Quiz

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Question 1 (10 points)

Demand is price inelastic if: 

Question 1 options:

  

the price of the good responds   slightly to a quantity change. 

 

the demand curve shifts very   little when a demand shifter changes. 

 

the percentage   change in quantity demanded is relatively small in response to a relatively   large percentage change in price. 

 

all of the above are true. 

Question 2 (10 points)

If the absolute value of price elasticity is greater than 1, this means the demand curve in that region is: 

Question 2 options:

  

price elastic. 

 

price inelastic. 

 

unit price elastic. 

 

upward sloping. 

Question 3 (10 points)

Which of the following will lead to a decrease in total revenue? 

Question 3 options:

  

price goes up and demand is   perfectly inelastic 

 

price goes up and demand is price   inelastic 

 

price declines and demand is price   elastic 

 

price increases and   demand is price elastic 

Question 4 (10 points)

If total revenue goes up when price falls, the price elasticity of demand is said to be: 

Question 4 options:

  

price inelastic. 

 

unit price elastic. 

 

price elastic. 

 

positive. 

Question 5 (10 points)

Price elasticity of demand measures the responsiveness of the change in: 

Question 5 options:

  

quantity demanded to   a change in price. 

 

price to a change in quantity   demanded. 

 

slope of the demand curve to a   change in price. 

 

slope of the demand curve to a   change in quantity demanded. 

Question 6 (10 points)

The price elasticity of demand is: 

Question 6 options:

  

always positive. 

 

always greater than 1. 

 

usually equal to 1. 

 

always negative. 

Question 7 (10 points)

A men's tie store sold an average of 30 ties per day when the price was $5 per tie but sold 50 of the same ties per day when the price was $3 per tie. Hence, the absolute value of the price elasticity of demand is: 

Question 7 options:

  

greater than zero but less than 1.   

 

equal to 1. 

 

greater than 1 but less than 3. 

 

greater than 3. 

Question 8 (10 points)

If the total revenue received by a firm does not change when it raises its price, this indicates that the demand for the firm's product is: 

Question 8 options:

  

unstable. 

 

price inelastic. 

 

price elastic. 

 

unit price elastic. 

Question 9 (10 points)

The ratio of the percentage change in a dependent variable to the percentage change in an independent variable, all other things unchanged, is: 

Question 9 options:

  

total revenue. 

 

production possibilities. 

 

elasticity. 

 

slope. 

Question 10 (10 points)

The price elasticity of a good will tend to be greater: 

Question 10 options:

  

the longer the   relevant time period. 

 

the fewer number of substitute   goods available. 

 

if it is a staple or necessity   with few substitutes. 

 

All of the above are true. 

Supply and Demand in Agriculture

Question 11 (10 points)

(Exhibit: Supply and Demand in Agriculture) To help farmers: 

Question 11 options:

  

a price floor would   be set at P4, causing a surplus of Q3 – Q0.

 

a price floor would be set at P2,   causing a surplus of Q2 – Q0.

 

a price ceiling would be set at P4,   causing a surplus of Q2 – Q1.

 

a price floor would be set at P1,   causing a shortage of Q3 – Q0.

Question 12 (10 points)

(Exhibit: Supply and Demand in Agriculture) If a price floor at P4 is set to help farmers in terms of income and government wants to assure farmers that their output will be purchased, the government would have to purchase an amount of output equal to: 

Question 12 options:

  

Q3 – Q0.

 

Q3 – Q1.

 

Q2 – Q1.

 

none of the above are correct.

Question 13 (10 points)

(Exhibit: Supply and Demand in Agriculture) If the government set an effective price floor at one of the prices shown on the vertical axis: 

Question 13 options:

  

with this much wheat on the market,   the price would fall to P1.

 

Q3 bushels   of wheat would be supplied.

 

the resulting shortage would be   made up by the government out of its accumulated stocks. 

 

all of the above would be true. 

Demand and Price Elasticity 1

Question 14 (10 points)

(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $2.50 and $2.25? 

Question 14 options:

  

-9

 

-19

 

indeterminate

 

none of the above

Question 15 (10 points)

(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $2.25 and $2.00? 

Question 15 options:

  

-5.67 

 

-4.00 

 

-9.00 

 

-17.6 

Question 16 (10 points)

(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.75 and $1.50? 

Question 16 options:

  

-0.42 

 

-1.5 

 

-1.86 

 

none of the above