CH20RTF - CHAPTER 20 Demand and Supply: Elasticities and...

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CHAPTER 20 Demand and Supply: Elasticities and Government-Set Prices Topic Question numbers ___________________________________________________________________________________________________ 1. Review of demand and supply 1-8 2. Price elasticity of demand 9-47 3. Total revenue test 48-83 4. Determinants of price elasticity 84-101 5. Applications of price elasticity 102-108 6. Elasticity of supply 109-132 7. Cross and income elasticity 133-155 8. Legal and disequilibrium prices 156-175 Last Word 176-177 True-False 178-197 ___________________________________________________________________________________________________ Multiple Choice Questions Review of demand and supply 1. A "change in demand" means: A) a change in the elasticity of a demand curve. B) the shift of a demand curve. C) a movement along a specific demand schedule or curve. D) that quantity demanded changes as price changes. 2. Suppose that a severe frost destroys one-half of Florida's orange crop. As a result, we would expect: A) an increase in the demand for oranges. B) a rise in the price of grapefruit. C) a decline in the price of oranges. D) a decline in the price of prunes. 3. Suppose we observe over a period of time that the price and the quantity sold of a certain product have both increased. One explanation might be that: A) supply increased over time, while demand declined. B) supply decreased over time, while demand remained the same. C) supply and demand both decreased. D) demand increased over time, while supply remained the same. Page 1
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4. In which of the following instances is the effect on equilibrium price indeterminate, that is, dependent on the magnitude of the shifts in supply and demand? A) demand rises and supply rises B) supply falls and demand remains constant C) demand rises and supply falls D) supply rises and demand falls 5. If the money income of a consumer decreases and, as a result, his or her demand for product X increases, product X is: A) a normal good. B) a complementary good. C) a substitute good. D) an inferior good. 6. Which of the following could not cause an increase in the supply of wheat? A) a decrease in the price of wheat B) a decrease in the price of corn C) a decrease in the price of machinery and equipment used in wheat farming D) improvements in the techniques of growing wheat 7. If the price of product K decreases, the demand for close substitute product M will: A) become highly elastic. B) shift to the right. C) shift to the left. D) not be affected. 8. The income and substitution effects explain why: A) the elasticity of demand can be unity. B) product demand curves are downsloping. C) product supply curves are upsloping. D) equilibrium is always achieved in a competitive market. Price elasticity of demand
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This note was uploaded on 06/24/2008 for the course ECO 201/202 taught by Professor N/a during the Spring '08 term at VCCS.

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CH20RTF - CHAPTER 20 Demand and Supply: Elasticities and...

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