PAGE 1. Econ Test 2 Fall 2003 Dr. Rupp. Multiple Choice. 1. The price elasticity of demand measures

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "PAGE 1. Econ 2113 - Test 2 Fall 2003 Dr. Rupp. Multiple Choice. 1. The price elasticity of demand measures"

Transcription

1 PAGE 1 Econ Test 2 Fall 2003 Dr. Rupp Multiple Choice 1. The price elasticity of demand measures a. how responsive buyers are to a change in income. b. how responsive sellers are to a change in price. c. how responsive buyers are to a change in price. d. how responsive sellers are to a change in buyers' income. 2. If the price elasticity of demand for a good is 4.0, then a 10 percent increase in price would result in a a. 4.0 percent decrease in the quantity demanded. b. 10 percent decrease in the quantity demanded. c. 40 percent decrease in the quantity demanded. d. 400 percent decrease in the quantity demanded. 3. If there are very few, if any, good substitutes for good A, then a. the supply of good A would tend to be price elastic. b. the demand for good A would tend to be price elastic. c. the demand for good A would tend to be price inelastic. d. the demand for good A would tend to be income elastic. 4. Economists compute the price elasticity of demand as a. the percentage change in the price divided by the percentage change in quantity demanded. b. the percentage change in the quantity demanded divided by the percentage change in price. c. the change in quantity demanded divided by the change in the price. d. the percentage change in the quantity demanded divided by the percentage change in income. 5. Demand is inelastic if a. elasticity is less than 1. b. elasticity is equal to 1. c. elasticity is greater than 1. d. elasticity is equal to In any market, total revenue is a. the price divided by the price elasticity of demand. b. the price multiplied by the quantity. c. the price plus the quantity. d. the price multiplied by the quantity minus the costs of production. 7. Alice says that she would buy one banana split a day regardless of the price. If she is telling the truth, a. Alice's demand for banana splits is perfectly inelastic. b. Alice's price elasticity of demand for banana splits is 1. c. Alice's income elasticity of demand for banana splits is negative. d. None of the above answers are correct.

2 PAGE 2 8. In the graph shown, as price falls from P A to P B, which demand curve is most elastic? a. D 1 b. D 2 c. D 3 d. All of the above are equally elastic.

3 PAGE 3 9. Refer to the graph shown. The total revenue at P 1 is represented by area(s) a. B + D. b. A + B. c. C + D. d. D. 10. The local pizza restaurant makes such great bread sticks that consumers do not respond much to a change in the price. If the owner is only interested in increasing revenue, he should a. lower the price of the bread sticks. b. raise the price of the bread sticks. c. leave the price of the bread sticks alone. d. reduce costs. 11. Last year, Joan bought 50 pounds of hamburger when the household income was $40,000. This year, the household income was only $30,000 and Joan bought 60 pounds of hamburger. All else constant Joan's income elasticity of demand for hamburger is a. positive, so Joan considers hamburger to be an inferior good. b. positive, so Joan considers hamburger to be a normal good and a necessity. c. negative, so Joan considers hamburger to be an inferior good. d. negative, so Joan considers hamburger to be a normal good. 12. Cross-price elasticity of demand measures a. how the quantity demanded of a good changes as price changes. b. how the quantity demanded of one good changes as the price of another good changes. c. how the quantity demanded of a good changes as income changes. d. how the price of a good is affected when income changes. 13. If the cross-price elasticity of demand is 1.25, then the two goods would be a. complements. b. luxuries. c. normal goods. d. substitutes.

4 PAGE 4 Suppose there is a baseball park with 10,000 seats and a demand for seats in the park as follows: Price per Ticket Quantity Demanded $20 2, , , , , , , Referring to the given information, if the management of the baseball park charges $8 per ticket a. there will be a shortage of tickets. b. there will be 2,000 empty seats. c. there will be 4,000 empty seats. d. revenue will be maximized. 15. Referring to the given information, the supply of seats a. is perfectly inelastic. b. is perfectly elastic. c. increases as price increases. d. decreases as price increases. 16. A legal minimum price at which a good can be sold is a a. price floor. b. price stabilization. c. price ceiling. d. price cut.

5 PAGE According to the graph shown, if the government imposes a binding price ceiling in this market at a price of $5.00, the result would be a. a shortage of 20 units. b. a shortage of 30 units. c. a surplus of 20 units. d. a surplus of 40 units. 18. The minimum wage is an example of a. a price ceiling. b. a price floor. c. a free-market process. d. an efficient labor allocation mechanism. 19. In the figure shown, which of the panels represents a binding price floor? a. panel (a) b. panel (b) c. panel (a) and panel (b) d. neither panel (a) nor panel (b)

6 PAGE Workers with high skills and much experience are not affected by the minimum wage because a. they belong to unions. b. they are not legally guaranteed the minimum wage. c. they generally earn wages less than the minimum wage. d. their equilibrium wages are well above the minimum wage. 21. Rent control is a. a common example of a social problem solved by government regulation. b. a common example of a price ceiling. c. the most effective way to provide affordable housing. d. the most efficient way to allocate housing. 22. The term tax incidence refers to a. the Boston Tea Party. b. the "flat tax" movement. c. the division of the tax burden between buyers and sellers. d. the division of the tax burden between sales taxes and income taxes. 23. Long lines at gas stations in the U.S. in the 1970s were primarily a result of a. the fact that OPEC raised the price of crude oil in world markets. b. the fact that U.S. gasoline producers raised the price of gasoline. c. the fact that the U.S. government had imposed a price ceiling on gasoline. d. the fact that Americans typically commute long distances. 24. If a tax is imposed on a market with inelastic demand and elastic supply, a. buyers will bear most of the burden of the tax. b. sellers will bear most of the burden of the tax. c. the burden of the tax will be shared equally between buyers and sellers. d. it is impossible to determine how the burden of the tax will be shared. 25. In 1990, Congress passed a new luxury tax on items such as yachts, private airplanes, furs, jewelry, and expensive cars. The goal of the tax was a. to raise revenue from rich people. b. to prevent rich people from buying luxuries. c. to force producers of luxury goods to reduce employment. d. to limit exports of luxury goods to other countries. 26. A consumer's willingness to pay measures a. the cost of a good to the buyer. b. how much a buyer values a good. c. how much a buyer has to pay to receive a good. d. how much a seller receives from the sale of a good. 27. If Brock is willing to pay $500 for a new suit, but is able to buy the suit for $350, his consumer surplus is a. $150. b. $350. c. $500. d. $850.

