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Exam 2 Workbook
Exam 2 Workbook
1. Betsy and Susan are roommates at UTD. Both recently received raises.
Betsy now buys more music downloads than before, but Susan buys
fewer. Betsy behaves as if music downloads are _____ goods, and
Susan's income elasticity of demand for music downloads is _____.
A) inferior; positive
B) inferior; negative
C) normal; positive
D) normal; negative
1. Betsy and Susan are roommates at UTD. Both recently received raises.
Betsy now buys more music downloads than before, but Susan buys
fewer. Betsy behaves as if music downloads are _____ goods, and
Susan's income elasticity of demand for music downloads is _____.
A) inferior; positive
B) inferior; negative
C) normal; positive
D) normal; negative
1. Which of the following shows that it is not always the case that when the
government increases taxes, then tax revenue increases
A) the Mashallian demand curve.
B) the backward-bending supply curve.
C) the Laffer curve.
D) the Lewis supply curve.
1. Which of the following shows that it is not always the case that when the
government increases taxes, then tax revenue increases
A) the Mashallian demand curve.
B) the backward-bending supply curve.
C) the Laffer curve.
D) the Lewis supply curve.
3. The income elasticity of demand for eggs has been estimated to be 0.57.
If income grows by 5% in a period, demand will:
A) decrease by about 11.4%.
B) increase by about 8.77%.
C) increase by about 2.85%.
D) increase by about 11.4%.
3. The income elasticity of demand for eggs has been estimated to be 0.57.
If income grows by 5% in a period, demand will:
A) decrease by about 11.4%.
B) increase by about 8.77%.
C) increase by about 2.85%.
D) increase by about 11.4%.
5. A rancher in Oklahoma decides to raise the price of her beef by 19% over
the prevailing market price. If the demand for beef is perfectly elastic,
this rancher's quantity demanded will:
A) fall to 0.
B) fall slightly.
C) increase slightly.
D) not change.
5. A rancher in Oklahoma decides to raise the price of her beef by 19% over
the prevailing market price. If the demand for beef is perfectly elastic,
this rancher's quantity demanded will:
A) fall to 0.
B) fall slightly.
C) increase slightly.
D) not change.
2. Suppose the price of good C rose by 25% and the quantity demand of
good D decreased by 50%. We know that the cross-price elasticity is
such that:
A) ECD = –0.5.
B) EDC = –0.5.
C) EDC = –2.
D) ECD = –2.
3.Following all guidelines for perfect answers, illustrate and calculate (algebraically) the market
equilibrium price and quantity if QD = 110 2P; QS = -10 + 2P.
10
2. Suppose the price of good C rose by 25% and the quantity demand of
good D decreased by 50%. We know that the cross-price elasticity is
such that:
A) ECD = –0.5.
B) EDC = –0.5.
C) EDC = –2.
D) ECD = –2.
3.Following all guidelines for perfect answers, illustrate and calculate (algebraically) the market
equilibrium price and quantity if QD = 110 2P; QS = -10 + 2P.
11
1. Suppose supply increases by 5%, ceteris paribus the effect on equilibrium price will be
the smallest when
a. ES = 5.
b. ES = 0.
c. ES = 0.5.
d. ES = 10.
2. If a price increase from $20 to $40 causes quantity demanded to decrease from 100
units to 50 units, one can conclude that demand for the product is _____.
a. inelastic
b. perfectly elastic
c. elastic
d. unitary elastic
e. perfectly inelastic
1. Suppose supply increases by 5%, ceteris paribus the effect on equilibrium price will be
the smallest when
a. ES = 5.
b. ES = 0.
c. ES = 0.5.
d. ES = 10.
2. If a price increase from $20 to $40 causes quantity demanded to decrease from 100
units to 50 units, one can conclude that demand for the product is _____.
a. inelastic
b. perfectly elastic
c. elastic
d. unitary elastic
e. perfectly inelastic
1. If the percentage change in the quantity demanded of a good is greater than the
percentage change in the price of the good, then the demand for the good is _____.
a. elastic
b. inelastic
c. unit-elastic
d. perfectly elastic
e. perfectly inelastic
2. Consider the market for an inferior good. If consumer incomes decrease and the
number of firms in the industry increase, the effect of equilibrium price is _____ and the
effect on equilibrium quantity is _____ .
a. an increase; indeterminate.
b. indeterminate; an increase.
c. a decrease; indeterminate.
d. indeterminate; a decrease.
