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| 6 | |
If price falls from $250 to $200, what is the elasticity of demand over this range? |
| | A) | -0.67 |
| | B) | -1.0 |
| | C) | -0.08 |
| | D) | -1.5 |
| | E) | -2.0 |
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| 7 | |
As output increases from 2,100 to 2,700 what is marginal revenue? |
| | A) | $25 |
| | B) | $50 |
| | C) | -$300 |
| | D) | -$25 |
| | E) | $75 |
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| 8 | |
If price falls from $250 to $200, |
| | A) | arrows representing the price and quantity effects both point down. |
| | B) | an arrow representing the price effect points down and is shorter than an arrow for the quantity effect. |
| | C) | an arrow representing the price effect points down and is longer than an arrow for the quantity effect. |
| | D) | arrows representing the price and quantity effects both point up. |
| | E) | total revenue moves in the same direction as the arrow representing the price effect. |
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| 9 | |
If price falls from $200 to $150, |
| | A) | arrows representing the price and quantity effects both point down. |
| | B) | an arrow representing the price effect points down and is shorter than an arrow for the quantity effect. |
| | C) | total revenue moves in the same direction as the arrow representing the price effect. |
| | D) | total revenue moves in the same direction as the arrow representing the quantity effect. |
| | E) | both b and c |
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| 10 | |
If the price elasticity of DVD players is -1.5 and price decreases 20%, what happens to the quantity of DVD players demanded? |
| | A) | quantity increases by 7.5% |
| | B) | quantity increases by 30% |
| | C) | quantity decreases by 13% |
| | D) | quantity decreases by 1.5% |
| | E) | none of the above |
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| 11 | |
If the own-price elasticity of demand for a good is -0.6 and quantity demanded decreases by 30%, price must have… |
| | A) | decreased by 0.6%. |
| | B) | decreased by 18%. |
| | C) | increased by 20%. |
| | D) | increased by 50%. |
| | E) | none of the above |
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| 12 | |
The demand for orthodontic treatment (braces) is price inelastic. So it follows that… |
| | A) | the percentage change in price is less than the resulting percentage change in quantity demanded. |
| | B) | if the price of orthodontic treatment increases, total expenditure by consumers on orthodontic treatment will rise. |
| | C) | changes in price do not affect the number of treatments demanded. |
| | D) | both b and c |
| | E) | none of the above |
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| 13 | |
Which of the following would tend to DECREASE the elasticity of demand for good X? |
| | A) | The cost of producing X declines. |
| | B) | New substitutes for X become available from other firms. |
| | C) | Consumers begin spending a smaller percentage of their income on X. |
| | D) | both b and c |
| | E) | all of the above |
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| 14 | |
Which of the following would tend to INCREASE the elasticity of demand for good X? |
| | A) | a new discovery allows firms to produce X at a much lower cost. |
| | B) | the percentage of a consumer's income spent on good X increases. |
| | C) | a new product, Y, which can be used in place of X, is introduced. |
| | D) | both b and c |
| | E) | all of the above |
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| 15 | |
All other things equal, the demand for good X will be more elastic than the demand for good Y when… |
| | A) | good X has more substitutes than good Y. |
| | B) | good X accounts for a smaller percentage of a typical consumer's budget than good Y. |
| | C) | consumers have more time to adjust to a change in the price of good X than they have time to adjust to a change in the price of good Y. |
| | D) | both a and c |
| | E) | all of the above |
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| 16 | |
Total revenue increased for a firm operating in the elastic range of its demand curve. Which of the following statements is correct? |
| | A) | Quantity demanded must have increased. |
| | B) | The firm must have raised price. |
| | C) | The firm must have lowered price. |
| | D) | both a and c |
| | E) | both b and c |
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