Module 3 quizzes

B

When Audrina raised the price of her homemade cookies, her total revenue increased. This suggests that the demand for Audrina's cookies is elastic. A. TRUE B. FALSE

D

Which of the following goods is likely to have the highest price elasticity of demand? A.Gasoline B.Salt C.Life-saving drugs D.Pizza

C

A budget constraint A.represents the bundles of consumption that make a consumer equally happy. B.reflects the desire by consumers to increase their income. C.refers to the limited amount of income available to consumers to spend on goods and services. D.shows the prices that a consumer chooses to pay for products he consumes.

C

A budget constraint is a straight line because: A.a consumer has a limited money income. B.the opportunity cost of buying each of the goods changes along the constraint. C.a consumer faces a fixed price of both goods that do not change with changes in consumption. D.the tastes and preferences of the consumer change along the constraint.

C

A change in the price of a good has two effects on the quantity consumed. What are these effects? A.the consumption effect and expenditure effect B.the utility effect and the budget effect C.the income effect and the substitution effect D.the total utility effect and marginal utility effect

B

A change in the slope of a budget constraint indicates: A.a change in the consumer's income. B.a change in the price of either good that causes a change in the opportunity cost. C.a change in the price of either good without a change in the opportunity cost. D.a change in the consumer's tastes and preferences.

A

A decrease in the price of either one or the other good will cause a consumer's budget constraint to: A.pivot rightward (pivot out). B.shift leftward. C.shift rightward. D.pivot leftward (pivot in).

B

A good is said to have a relatively elastic demand if the value of price elasticity is: A.equal to 0. B.greater than 1. C.between 0.5 and 1. D.between 0 and 0.5.

B

A movement along the demand curve for toothpaste would be caused by A.a change in the price of toothbrushes. B.a change in the price of toothpaste. C.a change in population. D.a change in consumer income.

B

A service station owner in Staten Island, New York, was worried that raising the price of gasoline would cause the quantity demanded to fall by so much that he would be in a worse situation than if he did not raise the price. If raising the price of gasoline would cause the owner to receive less total revenue from the sale of gasoline, the demand for gasoline is A.perfectly inelastic. B.elastic. C.inelastic. D.unit elastic.

B

Cross-price elasticity of demand is calculated as the A.percentage change in quantity sold divided by percentage change in buyers' incomes. B.percentage change in quantity demanded of one good divided by percentage change in price of a different good. C.percentage change in quantity supplied divided by percentage change in price of a good. D.percentage change in quantity demanded divided by percentage change in price of a good.

A

If the demand for a product is perfectly inelastic, a decrease in the price of the product A.will decrease total revenue. B.will increase total revenue. C.will not change total revenue. D.any of the above are possible.

B

If the demand for a steak is unit elastic, then A.quantity demanded does not respond to changes in price. B.the percentage change in quantity demanded is equal to the percentage change in price. C.the percentage change in quantity demanded is 100 percent greater than the percentage change in price (in absolute value). D.the percentage change in quantity demanded is 1 percent greater than the percentage change in price.

A

Opera Estate Girls' School is considering increasing its tuition to raise revenue. If the school believes that raising tuition will increase revenue it is assuming that the demand for attending the school is A.inelastic. B.unit elastic. C.perfectly elastic. D.elastic.

B

The demand schedule for a commodity illustrates how the consumption of a commodity changes with changes in: A.supply. B.its price. C.tastes and preferences. D.income.

B

The income effect of a price change refers to the change in the quantity demanded of a good that results from a change in the price of a complementary product. A. TRUE B. FALSE

D

Which of the following examples best describes the Law of Demand? A.When the price of watches increases, a local manufacturer starts offering more watches for sale. B.When a new anti-tobacco commercial is released, the consumption of tobacco products decreases sharply. C.When John's income doubles, his telephone bill also doubles. D.When the price of bread doubles, John's consumption of bread halves.

A

We can derive the market demand curve for gold earrings A.by adding horizontally the individual demand curves of each gold earring consumer. B.by adding the prices each gold earring consumer is willing to pay for each quantity. C.by adding vertically the quantity demanded of each gold earring consumed at each price. D.only if the tastes of all gold earring consumers are similar.

B

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.unit elastic. B.inelastic. C.elastic. D.perfectly inelastic.

