test_2_micro - TEST 1 MAX. GRADE: 150 points Choose only 40...

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TEST 1 MAX. GRADE: 150 points Choose only 40 questions. Each question 3.75 points. 1. Suppose that Victoria and her friends are running a fundraiser by selling donuts. They want to know what will happen to their revenue if they increase the price of each donut from $0.80 to $1. What concept do they need to apply to find out their expected revenue? A. price elasticity of supply B. price elasticity of demand C. cross elasticity of demand D. income elasticity of demand Answer: B 2. If the price elasticity of demand is 0.5, this means that a ________ increase in price causes a ________ decrease in quantity demanded. A. 20%; 100% B. 30%; 15% C. 20%; 1% D. 5%; 1% Answer: B 3. Suppose that in a month the price of tulips increases from $1 to $1.50. At the same time, the quantity of tulips demanded decreases from 200 to 190. The price elasticity of demand for tulips (calculated using the initial value formula) is: A. 0.1. B. 0.5. C. 10. D. 20. Answer: A 4. If Juan purchases the same number of gallons of gasoline per week regardless of changes in gasoline price, Juan's demand for gasoline is: A. perfectly elastic. B. elastic. C. perfectly inelastic. D. inelastic. Answer: C 5. Demand for items people do not really need for their survival, such as cars, is generally ________ than demand for items such as water. A. higher B. lower C. more elastic D. less elastic Answer: C
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for its beer is set at a point where the price elasticity is 1.6. If ABC Beer Brewer increases the product price, A. the demand becomes more elastic and total revenue increases. B. the demand becomes less elastic and total revenue increases. C. the demand becomes more elastic and total revenue decreases. D. the demand becomes less elastic and total revenue decreases. Answer: C 7. The demand for a particular good depends on variables such as: A. consumer income. B. price of substitutes. C. price of complements. D. all of the above Answer: D 8. The quantity supplied of bagels is 100 at the unit price $1. Suppose the price elasticity of supply by the initial value method is 1.5, and you would like to induce sellers to increase the quantity of bagels supplied to 130. Then the new price for bagels must be: A. $11. B. $10.20. C. $1.20. D. $1.10. Answer: C 9. A market equilibrium will generate the largest possible surplus when: A. there are no external benefits and external costs. B. there is perfect competition.
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test_2_micro - TEST 1 MAX. GRADE: 150 points Choose only 40...

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