Econ Chapter 20

98 Questions  I  By [email protected] on April 2, 2012

  
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1.     62.   Refer to Exhibit 5-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S1 to S2. What is the per-unit tax equal to?
A.
B.
C.
D.
E.
2.  The price elasticity of demand is lowest for which of the following goods?
A.
B.
C.
D.
E.
3.  108.   Refer to Exhibit 5-5. Assume that the seller of X increases the price from $1.50 to $2.00, and this results in an increase in total revenue. Which of the graphs represents the demand curve for X?
A.
B.
C.
D.
4.     28.   If goods A and B have a cross elasticity of demand that is positive, this is evidence that goods A and B are __________ goods.
A.
B.
C.
D.
5.     76.   If the demand for a good is unit elastic and the price of the good increases,
A.
B.
C.
D.
6.     58.   Refer to Exhibit 5-l. The demand curve D3 is
A.
B.
C.
D.
E.
7.     50.   Suppose a producer decides that if the price of her product is $9, the quantity supplied will be 1,000 units, and if the price is $11, the quantity supplied will be 1,300. The price elasticity of supply for the good is approximately
A.
B.
C.
D.
E.
8.  120.   Refer to Exhibit 5-7. If the government is contemplating imposing a per-unit tax and it wants the tax to have as small a negative effect on consumers as possible, it should choose a good for which the market is depicted on graph
A.
B.
C.
D.
9.  166.   If demand is __________, price and total revenue are __________ related; if demand is __________, price and total revenue are directly related.
A.
B.
C.
D.
E.
10.  119.   Refer to Exhibit 5-7. Which of the graphs shows a perfectly inelastic demand curve?
A.
B.
C.
D.
11.     32.   If price rises and total revenue falls,
A.
B.
C.
D.
E.
12.  125.   As the price of good X rises from $10 to $12 the result is a decrease in the quantity demanded of good X from 120 units to 100 units. The price elasticity of demand for good X is _____________ and total revenue __________ as the price of good X rises from $10 to $12.
A.
B.
C.
D.
13.  121.   Refer to Exhibit 5-7. If the government wants to impose a per-unit tax in order to raise revenues, which of the depicted markets should it choose in order to maximize tax revenues?
A.
B.
C.
D.
14.     35.   If Jack bought 21 CDs last year when his income was $18,000 and he buys 23 CDs this year when his income is $20,000, then his income elasticity of demand is ______________ making CDs a(n) ______________ good for Jack.
A.
B.
C.
D.
E.
15.     10.   If the percentage change in quantity demanded is equal to the percentage change in price, demand is
A.
B.
C.
D.
E.
16.  112.   Refer to Exhibit 5-5. For graph (3), what is the price elasticity of demand going between $2.00 and $1.50?
A.
B.
C.
D.
17.     56.   Refer to Exhibit 5-1. The demand curve D1 is
A.
B.
C.
D.
E.
18.     54.   The quantity supplied of land is constant regardless of price. Suppose a tax is imposed on the rental price of land. Who will pay the greater share of such a tax?
A.
B.
C.
D.
19.     59.   Refer to Exhibit 5-2. The market for good X is initially in equilibrium at $5. The government then places a tax on the producers of good X-in effect, taxing them on each unit of good X they sell. As a result, the supply curve
A.
B.
C.
D.
20.     21.   Vernon spends the following percentages of his budget on the following goods: 23 percent on good A, 11 percent on good B, 1 percent on good C, and 3 percent on good D. For which good is price elasticity of demand the highest, ceteris paribus?
A.
B.
C.
D.
21.     33.   If the cross elasticity of demand for good A with respect to good B is +2.7, then good A is
A.
B.
C.
D.
22.     74.   If the demand for a good is perfectly inelastic, then
A.
B.
C.
D.
E.
23.  113.   Refer to Exhibit 5-6. Let S1 be the supply curve of a firm. If S2 represents the supply curve of the same firm after the government imposes a per-unit tax, the tax is
A.
B.
C.
D.
24.       2.   The price elasticity of demand is the ratio of the
A.
B.
C.
D.
25.     65.   Refer to Exhibit 5-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X as shown by the shift of S1 to S2. What is an expression for the tax revenue raised?
A.
B.
C.
D.
E.
26.  122.   Refer to Exhibit 5-7. As a producer, if you had a choice, which of the depicted markets would you operate in?
A.
B.
C.
D.
27.       7.   Price falls from $1.80 to $1.70, and the quantity demanded rises from 110 units to 118 units. What is the price elasticity of demand between these two prices?
A.
B.
C.
D.
E.