3. If the price of good A decreases by 10 percent and the quantity demanded of good B
decreases by 5 percent, this is evidence that goods A and B are
a. both normal goods.
b. inelastic.
c. substitutes for one another.
d. complement goods to one another.
e. both inferior goods.
4. When the manager of a local movie theater raises the price of movie tickets from $7.50
to $8.50, his total revenue falls. This means that:
a. demand is inversely related to price.
b. demand is positively related to price.
c. price and movie tickets are substitutes.
d. the demand for movie tickets is elastic.
e. the demand for movie tickets is inelastic.
5. Suppose a producer decides that if the price of his or her product is $10, the quantity
supplied will be 1,000 units, and if the price is $11, the quantity supplied will be 1,100.
The supply of the good is
a. inelastic.
b. unitary elastic.
c. elastic.
d. perfectly inelastic.
e. perfectly elastic.
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1. If the percentage change in the quantity demanded of a good is greater than the
percentage change in the price of the good, then the demand for the good is _____.
a. elastic
b. inelastic
c. unit-elastic
d. perfectly elastic
e. perfectly inelastic
2. Consider the market for an inferior good. If consumer incomes decrease and the
number of firms in the industry increase, the effect of equilibrium price is _____ and the
effect on equilibrium quantity is _____ .
a. an increase; indeterminate.
b. indeterminate; an increase.
c. a decrease; indeterminate.
d. indeterminate; a decrease.
3. If the price of good A decreases by 10 percent and the quantity demanded of good B
decreases by 5 percent, this is evidence that goods A and B are
a. both normal goods.
b. inelastic.
c. substitutes for one another.
d. complement goods to one another.
e. both inferior goods.
4. When the manager of a local movie theater raises the price of movie tickets from $7.50
to $8.50, his total revenue falls. This means that:
a. demand is inversely related to price.
b. demand is positively related to price.
c. price and movie tickets are substitutes.
d. the demand for movie tickets is elastic.
e. the demand for movie tickets is inelastic.
5. Suppose a producer decides that if the price of his or her product is $10, the quantity
supplied will be 1,000 units, and if the price is $11, the quantity supplied will be 1,100.
The supply of the good is
a. inelastic.
b. unitary elastic.
c. elastic.
d. perfectly inelastic.
e. perfectly elastic.
15
1. For a linear (constant slope) demand curve, elasticity is ______ above the (quantity,
price) midpoint and _____ below it.
a. constant; constant.
b. less than one; greater than one.
c. positive; negative.
d. greater than one; less than one.
e. negative; positive.
2. If the price elasticity of demand for a given product is 7, this means that
a. the percentage change in quantity demanded is 7 times the percentage change
in price.
b. if quantity demanded fell by 1 percent, price would fall by 7 percent.
c. if price was raised 7 percent, quantity demanded would rise 7 percent.
d. if price was raised 7 percent, quantity demanded would fall by 7 percent.
e. none of the above
3. Which two of the following illustrate essentially the same economic effects?
a. The backward-bending labor supply curve and the Lewis supply curve.
b. The backward-bending labor supply curve and a nonlinear demand curve.
c. The Lewis supply curve and Marshallian supply in the short-run.
d. The Laffer curve and a firm's total revenue curve.
4. Assume that the price elasticity of demand good is 0.20. A 10 percent increase in the
price of the good will be followed by a:
a. 0.2 percent decrease in the quantity demanded.
b. 2 percent increase in the quantity demanded.
c. 2 percent decrease in the quantity demanded.
d. 20 percent decrease in the quantity demanded.
e. 20 percent increase in the quantity demanded.
5. Price rises from $10 to $12, and the quantity demanded falls from 200 units to 180
units. What is the approximate price elasticity of demand between these two prices?
a. 3.67
b. 1.73
c. 0.58
d. 0.27
6. Consider the market for a normal good. If consumer incomes decrease and the number
of firms in the industry increase, the effect of equilibrium price is _____ and the effect on
equilibrium quantity is _____ .
a. indeterminate; a decrease.
b. a decrease; indeterminate.
c. indeterminate; an increase.
d. an increase; indeterminate.
16
1. For a linear (constant slope) demand curve, elasticity is ______ above the (quantity,
price) midpoint and _____ below it.
a. constant; constant.
b. less than one; greater than one.
c. positive; negative.
d. greater than one; less than one.
e. negative; positive.
