(1.) John was ordering orange cones to use for soccer drills during practices. If John decided to purchase cones now, he would buy 10 sets at $5 per set. If he decided to purchase the cones at a later time when the demand decreased, he would purchase 14 sets at $3 per set.

Using the mid-point formula, the own-price elasticity of the soccer cones is __________.

• a.)
• -0.67
• b.)
• 0.25
• c.)
• 4
• d.)
• -12

(2.) On his most recent trip to the running store, Andy noticed that the water bottles for his favorite hydration belt were on sale. They were usually priced at $8, but they were on sale for $5.

The store owner told Andy that he was surprised that people were not only buying more water bottles due to the sale, but also more of the hydration belt, even though the belts were not on sale.

Based on the scenario above, what type of goods are the water bottles and hydration belts?

• a.)
• Normal
• b.)
• Complements
• c.)
• Substitutes
• d.)
• Inelastic

(3.) Rachel is hosting the neighborhood barbecue party at her house and decides to grill hotdogs. Last year, a package of hotdog buns costed $7 and a package of hotdogs costed $10 and Rachel had bought 15 packages of buns and 15 packages of hotdogs at that time.

Now the price of buns has increased to $8 a package, and the price of hotdogs remained at $10. Rachel decides she will only buy 10 packages of hotdogs this year.

Using the mid-point formula, the cross-price elasticity is __________ and the goods are __________.

• a.)
• 5; substitutes
• b.)
• -1; complements
• c.)
• -3; complements
• d.)
• 2; substitutes

(4.) Which of the following would be considered a luxury good?

• a.)
• Saving money by shopping at the local thrift store to find a dress with an income elasticity of -1.
• b.)
• Eating breakfast at the local diner on Saturdays with an income elasticity of 0.85.
• c.)
• Purchasing dining hall passes for weekday meals with an income elasticity of 0.15.
• d.)
• Renting a limousine with an income elasticity of 2.

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(5.) Ashley received a raise at work that increased her monthly income from $1,000 to $1,250. Last year, Ashley bought 20 slices of cheesecake for her birthday party. Due to her increase in income, she is able to buy 24 slices for her birthday this year.

Using the mid-point formula, the income elasticity is _________ and the cheesecake slices are __________ goods.

• a.)
• 1.2; luxury
• b.)
• 1.3; luxury
• c.)
• 0.5; normal
• d.)
• 0.8; normal

(6.) Which of the followingsstatements regarding perfectly competitive markets is true?

• a.)
• Perfectly competitive markets are common in the real world.
• b.)
• Most markets lie somewhere between perfect competition and monopoly.
• c.)
• Firms in perfectly competitive markets have control over price.
• d.)
• Perfect competition involves barriers in the flow of information.

(7.) Which of the following examples is acharacteristic necessary for a diamond firm to run as a monopoly?

• a.)
• The firm has complete control over price and is known as a price-maker.
• b.)
• The cost to enter the diamond industry is inexpensive and there are many mines available for purchase.
• c.)
• Companies differentiate their diamonds by the use of advertising.
• d.)
• Consumers have access to the production costs of diamond mining.

(8.) Which of the following description corresponds with a monopolistic competition?

• a.)
• The warehouse workers order sandwiches every Wednesday. Generally, they prefer to order from the Sandwich Shoppe because the oven-baked bread is their favorite. Since there are many competing sandwich places, sometimes they order from other restaurants who offer a great deal.
• b.)
• Jean Genieuses Label Haven to produce their brand's label. Label Haven has a patent on the production of this specific label, so the owner of Jean Geniecannot order the label to be manufacturedat another company.
• c.)
• All of the baggage handlers at a certain airport belong to the same labor union, which sets the wages for that type of labor.
• d.)
• There are only a few companies that offer catering services to the university, and although they offer similar food and beverages, their prices seem higher than they would be if there was more competition.

(9.) The oligopolist produces __________ and charges a __________ price than a monopolist.

• a.)
• more; lower
• b.)
• less; lower
• c.)
• more; higher
• d.)
• less; higher