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Chap 46 and 47 Practice Multiple Choice Questions

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14 views4 pages

Chap 46 and 47 Practice Multiple Choice Questions

Uploaded by

Alex McClain
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Name: ________________________ Class: ___________________ Date: __________ ID: A

Chapter 46 and 47 Practice

Multiple Choice
Identify the choice that best completes the statement or answers the question.

_c__ 1. When price goes down, the quantity demanded goes up. Price elasticity measures how:

a. much the price goes down.


b. much the quantity goes up.
c. responsive the price change is in relation to the quantity change.
d. responsive the quantity change is in relation to the price change.
e. responsive the consumer income change is in relation to the price change.
_a__ 2. If the price of a good is increased by 20% and the quantity demanded changes by 15%, then the price
elasticity of demand is equal to:

a. 0.75.
b. approximately 0.33.
c. approximately 1.33.
d. 1.
e. zero.
__d_ 3. If the demand curve is downward sloping, as calculated the price elasticity of demand is:
a. always positive.
b. always greater than 1.
c. usually equal to 1.
d. always negative.
e. always equal to zero.
_e__ 4. A shirt manufacturer sold 10 dozen shirts per day when the price was $4 per shirt and sold 10 dozen shirts per day
when the price was $3 per shirt. The absolute value of the price elasticity of demand, is:

a. greater than zero but less than 1.


b. equal to 1.
c. greater than 1 but less than 3.
d. greater than 3.
e. equal to zero.
_e__ 5. The demand for textbooks is price inelastic. Which of the following would explain this?

a. Many alternative textbooks can be used as substitutes.


b. Students have a lot of time to adjust to price changes.
c. Textbook purchases consume a large portion of most students' income.
d. Textbooks are luxury goods for college students.
e. The good is a necessity for college students.

_d__ 6. Egg producers know that the elasticity of demand for eggs is 0.1. If they want to increase sales by 5%, they will
have to lower price by ________%.

a. 0.1
b. 1
c. 5
d. 50
e. 0.5

__a_ 7. Which of the following best describes the income effect of a price increase?

a. The price of bacon increases, so Michelle buys more sausage.


b. The price of corn chips increases, so Michelle buys potato chips.
c. The tuition at the public university increases, so Michelle attends a community college.
d. Michelle's apartment rent increases, so she cancels her subscription to a monthly magazine.
e. Michelle’s apartment rent increases, so she moves to a smaller apartment.
b__ 8. For the vast majority of goods, demand curves slope downward because:

a. marginal utility rises as quantity demanded increases.


b. the substitution effect constitutes almost the entire effect of a price change, and this effect always causes quantity demanded
and price to be inversely related.
c. the income effect constitutes almost the entire effect of a price change, and this effect always causes quantity demanded
and price to be inversely related.
d. the income and substitution effects work in opposite directions.
e. the vast majority of goods are inferior goods.

_c__ 9. (Figure 47-1: Demand for Shirts) The price elasticity of demand for the segment AB, is:

a. equal to zero.
b. greater than one.
c. less than one, but greater than zero.
d. equal to one.
e. impossible to determine without more information.

_c__ 10. A local restaurant has estimated that the price elasticity of demand for meals is equal to 2. If the restaurant
increases menu prices by 5%, they can expect the number of customers to decrease by ________and total
revenue to ________.

a. 10%; increase
b. 5%; stay constant
c. 10%; decrease
d. 2.5%; decrease
e. 2.5%; increase
_b__ 11. Suppose the price elasticity of demand for cheeseburgers equals 0.37. This means the overall demand for
cheeseburgers is:

a. price elastic.
b. price inelastic.
c. price unit-elastic.
d. perfectly price inelastic.
e. perfectly price elastic.
_c__ 12. After you graduate from college, you open a business selling computers. There are many other businesses in your
city that sell similar computers. Based on this information, the price elasticity of demand for the computers that
your business sells will be:

a. unitary elastic.
b. equal to zero.
c. highly elastic.
d. highly inelastic.
e. perfectly inelastic.
d__ 13. Sonik, a local wireless phone company, tested the effect of a price reduction for text messaging. It lowered prices
from $0.08 to $0.04 per message and found that the number of messages sent tripled. This means:
a. the demand for text messaging is inelastic in this price range.
b. the demand curve for text messaging shifted to the right.
c. the supply curve of text messaging shifted to the left.
d. the demand for text messaging is elastic in this price range.
e. the demand for text messaging is unitary elastic in this price range.
_b__ 14. The price elasticity of demand for gasoline in the short run has been estimated to be 0.4. If a war in the Middle East
causes the price of oil (from which gasoline is made) to increase, how will that affect the quantity of gasoline
demanded and total revenue from gasoline in the short run, all other things unchanged?
a. Quantity demanded will stay the same; total revenue will fall.
b. Quantity demanded will decrease; total revenue will rise.
c. Quantity demanded will stay the same; total revenue will remain unchanged.
d. Quantity demanded will decrease; total revenue will fall.
e. Quantity demanded will increase; total revenue will rise.

_b__ 15. When a public transit system (such as a subway or bus line) raises its fares, it may experience an increase in total
revenue. This suggests that demand is:

a. unstable.
b. price-inelastic.
c. price-elastic.
d. price unit-elastic.
e. perfectly price-elastic.
_e__ 16. (Figure 47-2: Demand for Notebook Computers) The change in the firm's total revenue resulting from a change in
price from P to T suggests that demand is:

a. perfectly price-inelastic.
b. perfectly price-elastic
c. price-inelastic.
d. price unit-elastic.
e. price-elastic.

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