Rutgers University. Spring 2009

Rutgers University. Spring 2009 - Tests for Chapters 5-7....

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Tests for Chapters 5-7. Rutgers University. Spring 2009. Microeconomics. 220:102:08 Instructor: Swanzer. No Cell Phones allowed Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. ____ 1. The price elasticity of demand measures a. buyers’ responsiveness to a change in the price of a good. b. the extent to which demand increases as additional buyers enter the market. c. how much more of a good consumers will demand when incomes rise. d. the movement along a supply curve when there is a change in demand. ____ 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. There are very few, if any, good substitutes for motor oil. Therefore, a. the demand for motor oil would tend to be inelastic. b. the demand for motor oil would tend to be elastic. c. the demand for motor oil would tend to respond strongly to changes in prices of other goods. d. the supply of motor oil would tend to respond strongly to changes in people’s tastes for large cars relative to their tastes for small cars. ____ 4. The price elasticity of demand for bread a. is computed as the percentage change in quantity demanded of bread divided by the percentage change in price of bread. b. depends, in part, on the availability of close substitutes for bread. c. reflects the many economic, social, and psychological forces that influence consumers' tastes for bread. d. All of the above are correct. Figure 5-2 ____ 5. Refer to Figure 5-2 . If the price decreased from \$18 to \$6, a. total revenue would increase by \$1,200 and demand is elastic between points A and C. b. total revenue would increase by \$800 and demand is elastic between points A and C. c. total revenue would decrease by \$1,200 and demand is inelastic between points A and C. d. total revenue would decrease by \$800 and demand is inelastic between points A and C.

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____ 6. Demand is said to be unit elastic if a. quantity demanded changes by the same percent as the price. b. quantity demanded changes by a larger percent than the price. c. the demand curve shifts by the same percentage amount as the price. d. quantity demanded does not respond to a change in price. ____ 7. Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the a. steeper the demand curve will be. b. flatter the demand curve will be. c. further to the right the demand curve will sit. d.
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Rutgers University. Spring 2009 - Tests for Chapters 5-7....

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