Author: Christine Farr


1: If the demand for a good is elastic, then total revenue A: increases as price increases B: remains constant as quantity demanded increasesC: Increases as price decreases D: Decreases as quantity demanded increases E: Decreases as price decreases#2: If price elasticity of demand is -0.5A: a 1% decrease in quantity demanded leads to a 0.5% decrease in price B: a 1% decrease in price leads to a 0.5% in quantity demandedC: a 50% decrease in price leads to a 1% increase in quantity demandedD: a 50% decrease in price leads to a 100% increase in quantity demandedE: Demand is elastic#3: Demand is inelastic only if:A: Price elasticity has an absolute value of 1B: Price elasticity has an absolute value greater than 1C: Price elasticity has an absolute value less then 1D: Price elasticity is negativeE: Consumers do not respond to a change in price#4: If the administration raises tuition on our campus in order to increase revenue, it will:A: Not be successful if the demand curve slopes downwardB: Be successful if demand is elastic C: Be successful if demand is inelasticD: Be successful if supply is elasticE: Be successful if supply is inelastic #5: If demand is unit elastic, a price reduction will:A: increase revenuesB: Reduce revenuesC: Reduce quantity demanded D: Have no effect on revenuesE: Increase profits#6: Along a straight line downward sloping demand curve, elasticity is:A: A constant, but its value cannot be determined without measurementB: Constant and equal to an absolute value of oneC: Greater at higher pricesD: Greater at lower pricesE: Greater in the middle#7: For which of the following products in the consumers demand curve most likely to be vertical:A: Lobster, for a seafood loverB: Cars, for high school studentsC: Insulin, for a diabeticD: Compact disks, for a music loverE: Beef, for a food lover#8: The demand curve for a good that has many perfect substitutes in consumption is likely to be:A: Upward slopingB: SteepC: Highly inelasticD: Horizontal E: Vertical#9: If an increase in price from $1 to $2 per unit leads to an increase in quantity supplied from 20 to 100 units, then the value of price elasticity of supply is:A: 0.38B: 2C: 2.67D: 4E: 8#10: The supply of painting by van gogh is most likely to be:A: Of infinite elasticity because supply is limitedB: Of high elasticity because supply is limitedC: Elastic because the painting are luxury goodsD: Inelastic because supply is limitedE: Unit elastic#11: Todays supply curve of dorm rooms on campus is likely to be:A: Downward sloping B: Relatively flatC: Vertical D: HorizontalE: Price elastic #12: As producers have more time to adjust to a price change, price elasticity of supply:A: IncreasesB: DecreasesC: Remains the sameD: Rises and then fallsE: Falls and then rises#13: An inferior good is:A: Any good of low qualityB: One that consumers buy less of as the price risesC: One that consumers buy less of as thier income risesD: One that has few substitutes E: Any good made with inexpensive labor#14: If we wanted to prove that macaroni is an inferior good, we would test the___________of macaroni and get a ___________:A: cross-price elasticity; negative numberB: Income elasticity; number less than 1C: Income elasticity; positive numberD: Price elasticity of demand; number greater then negative 1E: Income elasticity; negative number#15: Economics distinguish between normal and and inferior goods using:A: Price elasticity of demandB: Price elasticity of supplyC: Income elasticity of demandD: Cross price elasticity of demandE: Tax incidence#16: The value of cross price elasticity of demand between golf balls and golf clubs is:A: Negative B: Positive C: 0D: Greater then 1E: Less then 1#17: The value of cross price elasticity of demand between orange soda and grape soda is:A: NegativeB: PositiveC: 0D: Between -1 and 0E: Less then -1#18: Utility is determined by an individuals:A: IncomeB: PriceC: Relative PriceD: ProfitE: Tastes and preferences#19

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