. When the percentage change in quantity demanded is larger thanthe percentage change in price, demand is said to be:
A) price inelastic.
B) unit price elastic.
C) price elastic.
D) perfectly inelastic.

38. If the price elasticity of demand is found to be -3/4, thendemand is:
A) price inelastic.
B) price elastic.
C) unit price elastic.
D) positively sloped.

39. If the price elasticity of demand is found to be -6, thendemand is:
A) price inelastic.
B) price elastic.
C) unit price elastic.
D) horizontal.

40. If the price of a good is increased by 15 percent and thequantity demanded falls by 20 percent, the price elasticity ofdemand is:
A) price elastic.
B) price inelastic.
C) unit price elastic.
D) normal.

41. If the absolute value of price elasticity is greater than 1,this means the demand curve in that region is:
A) price elastic.
B) price inelastic.
C) unit price elastic.
D) upward sloping

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47. When a public transit system (such as a subway or bus line)raises its fares, it may experience an increase in total revenue.This suggests that demand is:
A) unstable.
B) price inelastic.
C) price elastic.
D) unit price elastic.
45. If the quantity demanded of agricultural output is veryunresponsive to a fall in price, the demand for agricultural outputis:
A) price elastic.
B) price inelastic.
C) positively sloped.
D) horizontal.
48. A constant price elasticity of demand curve is one whose:
A) slope is the same at every point on the curve.
B) price elasticity of demand is the same at every point on thecurve.
C) quantity is the same at every point on the curve.
D) price elasticity of demand and slope are the same at every pointon the curve.

49. Whenever supply increases, the resulting market price willalways be lower except:
A) when demand is perfectly price elastic (when the demand curve ishorizontal).
B) when demand is completely price inelastic (when the demand curveis vertical).
C) when supply is perfectly price inelastic (when the supply curveis vertical).
D) in the case of demand having unit price elasticitythroughout.

50. A demand curve that is perfectly inelastic:
A) will be vertical.
B) will be horizontal.
C) will be upward sloping.
D) has an elasticity equal to 1 everywhere on the curve.

greensquirrel343

1-Economists recently found that a lot of increase in the price of beer caused the quantity demanded of wine to increase by 4%. This means that the cross-price elasticity of demand between beer and wine is.
a. 0.4, and beer and wine are substitutes
b. 2.5, and beer and wine are complements
c. 0.4, and beer and wine are complements
d. 2.5, and beer and wine are substitutes.

2. A I0% increase in the price of a movie ticket in Westridge 8 leads to an l5Yo decrease in the number of tickets sold, indicating the demand for movie tickets in Westridge 8 is:
a. elastic.
b. inelastic.
c. unit elastic.
d. Can not tell from the information given.

3. If economists estimate that the price elasticity of the supply of physician services is 0.2 then the supply of physician services is_ anda25o/o decrease in the price of physician services will result in the quantity supplied of physician services.
g. inelastic; 5olo decrease
h. inelastic; 5olo increase
i. inelastic;25Yo decrease
j. inelastic; 25olo increase
k. inelastic; 500/o decrease
l. inelastic; 500/o increase

4. A 5% decrease in the price of country music concert tickets causes a 15o/o increase in the demand for beer then the cross-price elasticity of demand between country music concert tickets and beers
a. -3.0 and tickets and beer are complements
b. -0.3 and tickets and beer are complements
c. -3.0 and tickets and beer are substitutes
d. -0.3 and tickets and beer are substitutes

5. An economist for the jeans industry has estimated the price elasticity of demand for blue jeans at -2.9. Based on this estimate 5o/o decrease in the price of jeans would result in a
a. 145% decrease in the quantity demanded of jeans
b. 14.5% increase in the quantity demanded of jeans
c. 2.9%o decrease in the quantity demanded of jeans
d. 2.9Yo increase in the quantity demanded of jeans

periwinkleduck471

4. Decisions made âat the marginâ entail a choice based upon_____________ of a decision.

a. the additional benefits
b. the total costs
c. comparing the total benefits and costs
d. comparing the additional benefits and costs
5. 100 units of Good X are available but individuals desire 500units. ______________ will determine who attains Good X, and whodoes not.

a. A rationing device
b. Opportunity Cost
c. Utility
d. Natural Selection

6. Individuals will continue consuming so long as:

a. The price of a good continues to decrease
b. The marginal costs of consuming are outweighed by the marginalbenefits
c. The individual seeks additional utility
d. The individual is willing and able

8. If the cross-price elasticity of two goods is positive, thenthose two goods are
a. substitutes.
b. complements.
c. normal goods.
d. inferior goods.

