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econ002springpracticeexam2ans

# econ002springpracticeexam2ans - ECON 002 Spring Practice...

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ECON 002 Spring Practice Exam #2 1. A restaurant can sell 20 slices of pizza at a price of \$5 per slice and 30 slices at a price of \$3 per slice. Using the midpoint method, what is the price elasticity of demand? A) 0.40 B) 0.80 C) 1.25 D) 6.25 2. Of the following goods, for which would demand be the most inelastic? A) food B) breakfast food C) breakfast cereal D) Post Raisin Bran 3. Alice says that she would buy one banana split a day regardless of the price. If she is telling the truth, A) Alice's demand for banana splits is perfectly inelastic. B) Alice's demand for banana splits is unit elastic. C) Alice's demand for banana splits is perfectly elastic. D) Alice's demand for banana splits is elastic but not perfectly elastic. 4. Which of the following cases illustrates a situation where demand is most price inelastic? A) Wage rates for clerical workers increase by 20%, and the number of workers hired decreases by 40%. B) Gasoline prices rise from \$1.00 per gallon to \$1.25 per gallon and total sales revenue increase from \$5,000 per month to \$6,000 per month. C) Prices for theater tickets fall by 10% and the number of tickets sold increases by 15%. D) Gasoline prices fall from \$1.25 per gallon to \$1.00 per gallon and total sales revenue increases from \$10,000 per month to 19,000 per month. 5. If a change in the price of a good results in no change in total revenue, A) the demand for the good must be elastic. B) the demand for the good must be inelastic. C) the demand for the good must be unit elastic. D) the demand for the good must be perfectly inelastic. 6. Supply tends to be A) less price elastic in the long run. B) more price elastic in the long run. C) perfectly price inelastic in the long run. D) perfectly price elastic in the long run.

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Refer to the following diagram to answer question #7. 7. In the above diagram, supply curve S2 is A) relatively more elastic than both S1 and S3. B) relatively more elastic than S3 but relatively less elastic than S1.
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econ002springpracticeexam2ans - ECON 002 Spring Practice...

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