7 28. We can say that the allocation of resources is efficient if a. producer surplus is maximized. b. consumer surplus is maximized. c. total surplus is maximized. d. None of the above are correct. 29. Producer surplus is PAGE 7 a. the area under the supply curve to the left of the amount sold. b. the amount a seller is paid less the cost of production. c. the amount represented by the area under the supply curve. d. the cost to sellers of participating in a market. 30. Donald produces nails at a cost of $200 per ton. If he sells the nails for $500 per ton, his producer surplus is a. $200 per ton. b. $300 per ton. c. $500 per ton. d. $700 per ton. This table refers to five possible buyers' willingness to pay for Good Z. Buyer Willingness to Pay Cassie $8.50 Jamie 7.00 John 5.50 Jeremy 4.00 Sarah Refer to the table shown. If the market price is $5.50, the consumer surplus in the market will be a. $3.00. b. $4.50. c. $ d. $21.00.

8 PAGE According to the graph shown, when the price is P 2, producer surplus is a. A. b. A + C. c. A + B + C. d. D + E. 33. Economists tend to see ticket scalping as a. a way for a few to profit while producing nothing of value. b. an inequitable interference in the orderly process of ticket distribution. c. a way of increasing the efficiency of ticket distribution. d. an unproductive activity which should be made illegal everywhere. 34. Producer surplus measures all of the following EXCEPT a. the amount sellers receive above the minimum they would accept. b. the benefit to sellers of participating in a market. c. the amount sellers are paid less the amount they were willing to accept. d. the total value of a good to sellers.

9 PAGE Refer to the graph shown. When the price is P 1, consumer surplus is a. A. b. A + B. c. A + B + C. d. A + B + D.

10 PAGE In the figure shown, the equilibrium (market-clearing) price is a. P 1. b. P 2. c. P 3. d. P In the figure shown, at the market-clearing equilibrium, total consumer surplus is represented by the area a. A. b. A + B + C. c. D + E + F. d. A + B + C + D + E + F. 38. In the figure shown, at the market-clearing equilibrium, total producer surplus is represented by the area a. F. b. F + G. c. D + E + F. d. D + E + F + G + H. 39. In the figure shown, at the market-clearing equilibrium, total surplus is represented by the area a. A + B + C. b. A + B + D + F. c. A + B + C + D + E + F. d. A + B + C + D + E + F + G + H. 40. Market power refers to a. the side effects that may occur in a market. b. the government regulations imposed on the sellers in a market. c. the ability to influence price. d. the forces of supply and demand in determining equilibrium price.

11 PAGE Revenue Passenger Miles (RPM) in the airline industry for June 2002 with June 2003 reveals that: a. RPMs are increasing for both full-service airlines and discounters. b. RPMs are decreasing for both full-service airlines and discounters. c. RPMs are increasing for full-service airlines and decreasing for discounters. d. RPMs are decreasing for full-service airlines and increasing for discounters c. RPMs are constant for both full-service airlines and discounters. Note: Full-service airlines include: Continental, United, American, Northwest, Delta, US Airways. Discounters include JetBlue, Frontier, ATA, AirTran, Alaska, Southwest, America West, & Spirit.

12 1. c. how responsive buyers are to a change in price. Chapter:5 QUESTION: 2 2. c. 40 percent decrease in the quantity demanded. Chapter:5 QUESTION: c. the demand for good A would tend to be price inelastic. Chapter:5 QUESTION: b. the percentage change in the quantity demanded divided by the percentage change in price. Chapter:5 QUESTION: a. elasticity is less than 1. Chapter:5 QUESTION: b. the price multiplied by the quantity. Chapter:5 QUESTION: a. Alice's demand for banana splits is perfectly inelastic. Chapter:5 QUESTION: a. D 1 9. a. B + D. Chapter:5 QUESTION: 40 Chapter:5 QUESTION: b. raise the price of the bread sticks. Chapter:5 QUESTION: c. negative, so Joan considers hamburger to be an inferior good. Chapter:5 QUESTION: b. how the quantity demanded of one good changes as the price of another good changes. Chapter:5 QUESTION: d. substitutes. Chapter:5 QUESTION: b. there will be 2,000 empty seats. Chapter:5 QUESTION: a. is perfectly inelastic. Chapter:5 QUESTION: 90

13 16. a. price floor. 17. a. a shortage of 20 units. 18. b. a price floor. 19. b. panel (b) Chapter:6 QUESTION: 4 Chapter:6 QUESTION: 14 Chapter:6 QUESTION: 37 Chapter:6 QUESTION: d. their equilibrium wages are well above the minimum wage. Chapter:6 QUESTION: b. a common example of a price ceiling. Chapter:6 QUESTION: c. the division of the tax burden between buyers and sellers. Chapter:6 QUESTION: c. the fact that the U.S. government had imposed a price ceiling on gasoline. Chapter:6 QUESTION: a. buyers will bear most of the burden of the tax. Chapter:6 QUESTION: a. to raise revenue from rich people. Chapter:6 QUESTION: b. how much a buyer values a good. Chapter:7 QUESTION: a. $150. Chapter:7 QUESTION: c. total surplus is maximized. Chapter:7 QUESTION: b. the amount a seller is paid less the cost of production. Chapter:7 QUESTION: b. $300 per ton. 31. b. $4.50. Chapter:7 QUESTION: 68 Chapter:7 QUESTION: 25