28.     55.   Suppose the demand for a particular good is perfectly inelastic and the government decides to impose a tax on the production of this good. Who will pay the greater share of such a tax?
A.
B.
C.
D.
29.     63.   Refer to Exhibit 5-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S1 to S2. Approximately what percentage of the tax do consumers end up paying?
A.
B.
C.
D.
E.
30.  109.   Refer to Exhibit 5-5. For graph (3), if the seller of X raises the price from $1.50 to $2.00, the total revenue the seller receives will
A.
B.
C.
D.
31.     70.   When the price of diamond rings rises by 40 percent, the quantity demanded falls by 10 percent. The price elasticity of demand for diamond rings is ____________, making diamond rings an _______________ good (in this example).
A.
B.
C.
D.
32.  150.   Income elasticity of demand for an inferior good is
A.
B.
C.
D.
33.  If the price of good X falls and the demand for good X is unit elastic, then the percentage rise in quantity demanded is __________ the percentage fall in price, and total revenue __________.
A.
B.
C.
D.
E.
34.    Price of Good A Quantity Demanded of Good A Quantity Supplied of Good A $5.50 5 55 $4.50 15 45 $3.50 25 35 $2.50 35 25 $1.50 45 15 $0.50 55 5 84.   Refer to Exhibit 5-3. When price decreases from $1.50 to $0.50, the price elasticity of supply is
A.
B.
C.
D.
35.  118.   Refer to Exhibit 5-7. Which of the graphs shows a perfectly elastic demand curve?
A.
B.
C.
D.
36.       4.   If the price elasticity of demand for a given product is 7, this means that
A.
B.
C.
D.
E.
37.     20.   Which of the following statements is false?
A.
B.
C.
D.
38.  For a certain good, when price rises from $90 to $95, quantity demanded falls from 90,000 to 85,000. The price elasticity of demand here is _____________, making the demand for this good ____________ in the price range between $90 and $95.
A.
B.
C.
D.
39.     22.   A good will tend to have a low price elasticity of demand if
A.
B.
C.
D.
40.  111.   Refer to Exhibit 5-5. For graph (1), what is the price elasticity of demand going between $2.00 and $1.50?
A.
B.
C.
D.
41.     53.   The demand curve for good X is generally highly inelastic at and around the current price. If we assume that the supply curve is neither perfectly elastic nor perfectly inelastic, then who will pay the greater share of a tax placed on the production of good X?
A.
B.
C.
D.
42.     25.   Cross elasticity of demand is the percentage change in the quantity __________ of a good divided by the percentage change in __________.
A.
B.
C.
D.
E.
43.  160.   Price elasticity of supply, and price elasticity of demand, are likely to be __________ in the __________ than in the __________.
A.
B.
C.
D.
E.
44.  Which of the following would result in higher price elasticity?
A.
B.
C.
D.
45.  100.   If a small increase in the price of a good reduces quantity demanded to zero, demand is ________________ and the price elasticity of demand is
A.
B.
C.
D.
46.  116.   Refer to Exhibit 5-6. Suppose the three equilibrium quantities are 700, 800, and 900, and the two other equilibrium prices are $2.20 and $2.75. What is the tax revenue collected from the tax that shifted S1 to S2 when D1 is the relevant demand curve?
A.
B.
C.
D.
47.  Which of the following would result in higher price elasticity?
A.
B.
C.
D.
48.    Price of Good A Quantity Demanded of Good A Quantity Supplied of Good A $5.50 5 55 $4.50 15 45 $3.50 25 35 $2.50 35 25 $1.50 45 15 $0.50 55 5    80.   Refer to Exhibit 5-3. If price increases from $2.50 to $3.50, total revenue along the demand curve
A.
B.
C.
D.
49.     75.   If the demand for a good is inelastic and the price of the good decreases,
A.
B.
C.
D.
50.     30.   If the price of good A decreases by 10 percent and the quantity demanded of good B increases by 10 percent, this is evidence that A and B are
A.
B.
C.
D.
51.     31.   If the price of good A decreases by 10 percent and the quantity demanded of good B decreases by 10 percent, this is evidence that A and B are
A.
B.
C.
D.
E.
52.  167.   If income elasticity of demand is 2.12, it means that quantity demanded will __________ by 2.12 percent for every __________ percent __________ in income.
A.
B.
C.
D.
E.
53.     61.   Refer to Exhibit 5-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S1 to S2. As a result,
A.
B.
C.
D.
E.
54.    Price of Good A Quantity Demanded of Good A Quantity Supplied of Good A $5.50 5 55 $4.50 15 45 $3.50 25 35 $2.50 35 25 $1.50 45 15 $0.50 55 5    77.   Refer to Exhibit 5-3. When price decreases from $5.50 to $4.50, the price elasticity of demand is
A.
