ECON CHAPTER 5 QUIZ
A gas station owner in a large city learned in his microeconomics class that buyers are relatively unresponsive to changes in the price of gasoline. If, based on that assumption, he increases the price of gas at his station: A) total revenue will increase. B) total revenue will decrease. C) total revenue will not change. D) the sale of complementary goods at his station will increase.
A
If the cross elasticity of demand for good A with respect to good B is 2.3, then good A is a(n): A) substitute for good B. B) complement for good B. C) normal good. D) inferior good.
A
In general, the flatter the supply curve is, the: A) more elastic is supply. B) less elastic is supply. C) shorter the period. D) fewer the adjustments firms can make to price changes.
A
In which period can firms decide to leave an industry? A) long run B) short run C) market period D) "here and now" period
A
If a firm sells a product that has a perfectly inelastic demand curve, then, if price doubles, it can be expected that: A) total revenue will decrease. B) total revenue will double. C) total revenue will remain unchanged. D) supply will decrease.
B
If a product's price rises by 6%, and its quantity demanded falls by 8%, then its elasticity is calculated to be: A) 0.75. B) 1.33. C) 2.00. D) 6.00.
B
If a store deals in a good that has a unitary elastic demand, what would be the net results on their total revenue of an increase in price? A) There would be a decrease in total revenue. B) There would be would be zero, so no change in total revenue. C) There would be an increase in total revenue. D) There is not enough information to answer this question.
B
If demand is inelastic, the tax burden falls primarily on the _____ and deadweight loss is _____. A) buyer; large B) buyer; small C) seller; large D) seller; small
B
Suppose the demand for toxic waste disposal is very elastic. The government imposes an excise tax on waste disposal. The deadweight loss associated with the production of toxic waste disposal will be: A) relatively small. B) relatively large. C) zero. D) a deadweight gain.
B
Home heating gas tends to have ____ demand because _____. A) elastic; it has many close substitutes B) elastic; it is a necessity C) inelastic; people do not have time to adjust their consumption patterns D) inelastic; people spend a large share of their incomes on heat
C
If the price of a product falls by 15%, and the quantity supplied falls by 25%, we can say that the elasticity of supply is: A) inelastic. B) unitary elastic. C) elastic. D) perfectly elastic.
C
Which of the following is the price elasticity of demand if price increases by 100% and quantity demanded decreases by 50%? A) 0.4 B) 2.0 C) 0.5 D) 22.0
C
A tax in which the percentage of income tax rises as income falls is known as a: A) flat tax. B) lump-sum tax. C) progressive tax. D) regressive tax.
D
How would you describe the supply of a horizontal line A) unitary for all prices B) elastic at high prices and inelastic at lower prices C) perfectly inelastic D) perfectly elastic
D
The price of gold increases by 200%. If the price elasticity of demand of gold is 0.4, what will happen in the market? A) Gold sales will increase by 1,000%. B) Gold sales will decrease by 40%. C) Gold sales will decrease by 5%. D) Gold sales will decrease by 80%.
D
The primary determinant of the elasticity of supply is: A) the availability of substitutes. B) the prices of substitutes. C) income. D) time.
D
When moving down along a straight-line demand curve: A) the elasticity of demand stays the same. B) the elasticity of demand changes from inelastic to elastic. C) total revenue always stays the same. D) the elasticity of demand changes from elastic to inelastic.
D