14 PAGE c. A + B + C. Chapter:7 QUESTION: c. a way of increasing the efficiency of ticket distribution. Chapter:7 QUESTION: d. the total value of a good to sellers. Chapter:7 QUESTION: c. A + B + C. 36. b. P b. A + B + C. 38. c. D + E + F. Chapter:7 QUESTION: 33 Chapter:7 QUESTION: 83 Chapter:7 QUESTION: 84 Chapter:7 QUESTION: c. A + B + C + D + E + F. Chapter:7 QUESTION: c. the ability to influence price. Chapter:7 QUESTION: Chapter:*** QUESTION: 1

Econ 2113 Test 2A Pledge: I have neither given nor received aid on this exam.

Econ 2113 Test 2A Pledge: I have neither given nor received aid on this exam. Econ 2113 Test 2A Dr. Rupp Spring 2011 Name: Pledge: I have neither given nor received aid on this exam. Signature: Multiple Choice Identify the choice that best completes the statement or answers the

More information

PROBLEM SET#3 PART I: MULTIPLE CHOICE

PROBLEM SET#3 PART I: MULTIPLE CHOICE 1 PROBLEM SET#3 PART I: MULTIPLE CHOICE 1. 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.

More information

ECON Chapter 4 review quiz

ECON Chapter 4 review quiz 1) The price elasticity of demand measures: ECON 1900-02 Chapter 4 review quiz a) the percentage change in quantity demanded as a result of a 1 percent change in supply b) the change in quantity demanded

More information

Review for the Midterm Exam.

Review for the Midterm Exam. Review for the Midterm Exam. 1. Chapter 1 The principles of decision making are: o People face tradeoffs. o The cost of any action is measured in terms of foregone opportunities. o Rational people make

More information

Chapter 6 Supply, Demand, and Government Policies

Chapter 6 Supply, Demand, and Government Policies Chapter 6 Supply, Demand, and Government Policies Review Questions Using supply-demand diagrams, show the difference between a non-binding price ceiling and a binding price ceiling in the wheat market.

More information

MICROECONOMIC PRINCIPLES SPRING 2001 MIDTERM ONE -- Answers. February 16, 2001. Table One Labor Hours Needed to Make 1 Pounds Produced in 20 Hours

MICROECONOMIC PRINCIPLES SPRING 2001 MIDTERM ONE -- Answers. February 16, 2001. Table One Labor Hours Needed to Make 1 Pounds Produced in 20 Hours MICROECONOMIC PRINCIPLES SPRING 1 MIDTERM ONE -- Answers February 1, 1 Multiple Choice. ( points each) Circle the correct response and write one or two sentences to explain your choice. Use graphs as appropriate.

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Survey of Microeconomics, Quiz #3 Fall 2006 Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) In the absence of a rent ceiling, the long run

More information

E201 Department Final Exam Questions, Sample Set Two

E201 Department Final Exam Questions, Sample Set Two E201 Department Final Exam Questions, Sample Set Two Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1 Sue s opportunity cost to produce last

More information

C H A P T E R 4: The Price System, Demand and Supply, and Elas ticity. The Price System: Rationing and Allocating Resources

C H A P T E R 4: The Price System, Demand and Supply, and Elas ticity. The Price System: Rationing and Allocating Resources C H A P T E R 4 The Price System, Demand and Supply, and Elasticity Prepared by: Fernando Quijano and Yvonn Quijano Karl Case, Ray Fair The Price System: Rationing and Allocating Resources The market system,

More information

6. In general, over longer periods, demand tends to become (A) More elastic (B) Perfectly elastic (C) Perfectly inelastic (D) Less elastic

6. In general, over longer periods, demand tends to become (A) More elastic (B) Perfectly elastic (C) Perfectly inelastic (D) Less elastic 5. The demand for a good is said to be inelastic if (A) More units will be purchased if price increases (B) The percentage change in quantity demanded is greater than the percentage in price (C) The demand

More information

FIRST HOURLY EXAMINATION ECON 200 Spring 2008 Version B DAY AND TIME YOUR SECTION MEETS:

FIRST HOURLY EXAMINATION ECON 200 Spring 2008 Version B DAY AND TIME YOUR SECTION MEETS: FIRST HOURLY EXAMINATION ECON 200 Spring 2008 Version B STUDENT'S NAME: STUDENT'S IDENTIFICATION NUMBER: DAY AND TIME YOUR SECTION MEETS: ENTER THE NUMBER 246531 UNDER "SPECIAL CODES" ON THE SCANTRON SHEET

More information

INTRODUCTORY MICROECONOMICS Instructor: Filip Vesely 12

INTRODUCTORY MICROECONOMICS Instructor: Filip Vesely 12 INTRODUCTORY MICROECONOMICS Instructor: Filip Vesely 12 MIDTERM EXAM will be on March 29 Everything you earn and many things you buy are taxed. Who really pays these taxes? Tax Incidence is the division

More information

A. a change in demand. B. a change in quantity demanded. C. a change in quantity supplied. D. unit elasticity. E. a change in average variable cost.

A. a change in demand. B. a change in quantity demanded. C. a change in quantity supplied. D. unit elasticity. E. a change in average variable cost. 1. The supply of gasoline changes, causing the price of gasoline to change. The resulting movement from one point to another along the demand curve for gasoline is called A. a change in demand. B. a change

More information

SUPPLY AND DEMAND : HOW MARKETS WORK

SUPPLY AND DEMAND : HOW MARKETS WORK SUPPLY AND DEMAND : HOW MARKETS WORK Chapter 4 : The Market Forces of and and demand are the two words that economists use most often. and demand are the forces that make market economies work. Modern

More information

Midterm Exam #2. ECON 101, Section 2 summer 2004 Ying Gao. 1. Print your name and student ID number at the top of this cover sheet.