B.
C.
D.
E.
55.  165.   Which of the following statements is false?
A.
B.
C.
D.
56.     24.   The longer the period of time consumers have to adjust to price changes, the __________ the __________ elasticity of demand.
A.
B.
C.
D.
57.       8.   If the percentage change in quantity demanded is greater than the percentage change in price, demand is
A.
B.
C.
D.
58.  130.   Which of the following defines elastic demand?
A.
B.
C.
D.
E.
59.  164.   Which of the following statements represents a correct and sequentially accurate economic explanation?
A.
B.
C.
D.
60.  168.   If supply is inelastic, it follows that
A.
B.
C.
D.
E.
61.     60.   Refer to Exhibit 5-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S1 to S2. As a result, the equilibrium price
A.
B.
C.
D.
62.     85.   Cross elasticity of demand measures the responsiveness of
A.
B.
C.
D.
E.
63.  178.   The longer the period of time allowed for the producer of a good to adjust to a change in the price of the good, the ____________ the price elasticity of supply will be.  This statement assumes that the quantity supplied __________ be altered with time.
A.
B.
C.
D.
64.     64.   Refer to Exhibit 5-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S1 to S2. Approximately what percentage of the tax do producers end up paying?
A.
B.
C.
D.
65.     57.   Refer to Exhibit 5-l. The demand curve D2 is
A.
B.
C.
D.
E.
66.     12.   Suppose at a price of $4 and at a price of $6, John purchases 40 units of good X. Given this information, we know that
A.
B.
C.
D.
E.
67.  110.   Refer to Exhibit 5-5. Which of the graphs represents a greater percentage change in quantity demanded than the percentage change in price?
A.
B.
C.
D.
68.     29.   If two goods are substitute goods,
A.
B.
C.
D.
69.  135.   If the seller of good X raises the price of good X, it follows that the total revenue of good X will __________, if demand is __________.
A.
B.
C.
D.
E.
70.       3.   If quantity demanded rises by 10 percent as price falls by 7 percent, the price elasticity of demand equals
A.
B.
C.
D.
71.    Price of Good A Quantity Demanded of Good A Quantity Supplied of Good A $5.50 5 55 $4.50 15 45 $3.50 25 35 $2.50 35 25 $1.50 45 15 $0.50 55 5    78.   Refer to Exhibit 5-3. When price decreases from $4.50 to $3.50, the price elasticity of demand is
A.
B.
C.
D.
E.
72.       1.   Price elasticity of demand is a measure of the responsiveness of quantity demanded to changes in
A.
B.
C.
D.
73.       9.   If the percentage change in quantity demanded is less than the percentage change in price, demand is
A.
B.
C.
D.
74.     23.   The shorter the period of time consumers have to adjust to price changes, the __________ the __________ elasticity of demand.
A.
B.
C.
D.
75.  16.   For a certain good, when price falls from $20 to $19, quantity demanded rises from 5,000 to 5,700. The price elasticity of demand here is
A.
B.
C.
D.
76.  If the price of good X rises and the demand for good X is inelastic, then the percentage fall in quantity demanded is __________ the percentage rise in price, and total revenue __________.
A.
B.
C.
D.
E.
77.    Price of Good A Quantity Demanded of Good A Quantity Supplied of Good A $5.50 5 55 $4.50 15 45 $3.50 25 35 $2.50 35 25 $1.50 45 15 $0.50 55 5 82.   Refer to Exhibit 5-3. When price decreases from $5.50 to $4.50, the price elasticity of supply is
A.
B.
C.
D.
E.
78.     11.   If quantity demanded is completely unresponsive to changes in price, demand is
A.
B.
C.
D.
E.
79.     16.   For a certain good, when price falls from $20 to $19, quantity demanded rises from 5,000 to 5,700. The price elasticity of demand here is
A.
B.
C.
D.
80.  140.   Which of the following statements is true?
A.
B.
C.
D.
E.
81.     72.   If the demand for a good is elastic, then
A.
B.
C.
D.
E.
82.     48.   Price elasticity of supply registers perfect inelasticity at the value of
A.
B.
C.
D.
83.  115.   Refer to Exhibit 5-6. Let S1 be the supply curve of a producer. If S2 is the supply curve of the same producer after the government imposes a per-unit tax, the share of the tax paid by the producer as compared to the share of the tax paid by consumers will be
A.
B.
C.
D.
84.     18.   The fewer substitutes for a good,
A.
B.
C.
D.
85.  134.   If the price elasticity of demand for a good is zero, then demand is
A.
B.
C.
D.
E.