Econ 2

Assume that the demand for taxi services is inelastic. If the price of taxi services increases, what will happen to total revenue? a) It will increase. b) It will decrease. c) It will stay the same. d) It will fall to zero.

A

If a 30% change in the price of grape soda leads to a 45% change in quantity demanded, then what is the price elasticity of demand for grape soda? a.0.67 b.1.5 c. 15 d. 75

B

If concerts have a price elasticity of 2, then that means for every 1% decrease in price, the quantity demanded will increase by: a) 0.5%. b) 1%. c) 2%. d) 4%.

C

If the price falls from $3 to $2, and the quantity demanded rises from 200 to 400 units, what is the price elasticity of demand using the midpoint method? a) 0.33 b) 0.6 c) 1.67 d) 3

C

Which of the following is most price elastic? a) Shrimp b) Onions c) Fast-food meals d) Vacation travel

D

If the price elasticity of demand for corn dogs is 1.8, then the price elasticity for corn dogs is considered: a.elastic. b.unitary elastic. c.inelastic. d.perfectly inelastic.

A

If the price elasticity of demand for ice cream is 1.6, then the price elasticity for ice cream is considered: a) elastic. b) inelastic. c) perfectly inelastic. d) unitary elastic.

A

If the price of a good decreases from $32 to $24, and the quantity demanded of the good increases from 80 to 100, then, using the midpoint method, what is the price elasticity of demand for that good? a) 0.78 b) 1 c) 1.2 d) 1.29

A

If the price of apples causes quantity demanded to fall on the elastic portion of the demand curve, what will an increase in price do to total revenue? a) It will fall. b) It will rise. c) It will stay the same because the demand curve is linear. d) It will fall to zero.

A

If the price of gasoline increases by 10% and the quantity demanded falls by 5%, then what is the price elasticity of demand for gasoline? a. 0.5 b.2 c. 5 d.20

A

In general, the smaller the percent of household income spent on a product: a) the lower the elasticity of demand. b) the higher the elasticity of demand. c) the lower the elasticity of supply. d) the higher the elasticity of supply.

A

Stores often advertise "one day only" sales. This technique uses the short time period to make demand more ______________. a) inelastic b) upward sloping c) elastic d) perfectly elastic

A

If the Sunset Café reduces their prices by 20%, and the number of customers increases by 40%, what is the elasticity of demand? a) 0.5 b) 2.0 c) 20 d) 40

B

If the price elasticity of demand for facial tissue is 0.4, then the price elasticity for facial tissue is considered: a) elastic. b) inelastic. c) perfectly inelastic

B

If the price of apples causes quantity demanded to fall on the elastic portion of the demand curve, what will a decrease in price do to total revenue? a) It will fall. b) It will rise. c) It will stay the same because the demand curve is linear. d) It will fall to zero.

B

If the quantity demanded of personal computers increases by 5% every time the price of personal computers decreases by 10%, the price elasticity of personal computers is (remember to report the absolute value): A. 4 B. 0.5 C. 1 D. 2

B

Many new restaurants have opened in Collegetown in recent years. Given this change in supply, what type of demand would result from a large drop in prices for restaurant meals? a) Elastic demand b) Inelastic demand c) A drop in prices does not affect demand.

B

Price elasticity of demand measures how: a) consumers respond to a change in income. b) consumers respond to a change in price. c) sellers respond to a change in revenue. d) sellers respond to a change in price.

B

Since there are many different brands of tablet computers to choose from, the elasticity of demand for the tablet market is: a) inelastic. b) elastic. c) unitary elastic. d) perfectly inelastic.

B

The ratio of the percentage change in quantity demanded to the percentage change in price is called: a) income elasticity of demand b) price elasticity of demand c) cross elasticity of demand d) cost elasticity of demand.

B

When the price of a Lady Gaga concert ticket in Boulder is 100 dollars per seat, the ticket office can sell 10,000 tickets. When the price of a ticket is 150 dollars per seat, they can sell 8,000 tickets. Which of the following statements is true? A. The demand for this ticket is price elastic, and so an increase in the price of the ticket will decrease the total revenue of the ticket seller B. The demand for this ticket is price inelastic, and so an increase in the price of the ticket will increase the total revenue of the ticket seller C. The demand for this ticket is price inelastic, and so an increase in the price of the ticket will decrease the total revenue of the ticket seller D. The demand for this ticket is price elastic, and so an increase in the price of the ticket will increase the total revenue of the ticket seller

B

If the following demand elasticities, 0.05 and 0.6, are given for a particular good or service, then: a) both are definitely short-run demand elasticities. b) both are definitely long-run demand elasticities. c) 0.05 is the short-run demand elasticity and 0.6 is the long-run demand elasticity. d) 0.6 is the short-run demand elasticity and 0.05 is the long-run demand elasticity.

C

Using the midpoint method, what is the price elasticity of demand for a product whose price increases from $2 to $4 and whose quantity demanded decreases from 10 to 5 units? a) 0.4 b) 0.5 c) 1 d) 2

C

When consumers are given more time to adjust to higher prices: a) demand becomes less elastic. b) consumers have fewer choices from which to select from. c) consumers have more choices from which to select from. d) quantity demanded the same

C

Which of the following goods would likely be very inelastic? a) A new sofa. b) A condo on the beach. c) Medication for a sick pet. d) A gourmet box of chocolates.

C

What will happen to the quantity demanded of a perfectly inelastic product when its price increases by 5%? a) It will increase by 5%. b) It will decrease by 5%. c) It will drop to zero. d) It will stay the same.

D

Assume the price elasticity of demand for oil is negative. If at the current price, the price elasticity of demand for oil is ___ than ___, marginally lowering the price will ___ OPEC's total revenue from the sale of oil. greater, -1, decrease less, -1, increase less, -1, decrease more than one of the other answers is correct

D

If demand for a good is inelastic, what would the demand curve for this good look like? a) It would be completely horizontal. b) It would be upward sloping. c) It would be downward sloping and relatively flat. d) It would be downward sloping and relatively steep

D

If grapefruits have a price elasticity of 4, then that means for every 1% decrease in price, the quantity demanded will increase by: a) $1. b) 1%. c) $4. d) 4%.

D

If the price of coffee increases by 50% and the quantity demanded falls by 10%, then what is the price elasticity of demand for coffee? a.5 b. 2 c.20 d. 1/5

D

Which of the following products approximately has the highest price elasticity of demand? a) Medical care b) Private education c) Automobiles d) Leisure air travel

D

You sell t-shirts in the street corner in order to support some of your tuition costs. Around the middle of the semester, your friend Carlos gives you the following advice: "if you increase the price of each t-shirt you sell you will be able to make a lot more money selling your t-shirts". For Carlos to be right, the price elasticity of t-shirts must be price: a) constant b) elastic c) unitary d) inelastic

D