midterm 2

# midterm 2 - Exam Name MULTIPLE CHOICE Choose the one...

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Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Suppose that the quantity demanded of skipping ropes rises from 1250 to 1750 units when the price falls from \$1.25 to \$0.75 per unit. The price elasticity of demand for this product is 1) _______ A) 1. B) 2. C) 1/3. D) 2/3. E) 3/2. 2) Which of the following illustrates elastic demand? 2) _______ A) a price elasticity of 1.0 B) A 10 percent increase in price causes a 5 percent decrease in quantity demanded. C) A 10 percent increase in price causes a 10 percent reduction in quantity demanded. D) A 10 percent increase in price causes a 20 percent decrease in quantity demanded. E) a price elasticity of 0.8 FIGURE 4 - 1 3) Refer to Figure 4 - 1. In diagram 1, the price elasticity of demand 3) _______ A) is equal at points A, B, and C. B) at point A is less than at point C. C) at point A is equal to that at point C. D) at point A is greater than at point C. E) none of the above. 4) If the total expenditure on perfume increases when the price of perfume falls, the price elasticity of demand is 4) _______ A) exactly zero. B) greater than one (demand is elastic). C) not determinable from the information given. D) less than one (demand is inelastic). E) unity (demand is unit elastic). 5) Suppose that as the price of some product increases from \$4.00 to \$5.00 per unit the quantity supplied rises from 500 to 1000 units per month. Th e price elasticity

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of supply for this product is 5) __ __ __ _ A) 2.0. B) 1.0. C) 3.0. D) 2.5. E) 0.33. 6) An upward - sloping straight - line supply curve through the origin has an elasticity of 6) _______ A) infinity. B) one. C) zero. D) greater than one. E) less than one. 7) Consumers will bear a larger burden of an excise tax if 7) _______ A) demand is relatively inelastic and supply is relatively elastic. B) both demand and supply are relatively elastic. C) demand is relatively elastic and supply is relatively inelastic. D) the tax is collected by firms rather than remitted directly to the government by consumers. E) both demand and supply are relatively inelastic. 8) Nancy's income has just risen from \$950 per week to \$1,050 per week. As a result, she decides to double the number of movies she attends each week. Nancy's demand for movies is 8) _______ A) price elastic. B) difficult to comprehend if she is rational. C) price inelastic. D) income inelastic. E) income elastic. 9) An inferior good has 9) _______ A) a negative income elasticity of demand. B) an income elasticity of demand greater than zero but less than 1. C) a positive income elasticity of demand and a price elasticity of
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## This note was uploaded on 12/31/2011 for the course ECON 101 taught by Professor Vanderwaal during the Fall '08 term at Waterloo.

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midterm 2 - Exam Name MULTIPLE CHOICE Choose the one...

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