2. If the price elasticity of demand for a given product is 7, this means that
a. the percentage change in quantity demanded is 7 times the percentage change
in price.
b. if quantity demanded fell by 1 percent, price would fall by 7 percent.
c. if price was raised 7 percent, quantity demanded would rise 7 percent.
d. if price was raised 7 percent, quantity demanded would fall by 7 percent.
e. none of the above
3. Which two of the following illustrate essentially the same economic effects?
a. The backward-bending labor supply curve and the Lewis supply curve.
b. The backward-bending labor supply curve and a nonlinear demand curve.
c. The Lewis supply curve and Marshallian supply in the short-run.
d. The Laffer curve and a firm's total revenue curve.
4. Assume that the price elasticity of demand good is 0.20. A 10 percent increase in the
price of the good will be followed by a:
a. 0.2 percent decrease in the quantity demanded.
b. 2 percent increase in the quantity demanded.
c. 2 percent decrease in the quantity demanded.
d. 20 percent decrease in the quantity demanded.
e. 20 percent increase in the quantity demanded.
5. Price rises from $10 to $12, and the quantity demanded falls from 200 units to 180
units. What is the approximate price elasticity of demand between these two prices?
a. 3.67
b. 1.73
c. 0.58
d. 0.27
6. Consider the market for a normal good. If consumer incomes decrease and the number
of firms in the industry increase, the effect of equilibrium price is _____ and the effect on
equilibrium quantity is _____ .
a. indeterminate; a decrease.
b. a decrease; indeterminate.
c. indeterminate; an increase.
d. an increase; indeterminate.
17
1. Consumers will bear the entire burden of a tax when _____ and producers will bear the
entire burden of a tax when _____ .
a. supply is perfectly elastic; demand is perfectly elastic.
b. supply is perfectly inelastic; demand is perfectly inelastic.
c. demand is perfectly elastic; supply is perfectly elastic.
d. none of the above.
2. Since they are often used together, peanut butter and jelly are:
a. substitutes and have a positive cross-price elasticity of demand.
b. complements and have a positive cross-price elasticity of demand.
c. substitutes and have a negative cross-price elasticity of demand.
d. complements and have a negative cross-price elasticity of demand.
3. For which of the following types of good is it possible for the elasticity of supply to be
negative.?
a. final products.
b. inferior goods.
c. Marshallian products.
d. complementary goods.
e. none of the above
5. Following all guidelines for perfect answers, illustrate and calculate (algebraically) the market equilibrium
price and quantity when QD = 260 5P; QS = -20 + 2P.
18
1. Consumers will bear the entire burden of a tax when _____ and producers will bear the
entire burden of a tax when _____ .
a. supply is perfectly elastic; demand is perfectly elastic.
relatively inelastic sector
b. supply is perfectly inelastic; demand is perfectly inelastic.
bears the burden
c. demand is perfectly elastic; supply is perfectly elastic.
d. none of the above.
2. Since they are often used together, peanut butter and jelly are:
a. substitutes and have a positive cross-price elasticity of demand.
b. complements and have a positive cross-price elasticity of demand.
c. substitutes and have a negative cross-price elasticity of demand.
d. complements and have a negative cross-price elasticity of demand.
3. For which of the following types of good is it possible for the elasticity of supply to be
negative.?
a. final products.
b. inferior goods.
c. Marshallian products.
d. complementary goods.
e. none of the above
5. Following all guidelines for perfect answers, illustrate and calculate (algebraically) the market equilibrium
price and quantity when QD = 260 5P; QS = -20 + 2P.
19
1. If Daniel bought 21 DVDs last year when his income was $30,000 and he buys 23
DVDs this year when his income is $35,000, then his income elasticity of demand is
approximately ______________ which means that DVDs are a(n) ______________ good
for Daniel.
a. +0.59; inferior
b. -1.69; inferior
c. +0.59; normal
d. -0.44; inferior
e. +1.69; normal
3. If a demand curve has a choke price (P-intercept) of 400 then demand is inelastic at a
price of
a. 100.
b. 200.
c. 300.
d. none of the above; we need to know the Q-intercept.
4. If the demand curve for a good is relatively inelastic and the supply curve is relatively
elastic, then who will pay the greater share of a tax placed on the good?
a. The sellers will pay the greater share.
b. The buyers and the sellers will pay equal shares.
c. There is not enough information to answer the question.
d. The buyers will pay the greater share.
