323-Review for exam1

323-Review for exam1 - -1- ECON 323 (502) TEST ASpring 2011

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Unformatted text preview: -1- ECON 323 (502) TEST ASpring 2011 Name___________________________________ ID#_____________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following would cause a rightward shift in the demand curve for gasoline? I. A large increase in the price of public transportation. II. A large decrease in the price of automobiles. III. A large reduction in the costs of producing gasoline. A) I and II only B) I only C) II and III only D) II only E) I, II, and III 2) From 1970 to 1993, the real price of a college education increased, and total enrollment increased. Which of the following couldhave caused this increase in price and enrollment? A) A shift to the left in the supply curve for college education and a shift to the left in the demand curve for college education. B) A shift to the right in the supply curve for college education and a shift to the left in the demand curve for college education. C) A shift to the left in the supply curve for college education and a shift to the right in the demand curve for college education. D) none of the above 3) Which of the following represents the price elasticity of demand? A) B) C) D) 4) Which of the following statements about the diagram below is true? A) Demand is completely inelastic. B) Demand becomes more inelastic as price declines. C) Demand is infinitely elastic. D) Demand becomes more elastic as price declines. 5) Which of the following pairs of goods are most likely to have a negative cross price elasticity of demand? A) Rail tickets and plane tickets B) Coke and Pepsi C) Hotdogs and hotdog buns D) A Luciano Pavarotti compact disc and a Placido Domingo compact disc (Both Pavarotti and Domingo are opera stars.) -2- 6) A simple linear demand function may be stated as Q = a bP + cI where Q is quantity demanded, P is the product price, and I is consumer income. To compute an appropriate value for b, we can use observed values for Q and P and then set -b(P/Q) equal to the: A) cross-price elasticity of demand. B) price elasticity of supply. C) income elasticity of demand. D) price elasticity of demand. 7) Suppose that, at the market clearing price of natural gas, the price elasticity of demand is -1.2 and the price elasticity of supply is 0.6. What will result from a price ceiling that is 10 percent below the market clearing price? A) A shortage equal to 1.8 percent of the market clearing quantity B) A shortage equal to 6 percent of the market clearing quantity C) A shortage equal to 0.6 percent of the market clearing quantity D) A shortage equal to 18 percent of the market clearing quantity E) More information is needed....
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This note was uploaded on 06/09/2011 for the course ECON 323 taught by Professor Staff during the Summer '08 term at Texas A&M.

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323-Review for exam1 - -1- ECON 323 (502) TEST ASpring 2011

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