C

Which of the following best describes a good with perfectly elastic demand? A.The quantity demanded of the good is completely unaffected by a price change. B.The demand curve for the good initially slopes upward, reaches its maximum, and then slopes downward. C.Even the smallest increase in the price of the good will cause consumers to stop consuming it completely. D.For a given price change, the percentage change in quantity demanded will be less than the percentage change in its price.

A

Which of the following best describes the difference between a demand curve and a demand schedule? A.A demand curve is a graphical representation of the relationship between the quantity of a good and its price, whereas a demand schedule is a tabular representation. B.A demand curve shows different quantities of a good demanded at different prices, whereas a demand schedule shows different quantities of a good demanded at different incomes. C.A demand curve can be derived from a demand schedule, but a demand schedule cannot be derived from a demand curve. D.A demand curve shows different quantities of a good demanded at different incomes, whereas a demand schedule shows different quantities of a good demanded at different prices.

B

Which of the following factors will NOT cause a shift in the demand for a good? A.A change in the number of consumers B.A change in the market price of the good C.A change in tastes and preferences D.A change in consumer incomes

A

Which of the following goods is likely to have the lowest price elasticity of demand? A.Life-saving drugs B.Chocolates C.Potato chips D.Decorative flowers

A

Which of the following is likely to shift the market demand curve for school textbooks to the right?A.An increase in the enrollment rates in high schools B.A fall in the total income of all consumers C.An increase in school tuition fees D.A fall in the price of school textbooks

C

Which of the following examples best describes the Law of Demand? A.When the price of gasoline increased, the demand for cars fell. B.When Alex received a pay hike, his consumption of all goods increased. C.When the price of tea increased, the quantity demanded of tea decreased. D.When the price of Nokia phones increased, the demand for Samsung phones increased.

D

Which of the following is the formula to calculate arc elasticity of demand? A.Arc elasticity of demand = [(Q2 + Q1) / (Q2/2)] / [(P2 + P1) / (P2/2)] B.Arc elasticity of demand = [(Q2 - Q1) / (Q2/2)] / [(P2 - P1) / (P2/2)] C.Arc elasticity of demand =[(Q1 - Q2) / (Q2 + Q1)] / [(P1 - P2) / (P2 + P1)] D.Arc elasticity of demand = [(Q2 - Q1) / (Q2+ Q1)/2] / [(P2 - P1) / (P2 + P1)/2]

D

Which of the following items is likely to have the highest income elasticity of demand? A.a tank of gasoline B.a bus ride C.a meal at Taco Bell D.a vacation home in the Swiss Alps

A

Which of the following pairs of goods are likely to be considered complements? A.Pens and writing pads B.Nokia and Samsung cell phones C.Motorcycles and typewriters D.Laptops and electric heaters

B

Which of the following statements about the price elasticity of demand along a downward-sloping linear demand curve is true? A.It is perfectly elastic at very high prices and perfectly inelastic at very low prices. B.It is elastic at high prices and inelastic at low prices. C.It is inelastic at high prices and elastic at low prices. D.It is unit elastic throughout the demand curve.

C

As the ________ increases, ________. A.quantity demanded of a good; its price increases B.price of a good; its quantity demanded increases C.price of a good; its quantity demanded decreases D.quantity demanded of a good; its price decreases

C

Assume that an individual spends his income on sweaters and shirts. If the price of a sweater increases: A.the opportunity cost of buying sweaters decreases. B.the opportunity cost of buying shirts increases. C.the opportunity cost of buying sweaters increases. D.There is no change in the opportunity cost of consuming either good.

A

Demand for a luxury item, such as a yacht, is likely to be A.both income elastic and price elastic. B.both income inelastic and price inelastic. C.income inelastic and price elastic. D.income elastic and price inelastic.

B

Elasticity is: A.the product of the percentage change in two variables. B.the ratio of the percentage change in two variables. C.the difference of the percentage change in two variables. D.the sum of the percentage change in two variables.

B

If Sandra and Mary consume 12 bottles of wine combined and the market demand for wine is 19 bottles, David's consumption of wine is A.12 bottles. B.7 bottles. C.4 bottles. D.9 bottles.

B

If a 1% change in the price of a good causes a 1% change in the quantity demanded, the good has an elasticity of demand: A.less than 1. B.equal to 1. C.greater than 1. D.equal to 0.

B

If a 35 percent increase in price of golf balls led to an 42 percent decrease in quantity demanded, then the demand for golf balls is A.perfectly elastic. B.relatively elastic. C.relatively inelastic. D.unit elastic.

