Download File

AP Microeconomics
Quiz #2 (Take-home)
Name: ___________________________________
Multiple Choice: (8 points each) Circle the letter of the correct answer.
1. If the price of avocados rises 6 percent and the quantity demanded for avocados falls 8 percent,
then
a. Ed = 3/4 and demand is price elastic
b. Ed = 4/3 and demand is price elastic
c. Ed = 3/4 and demand is price inelastic
d. Ed = 4/3 and demand is price inelastic
e. Ed = 3/4 and corn is unit elastic
2. A small business estimates price elasticity for its product to be 3. To raise total revenue, owners
should
a. Decrease price as demand is elastic
b. Decrease price as demand is inelastic
c. Increase price as demand is elastic
d. Increase price as demand is inelastic
e. Do nothing; they are already maximizing total revenue
3. If the price of lunch at the school cafeteria increases and cafeteria revenue remains constant, the
elasticity of demand for a school lunch at that price range must be
a. Elastic
b. Perfectly elastic
c. Unit elastic
d. Inelastic
e. Perfectly inelastic
4. If a 3 percent increase in price leads to a 5 percent increase in quantity supplied
a. Supply is unit elastic
b. Demand is inelastic
c. Demand is elastic
d. Supply is elastic
e. Supply is inelastic
5. India’s income elasticity of demand for symphony tickets is 1.50. All else equal, this means that
if her income increases by 20%, she will buy ________ more tickets.
a. 150% b. 50%
c. 30%
6. Normal goods always have a/an
a. Elastic demand curve
b. Positive cross-price elasticity
c. Negative elasticity of supply
d. Negative income elasticity
e. Positive income elasticity
d. 20%
e. 5%
AP Microeconomics
Quiz #2 (Take-home)
Name: ___________________________________
7. When the cross-price elasticity of demand is positive, we can conclude that the goods in question
are therefore
a. Normal
b. Inferior
c. Complements
d. Substitutes
e. Luxuries
8. When a demand curve is relatively flat,
a. Consumers respond significantly to a change in price for that product.
b. Consumers do not respond at all to a change in price for that product.
c. Consumers respond just slightly to a change in price for that product.
d. Demand for that product is perfectly inelastic.
e. Both C and D are true.
9. If the price of eggs rises by 1 percent and the quantity demanded of bacon falls by 2 percent, then
a. Exy = -2 and eggs and bacon are substitute goods.
b. Exy = -2 and eggs and bacon are complementary goods.
c. Exy = -1/2 and eggs and bacon are substitute goods.
d. Exy = 1/2 and eggs and bacon are complementary goods.
e. Exy = 2 and eggs and bacon are inferior goods.
10. All of the following are determinants of price elasticity of demand EXCEPT
a. period of time.
b. price of resources.
c. number of substitute goods available.
d. proportion of income.
e. whether a good is a luxury or a necessity.
True/False: (4 points each)
11. Income elasticity of demand measures how responsive producers are to a change in market price
for a given product.
T
/
F
12. Price elasticity of demand measures how responsive consumers are to a change in market price
for a given product.
T
/
F
13. The cross-price elasticity of demand can tell us whether goods are complements or substitutes.
T
/
F
14. Supply is more elastic in the short run than it is in the long run.
T
/
F
15. If the price of watermelons falls by 10%, and the quantity supplied of watermelon falls by 2%,
then supply of watermelons is elastic.
T
/
F