Quiz 3 - version 11 PDF

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8/3/2021

Quiz 3

Question 2 Correct

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Price elasticities of demand are always stated as positive numbers because

Select one: a. the numerators and denominators of the formula are both negative. b. price increases always lead to increases in quantity demanded. c. price decreases always lead to decreases in quantity demanded. d. price elasticities are always negative, so we ignore the sign. 

Your answer is correct. The correct answer is: price elasticities are always negative, so we ignore the sign.

Question 3 Correct

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If a tax is imposed on the buyer of a product, the demand curve will shift

Select one: a. downward by the amount of the tax.  b. upward by the amount of the tax. c. downward by less than the amount of the tax. d. upward by more than the amount of the tax.

Your answer is correct. The correct answer is: downward by the amount of the tax.

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Question 4 Incorrect

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When demand is elastic, what is the price elasticity, and how do price and total revenue behave?

Select one: a. less than 1, and price and total revenue will move in the same direction b. greater than 1, and price and total revenue will move in opposite directions c. less than 1, and price and total revenue will move in opposite directions d. greater than 1, and price and total revenue will move in the same direction 

Your answer is incorrect. The correct answer is: greater than 1, and price and total revenue will move in opposite directions

Question 5 Correct

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What does a tax placed on the seller of a good do to the price paid and received?

Select one: a. It lowers the price buyers pay and raises the price sellers receive. b. It raises the price buyers pay and lowers the price sellers receive.  c. It raises both the price buyers pay and the price sellers receive. d. It lowers both the price buyers pay and the price sellers receive.

Your answer is correct. The correct answer is: It raises the price buyers pay and lowers the price sellers receive.

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Question 6 Correct

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Which statement best describes a price ceiling?

Select one: a. A price ceiling is a legal minimum on the price at which a good can be sold. b. A price ceiling occurs when the price in the market is temporarily above equilibrium. c. A price ceiling occurs when the price in the market is subsidized by the government. d. A price ceiling is a legal maximum on the price at which a good can be sold. 

Your answer is correct. The correct answer is: A price ceiling is a legal maximum on the price at which a good can be sold.

Question 7 Incorrect

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What is a key determinant of the elasticity of supply?

Select one: a. the number of firms in the market b. the ability of sellers to change the price of the good they produce  c. the responsiveness of buyers to changes in sellers’ prices d. the ability of sellers to change the amount of the good they produce

Your answer is incorrect. The correct answer is: the ability of sellers to change the amount of the good they produce

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Question 8 Correct

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What happens as elasticity of supply rises?

Select one: a. The supply curve gets flatter.  b. The quantity supplied falls. c. The supply curve gets steeper. d. The quantity supplied increases.

Your answer is correct. The correct answer is: The supply curve gets flatter.

Question 9 Correct

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What is the difference between slope and elasticity?

Select one: a. Slope measures percentage changes, and elasticity measures actual changes. b. Slope and elasticity both measure actual changes. c. Slope measures actual changes, and elasticity measures percentage changes.  d. Slope and elasticity both measure percentage changes.

Your answer is correct. The correct answer is: Slope measures actual changes, and elasticity measures percentage changes.

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Question 10 Correct

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The price elasticity of demand measures how responsive

Select one: a. sellers are to a change in buyers’ incomes. b. buyers are to a change in income. c. buyers are to a change in price.  d. sellers are to a change in price.

Your answer is correct. The correct answer is: buyers are to a change in price.

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Question 11 Correct

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Refer to the figure below. If price falls in the A range of the demand curve, we can expect total revenue to _______________ as one moves down the curve?

Select one: a. increase.  b. stay the same c. decrease d. decrease, then increase

Your answer is correct. The correct answer is: increase.

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Quiz 3

Question 12 Incorrect

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If the value of cross-elasticity of demand for two goods is negative, this implies that

Select one: a. they are inferior goods. b. the goods are substitutes.  c. they are normal goods. d. the goods are complements.

Your answer is incorrect. The correct answer is: the goods are complements.

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Question 13 Correct

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Refer to the figure below. Without the price ceiling in this market for gasoline, what will happen to the price when the supply curve shifts from S1 to S2?

Select one: a. It will eventually move to P2 without government assistance. b. It will increase to P3, and the market will clear.  c. It will increase to P3, but a shortage will still exist. d. It will remain at P1, and a shortage will still exist.

Your answer is correct. The correct answer is: It will increase to P3, and the market will clear.

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Question 14 Incorrect

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Refer to the figure below. What price do sellers receive after the tax is imposed?

Select one: a. $5.00 b. $6.00 c. $7.00  d. $8.00

Your answer is incorrect. The correct answer is: $5.00

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Question 15 Incorrect

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When the local used bookstore prices economics books at $95 each, they generally sell 70 per month. If they lower the price to $65 each, they sell 90. Given this information, the elasticity of demand for economics books is _________. What action should the store take?

Select one: a. 0.67; the store should raise prices to raise total revenue. b. 1.50; the store should lower prices to raise total revenue. c. 1.50; the store should raise prices to raise total revenue.  d. 0.67; the store should lower prices to raise total revenue.

Your answer is incorrect. The correct answer is: 0.67; the store should raise prices to raise total revenue.

Question 16 Correct

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When a tax is placed on the buyer of a product,

Select one: a. buyers pay more, and sellers receive less.  b. buyers pay less, and sellers receive less. c. buyers pay more, and sellers receive more. d. buyers pay less, and sellers receive more.

Your answer is correct. The correct answer is: buyers pay more, and sellers receive less.