Midterm Exam #2. ECON 101, Section 2 summer 2004 Ying Gao. 1. Print your name and student ID number at the top of this cover sheet. NAME: STUDENT ID: Midterm Exam #2 ECON 101, Section 2 summer 2004 Ying Gao Instructions Please read carefully! 1. Print your name and student ID number at the top of this cover sheet. 2. Check that your

More information

Boğaziçi University Department of Economics Spring 2016 EC 102 PRINCIPLES of MACROECONOMICS Problem Set 2 Answer Key

Boğaziçi University Department of Economics Spring 2016 EC 102 PRINCIPLES of MACROECONOMICS Problem Set 2 Answer Key Boğaziçi University Department of Economics Spring 2016 EC 102 PRINCIPLES of MACROECONOMICS Problem Set 2 Answer Key 1. Assume Leo buys coffee beans in a competitive market. It follows that a. Leo has

More information

1. If the price elasticity of demand for a good is.75, the demand for the good can be described as: A) normal. B) elastic. C) inferior. D) inelastic.

1. If the price elasticity of demand for a good is.75, the demand for the good can be described as: A) normal. B) elastic. C) inferior. D) inelastic. Chapter 20: Demand and Supply: Elasticities and Applications Extra Multiple Choice Questions for Review 1. If the price elasticity of demand for a good is.75, the demand for the good can be described as:

More information

Sample Exam Questions/Chapter 7

Sample Exam Questions/Chapter 7 Sample Exam Questions/Chapter 7 1. The burden of a tax that is imposed on a good is said to fall completely on the consumers if the: A) price paid by consumers for the good declines by the amount of the

More information

Econ 2113 Test 2A Pledge: I have neither given or received aid on this exam Signature

Econ 2113 Test 2A Pledge: I have neither given or received aid on this exam Signature Econ 2113 Test 2A Dr. Rupp Fall 2012 Name Pledge: I have neither given or received aid on this exam Signature Multiple Choice Identify the choice that best completes the statement or answers the question.

More information

Instructor: Brian B. Young

Instructor: Brian B. Young Economics 212 Microeconomic Principles Exam No. 1 Date: 15 February 2012 Name The value of this exam is 100 points Instructor: Brian B. Young Please show your work where appropriate! Multiple Choice #1

More information

Managerial Economics Prof. Trupti Mishra S.J.M School of Management Indian Institute of Technology, Bombay. Lecture - 14 Elasticity of Supply

Managerial Economics Prof. Trupti Mishra S.J.M School of Management Indian Institute of Technology, Bombay. Lecture - 14 Elasticity of Supply Managerial Economics Prof. Trupti Mishra S.J.M School of Management Indian Institute of Technology, Bombay Lecture - 14 Elasticity of Supply We will continue our discussion today, on few more concept of

More information

as a function of E D and E S can be looked as follows:

as a function of E D and E S can be looked as follows: TOPIC IV: MARKETS IN ACTION - Applications of S&D and E D &E S A. Using E D and E S to increase our understanding of the impact of a change in S or D. B. Price ceilings and price floors C. Trade quotas

More information

Economic Efficiency. Chapter 6 CHAPTER SUMMARY

Economic Efficiency. Chapter 6 CHAPTER SUMMARY Chapter 6 Economic Efficiency CHAPTER SUMMARY The central idea in this chapter is Adam Smith s invisible hand. Free-market competition will ensure that the allocation of resources is economically efficient.

More information

17. Suppose demand is given by Q d = 400 15P + I, where Q d is quantity demanded, P is. I = 100, equilibrium quantity is A) 15 B) 20 C) 25 D) 30

17. Suppose demand is given by Q d = 400 15P + I, where Q d is quantity demanded, P is. I = 100, equilibrium quantity is A) 15 B) 20 C) 25 D) 30 Ch. 2 1. A relationship that shows the quantity of goods that consumers are willing to buy at different prices is the A) elasticity B) market demand curve C) market supply curve D) market equilibrium 2.

More information

MARKETS IN ACTION. Chapter. Housing Markets and Rent Ceilings

MARKETS IN ACTION. Chapter. Housing Markets and Rent Ceilings Chapter 6 MARKETS IN ACTION Housing Markets and Rent Ceilings Topic: Market Response to a Decrease in Supply 1) The short-run impact of the San Francisco earthquake on the housing market shifted the A)

More information

CH 7. Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question.

CH 7. Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question. Class: Date: CH 7 Multiple Choice Identify the choice that best completes the statement or answers the question. 1. A price ceiling a. is an illegal price. b. is the price that exists in a black market.

More information

Chapter 5 Applications of Supply and Demand

Chapter 5 Applications of Supply and Demand 1. Elasticity of Demand (E d ) Chapter 5 Applications of Supply and Demand Measures the responsiveness of Q d to a change in price. How much does Q d change (%) when P changes (%)? We can use a formula

More information

JANUARY EXAMINATIONS 2006

JANUARY EXAMINATIONS 2006 No. of Pages: (A) 10 No. of Questions: 29 EC1000A ' JANUARY EXAMINATIONS 2006 Subject Title of Paper ECONOMICS EC1000 MICROECONOMICS Time Allowed Two Hours (2 Hours) Instructions to candidates This paper

More information

Economics 103h Fall 2012: Part 1 of review questions for final exam

Economics 103h Fall 2012: Part 1 of review questions for final exam Economics 103h Fall 2012: Part 1 of review questions for final exam This is the first set of review questions. The short answer/graphing go through to the end of monopolistic competition. The multiple

More information

SAMPLE FINAL. Part I - Multiple Choice Questions:

SAMPLE FINAL. Part I - Multiple Choice Questions: Part I - Multiple Choice Questions: SAMPLE FINAL 1. Which of the following is not a characteristic of a perfectly competitive market? a. Firms are price takers. b. Firms have difficulty entering the market.

