Week 3 Quiz Review Question Preview (ID: 21725)


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Which of the following products are most likely to be price elastic in the long run?
a) Computers and TV's
b) Milk and Eggs
c) Cereal and Bread
d) Gasoline and Engine Oil

Which of the following would be most likely to have a price inelastic demand?
a) Car
b) Steak
c) Name Brand Shampoo
d) Electricity

At a price of $100, 900 units are demanded and 1000 are supplied. At a price of $150, 500 units are demanded and 1500 are supplied. The elasticity of supply is:
a) 1
b) -1
c) 1.42857
d) -1.42857

Which of the following will cause the demand curve to be relatively inelastic.
a) The good is considered to be a luxury.
b) There are many substitutes.
c) There are few substitutes.
d) The price of the good makes up a relatively large portion of an individual's income.

Let's assume that the demand for a particular product is inelastic in the short run, but elastic in the long run. A price increase will.
a) Cause total revenue to decrease in the short run and increase in the long run.
b) Cause total revenue to increase in the short run and decrease in the long run.
c) Cause total revenue to decrease in the short run, but stay the same in the long run.
d) Cause total revenue to stay the same in the short run, but decrease in the long run.

Which of the following would not be a characteristic of a product with a relatively elastic demand?
a) There are many different substitutes.
b) The substitutes for the product are nearly identical.
c) Buyers spend a relatively small portion of their income on the good.
d) Buyers spend a relatively large portion of their income on the good.

Which of the following would represent a market where the demand for a particular brand would be very inelastic?
a) There are many different brands to choose from and I always buy the cheapest.
b) There are many different brands to choose from and all of them are almost identical.
c) There are a few different choices and I always choose the same brand.
d) There are no other real choices. I have to buy a particular brand.

If a business raised its price from $8 to $9 when the demand was price elastic, total revenue would
a) Increase
b) Decease
c) Remain Unchanged
d) Be Perfectly Inelastic

You are the manager and have been informed that the elasticity for your product is 2.3. To increase total revenue you should
a) Increase the supply.
b) Increase the price.
c) Decrease the price.
d) Keep the price exactly where it is.

A product has a price of $6.00 and sales of 650 units. Price increases to $8.00 and the quantity of sales falls to 550. The price elasticity of demand is
a) Elastic
b) Inelastic
c) Unitary Elastic
d) Zero

Demand is elastic when
a) An increase in price results in a decrease in total revenue.
b) A reduction in price results in a decrease in total revenue.
c) An increase in price results in an increase in total revenue.
d) The elasticity coefficient is less than one.

Total revenue will fall if
a) elasticity of demand is 4.71 and price decreases.
b) elasticity of demand is 0.78 and price decreases.
c) Price increases and demand is inelastic.
d) Price increases and demand is unitary elastic.

As we move down a downward sloping demand curve, the price elasticity of demand
a) is greater than one across each price range
b) is less than one across each price range
c) is equal to one across each price range
d) is different across each price range

If the price falls and total revenue goes up, we can assume that the price elasticity of demand is
a) Inelastic
b) Elastic
c) Unitary Elastic
d) Perfectly Elastic

If the demand for a good is price inelastic at a given output level
a) Total revenue will be negative.
b) Total revenue will increase if its price increases.
c) Total revenue will decrease if its price increases.
d) A relatively small change in price will lead to a large change in quantity demanded.

Let's assume that the supply of paper increases resulting in a decrease in the price of paper, but the quantity sold doesn't change. This tells us that
a) the price elasticity of demand is zero
b) the price elasticity of supply is zero
c) the price elasticity of demand is unitary
d) the price elasticity of supply is infinite

If price falls by 10 percent and the quantity demanded increases by 15 percent, the demand for the product is
a) Elastic
b) Inelastic
c) Unitary Elastic
d) Perfectly Elastic

If the price elasticity of demand for a good is .25, the demand for the good can be described as:
a) elastic
b) inelastic
c) normal
d) inferior

Angie of Angie's Cupcake Emporium sells custom cupcake packages for 18.00. She sells 100 packages a week at that price. She ran a sale this week and charged $15.00. She sold 200. What is her elasticity of demand?
a) -0.272727
b) 0.272727
c) -3.666667
d) 3.666667

Price elasticity of demand measures:
a) how sensitive the demand for one good is to changes in price of the other good.
b) the total change in quantity demanded and price.
c) how responsive quantity demanded is to changes in the price of the product.
d) the steepness of the slope of the demand curve.

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