11. The basic reason most supply curves are upward sloping isthat:

a. More firms are in the market, therefore more goods areproduced.
b. Because more quantity is being demanded, suppliers raise theprice.
c. Producers face higher opportunity costs when producing higherlevels of quantity, so they must receive a higher price.
d. Producers seek to maximize total revenue.

18. When the price of bubble gum is $0.60, the quantity demanded is500 packs per day. When the price falls to $0.50, the quantitydemanded increases to 900. The demand for gum would beconsidered:

a. inelastic.
b. elastic.
c. unit elastic.
d. perfectly inelastic.

20. Inefficient Production implies which of the following:

a. it is impossible to produce more of one good without producingless of another
b. there are too few resources
c. there are too many resources
d. it is possible to produce more of one good without producingless of another

21. Workers at a bicycle assembly plant currently make minimumwage. If the federal government increases the minimum wage by $1.00an hour it is likely that the

a. demand for bicycle assembly workers will increase.
b. supply of bicycles will shift to the right.
c. supply of bicycles will shift to the left.
d. firm must increase output to maintain profit levels.

24. Suppose at a price of $5 and at a price of $9, John purchases40 units of good X. Given this information, we know that Johnâsdemand for good X is
a. perfectly elastic at all prices.
b. inelastic at all prices.
c. unit elastic between the prices of $5 and $9.
d. perfectly elastic between the prices of $5 and $9.
e. perfectly inelastic between the prices of $5 and $9.

25. If the price of good A decreases by 10 percent and the quantitydemanded of good B decreases by 10 percent, this is evidence that Aand B are
a. substitute goods.
b. complement goods.
c. inferior goods.
d. normal goods.
e. not related.

6. For an individual to achieve consumer equilibrium when consumingtwo goods, A and B, the individual must satisfy the followingcondition:

a. TUA = TUB
b. TUA/PA = TUB/PB
c. MUA = MUB
d. MUA/PA = MUB/PB
e. MUA/PB = MUB/PA

7. Which of the following statements is correct regarding a firm'sdecision making?
a. The decision to shut down and the decision to exit are bothshort-run decisions.
b. The decision to shut down and the decision to exit are bothlong-run decisions.
c. The decision to shut down is a short-run decision, whereas thedecision to exit is a long-run decision.
d. The decision to exit is a short-run decision, whereas thedecision to shut down is a long-run decision.

Table 1

Output Total Cost
0 $20
1 $30
2 $41
3 $51
4 $65
5 $75
6 $84
7 $105

13. Refer to Table 1. The marginal cost of producing the fifth unitof output is
a. $55.00
b. $15.00
c. $9.00
d. $10.00

21. A perfectly competitive firm can produce its current level ofoutput at an average total cost of $10 and a marginal cost of $8.If the market price of the product is currently $8, what should thefirm do?

a. The firm should definitely shut down since average total costexceeds price.
b. The firm should shut down if average variable cost is $8 orgreater, but the firm should continue to produce the current levelof output if average variable cost is less than $8.
c. The firm should increase production in order to increaseprofit.
d. The firm should continue to produce, but it should decreaseproduction in order to increase profit.
24. In the long run all costs are variable. Thus, aprofit-maximizing firm may exit:

a. When Price < Average Total Cost
b. When Price > Average Total Cost
c. When Average Revenue > Average Fixed Cost
d. When Average Revenue > Marginal Cost

25. Marginal cost tells us the
a. value of all resources used in a production process.
b. marginal increment to profitability when price isconstant.
c. amount by which total cost rises when output is increased by oneunit.
d. amount by which output rises when labor is increased by oneunit.

26. For a perfectly competitive firm:
a. marginal revenue is equal to price.
b. price is equal to marginal cost at the output level thatmaximizes profit.
c. selling an additional unit of the good it produces increasestotal revenue by the price of the good.
d. a and b
e. a, b, and c

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