Question

9.When price increase from $43 to $49, quantity supplied increases from 220 units to 240 units. The price elasticity of supply in this price range is (use the Midpoint Formula):

Multiple Choice

a.0.3

b.0.67

c.1.5

d.3.33

10. When any change in price results in an infinite change in quantity demanded:

Multiple Choice

a.price elasticity of supply is zero.

b.demand is perfectly elastic.

c.demand is perfectly inelastic.

d.price elasticity of supply is infinite.

12. Over a longer period of time:

Multiple Choice

a.demand is more elastic since consumers will rarely change consumption habits after a price change.

b.demand is less elastic since consumers will have more time to alter consumption after a price change.

c.demand is more elastic since consumers will have more time to alter consumption after a price change.

d.demand is less elastic since consumers will have less time to alter consumption after a price change.

13. Taxes on goods with ______ demand curves will tend to raise more tax revenue for the government than taxes on goods with ______ demand curves.

Multiple Choice

a.elastic; unit elastic

b.elastic; inelastic

c.inelastic; elastic

d.unit elastic; inelastic

14. Cross-price elasticity of demand for substitutes is a ______ number and is a ______ number for complements.

Multiple Choice

a.positive; positive

b.negative; negative

c.positive; negative

d.negative; positive

15. A 10 percent increase in the price of soda leads to a 20 percent increase in the quantity of iced tea demanded. It appears that:

Multiple Choice

a.elasticity of demand for soda 0.5 and is inelastic.

b.elasticity of demand for iced tea is 2 and is elastic.

c.cross-price elasticity of demand for soda is -0.5.

d.cross-price elasticity of demand for iced tea is 2.

16. A 10 percent increase in income leads to a 15 percent decrease in the quantity of macaroni and cheese demanded. From this information, we can assume:

Multiple Choice

a.macaroni is a normal good and income elasticity of demand equals 1.5.

b.macaroni is an inferior good and income elasticity of demand equals 0.67.

c.macaroni is an inferior good and income elasticity of demand equals -1.5.

d.macaroni is an inferior good and income elasticity of demand equals -0.67.

17. Suppose you receive a 25% increase in your income. As a result of this, you double the amount of music festivals you attend each summer. Which of the following is correct?

Multiple Choice

a.Music festivals are a normal good and income elasticity of demand equals 4.

b.Music festivals are an inferior good and income elasticity of demand equals -4.

c.Music festivals are a normal good and income elasticity of demand equals 0.25.

d.Music festivals are an inferior good and income elasticity of demand equals -0.25.

18. Suppose the cross-price elasticity of demand between Good X and Good Y is -0.75 and the income-elasticity of demand between Good Y and Good Z is 1.25. In this example, Goods X and Y are _________ and Goods Y and Z are __________.

Multiple Choice

a.substitutes; inferior

b.complements; inferior

c.substitutes; normal

d.complements; normal.

32.An inferior good is a product:

Multiple Choice

a.for which demand increases as income increases.

b.for which there is no demand.

c.for which demand decreases as income increases.

d.that has an upward sloping demand curve.

33.Louisa works for a hedge fund company. Her wage increased from $30 per hour to $40 per hour. She can work up to 50 hours each week. Louisa is currently working 10 hours per week and receives 84 utils for the leisure time she enjoys. If she decides to work 20 hours instead, her total utility of having only 30 hours of leisure is 71 utils. Her total utility from the income she receives working 10 hours per week is 74 utils and her total utility from the income she receives working 20 hours per week is 110 utils. If she decides to work 30 hours then her marginal utility gain from having more income will now be:

Multiple Choice

a.74.

b.36.

c.13.

d.12.

Answer 1

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