ECONOMICS 202 – EXAM 2A – FALL 2009
1. Assume the price for good Z fell from $11 to $9 and then the number of units sold increased from 5 to 7.
Therefore, between $11 and $9 |Ed| = : (use midpoints formula)
2. Consider again your calculation of |Ed| for good Z in question #1.
If the demand curve for Z is a straight line,
|Ed| for good Z between prices 20 and 22, will be ______ between prices 9 & 11.
a. greater than;
b. less than;
c. equal to;
d. not enough information to know how |Ed| would change.
3. The reason for using the midpoints formula to calculate |Ed| is because if we did not,:
a. the sign of Ed would be positive if the price were rising but negative if the price were falling.
b. we could not determine whether goods are complements or substitutes
c. we could not determine if the goods in question are normal or inferior
d. we could not identify the price that separates the elastic from the inelastic range of the demand curve.
e. none above
4. When we measure |Ed|, Es, Edxy and Esxy were are measuring a ____, ____, ____, ____, the relevant
a. movement along, shift of, shift of, shift of
b. movement along, movement along, shift of, shift of
c. movement along, movement along, movement along, shift of
d. shift of, movement along, movement along, shift of
d. shift of, shift of, shift of, movement along.
5. My barber says he has to raise his prices to increase his revenues.
I have told him that instead he should
lower his prices if he wants more revenue.
Thus, between the relevant prices my barber believes |Ed| is _____
while I believe |Ed| is ______.
a. > 1, < 1;
b. < 1, > 1;
c. = 1, <1;
d. < 1, = 1;
e. > 1, = 1
6. In the example discussed in class about the Canadian government’s attempt to reduce cigarette smoking by
raising the price of cigarettes, the results of the program revealed that |Ed| among teenagers was greater than
The likely reason given for this was that:
a. adults were able to find more or better substitutes that were teenagers.
b. addiction was more intense among teenagers than adults
c. adults apparently react more slowly to a change in price than do teenagers.