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Hell on Earth Economics [Teacher: Abdinova Makpal ; Final Exam + Quizzes] ▼ (Final Exam Prep) Quiz on Economics Final Exam [Chap. 5-6], created by Good Guy Beket on 27/12/2018.

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Economics Final Exam [Chap. 5-6]

Economics Final Exam [Chap. 5-6]

Question 1 of 20

1

A good will tend to have an inelastic demand if

Select one of the following:

  • The good has many close substitutes

  • The good is a luxury

  • The market is defined very broadly

  • The time horizon is long

Explanation

Question 2 of 20

1

A perfectly elastic demand is represented graphically by a:

Select one of the following:

  • relatively steep demand curve

  • Relatively flat demand curve

  • vertical demand curve

  • Horizontal demand curve

Explanation

Question 3 of 20

1

What effect will an increase in the price have on total revenue, if demand is elastic?

Select one of the following:

  • total revenue will increase

  • total revenue will decrease

  • total revenue will first decrease and then increase

  • total revenue will remain unchanged

Explanation

Question 4 of 20

1

The price elasticity of demand tends to be more elastic:

Select one of the following:

  • at points further up and to the left along the demand curve

  • at points further down into the right along the demand curve

  • when the demand curve becomes steeper

  • when the demand curve is vertical

Explanation

Question 5 of 20

1

Suppose that General Cars increases the price of its Cadillac model from $13,500 to 16,500. As a result of this the quantity demanded of the Cadillac model decreases from $600,000 to $400,000 per year. Find the price elasticity of demand of the Cadillac.

Select one of the following:

  • 3.0

  • 0.5

  • 1.5

  • 0.33

Explanation

Question 6 of 20

1

If a firm needs to increase its total revenue, the firm should ________ the price, if the demand for its product is:

Select one of the following:

  • Drop, inelastic

  • raise, elastic

  • Drop, elastic

  • Drop, unit elastic

Explanation

Question 7 of 20

1

Suppose that consumers income rise by 3% and that this causes the quantity demanded for a good to increase by 4.5%. What is the income elasticity of demand?

Select one of the following:

  • 1.50

  • 0.67

  • — 1.50

  • — 0.67

Explanation

Question 8 of 20

1

Suppose that a good has an income elasticity of -2.0. This means that the good is:

Select one of the following:

  • normal

  • inferior

  • substitute

  • a complement

Explanation

Question 9 of 20

1

Suppose that two goods have a cross price elasticity of -0.8, this means that these goods are:

Select one of the following:

  • normal

  • inferior

  • a substitute

  • a complement

Explanation

Question 10 of 20

1

The price of good A increases from $4.50 to $5.50. This causes the quantity demanded of good B to increase from 900 to 1100 units per month. Find the cross price elasticity of demand.

Select one of the following:

  • — 1.0

  • + 2.0

  • + 1.0

  • — 2.0

Explanation

Question 11 of 20

1

Suppose that a regulation is in place that does not allow the price of a good to exceed $5. If this price is above the equilibrium price in the market, this would be an example of a:

Select one of the following:

  • binding price ceiling.

  • not binding price ceiling.

  • binding price floor.

  • not binding price floor.

Explanation

Question 12 of 20

1

Suppose that a regulation is in place that does not allow the price of a good to fall below $10. If this price is above the equilibrium price in the market, this would be an example of a:

Select one of the following:

  • binding price ceiling.

  • not binding price ceiling.

  • binding price floor.

  • not binding price floor.

Explanation

Question 13 of 20

1

Suppose that a regulation is in place that does not allow the price of a good to exceed $5. If this price is below the equilibrium price in the market, this would be an example of a:

Select one of the following:

  • binding price ceiling.

  • not binding price ceiling.

  • binding price floor.

  • not binding price floor.

Explanation

Question 14 of 20

1

If a price floor is in place and it is binding, the market will:

Select one of the following:

  • remain in equilibrium, unaffected by the price floor.

  • experience a shortage.

  • experience a surplus.

  • adjust its equilibrium point toward the price floor.

Explanation

Question 15 of 20

1

If a price ceiling is in place and it is binding, the market will:

Select one of the following:

  • remain in equilibrium, unaffected by the price floor.

  • experience a shortage.

  • experience a surplus.

  • adjust its equilibrium point toward the price floor.

Explanation

Question 16 of 20

1

If a price floor is in place and it is not binding, the market will:

Select one of the following:

  • remain in equilibrium, unaffected by the price floor.

  • experience a shortage.

  • experience a surplus.

  • adjust its equilibrium point toward the price floor.

Explanation

Question 17 of 20

1

If a tax is imposed on buyers of a good, the ________ curve of the good will shift ________ by the amount of the tax.

Select one of the following:

  • demand, upward

  • demand, downward

  • supply, upward

  • supply, downward

Explanation

Question 18 of 20

1

If a tax is imposed on sellers of a good, the ________ curve of the good will shift ________ by the amount of the tax.

Select one of the following:

  • demand, upward

  • demand, downward

  • supply, upward

  • supply, downward

Explanation

Question 19 of 20

1

If a tax is imposed on a good and the incidence of the tax ends up falling more heavily on the sellers than on the buyers, this will be because:

Select one of the following:

  • demand is more elastic than supply for that good.

  • demand is less elastic than supply for that good.

  • the tax was imposed on the buyers of the good.

  • the tax was imposed on the sellers of the good.

Explanation

Question 20 of 20

1

If a tax is imposed on a good and the incidence of the tax ends up falling more heavily on the buyers than on the sellers, this will be because:

Select one of the following:

  • demand is more elastic than supply for that good.

  • demand is less elastic than supply for that good.

  • the tax was imposed on the buyers of the good.

  • the tax was imposed on the sellers of the good.

Explanation

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