eco212_r5_quiz_week2[1] - Supply, Demand, and Price...

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Supply, Demand, and Price Elasticity Quiz ECO/212 Version 5 1 University of Phoenix Material Supply, Demand, and Price Elasticity Quiz Student: ____________________________ Date: ____________________________________ Section One: Multiple Choice 1. If a 20% decrease in the price of long distance phone calls leads to a 35% increase in the quantity of calls demanded, you may conclude that the demand for phone calls is a. elastic. b. inelastic. c. unit elastic. d. stretchy elastic. 2. Which of the following pairs are examples of substitutes? Popcorn and Soda Automobiles and bicycles Boats and fishing tackle Wine and cheese 3. If a price in a competitive market is “too high to clear the market,” what does this usually mean? Assume upward-sloping supply curves. .a No producer can cover the costs of production at that price. .b Quantity supplied exceeds quantity demanded at that price. .c Producers are leaving the industry. .d Consumers are willing to buy all the units produced at that price. 4. Which of the following statements is incorrect? Assume upward-sloping supply curves. .a If the supply curve shifts left and the demand remain constant, equilibrium price will rise. .b If the demand curve shifts left and the supply increase, equilibrium price will rise. .c If the supply curve shifts right and the demand curve shifts left, equilibrium price will fall. .d If the demand curve shifts right and the supply curve shifts left, price will rise.
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Supply, Demand, and Price Elasticity Quiz ECO/212 Version 5 2 Section Two: Short Answer (250 words or less) 1. Define elasticity of demand. Provide an example. Elasticity of demand is how the product demanded influences the changes in price. If a product is elastic, a noticeable change in price takes place when demands increase or decrease. If a product is inelastic, it is most likely a necessity, and the price does not change due to demands. The company I work for would be considered inelastic. I
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This note was uploaded on 08/22/2011 for the course ACCOUNTING 201 taught by Professor Stevejoseph during the Winter '11 term at Aarhus Universitet.

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eco212_r5_quiz_week2[1] - Supply, Demand, and Price...

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