More information

Econ 202 Exam 2 Practice Problems

Econ 202 Exam 2 Practice Problems Econ 202 Exam 2 Practice Problems Principles of Microeconomics Dr. Phillip Miller Multiple Choice Identify the choice that best completes the statement or answers the question. Chapter 6 1. If a binding

More information

Problems: Table 1: Quilt Dress Quilts Dresses Helen 50 10 1.8 9 Carolyn 90 45 1 2

Problems: Table 1: Quilt Dress Quilts Dresses Helen 50 10 1.8 9 Carolyn 90 45 1 2 Problems: Table 1: Labor Hours needed to make one Amount produced in 90 hours: Quilt Dress Quilts Dresses Helen 50 10 1.8 9 Carolyn 90 45 1 2 1. Refer to Table 1. For Carolyn, the opportunity cost of 1

More information

Chulalongkorn University: BBA International Program, Faculty of Commerce and Accountancy

Chulalongkorn University: BBA International Program, Faculty of Commerce and Accountancy Chulalongkorn University: BBA International Program, Faculty of Commerce and Accountancy 2900111 (Section 1) Chairat Aemkulwat Economics I: Microeconomics Spring 2015 Solution to Selected Questions: CHAPTER

More information

ECON 101 MIDTERM 1 REVIEW SESSION (WINTER 2015) BY BENJI HUANG

ECON 101 MIDTERM 1 REVIEW SESSION (WINTER 2015) BY BENJI HUANG ECON 101 MIDTERM 1 REVIEW SESSION (WINTER 2015) BY BENJI HUANG TABLE OF CONTENT I. CHAPTER 1: WHAT IS ECONOMICS II. CHAPTER 2: THE ECONOMIC PROBLEM III. CHAPTER 3: DEMAND AND SUPPLY IV. CHAPTER 4: ELASTICITY

More information

AP MICRO Week 4 Practice Quiz: M, 20

AP MICRO Week 4 Practice Quiz: M, 20 1 1. A marketing survey shows that gate receipts would increase if the price of tickets to a summer rock concert increased, even though the number of tickets sold would fall. What does this imply about

More information

Economic Efficiency, Government Price Setting, and Taxes

Economic Efficiency, Government Price Setting, and Taxes CHAPTER 4 Economic Efficiency, Government Price Setting, and Taxes Modified by: Changwoo Nam 1 Economic Efficiency, Government Price Setting, and Taxes A legally determined maximum price that sellers may

More information

How to measure the total economic well-being of a society?

How to measure the total economic well-being of a society? Welfare Economics continued Market efficiency How to measure the total economic well-being of a society? Suppose there is a all-powerful, well-intentioned dictator called a social planner who can allocate

More information

Chapters 6, 7 & 8 Review Questions

Chapters 6, 7 & 8 Review Questions Chapters 6, 7 & 8 Review Questions Multiple Choice Identify the letter of the choice that best completes the statement or answers the question. 1. A price ceiling will be binding only if it is set a. equal

More information

Microeconomics Instructor Miller Elasticity Practice Problems

Microeconomics Instructor Miller Elasticity Practice Problems Microeconomics Instructor Miller Elasticity Practice Problems 1. Price elasticity of demand measures A) how responsive suppliers are to price changes. B) how responsive sales are to changes in the price

More information

Chapter 3 Market Demand, Supply and Elasticity

Chapter 3 Market Demand, Supply and Elasticity Chapter 3 Market Demand, Supply and Elasticity Multiple Choice Questions Choose the one alternative that best completes the statement or answers the question. 1. Ceteris paribus means (a) other things

More information

Principle of Microeconomics Econ 202-506 chapter 6

Principle of Microeconomics Econ 202-506 chapter 6 Principle of Microeconomics Econ 202-506 chapter 6 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The buyers pay the entire sales tax levied on

More information

Econ 202 Exam 1 Practice Problems

Econ 202 Exam 1 Practice Problems Econ 202 Exam 1 Practice Problems Principles of Microeconomics r. Phillip Miller Multiple Choice Identify the choice that best completes the statement or answers the question. Chapters 1 and 2 1. For an

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Chapter 11 Perfect Competition - Sample Questions MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Perfect competition is an industry with A) a

More information

MFP SET. Lecture 3 Surplus: Consumer & producer Elasticity & its applications MFP SET 2000 1

MFP SET. Lecture 3 Surplus: Consumer & producer Elasticity & its applications MFP SET 2000 1 MFP SET Lecture 3 Surplus: Consumer & producer Elasticity & its applications MFP SET 1 Consumer surplus! Willingness to pay: the maximum amount that a consumer will pay for a good! Consumer surplus: the

More information

6. Which of the following is likely to be the price elasticity of demand for food? a. 5.2 b. 2.6 c. 1.8 d. 0.3

6. Which of the following is likely to be the price elasticity of demand for food? a. 5.2 b. 2.6 c. 1.8 d. 0.3 Exercise 2 Multiple Choice Questions. Choose the best answer. 1. If a change in the price of a good causes no change in total revenue a. the demand for the good must be elastic. b. the demand for the good

More information

Multiple Choice Questions for Self Study. (GZ der VWL / Introduction to Economics)

Multiple Choice Questions for Self Study. (GZ der VWL / Introduction to Economics) Multiple Choice Questions for Self Study (GZ der VWL / Introduction to Economics) ao. Prof. Dr. B. Yurtoglu) Economic Models 1) The purpose of making assumptions in economic model building is to (a) force

More information

CHAPTER 4 WORKING WITH SUPPLY AND DEMAND

CHAPTER 4 WORKING WITH SUPPLY AND DEMAND CHAPTER 4 WORKING WITH SUPPLY AND DEMAND ANSWERS TO ONLINE REVIEW QUESTIONS 1. The rate of change along a demand curve measures how much one variable changes for every one-unit change in another variable.