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Quiz 3

Question 17 Incorrect

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A price floor is binding when it is

Select one: a. lower than the equilibrium market price. b. equal to the equilibrium market price. c. set by the government.  d. higher than the equilibrium market price.

Your answer is incorrect. The correct answer is: higher than the equilibrium market price.

Question 18 Correct

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If sellers respond substantially to changes in price,

Select one: a. the supply curve will shift substantially when the price rises. b. the sellers are considered to be relatively price sensitive.  c. the price elasticity of supply equals 1. d. the sellers are considered to be relatively price insensitive.

Your answer is correct. The correct answer is: the sellers are considered to be relatively price sensitive.

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Quiz 3

Question 19 Incorrect

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Using the midpoint method, what would be the price elasticity of demand for orthodontics procedures if the number of procedures fell from 6,000 to 4,000 per week after its price increased from $6,000 to $10,000?

Select one: a. 0.80 b. 0.45  c. 2.22 d. 1.80

Your answer is incorrect. The correct answer is: 0.80

Question 20 Correct

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If a tax is imposed on the buyer of a product, the demand curve will shift

Select one: a. upward by more than the amount of the tax. b. downward by less than the amount of the tax. c. upward by the amount of the tax. d. downward by the amount of the tax. 

Your answer is correct. The correct answer is: downward by the amount of the tax.

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Quiz 3

Question 21 Correct

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What is one disadvantage of government subsidies over price controls?

Select one: a. Subsidies require higher taxes.  b. Subsidies cause lower prices to suppliers. c. Subsidies cause disequilibrium in the market in which they are imposed. d. Subsidies cause unemployment.

Your answer is correct. The correct answer is: Subsidies require higher taxes.

Question 22 Incorrect

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A perfectly elastic demand implies that

Select one: a. buyers will not respond to any change in price. b. any rise in price above that represented by the demand curve will result in no output demanded. c. price will rise by an infinite amount when there is a change in quantity demanded.  d. price and quantity demanded respond proportionally.

Your answer is incorrect. The correct answer is: any rise in price above that represented by the demand curve will result in no output demanded.

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Quiz 3

Question 23 Correct

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If two goods are substitutes, their cross-price elasticity of demand will be

Select one: a. positive.  b. negative. c. zero. d. one.

Your answer is correct. The correct answer is: positive.

Question 24 Incorrect

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If a 10% change in price causes a 15% change in quantity supplied, what do we know about the price elasticity of supply?

Select one: a. It is 0.67, and supply is inelastic. b. It is 1, and supply is unit elastic.  c. It is 1.5, and supply is elastic. d. It is 1/3, and supply is inelastic.

Your answer is incorrect. The correct answer is: It is 1.5, and supply is elastic.

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Quiz 3

Question 25 Incorrect

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When the minimum wage is above the equilibrium wage,

Select one: a. the quantity demanded of labour will be greater than the quantity supplied.  b. the quantity demanded of labour will be equal to the quantity supplied. c. the quantity demanded of labour will be less than the quantity supplied. d. anyone who wants a job at the minimum wage will be able to find one.

Your answer is incorrect. The correct answer is: the quantity demanded of labour will be less than the quantity supplied.

Question 26 Incorrect

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When her income increased from $40,000 to $50,000, Cindy’s consumption of macaroni and soy burgers increased from three kilograms to four kilograms for both goods. What can we conclude for Cindy?

Select one: a. Macaroni and soy burgers are both normal goods with income elasticities greater than 1. b. Macaroni is an inferior good and soy burgers are a normal good; both have income elasticities of 1. c. Macaroni is an inferior good with an income elasticity of –1, and soy burgers are a normal good with an income elasticity of 1.  d. Macaroni and soy burgers are both inferior goods with income elasticities equal to –1.

Your answer is incorrect. The correct answer is: Macaroni and soy burgers are both normal goods with income elasticities greater than 1.

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Quiz 3

Question 27 Incorrect

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Suppose that the demand for digital pianos is price inelastic, and the supply of digital pianos is price elastic. By what amount will a tax of $1.00 per digital piano levied on buyers of digital pianos increase the equilibrium price paid by buyers of digital pianos?

Select one: a. by less than $0.50 b. by more than $0.50 but less than $1.00 c. by $1.00 d. by more than $1.00 

Your answer is incorrect. The correct answer is: by more than $0.50 but less than $1.00

Question 28 Incorrect

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The initial effect of a tax on the buyers of a good appears

Select one: a. on the demand for the good. b. on the equilibrium quantity of the good.  c. on the equilibrium price of the good. d. on the supply of the good.

Your answer is incorrect. The correct answer is: on the demand for the good.

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Quiz 3

Question 29 Incorrect

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Refer to the figure below. What is the slope and elasticity between point A and point B?

Select one: a. The slope is equal to –3, and elasticity is equal to 1. b. The slope is equal to –0.33, and elasticity is equal to 1. c. The slope is equal to 0.33, and elasticity is equal to 1.33. d. The slope is equal to –3, and elasticity is equal to 1.33.  e. The slope is equal to –2/3, and elasticity is equal to 1/4.

Your answer is incorrect. The correct answer is: The slope is equal to –0.33, and elasticity is equal to 1.

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Quiz 3

Question 30 Incorrect

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How do most economists report the elasticity of demand?

Select one: a. as the absolute value of the actual number b. as a dollar amount, since we are measuring the change in price  c. as a negative number, since price and quantity demanded move in opposite directions d. as a percentage, since both the numerator and denominator are percentages

Your answer is incorrect. The correct answer is: as the absolute value of the actual number

◄ Unit 3: The Elasticity of Demand and Supply Jump to... Unit 4: Markets and Economic Welfare ►

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