Question 1

Airlines now charge passengers for checking luggage, and for food and blankets in flight. Airlines must have determined that demand for these items is

Accepted Answer

A)   elastic.
B)   inelastic.
C)   unit elastic.
D)   perfectly elastic.
E)   perfectly inelastic.F) A) and E)
G) A) and D)

Question 2

Price is the same as

Accepted Answer

A)   cost
B)   marginal revenue
C)   average revenue
D)   total revenue
E)   quantityF) D) and E)
G) C) and D)

Question 3

If total revenue falls as price rises, then the demand for the product

Accepted Answer

A)   is elastic.
B)   is unit elastic.
C)   is inelastic.
D)   has a slope greater than 1.
E)   is upward sloping.F) C) and D)
G) A) and E)

Question 4

Total revenue is the

Accepted Answer

A)   price at which a product is sold multiplied by the cost of producing the product.
B)   price at which a product is sold multiplied by the number of units of the product that is sold.
C)   price at which a product is sold multiplied by the number of units of the product that is produced.
D)   average price of a product divided by the number of units of the product that is sold.
E)   none of these.F) A) and E)
G) B) and C)

Question 5

To say there is an elastic demand for a product means that

Accepted Answer

A)   there are relatively few substitutes, few competitors, and a short time period under consideration.
B)   consumers are very responsive to a change in the price of the product.
C)   consumers are not very responsive to a change in the price of the product.
D)   if the price rises by some percentage, then the quantity demanded will fall by a smaller percentage.
E)   there is a positive relationship between price and total revenue.F) A) and B)
G) None of the above

Question 6

For a downward-sloping straight-line demand curve, the top portion of the curve is generally

Accepted Answer

A)   perfectly elastic.
B)   elastic.
C)   unit elastic.
D)   inelastic.
E)   perfectly inelastic.F) A) and D)
G) D) and E)

Question 7

If a change in price causes no response at all in the quantity of the product demanded, then demand for the product is

Accepted Answer

A)   elastic.
B)   infinitely elastic.
C)   relatively inelastic.
D)   perfectly inelastic.
E)   unit elastic.F) C) and D)
G) A) and B)

Question 8

If a product has an inelastic demand, then

Accepted Answer

A)   there is probably a long time period under consideration.
B)   as price increases, total revenue to producers decreases.
C)   an increase in the price will decrease total consumer expenditures.
D)   there are probably lots of substitutes.
E)   there are probably few substitutes.F) B) and C)
G) B) and D)

Question 9

When the price of a good increases by 50 percent, quantity demanded decreases by 2 percent. What is the price elasticity of demand?

Accepted Answer

A)   1/25
B)   2
C)   25
D)   50
E)   It is impossible to determine from the information given.F) B) and D)
G) A) and D)

Question 10

Any change in price that causes a limitless response in the quantity demanded of a product indicates that demand is perfectly inelastic.

Accepted Answer

A) True 
 B)False

Question 11

If a university charges a set tuition for 12 credit hours or more, its marginal revenue from students taking an overload is zero.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following would most likely be the price elasticity of demand for a fancy cruise to Hawaii?

Accepted Answer

A)   -0.01
B)   -0.50
C)   -1
D)   -5
E)   -10F) B) and E)
G) A) and C)

Question 13

If the price elasticity of demand is equal to 4, a 1 percent increase in price will cause the quantity demanded to ____ by ____ percent.

Accepted Answer

A)   increase; 1/4
B)   decrease; 1/4
C)   increase; 4
D)   decrease; 25
E)   decrease; 4F) B) and C)
G) B) and E)

Question 14

The reason students receive discounts to their athletic events is

Accepted Answer

A)   their demand is less elastic than the general public.
B)   they pay for athletic events through mandated fees.
C)   their demand is more elastic than the general public.
D)   they are too busy studying economics and have to be offered a "good deal".
E)   the student section is not premium seating.F) B) and D)
G) A) and B)

Question 15

If demand is perfectly inelastic, then the

Accepted Answer

A)   elasticity of demand is 1.
B)   elasticity of demand is -1.
C)   demand curve will be nonexistent.
D)   demand curve will be a horizontal line.
E)   demand curve will be a vertical line.F) A) and E)
G) C) and D)