20
1. If Daniel bought 21 DVDs last year when his income was $30,000 and he buys 23
DVDs this year when his income is $35,000, then his income elasticity of demand is
approximately ______________ which means that DVDs are a(n) ______________ good
for Daniel.
a. +0.59; inferior
b. -1.69; inferior
c. +0.59; normal
d. -0.44; inferior
e. +1.69; normal
3. If a demand curve has a choke price (P-intercept) of 400 then demand is inelastic at a
price of
a. 100.
b. 200.
c. 300.
d. none of the above; we need to know the Q-intercept.
4. If the demand curve for a good is relatively inelastic and the supply curve is relatively
elastic, then who will pay the greater share of a tax placed on the good?
a. The sellers will pay the greater share.
b. The buyers and the sellers will pay equal shares.
c. There is not enough information to answer the question.
d. The buyers will pay the greater share.
21
4. Consider the market for yoga pants. If it is found that yoga pants
dangerously decrease blood flow in wearers’ legs and the price of lycra
(used to make yoga pants) decreases, then
A) the equilibrium price will increase but the effect on equilibrium
quantity is indeterminate.
B) the equilibrium price will decrease but the effect on equilibrium
quantity is indeterminate.
C) the effect on equilibrium price is indeterminate but equilibrium
quantity will increase.
D) the effect on equilibrium price is indeterminate but equilibrium
quantity will decrease.
22
4. Consider the market for yoga pants. If it is found that yoga pants
dangerously decrease blood flow in wearers’ legs and the price of lycra
(used to make yoga pants) decreases, then
A) the equilibrium price will increase but the effect on equilibrium
quantity is indeterminate.
B) the equilibrium price will decrease but the effect on equilibrium
quantity is indeterminate.
C) the effect on equilibrium price is indeterminate but equilibrium
quantity will increase.
D) the effect on equilibrium price is indeterminate but equilibrium
quantity will decrease.
23
25
5. You are asked to forecast the change in the price of vanilla. You know
that ED = 2, ES = 0.5 and supply will increase by 10%. Your prediction
should be
A) a 0.25% decrease in price.
B) a 0.25% increase in price.
C) a 4% decrease in price.
D) a 4% increase in price.
26
5. You are asked to forecast the change in the price of vanilla. You know
that ED = 2, ES = 0.5 and supply will increase by 10%. Your prediction
should be
A) a 0.25% decrease in price.
B) a 0.25% increase in price.
C) a 4% decrease in price.
D) a 4% increase in price.
27
4. If the price of Good & Plenty decreases from $1.10 to $0.90, the quantity
demanded increases from 190 boxes to 210 boxes. The price elasticity of
demand is:
A) 2.
B) 1.
C) 0.
D) 0.5.
5. It is found that EI = –0.8 for paletas and incomes fall by 10%. Based on
this, it can be estimated that paleta sales will:
A) decrease by 80%.
B) increase by 80%.
C) increase by 8%.
D) decrease by 8%.
28
4. If the price of Good & Plenty decreases from $1.10 to $0.90, the quantity
demanded increases from 190 boxes to 210 boxes. The price elasticity of
demand is:
A) 2.
B) 1.
C) 0.
D) 0.5.
5. It is found that EI = –0.8 for paletas and incomes fall by 10%. Based on
this, it can be estimated that paleta sales will:
A) decrease by 80%.
B) increase by 80%.
C) increase by 8%.
D) decrease by 8%.
29
1. If a product's price rises by 6%, and its quantity demanded falls by 8%,
then we can say that demand for this product is:
A) inferior.
B) unitary elastic.
C) elastic.
D) normal.
E) inelastic.
2. When the price of good decreases from $10 to $8, the quantity supplied
of it decreases from 80 to 65. The price elasticity of supply is
approximately:
A) 0.80.
B) 0.93.
C) 1.07.
D) 0.75.
3. Suppose that the demand for a good is elastic. If the price of the good
decreases, then total revenue:
A) increases.
B) is negative.
C) remains constant.
D) decreases.
4. The idea that an increase in the tax rate may increase or decrease a
government's revenue is captured by
A) the Lewis turning point.
B) a Marshallian period.
C) Hauser's law.
D) the Laffer curve.
E) the total revenue curve.
Following all guidelines for perfect answers, illustrate and calculate (algebraically) the market
equilibrium when QD = 10 – 0.5ꞏP; QS = 0.5ꞏP.
30
1. If a product's price rises by 6%, and its quantity demanded falls by 8%,
then we can say that demand for this product is:
A) inferior.
B) unitary elastic.
C) elastic.
D) normal.
E) inelastic.
2. When the price of good decreases from $10 to $8, the quantity supplied
of it decreases from 80 to 65. The price elasticity of supply is
approximately:
A) 0.80.
