exam2b - ECON 210 Exam #2 Pink Fall 2009 (Practice Exam #2B...

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ECON 210 Exam #2 Pink Fall 2009 (Practice Exam #2B for Fall 2010) 1. If an increase in price by 40% decreases the quantity demanded by 30%, the price elasticity of demand is ____, and demand is ______. a. 3/10; inelastic b. 0; perfectly inelastic c. ¾; inelastic d. 2/5; elastic 2. When creating your grocery budget for this school year, purchases of Pepsi took up 70% of your budget, while banana purchases represented 1% of your budget, peaches represented 2% of your budget, and fast food represented 5% of your budget. Based on this information, your demand is likely to be most elastic for which product? a. Pepsi b. Bananas c. Peaches d. Fast food 3. When the price of cakes is $20, a bakery is willing to supply 30 cakes each day. When the price rises to $22, the bakery is willing to supply 36 cakes each day. What is the price elasticity of supply? a. 11/21 = .52 b. 21/11 = 1.91 c. 7/33 = .21 d. 33/7 = 4.71 4. If two goods are substitutes, their cross-price elasticity between the goods is a. Negative b. Positive c. Equal d. Zero 5. If the demand for tickets to a football game is elastic, an increase in the ticket price will a. Increase revenue b. Decrease revenue c. Make demand less elastic d. None of the above
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6. If the income elasticity for toilet paper is 0.7, which of the following is true? a. Demand for toilet paper is elastic b. Demand for toilet paper is inelastic c. Toilet paper is a normal good d. Toilet paper is an inferior good 7. If the income elasticity for toilet paper is 0.7, if incomes have fallen by 15%, you expect to see the quantity demanded of toilet paper to a. Increase by 10.5% b. Decrease by 10.5% c. Increase by 2.1% d. Decrease by 2.1% 8. The price elasticity of demand for sailboats is 3.2 and the price elasticity of supply for sailboats is 1.4. Who will bear more of the burden of a $4 tax in this market? a. Consumers b. Producers c. Government d. Consumers and producers share the burden equally 9. In the market for video games, the current price is $30 per game. The price elasticity of demand is 4, and the price elasticity of supply is 4. If a $2 per game tax is imposed in the market, how will consumers and producers be affected? a. Consumers will pay $2 more per video game, and producers will receive $2 less per video game. b. Consumers will pay $2 more per video game, and producers will receive $1 less per video game. c. Consumers will pay $1.50 more per video game, and producers will receive $0.50 less per video game. d. Consumers will pay $1 more per video game, and producers will receive $1 less per video game.
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exam2b - ECON 210 Exam #2 Pink Fall 2009 (Practice Exam #2B...

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