More information

Practice Test for Midterm 1 Econ 2010-200 Fall 2009 Instructor: Soojae Moon

Practice Test for Midterm 1 Econ 2010-200 Fall 2009 Instructor: Soojae Moon Practice Test for Midterm 1 Econ 2010-200 Fall 2009 Instructor: Soojae Moon Please read carefully and choose the choice that best completes the statement or answers the question. 1. The word economy comes

More information

Quantity of trips supplied (millions)

Quantity of trips supplied (millions) Taxes chapter: 7 1. The United tates imposes an excise tax on the sale of domestic airline tickets. Let s assume that in 2010 the total excise tax was $6.10 per airline ticket (consisting of the $3.60

More information

Government Intervention in the Market. Price Controls. Price Ceilings. Government Intervention in the Market

Government Intervention in the Market. Price Controls. Price Ceilings. Government Intervention in the Market Government Intervention in the Market Price Controls Buyers look to government for ways to hold prices down. Sellers look to government for ways to hold prices up. Government Intervention in the Market

More information

Unit 2 test prep. Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question.

Unit 2 test prep. Name: Class: Date: Multiple Choice Identify the choice that best completes the statement or answers the question. Class: Date: Unit 2 test prep Multiple Choice Identify the choice that best completes the statement or answers the question. 1. Rapidly increasing health costs have been a major political concern for several

More information

AP MICRO Week 3 Practice Quiz: G J, 9 17

AP MICRO Week 3 Practice Quiz: G J, 9 17 1 1. If the cost of producing automobiles increases, the price, equilibrium quantity and consumer surplus will most likely change in which of the following ways? Price Quantity Consumer Surplus (A) Increase

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Chapter 6 - Markets in Action - Sample Questions MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The short-run impact of the San Francisco earthquake

More information

Gov t Intervention: Price Floors & Price Ceilings / Taxes & Subsidies

Gov t Intervention: Price Floors & Price Ceilings / Taxes & Subsidies Gov t Intervention: Price Floors & Price Ceilings / Taxes & Subsidies Price Floor: Regulated price, cannot charge below this price. A price floor will be binding if it is set above the true equilibrium

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. ECN 202 Midterm 2 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) When a sales tax is imposed on sellers, the supply curve shifts so that the vertical

More information

2007 Thomson South-Western

2007 Thomson South-Western Elasticity... allows us to analyze supply and demand with greater precision. is a measure of how much buyers and sellers respond to changes in market conditions THE ELASTICITY OF DEMAND The price elasticity

More information

Final Exam Microeconomics Fall 2009 Key

Final Exam Microeconomics Fall 2009 Key Final Exam Microeconomics Fall 2009 Key On your Scantron card, place: 1) your name, 2) the time and day your class meets, 3) the number of your test (it is found written in ink--the upper right-hand corner

More information

Consumer and Producer Surplus. Consumer and Producer Surplus. Consumer Surplus. Consumer Surplus. Consumer Surplus Individual consumer surplus

Consumer and Producer Surplus. Consumer and Producer Surplus. Consumer Surplus. Consumer Surplus. Consumer Surplus Individual consumer surplus Consumer and Consumer and February 6, 2007 Reading: Chapter 6 Introduction Consumer surplus Producer surplus Efficiency and the gains from trade s 2 Introduction Connections to: Opportunity costs to consumers

More information

Practice Exam 1. 1. Economics is the study of choice under conditions of a. demand b. supply c. scarcity d. opportunity e.

Practice Exam 1. 1. Economics is the study of choice under conditions of a. demand b. supply c. scarcity d. opportunity e. Practice Exam 1 1. Economics is the study of choice under conditions of a. demand b. supply c. scarcity d. opportunity e. abundance 2. Suppose your friends take you out for dinner on your birthday and

More information

THE ELASTICITY OF DEMAND

THE ELASTICITY OF DEMAND In this chapter, look for the answers to these questions: What is elasticity? What kinds of issues can elasticity help us understand? What is the price elasticity of demand? How is it related to the demand

More information

ELASTICITY AND ITS APPLICATION

ELASTICITY AND ITS APPLICATION 5 ELASTICITY AND ITS APPLICATION CHAPTER OUTLINE: I. The Elasticity of Demand A. Definition of elasticity: a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants.

More information

DEMAND AND SUPPLY. Chapter. Markets and Prices. Demand. C) the price of a hot dog minus the price of a hamburger.

DEMAND AND SUPPLY. Chapter. Markets and Prices. Demand. C) the price of a hot dog minus the price of a hamburger. Chapter 3 DEMAND AND SUPPLY Markets and Prices Topic: Price and Opportunity Cost 1) A relative price is A) the slope of the demand curve B) the difference between one price and another C) the slope of

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) If a producing firm does not have enough time to expand its plant capacity, it is: A)

More information

Review chapters 19, 20, 21,22, 23, 24, 8 Know how to compute the tax burden on consumers and on producers, given pre-tax equilibrium price and

Review chapters 19, 20, 21,22, 23, 24, 8 Know how to compute the tax burden on consumers and on producers, given pre-tax equilibrium price and Review chapters 19, 20, 21,22, 23, 24, 8 Know how to compute the tax burden on consumers and on producers, given pre-tax equilibrium price and post-tax equilibrium price: Consumer tax burden equals (post-tax

More information

DO NOT WRITE ON THIS PAPER 1) A

DO NOT WRITE ON THIS PAPER 1) A 1) A market: A) reflects upsloping demand and downsloping supply curves. B) entails the exchange of goods, but not services. C) is an institution that brings together buyers and sellers. D) always requires

More information

Demand & Supply. Chapter 7 discusses the laws of supply and demand and the ways in which a voluntary market supports them.