B) 0.93.
C) 1.07.
D) 0.75.
3. Suppose that the demand for a good is elastic. If the price of the good
decreases, then total revenue:
A) increases.
B) is negative.
C) remains constant.
D) decreases.
4. The idea that an increase in the tax rate may increase or decrease a
government's revenue is captured by
A) the Lewis turning point.
B) a Marshallian period.
C) Hauser's law.
D) the Laffer curve.
E) the total revenue curve.
Following all guidelines for perfect answers, illustrate and calculate (algebraically) the market
equilibrium when QD = 10 – 0.5ꞏP; QS = 0.5ꞏP.
31
1) If in absolute terms the percentage change in the quantity demanded is less
than the percentage change in price, then demand is
A) inferior.
B) normal.
C) elastic.
D) inelastic.
2) When a goodʹs income elasticity is _____ it is characterized as _____
A) greater than one; necesssity
B) negative; complements
C) positive; inferior
D) all of the above
E) none of the above
3) Suppose that demand is perfectly inelastic and the elasticity of supply is 3.
If a tax causes a 6% decrease in supply we would expect the new
equilibrium price to increase by
A) 0.5%
B) 0%
C) 12%
D) 2%
4) A 10% increase in price leads to a 20% decrease in the quantity demanded.
The price elasticity of demand equals
A) 0.5.
B) 2.
C) 20.
D) 10.
E)
32
1) If in absolute terms the percentage change in the quantity demanded is less
than the percentage change in price, then demand is
A) inferior.
B) normal.
C) elastic.
D) inelastic.
2) When a goodʹs income elasticity is _____ it is characterized as _____
A) greater than one; necesssity
B) negative; complements
C) positive; inferior
D) all of the above
E) none of the above
3) Suppose that demand is perfectly inelastic and the elasticity of supply is 3.
If a tax causes a 6% decrease in supply we would expect the new
equilibrium price to increase by
A) 0.5%
B) 0%
C) 12%
D) 2%
4) A 10% increase in price leads to a 20% decrease in the quantity demanded.
The price elasticity of demand equals
A) 0.5.
B) 2.
C) 20.
D) 10.
E)
33
1) A firm is currently producing in the elastic portion of its demand curve.
What course of action do you recommend for it assuming it wants to raise
revenue?
A) Increase price because marginal revenue is positive
B) Decrease price because marginal revenue is positive
C) Decrease price because marginal revenue is negative
D) Increase price because marginal revenue is negative
2) A government that increases taxes to raise revenue
A) believes that it is on the left side of the Laffer curve
B) believes that it is on the left side of the Envelope curve
C) believes that it is on the right side of the Envelope curve
D) believes that it is on the right side of the Laffer curve
3) If a 15% price increase generates a 5% decrease in quantity demanded, then
demand is
A) elastic.
B) unit elastic.
C) inelastic.
D) perfectly elastic.
E) perfectly inelastic .
4) At a price of $4, quantity supplied is 100; and at a price of $6, quantity
supplied is 120. The price elasticity of supply is ________ .
A) 0.1
B) 2.2
C) 10
D) 0.45
5) Suppose that demand is perfectly inelastic. The effect of a tax is
A) consumer and producer burden is shared equally
B) producer burden equals the governmentʹs revenue
C) consumer burden equals the governmentʹs revenue
D) none of the above
34
1) A firm is currently producing in the elastic portion of its demand curve.
What course of action do you recommend for it assuming it wants to raise
revenue?
A) Increase price because marginal revenue is positive
B) Decrease price because marginal revenue is positive
C) Decrease price because marginal revenue is negative
D) Increase price because marginal revenue is negative
2) A government that increases taxes to raise revenue
A) believes that it is on the left side of the Laffer curve
B) believes that it is on the left side of the Envelope curve
C) believes that it is on the right side of the Envelope curve
D) believes that it is on the right side of the Laffer curve
3) If a 15% price increase generates a 5% decrease in quantity demanded, then
demand is
A) elastic.
B) unit elastic.
C) inelastic.
D) perfectly elastic.
E) perfectly inelastic .
4) At a price of $4, quantity supplied is 100; and at a price of $6, quantity
supplied is 120. The price elasticity of supply is ________ .
