Microeconomics Week 3 And 4 Question Preview (ID: 26762)


The Test Includes The Following Topics: -Elasticity -Elasticity And Total Revenue -Consumers, Producers And The Efficiency Of Markets -Consumer Surplus -Producer Surplus. TEACHERS: click here for quick copy question ID numbers.

In general, elasticity is a measure of
a) The extent to which advances in technology are adopted by producers.
b) The extent to which a market is competitive.
c) How firms’ profits respond to changes in market prices.
d) How much buyers and sellers respond to changes in market conditions.

Demand is said to be inelastic if
a) Buyers respond substantially to changes in the price of the good.
b) Demand shifts only slightly when the price of the good changes.
c) The quantity demanded changes only slightly when the price of the good changes.
d) The price of the good responds only slightly to changes in demand.

A good will have a more elastic demand, the
a) Greater the availability of close substitutes.
b) more broad the definition of the market.
c) shorter the period of time.
d) more it is regarded as a necessity.

If the price elasticity of demand for a good is 2.0, then a 10 percent increase in price results in a
a) 0.2 percent decrease in the quantity demanded.
b) 5 percent decrease in the quantity demanded.
c) 20 percent decrease in the quantity demanded.
d) 40 percent decrease in the quantity demanded.

Total revenue will be at its largest value on a linear demand curve at the
a) Pop of the curve, where prices are highest.
b) Midpoint of the curve.
c) Low end of the curve, where quantity demanded is highest.
d) None of the above is correct.

You and your college roommate eat three packages of Ramen noodles each week. After graduation last month, both of you were hired at several times your college income. Your roommate still enjoys Ramen noodles very much and buys even more, but you plan
a) Be negative and your roommate's would be positive.
b) Be positive and your roommate's would be negative.
c) Be zero and your roommate's would approach infinity.
d) Approach infinity and your roommate's would be zero.

Consumer surplus is the area
a) Below the demand curve and above the price.
b) Above the demand curve and below the price.
c) Above the supply curve and below the price.
d) Below the supply curve and above the price.

A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it
a) Maximizes both the total revenue for firms and the quantity supplied of the product.
b) Maximizes the combined welfare of buyers and sellers.
c) Minimizes costs and maximizes output.
d) Minimizes the level of welfare payments.

Producer surplus directly measures
a) The well-being of sellers.
b) Production costs.
c) Excess demand.
d) Unsold inventories.

The primary difference between an import tariff and an import quota is that
a) Tariffs cause prices to rise, but quotas do not
b) Quotas cause prices to rise, but tariffs do not
c) Tariff revenues go to government, but quotas benefit those with the right to sell foreign goods domestically
d) All of the above are true

Trade restrictions in the real world
a) Are extremely rare, due to the economic benefits of specialization and trade
b) Hurt domestic producers and benefit foreign consumers
c) Hurt domestic producers and benefit domestic consumers
d) Hurt domestic consumers and benefit domestic producers

When a country allows international trade and becomes an exporter of a good,
a) Domestic producers of the good become better off.
b) The gains of the winners exceed the losses of the losers.
c) Domestic consumers of the good become worse off.
d) All of the above are correct.

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