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

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Published on 1 Oct 2018
School
University of Illinois
Department
Economics
Course
ECON 102
Professor
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
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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. )

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