumers
A
A change in demand means that: a) more will be bought at a lower price, b) a changed amount will be bought at the same given prices, c) less will be purchased at a higher price, d) the quantity demanded changes as the price changes
B
An increase in supply will cause the supply line to: a) move to the left, b) move to the right, c) become more vertical, d) become more horizontal
B
Consider the market for bicycles. If a dealer cuts prices by 10% and sells 20% more bikes, then demand for bicycles is: a) inelastic, and total revenue will increase, b) elastic, and total revenue will increase, c) inelastic, and total revenue will decrease, d) elastic, and total revenue will decrease
B
If a 2% change in price is followed by a 10% change in quantity sold, the coefficient of price elasticity is: a) 0.2, b) 5.0, c) 8.0, d) 20.0
B
A change in demand would be illustrated by: A) a drop in price, which causes people to buy more; B) an increase in price, which causes people to buy less; C) a change in people's preferences that causes them to buy either more or less than before, D) all of these
C
A demand curve generally: a) is a straight horizontal line, b) is a straight vertical line, c) slopes downward to the right, d) slopes downward to the left
C
According to the total revenue rule, if the coefficient of price elasticity of demand is less than 1 and if price goes: a) up, total revenue stays the same; b) down, total revenue goes up; c) down, total revenue goes down; d) up, total revenue goes down
C
The demand curve for a product slopes downward to the right because: a) demanded as income rises, b) bought as the population grows, c) purchased as price falls, d) demanded as the price of substitutes falls
C
The price elasticity of demand is defined as: A) the absolute change in price divided by the absolute change in quantity demanded, B) the absolute change in quantity demanded divided by the absolute change in price, C) the percentage change in quantity demanded divided by the percentage change in price, D) the percentage change in price divided by the percentage change in quantity demanded
C
When talking about demand, price elasticity refers to the: a) price flexibility in response to demand changes, b) adaptability of suppliers to price changes, c) responsiveness of buyers to price changes, d) ability to stretch one's budget by making wise choices
C
Which of the following is assumed to be constant along a demand curve for pet dogs? A) the quantity of dogs demanded each time period, B) the price of dogs, C) the price of cats, D) the number of dogs people want to buy
C
A supply curve generally: a) is a straight horizontal line, b) is a straight vertical line, c) slopes downward to the right, d) slopes upward to the right
D
If 12 units of a good are sold when the price is $1 per unit, and 8 units are sold at a price of $1.50 a unit, then demand is: a) elastic, b) inelastic, c) of indeterminate elasticity, d) unit elastic
D
The demand for a product at a given time is defined as the: a) desire for it, b) sum spent on it, c) measure of total utility for it, d) amount that would be bought at various prices
D
The law of demand illustrates that as: a) price decreases, demand increases; b) price increases, quantity demanded increases; c) price decreases, quantity supplied increases; d) price decreases, quantity demanded increases
D
A change in demand occurs whenever consumers will purchase more because of a decrease in price
False
Any time the market price moves away from its equilibrium position to a lower price, market action will tend to force it further away from its original equilibrium position
False
If 1,000 units of a particular good were sold for 40¢ per unit, but only 750 units would be purchased for 50¢ per unit, the demand for the good is inelastic
False
If total revenue decreases when a price is decreased, the demand for the commodity is elastic.
False
Price ceilings usually create surpluses since supply is increased
False
Probably the main characteristic of a demand curve is that it slopes upward from left to right
False
The measure of elasticity will be the same at any place along a given straight-line, slanted demand curve
False
The slope of a demand curve is a measure of elasticity
False
It is possible for the change in price of one commodity to lead to a change in demand for another commodity
True
Price elasticity of demand is a measure of consumer responsiveness to a change in price
True
Price elasticity of demand tends to be greater for substitute items than for complementary goods
True
Price floors can create surpluses if price floors are above market prices
True
The demand for a fur coat tends to be more price elastic than the demand for automobile tires
True
The demand for necessities and goods that require a small expenditure tends to be price inelastic
True
Typically, the higher the price of a commodity, the greater the quantity supplied
True
An increase in demand tends to increase both the equilibrium price and the amount of a commodity exchanged
True
Graphically, perfectly elastic demand is represented by a straight horizontal line
True
If supply increases more than demand, equilibrium price will fall
True
If the coefficient of elasticity for a commodity is 1.5 and the price of that commodity is raised, total revenue will decrease.
True
If the cross-elasticity coefficient is negative, then the two goods must be complements
True