A) 0.1
B) 2.2
C) 10
D) 0.45
5) Suppose that demand is perfectly inelastic. The effect of a tax is
A) consumer and producer burden is shared equally
B) producer burden equals the governmentʹs revenue
C) consumer burden equals the governmentʹs revenue
D) none of the above
35
1) One thing that we ALWAYS know about tax burden is
A) it is regressive
B) consumers pay some of the burden
C) the elastic sector pays the majority of the burden
D) the inelastic sector pays the majority of the burden
E) it is progressive
2) If a 2% change in price leads to a ________ % change in the quantity
demanded, then demand is ________.
A) 2; elastic
B) 0; perfectly elastic
C) 4; elastic
D) 3; inelastic
E) 1; unit elastic
3) The marginal revenue curve associated with a linear downward sloping
demand curve
A) has a q‐intercept where demand is unitary elastic
B) has a P‐intercept at the choke price
C) lies below the demand curve
D) all of the above
E) none of the above
4) If UTD builds another dorm and first‐year enrollment further increases we
would expect the equilibrium price of a dorm room to _____ and the
equilibrium quantity to _____
A) be uncertain; decrease
B) increase; be uncertain
C) decrease; be uncertain
D) be uncertain; increase
5) In output (product) markets, the elasticity of supply tends to be
A) positive.
B) zero.
C) negative.
D) all of the above owing to the potential for a backward‐bending curve.
36
1) One thing that we ALWAYS know about tax burden is
A) it is regressive
B) consumers pay some of the burden
C) the elastic sector pays the majority of the burden
D) the inelastic sector pays the majority of the burden
E) it is progressive
2) If a 2% change in price leads to a ________ % change in the quantity
demanded, then demand is ________.
A) 2; elastic
B) 0; perfectly elastic
C) 4; elastic
D) 3; inelastic
E) 1; unit elastic
3) The marginal revenue curve associated with a linear downward sloping
demand curve
A) has a q‐intercept where demand is unitary elastic
B) has a P‐intercept at the choke price
C) lies below the demand curve
D) all of the above
E) none of the above
4) If UTD builds another dorm and first‐year enrollment further increases we
would expect the equilibrium price of a dorm room to _____ and the
equilibrium quantity to _____
A) be uncertain; decrease
B) increase; be uncertain
C) decrease; be uncertain
D) be uncertain; increase
5) In output (product) markets, the elasticity of supply tends to be
A) positive.
B) zero.
C) negative.
D) all of the above owing to the potential for a backward‐bending curve.
37
1) The cross‐price elasticity of demand between good X and good Y is 0.5.
Given this information, which of the following statements is TRUE?
A) Goods X and Y are nornal.
B) Goods X and Y are substitutes.
C) Goods X and Y are necessities.
D) Goods X and Y are complements.
2) A firm can sell 10 units if the price is $100 and can sell 8 units if the price is
$125. What is the price elasticity of demand?
A) 1.00
B) 1.25
C) 0.50
D) 0.75
E) 0.0
3) If the elasticity of labor supply is positive, the labor supply curve would be
A) forward falling.
B) upward sloping.
C) backward bending.
D) downward sloping.
4) If both equilibrium price and quantity decrease this can only be the result of
A) an increase in demand
B) a decrease in supply
C) a decrease in demand
D) an increase in supply
38
1) The cross‐price elasticity of demand between good X and good Y is 0.5.
Given this information, which of the following statements is TRUE?
A) Goods X and Y are nornal.
B) Goods X and Y are substitutes.
C) Goods X and Y are necessities.
D) Goods X and Y are complements.
2) A firm can sell 10 units if the price is $100 and can sell 8 units if the price is
$125. What is the price elasticity of demand?
A) 1.00
B) 1.25
C) 0.50
D) 0.75
E) 0.0
3) If the elasticity of labor supply is positive, the labor supply curve would be
A) forward falling.
B) upward sloping.
C) backward bending.
D) downward sloping.
4) If both equilibrium price and quantity decrease this can only be the result of
A) an increase in demand
B) a decrease in supply
C) a decrease in demand
D) an increase in supply
Following all guidelines for perfect answers, illustrate and calculate (algebraically) the market
equilibrium price and quantity when QD = 240 8P; QS = 4P.
40
Following all guidelines for perfect answers, illustrate and calculate (algebraically) the market
equilibrium price and quantity when QD = 240 8P; QS = 4P.
41
Questions:
Following all guidelines for perfect answers, illustrate and calculate (algebraically) the
market equilibrium price and quantity when QD = 300 4P; QS = 8P.
48
Following all guidelines for perfect answers, illustrate and calculate (algebraically) the market
equilibrium price and quantity when QD = 300 4P; QS = 8P.
49