1

At a price of $30, Ted will buy 500 units. At a price of $40, Ted will buy 400 units. What is Ted's price elasticity of demand?

a) elasticity = 0.78

b) elasticity = 1.29

c) elasticity = 0.60

d) elasticity = 1.67

2

Which of the following goods would have the most elastic demand curve?

a) Food

b) Gasoline

c) Orange Juice

d) Minute Maid brand Orange Juice

3

Suppose the following points are on a demand curve:

Price	8	7	6	5	4	3	2	1
Quantity	1	2	3	4	5	6	7	8

Over which price range is the curve most elastic?

a) Price of 2 to 3

b) Prices of 7 to 8

c) Prices of 4 to 5

d) Prices of 6 to 7

4

Which of the following is consistent with a demand curve that shows a larger percent change in quantity than its percent change in price?

a) Price Elasticity = 0.8, Elastic demand

b) Price Elasticity = 0.8, Inelastic demand

c) Price Elasticity = 1.2, Elastic demand

d) Price Elasticity = 1.2, Inelastic demand

5

Which of the following is true?

a) An inelastic demand curve has a price elasticity of demand greater than 1

b) The more substitutes there are for a good, the less elastic the demand curve

c) Cigarettes would probably be considered an elastic good

d) For an elastic demand curve the percentage change in quantity is smaller than the percentage change in price

e) The demand curve for "French Roast Coffee" is more elastic than the demand curve for all "Coffee"

6

Which of the following demand curves is likely the most elastic? (Note: Bill Gates has over $100 billion in wealth)

a) Bill Gates' demand for Pizza

b) Chris Hendrixson's demand for Pizza

c) Bill Gates' demand for Domino's Pizza

d) Chris Hendrixson's demand for Domino's Pizza

7

If a market has a large number of small firms, no barriers to entry, and each seller's product is identical, then sellers in the market are

a) likely to cooperate with each other and set prices and output together

b) likely to compete through advertising

c) price-takers

d) able to earn supernormal profit in the long-run

8

Which of the following is an assumption of monopolistic competition?

a) Each seller produces a similar, but different good

b) There is a single seller

c) There are no barriers to entry

d) The actions of one seller will affect the actions of the others

9

Which of the following is not a characteristic of oligopoly?

a) The actions of one seller will affect the actions of the others

b) Each seller produces identical goods

c) There are a small number of sellers with large shares of the market

d) There are high barriers to entry

10

Which of the following market structures are found most often in an economy?

a) Perfect Competition and Monopoly

b) Monopolistic Competition and Oligopoly

c) Oligopoly and Monopoly

d) Perfect Competition and Monopolistic Competition