# Quiz 2 - ECO 304K INTRODUCTION TO MICROECONOMICS Unique it...

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Unformatted text preview: ECO 304K: INTRODUCTION TO MICROECONOMICS Unique it 33645, Fall 2009, Prof. Wiseman Quiz 2 Seiect the single best answer for each question. I. In a market economy, prices are determined by: A. A benevolent government B. Producers who supply goods and services that consumers want Cg Buyers and sellers, each acting as a selfuinterested decision maker D. Consumers, since they are ultimately the demanders of good and services / 2. Which of the following might cause the equilibrium price of honey to rise and the equilibriumﬂuantity to faii?» A. An increase in population of honey lovers " ‘ 4’ wevastation of honeybee population by a parasitic bug C. Increase in the use of honeybee colonies for agricultural poliination D. An increase in the price of molasses, a substitute for honey 3:”The price elasticity of demand for electricity in the United States is estimated at «0.13. Which of the following could explain why the price elasticity of demand for electricity is so low? {54 Electricity is an addictive product ,IB': Electricity is a heavily subsidized industry @There are few close substitutes for electricity 3 D. Households use too many electricity chugging appliances 4. The price elasticity of demand is the ratio of the: A. Amount of change in quantity demanded to the amount of change in price 8. mount of change in price to the amount of change in quantity demanded CC: ercentage change in quantity demanded to the percentage change in price I). i’ercentage change in price to the percentage change in quantity demanded 5. Suppose when the price of Dr. Bob‘s ice cream rose by 4 percent, quantity demanded feil by 6 percent. What happens to total revenue following the price increase? . b; M AsﬂTotal revenue increases ”QT-r r l - ‘3 (Eyrotal revenue decreases if. > i . Total revenue remains unchanged n . D. Cannot be determined without information on prices and quantities sold at last: ﬂ 6. The figure beiow shows the demand and supply curves for cheese. At a price of \$3.00, A? Quantity sold is 138 pounds .9 There is a shortage of 66 pounds . All buyers who are willing to pay \$3.00 wiii be able to purchase this cheese D. The quantity supplied is greater than the quantity demanded 3.00 Price per Pound 513 F2 99 138 Quantity of Cheese (pounds) ...
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