Microeconomics Quiz 3

8. A positive cross-price elasticity of demand for two goods means a. the goods are complements. b. the goods are inferior. c. the goods are substitutes. d. the goods are normal.

C

15. Which of the following could be the price elasticity of demand for a good for which a decrease in price would increase revenue? a. 0 b. 0.2 c. 1 d. 2.1

D

1. The price elasticity of demand measures the a. response in quantity demanded to a change in price. b. direction of the shift in the demand curve in response to a market event. c. size of the shortage created by the increase in demand. d. responsiveness of quantity demanded to a change in income.

A

11. Refer to Figure 5-14. Along which of these segments of the supply curve is supply most elastic? a. AB b. CD c. DH d. GH

A

3. For a good that is a necessity, demand a. tends to be inelastic. b. tends to be elastic. c. has unit elasticity. d. cannot be represented by a demand curve in the usual way.

A

4. Which of the following could be the cross-price elasticity of demand for two goods that are complements? a. 1.0 b. -0.8 c. 0 d. any positive number

B

9. Suppose that two supply curves pass through the same point. One is steep, and the other is flat. Which of the following statements is correct? a. The flatter supply curve represents a supply that is inelastic relative to the supply represented by the steeper supply curve. b. The steeper supply curve represents a supply that is inelastic relative to the supply represented by the flatter supply curve. c. Given two prices with which to calculate the price elasticity of supply, that elasticity would be the same for both curves. d. A decrease in demand will increase total revenue if the steeper supply curve is relevant, while a decrease in demand will decrease total revenue if the flatter supply cure is relevant.

B

12. Refer to Figure 5-17. Which of the following statements is not correct? a. Supply curve A is perfectly inelastic. b. Supply curve B is perfectly elastic. c. Supply curve C is unit elastic. d. Supply curve D is more elastic than supply curve C.

C

7. Refer to Figure 5-7. For prices above $8, demand is price a. elastic, and total revenue will rise as price rises. b. inelastic, and total revenue will rise as price rises. c. elastic, and total revenue will fall as price rises. d. inelastic, and total revenue will fall as price rises

C

10. Refer to Figure 5-13. Over which range is the supply curve in this figure the least elastic? a. $16 to $40 b. $40 to $100 c. $100 to $220 d. $220 to $430

D

5. For an inferior good a. the income elasticity of demand is positive. b. the cross-price elasticity of demand is negative. c. the price elasticity of demand is positive. d. the income elasticity of demand is negative

D

14. If the demand for donuts is elastic, then a decrease in the price of donuts will a. increase total revenue of donut sellers. b. decrease total revenue of donut sellers. c. not change total revenue of donut sellers. d. There is not enough information to answer this question.

A

6. Refer to Figure 5-2. As price falls from Pa to Pb, which demand curve represents the most elastic demand? a. D1 b. D2 c. D3 d. All of the above are equally elastic.

A

13. Refer to Figure 5-3. Which demand curve is perfectly elastic? a. A b. B c. C d. D

D

2. If the price elasticity of demand for a good is 0.80, then which of the following events is consistent with a 4 percent decrease in the quantity of the good demanded? a. a 0.2 percent increase in the price of the good b. a 3.2 percent increase in the price of the good c. a 4.8 percent increase in the price of the good d. a 5 percent increase in the price of the good

D