OldExam2 - Name: _ Class: _ Date: _ ID: A Exam 2 Multiple...

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Name: ________________________ Class: ___________________ Date: __________ ID: A 1 Exam 2 Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. The flatter the demand curve through a given point, the a. greater the price elasticity of demand at that point. b. smaller the price elasticity of demand at that point. c. closer the price elasticity of demand will be to the slope of the curve. d. greater the absolute value of the change in total revenue when there is a movement from that point upward and to the left along the demand curve. ____ 2. Suppose the income elasticity of demand for basketballs is 1.20. A 3 percent increase in the price of basketballs will result in a. a 3.6 percent decrease in the quantity of basketballs demanded. b. a 3.6 percent increase in the quantity of basketballs demanded. c. a 4 percent decrease in the number of basketballs demanded. d. None of the above is correct. ____ 3. If marijuana were legalized, it is likely that there would be an increase in the supply of marijuana. Advocates of marijuana legalization argue that this would significantly reduce the amount of revenue going to the criminal organizations that currently supply marijuana. These advocates believe that the a. supply for marijuana is elastic. b. demand for marijuana is elastic. c. supply for marijuana is inelastic. d. demand for marijuana is inelastic. ____ 4. Suppose that the cross-price elasticity of the demand for beer with respect to the price of wine is +0.30 in Sweeden, but -0.25 in Luxemborg. Which of the following is true: a. Wine is a substitute for wine in Sweeden and Luxemborg c. Wine is a substitute for wine in Sweeden and a complement in Luxemborg b. Wine is a complement for wine in Sweeden and Luxemborg d. Wine is a complement for wine in Sweeden and a substitute in Luxemborg
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Name: ________________________ ID: A 2 The picture below depicts the supply and demand diagram for slices of pizza. Use the diagram to answer the questions that follow.
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OldExam2 - Name: _ Class: _ Date: _ ID: A Exam 2 Multiple...

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