D

If a consumer purchases any combination of goods and services on his ________, he will exhaust his income completely. A.demand schedule B.indifference curve C.demand function D.budget constraint

B

If a decrease in income leads to a decrease in the demand for mac and cheese, then mac and cheese is A.a necessity. B.a normal good. C.a neutral good. D.a complement.

C

If a firm raised its price and discovered that its total revenue fell, then the demand for its product is A.perfectly inelastic. B.perfectly elastic. C.relatively elastic. D.relatively inelastic.

D

If demand is perfectly elastic, the absolute value of the price elasticity coefficient is A.zero. B.one. C.equal to the absolute value of the slope of the demand curve. D.infinity.

A

If quantity of milk is measured on the horizontal axis and quantity of juice is measured on the vertical axis, a decrease in the price of milk will cause the budget constraint to: A.pivot rightward (pivot out) along the vertical axis. B.shift to the left. C.shift to the right. D.pivot rightward (pivot out) along the horizontal axis.

C

If quantity of tea is measured on the horizontal axis and quantity of coffee is measured on the vertical axis, an increase in the price of coffee will cause the budget constraint to: A.pivot leftward (pivot in) along the horizontal axis. B.pivot rightward (pivot out) along the horizontal axis. C.pivot leftward (pivot in) along the vertical axis. D.pivot rightward (pivot out) along the vertical axis.

A

If the absolute value of the price elasticity of demand for aspirin equals 0.8 then A.the demand for aspirin is inelastic. B.aspirin has few substitutes. C.the demand for aspirin is elastic. D.aspirin is a normal good.

B

If the demand for a steak is unit elastic, then A.the percentage change in quantity demanded is 100 percent greater than the percentage change in price (in absolute value). B.the percentage change in quantity demanded is equal to the percentage change in price. C.quantity demanded does not respond to changes in price. D.the percentage change in quantity demanded is 1 percent greater than the percentage change in price.

D

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

B

If the price of a good increases, ________. A.the budget constraint shifts to the right B.the consumer surplus decreases C.the budget constraint shifts to the left D.the consumer surplus increases

C

If the price of steel increases drastically, the quantity of steel demanded by the building industry will fall significantly over the long run because A.buyers of steel are less sensitive to a price change if they have more time to adjust to the price change. B.profits will fall by a greater amount in the long run than in the short run. C.buyers of steel are more sensitive to a price change if they have more time to adjust to the price change. D.sales revenue in the building industry will fall sharply.

A

If the price of the good measured along the vertical axis increases without a change in the price of the good measured along the horizontal axis, the consumer's budget constraint: A.pivots leftward (pivot in) without a change in the intercept on the horizontal axis. B.pivots rightward (pivot out) without a change in the intercept on the horizontal axis. C.shifts to the right. D.shifts to the left.

C

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative, demand for using the toll road must be A.elastic. B.perfectly elastic. C.inelastic. D.unit elastic.

D

In June, buyers of titanium expect that the price of titanium will fall in July. What happens in the titanium market in June, holding everything else constant? A.The demand curve shifts to the right. B.The quantity demanded increases. C.The quantity demanded decreases. D.The demand curve shifts to the left.

D

In order to prove that Motrin and Ibuprofen are substitutes, one should measure the ________ and get a ________. A.price elasticity of demand; number less than 1 (in absolute value) B.price elasticity of demand; number greater than 1 (in absolute value) C.cross-price elasticity; negative number D.cross-price elasticity; positive number

D

Studies have shown links between calcium consumption and a reduction in osteoporosis. How does this affect the market for calcium? A.The calcium demand curve shifts to the left because this new information will increase the price of calcium. B.The calcium supply curve shifts to the left because this new information will increase the price of calcium. C.The calcium supply curve shifts to the right because of a change in tastes in favor of calcium. D.The calcium demand curve shifts to the right because of a change in tastes in favor of calcium.

D

Suppose Tinsel Town Videos lowers the price of its movie club membership by 10 percent and as a result, CineArts Videos experienced a 16 percent decline in its movie club membership. What is the value of the cross-price elasticity between the two movie club memberships? A.-1.6 B.-0.625 C.0.625 D.1.6

A

Suppose that when the price of hamburgers decreases, the Landry family decreases their purchases of chicken nuggets. To the Landry family hamburgers and chicken nuggets are: A.substitutes. B.normal goods. C.complements. D.inferior goods.

