Econ 101 - Microeconomics » Fall 2019 » iVat Chapter 6

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Question #1
The price elasticity of demand is defined as the:
A.   Change in quantity above the equilibrium
B.   Change in price divided by the change in quantity demanded.
C.   Percentage change in quantity demanded divided by percentage change in price.
D.   Change in quantity demanded divided by the change in price.
E.   Percentage change in price divided by the percentage change in quantity demanded.
Question #2
The price elasticity of demand for heroin, an extremely addictive substance, is most likely:
A.   Less than 1.
B.   Equal to 1.
C.   Greater than 1.
D.   Is elastic in the short run and inelastic in the long run.
E.   Between 0 and 1.5.
Question #3
Elasticity's independence from units is useful:
A.   Because it causes the demand curve to invert.
B.   Because it enables a greater variety of units.
C.   Because it enables us to compare the price sensitivities of various markets.
D.   Because it complicates the analysis.
Question #4
A price elasticity of demand of 0.6 means that:
A.   quantity demanded changes for each 9% for each 1% change in price.
B.   quantity demanded changes 8 units for every $1 change in price.
C.   quantity demanded changes .6 units for every $1 change in price.
D.   quantity demanded changes 6% for each 1% change in price.
E.   quantity demanded changes 1.2% for each 2% change in price.
Question #5
If an economist estimated the price elasticity of demand for new cars to be 0.93. If the price of cars rose by 20%, one would expect the quantity of new cars demanded to:
A.   Rise by 40%.
B.   Rise by 49%.
C.   Fall by 0.93%.
D.   Fall by 18.6%.
E.   Rise by 0.93%.
Question #6
Why is it important to utilize the end-point problem elasticity formula when calculating elasticity along a demand or supply curve?
A.   Because you will get differing quantity figures depending on whether you are analyzing a price increase or price decrease.
B.   Because you will get differing elasticity figures depending on whether you are analyzing a price increase or price decrease.
C.   None of the available answers.
D.   Because you will get differing elasticity figures depending on whether you are analyzing supply or demand.
Question #7
Suppose that an economist estimated that for every 1% increase in wages for fast food workers, workers increased their supply of labor by 1.45%. This indicates that the price elasticity of supply for fast food workers is:
A.   Elastic
B.   Perfectly inelastic
C.   inelastic
D.   Perfectly elastic
E.   In equilibrium
Question #8
If a supply curve is vertical, it is:
A.   Elastic
B.   In equilibrium
C.   Perfectly elastic
D.   Perfectly inelastic
E.   Inelastic
Question #9
As you move down a demand curve and drop the price further and further:
A.   The price elasticity of demand moves toward being inelastic.
B.   The price elasticity of demand moves toward being elastic.
C.   The price elasticity of demand moves toward being hyper-elastic.
D.   None of the available answers.
Question #10
Suppose we have the following information for the following markets: Luxury Watches: ED=5 Coffee: ED=0.3 Question: Suppose that the supply curves increase and shift to the right in both markets. Which market's equilibrium price will change by the greatest amount?
A.   The coffee market's equilibrium price will drop by a greater amount, in percentage terms, relative to the luxury watch market.
B.   The coffee market's equilibrium price will drop by a lesser amount, in percentage terms, relative to the luxury watch market.
C.   The luxury watch market's equilibrium price will drop by a greater amount, in percentage terms, relative to the coffee market.
D.   The luxury watch market's equilibrium price will drop by an equal amount, in percentage terms, relative to the coffee market.
Question #11
Elasticity of supply is lower the shorter the time period considered because the shorter the time period:
A.   The fewer options that are available for producers to change production.
B.   The higher the equilibrium.
C.   The lower the marginal cost of production.
D.   The higher the marginal cost of production.
E.   The fewer the options available for consumers to change consumption.
Question #12
Which good would we expect to be the most inelastic?
A.   Sunglasses.
B.   Apple Computer.
C.   Luxury watch.
D.   Wheelchair.
Question #13
The price elasticity of demand for soda:
A.   In Sacramento is less than the price elasticity of demand for the State of California.
B.   In the State of California is greater than the price elasticity of demand for Sacramento.
C.   In Sacramento is equal to the price elasticity of demand for the State of California.
D.   In Sacramento is greater than the price elasticity of demand for the State of California.
Question #14
Suppose we have the following information concerning the price elasticity of demand for calculators: ED=3 Question: If the calculator manufacturer increases production what will happen to total revenue (TR)?
A.   TR will increase.
B.   TR will initially increase, but will subsequently decrease.
C.   TR will stay the same.
D.   TR will decrease.
Question #15
Suppose that an economist has estimated elasticity of demand for commuter rail transportation to be 0.4 in the short-run and 1.8 in the long run. An increase in rail fares would:
A.   Raise revenue in the short run but decrease revenue in the long run.
B.   Decrease revenue in both the short and long run.
C.   Raise revenue in both the short and long run.
D.   Decrease revenue in the short run but raise revenue in the long run.
E.   Decrease revenue only in the short run.
Question #16
Suppose we have the following information concerning the price elasticity of demand for calculators: ED=0.7 Question: If the calculator manufacturer increases production what will happen to total revenue (TR)?
A.   TR will stay constant.
B.   TR will increase.
C.   TR will initially decrease, but will then subsequently increase.
D.   TR will decrease.
Question #17
The fact that airlines charge business travelers more for the same airplane seat than leisure travelers is an example of:
A.   disequilibrium.
B.   price discrimination where the carrier charges those with greater elasticity a lower fare.
C.   a price control where the carrier charges those with greater elasticity a higher fare
D.   a price control where the carrier charges those with greater elasticity an equal fare
E.   price discrimination where the carrier charges those with greater elasticity a higher fare.
Question #18
Which of the following goods should have a positive income elasticity of demand?
A.   Louis Vuitton Shoes.
B.   Instant Coffee.
C.   Payless Shoes.
D.   Spam.
Question #19
Which of the following goods should have a positive cross-price elasticity of demand between one another?
A.   Coffee and sugar.
B.   Peanut butter and jelly.
C.   Business suits and ties.
D.   Mercedes-Benz and BMW automobiles.

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