# ECON 102 Study Guide - Quiz Guide: Demand Curve, Economic Surplus, Economic Equilibrium

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Week 4 Quiz

Price elasticity of demand is a measure of:

a.) Efficiency

b.) Opportunity cost

c.) Responsiveness

d.) Profitability

Following a price decrease, total revenue will:

a.) Increase if demand is price el8astic

b.) Increase if the demand is price inelastic

c.) Always increase

d.) Always decrease

If the price elasticity of demand for concert tickets

is 2.12, then the demand is _______ and total

revenue will ________ if the price of concert tickets

increases.

a.) Inelastic, increase

b.) Elastic, increase

c.) Elastic, decrease

d.) Inelastic, decrease

* Since the price elasticity of demand is larger than

1, the demand is elastic. This means that when the

price increases, demand will be greatly affected, so

total revenue will decrease. *

We would say that apples are a normal good if the

_______ for apples is ________.

a.) Income elasticity of demand, negative

b.) Price elasticity of demand, positive

c.) Income elasticity of demand, positive

d.) Price elasticity of demand, negative

If two goods have a negative cross-price elasticity

of demand between them, we would say that these

two goods are:

a.) Normal

b.) Substitutes

c.) Inferior

d.) Complements

If a 12 percent increase in the price of lodging at a

ski resort causes a 10 percent decrease in the

quantity of skis rented, then the cross-price

elasticity of demand between lodging and ski

rentals is:

a.) -1.20

b.) -0.83

c.) 1.20

d.) 0.83

If supply is price elastic, then a 5 percent increase in

the price of the good would cause ________ in the

quantity supplied.

a.) No change

b.) Less than a 5 percent increase

c.) Exactly a 5 percent increase

d.) More than a 5 percent increase

When an exercise tax is imposed on buyers, this

will cause the _______ curve to shift ________.

a.) Demand, leftward

b.) Supply, up and to the left

c.) Supply, down and to the right

d.) Demand, rightward

If a $10 exercise tax is collected from gasoline

buyers on each gallon of gasoline sold, then the

demand curve for gasoline will shift ________ by

$10, thereby _________ the equilibrium price.

a.) Leftward, increasing

b.) Leftward, decreasing

c.) Rightward, increasing

d.) Rightward, decreasing

Suppose that in response to a $3 exercise tax being

imposed on firms providing car washes, the price of

a car wash rises from $13 to $15. How much of the

tax is actually paid by consumers?

a.) $2

b.) $6

c.) $3

d.) $1

Which of the following would result in a larger loss

of total surplus from a given tax?

a.) A relatively inelastic demand

b.) A relatively elastic supply

c.) A relatively steep supply curve

d.) A relatively steep demand curve

* Given a tax, the demand curve will shift to the left

by a certain amount. With a relatively elastic

supply curve, the quantity demanded will change a

lot. Thus the loss in consumer surplus will be larger

than with a relatively inelastic supply curve. *

Demand is elastic when the absolute value of the

price elasticity of demand is:

a.) Less than 1

b.) 0

c.) Greater than 1

d.) Equal to 1

## Document Summary

Price elasticity of demand is a measure of: a. ) Following a price decrease, total revenue will: a. ) Increase if the demand is price inelastic c. ) always increase d. ) always decrease. If the price elasticity of demand for concert tickets is 2. 12, then the demand is _______ and total revenue will ________ if the price of concert tickets increases. a. ) Elastic, increase c. ) elastic, decrease d. ) inelastic, decrease. * since the price elasticity of demand is larger than. This means that when the price increases, demand will be greatly affected, so total revenue will decrease. We would say that apples are a normal good if the. Price elasticity of demand, positive c. ) income elasticity of demand, positive d. ) price elasticity of demand, negative. If two goods have a negative cross-price elasticity of demand between them, we would say that these two goods are: a. )