practicetest_micro5

practicetest_micro5 - Practice Test Microeconomics Chapter...

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1 Practice Test Microeconomics Chapter 5 Instructor: Song Gao Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. Demand is said to be elastic if a. the price of the good responds substantially to changes in demand. b. demand shifts substantially when income or the expected future price of the good changes. c. buyers do not respond much to changes in the price of the good. d. buyers respond substantially to changes in the price of the good. ____ 2. The demand for Werthers candy is likely a. elastic because candy is expensive relative to other snacks. b. elastic because there are many close substitutes for Werthers. c. elastic because Werthers are regarded as a necessity by many people. d. inelastic because it is usually eaten quickly, making the relevant time horizon short. ____ 3. The price elasticity of demand for a good measures the willingness of a. consumers to move away from the good as price rises. b. consumers to avoid monopolistic markets in favor of competitive markets. c. firms to produce more of a good as price rises. d. firms to cater to the tastes of consumers. ____ 4. If the quantity demanded of a certain good responds only slightly to a change in the price of the good, then a. the demand for the good is said to be elastic. b. the demand for the good is said to be inelastic. c. the law of demand does not apply to the good. d. the demand curve for the good shifts only slightly in response to a change in price. ____ 5. The greater the price elasticity of demand, the a. more likely the product is a necessity. b. smaller the responsiveness of quantity demanded to a change in price. c. greater the percentage change in price over the percentage change in quantity demanded. d. greater the responsiveness of quantity demanded to a change in price. ____ 6. The value of the price elasticity of demand for a good will be relatively large when a. there are no good substitutes available for the good. b. the time period in question is relatively short. c. the good is a luxury as opposed to a necessity. d. All of the above are correct. ____ 7. Suppose there is a 6 percent increase in the price of good X and a resulting 6 percent decrease in the quantity of X demanded. Price elasticity of demand for X is a. 0. b. 1. c. 6. d. 36. ____ 8. Suppose the price of Twinkies decreases from $1.45 to $1.25 and, as a result, the quantity of Twinkies demanded increases from 2,000 to 2,200. Using the midpoint method, the price elasticity of demand for Twinkies in the given price range is a. 2.00. b. 1.55. c. 1.00. d. 0.64.
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2 Figure 5-1 ____ 9. Refer to Figure 5-1 . Suppose the point labeled B is the halfway point? on the demand curve and it corresponds to a price of $5.00. Then, between prices of $4.90 and $5.10, a. the price elasticity of demand is less than 1. b.
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practicetest_micro5 - Practice Test Microeconomics Chapter...

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