Download ECON 1900-02 Chapter 4 review quiz 1) The price elasticity of

ECON 1900-02
Chapter 4 review quiz
1) The price elasticity of demand measures:
a) the percentage change in quantity demanded as a result of a 1 percent change in supply
b) the change in quantity demanded as the result of a 1 percent change in price
c) the percentage change in quantity demanded as a result of a 1 percent change in price
d) the slope of the demand curve
2) If a 1 percent fall in the price of a commodity causes the quantity demanded of the commodity
to increase 2 percent, demand is:
a) inelastic
b) elastic
c) unit elastic
d) perfectly elastic
3) Moving down a straight-line demand curve that has a slope of -2:
a) the elasticity of demand coefficient is a constant equal to 2
b) the elasticity of demand coefficient always equals 1
c) the elasticity of demand coefficient declines as the price is lowered
d) the elasticity is largest at the intercept value on the quantity axis
4) Suppose the only beer store in town increased the price of a litre of beer from $2.75 to $3.25.
If the number of litres of beer sold decreased by 22 percent, then the elasticity of demand for
beer is about:
a) 0.67
b) 0.9
c) 1
d) 1.32
5) An individual always spends the same amount on a good, regardless of its price. His/her
demand curve is:
a) Elastic
b) Unit elastic
c) inelastic
d) unknown
6) If demand is perfectly inelastic, a decrease in supply will result in:
a) a decrease in the equilibrium price
b) an increase in the equilibrium quantity
c) a decrease in equilibrium quantity
d) no change in equilibrium quantity
7) If price decreases from $8 to $7, the percentage decrease is:
a) 13.3%
b) 12.5%
c) 14.3%
d) $1
8) If the income elasticity of demand for turnips is -0.2, what is the effect of an 8% decrease in
incomes?
a) quantity demanded will fall by 1.6%
b) quantity demanded will rise by 1.6%
c) quantity demanded will fall by 4%
d) quantity demanded will rise by 4%
9) Which of the following is not characteristic of a good for which the demand is price inelastic?
a) the good has many good substitutes
b) the buyer spends a small percentage of his/her total income on the good
c) the good is regarded by consumers as a necessity
d) the period of time for which demand is given is very short
10) Generally in the long run the supply curve:
a) is less elastic than in the short run
b) is more elastic than in the short run
c) has the same elasticity as in the short run
d) is perfectly elastic
11) Supply curves are ______ during the market period.
a) elastic
b) inelastic
c) Perfectly elastic
d) Perfectly inelastic
12) If supply is perfectly elastic, an increase in demand will result in:
a) an increase in the equilibrium price
b) a decrease in the equilibrium price
c) a decrease in the equilibrium quantity
d) an increase in the equilibrium quantity
13) Which of the following pairs of goods would be most likely to have a negative cross price
elasticity of demand?
a) tea and coffee
b) fire extinguishers and blue jeans
c) camp stoves and tents
d) steak and hamburger
14) The tax burden will fall primarily on consumers
a) the more elastic the demand curve and the more elastic the supply curve
b) the more elastic the demand curve and the more in inelastic the supply curve
c) the more inelastic the demand curve and the more elastic the supply curve
d) the more inelastic the demand curve and the more inelastic the supply curve
15) Suppose gasoline producers are taxed at the rate of 30% and the tax pushes the new price
(including tax) up by almost 30%, then:
a) the demand is relatively more inelastic than the supply
b) the supply is relatively more elastic than the demand
c) the demand is relatively more elastic than the supply
d) neither supply nor demand is elastic
16) A legislature that wants to maximize its revenue from sales taxes would be wise to tax:
a) goods that have no substitutes
b) goods that have no complements
c) inferior goods
d) luxury goods
17) Use this graph for the question that follows
Given the demand curve in the graph, if the market price is P*, the total amount the consumer is
willing to pay for Q* units is area:
a) A
b) B
c) A + B
d) A + B + C
18) If Svend was prepared to sell blueberries for $1.00 per pound and the market price is $3.00
per pound, his producer surplus is
a) $1.00 per pound
b) $2.00 per pound
c) $3.00 per pound
d) $4.00 per pound
19) Gene is willing to pay $10 to go to one movie, $8 to go to second movie, and $6 to go to a
third movie. If the price of movies is $7, how many movies will Gene choose to see, and how
much consumer surplus will he enjoy in total?
a) 2 movies and $4
b) 3 movies and $3
c) 2 movies and $2
d) 3 movies and $2
20) The difference between productive and allocative efficiency is
a) productive efficiency requires producing the correct amount of a good whereas
allocative efficiency requires producing at minimum cost
b) allocative efficiency requires producing the correct amount of a good whereas
productive efficiency requires producing at minimum cost
c) productive efficiency happens in the short run whereas allocative efficiency requires
producing at minimum cost over the long run
d) productive efficiency requires producing the correct amount of a good whereas
allocative efficiency requires producing what society values the most
Key
1c
2b
3c
4d
5b
6d
7a
8b
9a
10b
11d
12d
13c
14c
15a
16a
17c
18b
19a
20b