Demand & Supply. Chapter 7 discusses the laws of supply and demand and the ways in which a voluntary market supports them. Demand & Supply Chapter 7 discusses the laws of supply and demand and the ways in which a voluntary market supports them. E.2.1 Define supply and demand and explain the causes of the Law of Supply and

More information

ECO 105 Midterm Practice Problems Opportunity Costs

ECO 105 Midterm Practice Problems Opportunity Costs ECO 105 Midterm Practice Problems Opportunity Costs 1. Chris can bake either 8 pies or 4 loaves of bread per hour. For Chris, the opportunity cost of baking an extra pie is A. 2 loaves of bread B. 1/2

More information

#1: Supply and Demand

#1: Supply and Demand #1: Supply and Demand Answers: SD-1) C. Substitution is when the price of a good falls, the consumer buys more of that good (instead of other goods), or when the price of a good rises, the consumer buys

More information

Student Name: Date: Teacher Name: Heather Creamer. Score:

Student Name: Date: Teacher Name: Heather Creamer. Score: Economics EOC Quiz Answer Key Microeconomic Concepts - (SSEMI1) Flow Of Goods, (SSEMI2) Law Of Demand, (SSEMI3) Economic Behavior, (SSEMI4) Organization And Role Of Business Student Name: Teacher Name:

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. MBA 640, Survey of Microeconomics Fall 2006, Final Exam Name MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The "law of demand" states that, other

More information

The Analysis of Markets

The Analysis of Markets The Analysis of Markets Evaluating the Gains and Losses from Government Policies Consumer and Producer Surplus In this chapter, we return to supply demand analysis and show how it can be applied to a wide

More information

Macroeconomics/Microeconomics Machine-graded Assessment Items Module: Government Action

Macroeconomics/Microeconomics Machine-graded Assessment Items Module: Government Action Macroeconomics/Microeconomics Machine-graded Assessment Items Module: Government Action Machine-graded assessment question pools are provided for your reference and are organized by learning outcome. It

More information

Econ 201, Microeconomics Principles, Final Exam Version 1

Econ 201, Microeconomics Principles, Final Exam Version 1 Econ 201, Microeconomics Principles, Final Exam Version 1 Instructions: Please complete your answer sheet by filling in your name, student ID number, and identifying the version of your test (1 or 2).

More information

ECO 2301 Spring 2014. EXAM 2 Form 1 Solutions

ECO 2301 Spring 2014. EXAM 2 Form 1 Solutions ECO 2301 Spring 2014 Sec 002 Klaus Becker EXAM 2 Form 1 Solutions 1. The equilibrium price and quantity of any good or service is established by: A. only demanders. B. government regulations. C. only suppliers.

More information

Chapter 3 Market Demand, Supply, and Elasticity

Chapter 3 Market Demand, Supply, and Elasticity Chapter 3 Market Demand, Supply, and Elasticity After reading chapter 3, MARKET DEMAND, SUPPLY, AND ELASTICITY, you should be able to: Discuss the Law of Demand and draw a Demand Curve. Distinguish between

More information

AP Microeconomics Chapter 3 Outline

AP Microeconomics Chapter 3 Outline I. Learning Objectives In this chapter students should learn: A. What demand is and how it can change. B. What supply is and how it can change. C. How supply and demand interact to determine market equilibrium.

More information

Recitation #5 Week 02/08/2009 to 02/14/2009. Chapter 6 - Elasticity

Recitation #5 Week 02/08/2009 to 02/14/2009. Chapter 6 - Elasticity Recitation #5 Week 02/08/2009 to 02/14/2009 Chapter 6 - Elasticity 1. This problem explores the midpoint method of calculating percentages and why this method is the preferred method when calculating price

More information

Price per Bushel. a. Graph the demand and supply curves in the figure below. Indicate the equilibrium price and quantity.

Price per Bushel. a. Graph the demand and supply curves in the figure below. Indicate the equilibrium price and quantity. Price 18 17 16 15 14 13 12 11 1 9 8 7 6 5 4 3 2 1 Practice Homework Farm Policy Economics 11 The Economic Way of Thinking 1. The table below shows the demand and supply for Kiwi in the U.S. Quantity Demanded

More information

Test 1 10 October 2008. 1. Assume that tea and lemons are complements and that coffee and tea are substitutes.

Test 1 10 October 2008. 1. Assume that tea and lemons are complements and that coffee and tea are substitutes. Eco 301 Name Test 1 10 October 2008 100 points. Please write all answers in ink. Please use pencil and a straight edge to draw graphs. Allocate your time efficiently. 1. Assume that tea and lemons are

More information

1 st Exam. 7. Cindy's cross-price elasticity of magazine demand with respect to the price of books is

1 st Exam. 7. Cindy's cross-price elasticity of magazine demand with respect to the price of books is 1 st Exam 1. Marginal utility measures: A) the total utility of all your consumption B) the total utility divided by the price of the good C) the increase in utility from consuming one additional unit

More information

Answers to Text Questions and Problems in Chapter 7

Answers to Text Questions and Problems in Chapter 7 Answers to Text Questions and Problems in Chapter 7 Answers to Review Questions 1. If a policy is not efficient, then it can, by definition, be altered in a way that benefits at least some people without

More information

Taxes and Subsidies PRINCIPLES OF ECONOMICS (ECON 210) BEN VAN KAMMEN, PHD

Taxes and Subsidies PRINCIPLES OF ECONOMICS (ECON 210) BEN VAN KAMMEN, PHD Taxes and Subsidies PRINCIPLES OF ECONOMICS (ECON 210) BEN VAN KAMMEN, PHD Introduction We have already established that taxes are one of the reasons that supply decreases. Subsidies, which could be called

More information

Keep this copy of the test - turn in only the answer sheet.

