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econ practice exam 2

# econ practice exam 2 - EXAM 2 1 When the rental price of...

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EXAM 2 ____ 1. When the rental price of DVD movies is \$4, Denise rents five per month. When the price is \$1, she rents nine per month. Denise's demand for DVD rentals is a. elastic and her demand curve would be relatively flat. b. inelastic and her demand curve would be relatively steep. c. elastic and her demand curve would be relatively steep. d. inelastic and her demand curve would be relatively flat. ____ 2. For a good that is a Luxury, ____ 3. Harry's Barber Shop increased its total monthly revenue from \$1,500 to \$1,800 when it raised the price of a haircut from \$5 to \$9. The price elasticity of demand for Harry's Haircuts is ____ 4. Suppose a producer is able to separate customers into two groups, one having an inelastic demand and the other having an elastic demand. If the producer's objective is to increase total revenue, she should ____ 5. When small changes in price lead to infinite changes in quantity demanded, demand is perfectly a. elastic and the demand curve will be vertical. b. inelastic and the demand curve will be horizontal. c. inelastic and the demand curve will be vertical. d. elastic and the demand curve will be horizontal. ____ 6. Whether a good is a luxury or necessity depends on ____ 7. Which of the following is not a determinant of the price elasticity of demand for a good? ____ 8. Suppose the cross-price elasticity of demand between hot dogs and mustard is -2.00. This implies that a 20 percent increase in the price of hot dogs will cause the quantity of mustard purchased to

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econ practice exam 2 - EXAM 2 1 When the rental price of...

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