A

Suppose the value of the price elasticity of demand is -3. What does this mean? A.A 1 percent increase in the price of the good causes quantity demanded to decrease by 3 percent. B.A 1 percent increase in the price of the good causes quantity demanded to increase by 3 percent. C.A 3 percent increase in the price of the good causes quantity demanded to decrease by 1 percent. D.A $1 increase in price causes quantity demanded to fall by 3 units.

B

Suppose when Nablom's Bakery raised the price of its breads by 10 percent, the quantity demanded fell by 15 percent. What was the effect on sales revenue? A.Sales revenue increased. B.Sales revenue decreased. C.Sales revenue remained unchanged. D.It cannot be determined without information on prices.

B

The Internet has created a new category in the book selling market, namely, the "barely used" book. How does the availability of barely used books affect the market for new books? A.The supply curve for new books shifts to the left. B.The demand curve for new books shifts to the left. C.The supply curve for new books shifts to the right. D.The demand curve for new books shifts to the right.

A

The buyers of a good will want to purchase it as long as their willingness to pay for the good is: A.greater than or equal to the price. B.greater than zero. C.less than the price. D.equal to zero.

D

The demand by all the consumers of a given good or service is the ________ for the good or service. A.scheduled demand B.law of demand C.quantity demanded D.market demand

B

The income effect of an increase in the price of peaches is A.the change in the quantity of other fruit demanded that results from the impact of the price change on purchasing power, holding all other factors constant. B.the change in the quantity of peaches demanded that results from the effect of the change in price on consumer purchasing power, holding all other factors constant. C.the change in the quantity of peaches demanded that results from the price increase, making peaches more expensive than other fruit, holding constant the effect of the price change on consumer purchasing power. D.None of the above.

C

The law of demand implies, holding everything else constant, that as the price of bagels increases, A.the demand for bagels will decrease. B.the demand for bagels will increase. C.the quantity of bagels demanded will decrease. D.the quantity of bagels demanded will increase.

C

The price elasticity of demand for Stork ice cream is -4. Suppose you're told that following a price increase, quantity demanded fell by 10 percent. What was the percentage change in price that brought about this change in quantity demanded? A.40 percent B.25 percent C.2.5 percent D.0.4 percent

B

The quantity demanded of a good is: A.always determined by government intervention. B.the amount of a good that buyers are willing to purchase at a given market price. C.the amount of a good that sellers are willing to supply at a given market price. D.determined independent of the market price.

C

The restriction that a consumer's total expenditure on goods and services purchased cannot exceed the income available is referred to as A.maximizing behavior. B.the price constraint. C.the budget constraint. D.economizing behavior.

B

The slope of a budget constraint represents: A.the price of the good measured along the vertical axis. B.the opportunity cost of one good in terms of another. C.the price of the good measured along the horizontal axis. D.the money income of the consumer.

D

The slope of a demand curve is not used to measure the price elasticity of demand because: A.the slope of the demand curve does not tell us how much quantity changes as price changes. B.the slope of a linear demand curve is not constant. C.the slope of a line cannot have a negative value. D.the measurement of slope is sensitive to the units chosen for price and quantity.

D

Total revenue equals A.price per unit times change in quantity sold. B.change in price per unit times quantity sold. C.price per unit times quantity supplied. D.price per unit times quantity sold.

D

Which of the following statements about the price elasticity of demand is correct? A.The elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good. B.The absolute value of the elasticity of demand ranges from zero to one. C.Demand is more elastic the smaller the percentage of the consumer's budget the item takes up. D.Demand is more elastic in the long run than it is in the short run.

C

Which of the following statements is true? A.Whenever a firm raises its price its total revenue will increase. B.Total revenue will equal zero when the demand for a product is unit elastic. C.When a firm lowers its price its total revenue may either increase or decrease. D.Whenever a firm increases its quantity sold its revenue will increase.

D

Which of the following statements is true? A.If the price of a good is lowered and total revenue decreases, demand is elastic. B.If the price of a good is lowered and total revenue increases, demand is inelastic. C.If the price of a good is raised and total revenue does not change, demand is perfectly elastic. D.If the price of a good is raised and total revenue increases, demand is inelastic.

B

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

A

Which of the following will lead to a change in the opportunity cost of buying a pen and a pencil? A.A twofold increase in the price of pens and a threefold increase in the price of pencils B.An increase in the consumer's income C.A decrease in the consumer's income D.A twofold increase in the prices of both pens and pencils

B

________ is the difference between the willingness to pay and the price paid for a good. A.Revenue B.Consumer surplus C.Seller's profit D.Producer surplus