Keep this copy of the test - turn in only the answer sheet. Agricultural Production per period Economics 11 The Economic Way of Thinking r. tock Fall 29 Midterm 1 Instructions: Answer all of the following 25 questions (each worth points). Using pencil, mark your

More information

4. According to the graph, assume that Cliff and Paul were both producing wheat and corn, and each were dividing their time equally between the two. T

4. According to the graph, assume that Cliff and Paul were both producing wheat and corn, and each were dividing their time equally between the two. T 1. Your professor loves his work, teaching economics. He has been offered other positions in the corporate world making 25 percent more, but has decided to stay in teaching. His decision would not change

More information

Good Luck writing the Mock Exam!!

Good Luck writing the Mock Exam!! PASS MOCK EXAM FOR PRACTICE ONLY Course: ECON 1000 B Facilitator: Ben Dates and locations of mock exam take up: FRIDAY DECEMBER 11: 10 12 ME 3380 1 3 ME 3380 It is most beneficial to you to write this

More information

Elasticity and applications. Elasticity. Price elasticity of demand. Two demand curves 06.03.2012

Elasticity and applications. Elasticity. Price elasticity of demand. Two demand curves 06.03.2012 Elasticity Elasticity and applications Law of demand: The demand curve is downward-sloping. As price rises quantity demanded falls, [as price falls quantity demanded rises]. Two markets: public transportation

More information

a. Meaning: The amount (as a percentage of total) that quantity demanded changes as price changes. b. Factors that make demand more price elastic

a. Meaning: The amount (as a percentage of total) that quantity demanded changes as price changes. b. Factors that make demand more price elastic Things to know about elasticity. 1. Price elasticity of demand a. Meaning: The amount (as a percentage of total) that quantity demanded changes as price changes. b. Factors that make demand more price

More information

In a completely free market, does NOT set prices. Prices change based on changing and. In the Wheat Market Game, Sellers = and Buyers =.

In a completely free market, does NOT set prices. Prices change based on changing and. In the Wheat Market Game, Sellers = and Buyers =. Economics/ Mr. DeNardo Date: Supply and Demand: Unit II Essential Questions: How is the price of a thing determined? How does the market system work to divide up scarce resources? Is a market system s

More information

ECON 202: Principles of Microeconomics. Chapter 6 Elasticity: The Responsiveness of Demand and Supply

ECON 202: Principles of Microeconomics. Chapter 6 Elasticity: The Responsiveness of Demand and Supply ECON 202: Principles of Microeconomics Chapter 6 Elasticity: The Responsiveness of Demand and Supply Elasticity: The Responsiveness of Demand and Supply 1. Price elasticity of demand. 2. Determinants of

More information

Demand, Supply, and Market Equilibrium

Demand, Supply, and Market Equilibrium Chapter Summary 4 Demand, Supply, and Market Equilibrium In this chapter, we ve seen how demand and supply determine prices. We also learned how to predict the effects of changes in demand or supply on

More information

Elasticity and Its Uses

Elasticity and Its Uses CHAPTER 4 Elasticity and Its Uses CHAPTER OVERVIEW One of the most practical uses of economic analysis is to predict the effects of changes in underlying conditions or policies on the prices and production

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. Chapter 11 Monopoly practice Davidson spring2007 MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) A monopoly industry is characterized by 1) A)

More information

http://ezto.mhecloud.mcgraw-hill.com/hm.tpx

http://ezto.mhecloud.mcgraw-hill.com/hm.tpx Page 1 of 17 1. Assume the price elasticity of demand for U.S. Frisbee Co. Frisbees is 0.5. If the company increases the price of each Frisbee from $12 to $16, the number of Frisbees demanded will Decrease

More information

The formula to measure the rice elastici coefficient is Percentage change in quantity demanded E= Percentage change in price

The formula to measure the rice elastici coefficient is Percentage change in quantity demanded E= Percentage change in price a CHAPTER 6: ELASTICITY, CONSUMER SURPLUS, AND PRODUCER SURPLUS Introduction Consumer responses to changes in prices, incomes, and prices of related products can be explained by the concept of elasticity.

More information

ECF1100 Microeconomics

ECF1100 Microeconomics ECF1100 Microeconomics Semester 2, 2015 Notes Textbook: Gans, King, Byford and Mankiw, Principles of Microeconomics 6th Edition, Cengage Learning, Copyright 2015 (ISBN 9780170248525). Contents Week 1 Introduction

More information

Economics 100 Exam 2

Economics 100 Exam 2 Name: 1. During the long run: Economics 100 Exam 2 A. Output is limited because of the law of diminishing returns B. The scale of operations cannot be changed C. The firm must decide how to use the current

More information

Chapter 14 Monopoly. 14.1 Monopoly and How It Arises

Chapter 14 Monopoly. 14.1 Monopoly and How It Arises Chapter 14 Monopoly 14.1 Monopoly and How It Arises 1) A major characteristic of monopoly is A) a single seller of a product. B) multiple sellers of a product. C) two sellers of a product. D) a few sellers

More information

Chapter 6. Elasticity: The Responsiveness of Demand and Supply

Chapter 6. Elasticity: The Responsiveness of Demand and Supply Chapter 6. Elasticity: The Responsiveness of Demand and Supply Instructor: JINKOOK LEE Department of Economics / Texas A&M University ECON 202 504 Principles of Microeconomics Elasticity Demand curve:

More information

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The law of demand states that, other things remaining the same, the lower the price of a good,

More information

Practice Questions Week 3 Day 1

Practice Questions Week 3 Day 1 Practice Questions Week 3 Day 1 Figure 4-1 Quantity Demanded $ 2 18 3 $ 4 14 4 $ 6 10 5 $ 8 6 6 $10 2 8 Price Per Pair Quantity Supplied 1. Figure 4-1 shows the supply and demand for socks. If a price

More information