Question 16

The demand for a product is said to be inelastic if total consumer expenditures

Accepted Answer

A)   remain constant as price changes.
B)   rise more than price rises as a percentage.
C)   fall when price falls.
D)   fall when price rises.
E)   rise less than price as a percentage.F) A) and C)
G) B) and D)

Question 17

When demand is perfectly inelastic, an increase in price will result in

Accepted Answer

A)   a decrease in total revenue.
B)   an increase in total revenue.
C)   no change in total revenue.
D)   a decrease in quantity demanded.
E)   an increase in quantity demanded.F) B) and C)
G) C) and D)

Question 18

Teddy's Burgers decreased the price of their hamburgers by 25 cents, and sold 100 more hamburgers each day. It can be concluded that Teddy's Burgers has a(n)  ____ demand for its burgers.

Accepted Answer

A)   inelastic
B)   elastic
C)   unit elastic
D)   perfectly elastic
E)   Nothing can be concluded about elasticity for Teddy's Burgers.F) C) and D)
G) B) and E)

Question 19

Figure 4.2
 
-Refer to Figure 4.2. The demand curve E is most likely to represent the

Accepted Answer

A)   demand for heroin by a drug addict.
B)   market demand for wheat.
C)   demand for one orchard's apples.
D)   demand for a particular brand of breakfast cereal.
E)   demand for air conditioning during a hot summer.F) A) and E)
G) All of the above

Question 20

Price elasticity of demand is also known as the slope of the demand curve.

Accepted Answer

A) True 
 B)False

Exam 4: The Firm and the Consumer

Which of the following would most likely be the price elasticity of demand for a fancy cruise to Hawaii?

Correct AnswerverifiedShow Answer

Figure 4.2 -Refer to Figure 4.2. The demand curve E is most likely to represent the

Correct AnswerverifiedShow Answer

Price elasticity of demand is also known as the slope of the demand curve.

Correct AnswerverifiedShow Answer

For a downward-sloping straight-line demand curve, the top portion of the curve is generally

Correct AnswerverifiedShow Answer

If demand is perfectly inelastic, then the

Correct AnswerverifiedShow Answer

When the price of a good increases by 50 percent, quantity demanded decreases by 2 percent. What is the price elasticity of demand?

Correct AnswerverifiedShow Answer

Any change in price that causes a limitless response in the quantity demanded of a product indicates that demand is perfectly inelastic.

Correct AnswerverifiedShow Answer

Airlines now charge passengers for checking luggage, and for food and blankets in flight. Airlines must have determined that demand for these items is

Correct AnswerverifiedShow Answer

The demand for a product is said to be inelastic if total consumer expenditures

Correct AnswerverifiedShow Answer

Price is the same as

Correct AnswerverifiedShow Answer

If a university charges a set tuition for 12 credit hours or more, its marginal revenue from students taking an overload is zero.

Correct AnswerverifiedShow Answer

If a change in price causes no response at all in the quantity of the product demanded, then demand for the product is

Correct AnswerverifiedShow Answer

The reason students receive discounts to their athletic events is

Correct AnswerverifiedShow Answer

If total revenue falls as price rises, then the demand for the product

Correct AnswerverifiedShow Answer

If the price elasticity of demand is equal to 4, a 1 percent increase in price will cause the quantity demanded to ____ by ____ percent.

Correct AnswerverifiedShow Answer

When demand is perfectly inelastic, an increase in price will result in

Correct AnswerverifiedShow Answer

Total revenue is the

Correct AnswerverifiedShow Answer

To say there is an elastic demand for a product means that

Correct AnswerverifiedShow Answer

If a product has an inelastic demand, then

Correct AnswerverifiedShow Answer

Teddy's Burgers decreased the price of their hamburgers by 25 cents, and sold 100 more hamburgers each day. It can be concluded that Teddy's Burgers has a(n) ____ demand for its burgers.

Correct AnswerverifiedShow Answer

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If the price elasticity of demand is equal to 4, a 1 percent increase in price will cause the quantity demanded to by percent.

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