1. When the quantity demanded Qd is extremely responsive to even very small changes in price, the price elasticity of demand will be: *

3 points

Zero

Infinity

Exactly 1

Less than 1

2. If at a price of $15, Ahmad sells 20 boxes of his special organic soap and at $20 he sells 10 boxes, then, the demand for his organic soaps is *

3 points

perfectly price elastic

price inelastic

unit price elastic

price elastic

3. The demands for such products as salt, bread, and electricity tend to be: *

3 points

perfectly price elastic

unit price elastic

price inelastic

price elastic

4. If the price elasticity of demand is unitary, and a firm raises its price by 20%, the total revenue will: *

3 points

Fall by 20 percent

Not change

Rise by 400 percent

Rise by 200 percent

5. The _______ of a decision is the value of the good or service forgone. *

3 points

opportunity cost

efficiency

economics

scarcity

6. Scarcity is *

3 points

The fact that our goods are infinite

The fact that our resources are infinite

The fact that our needs for goods is more than our resources

The fact that all countries are poor

7. Which of these economic concepts is illustrated in the PPF framework? *

3 points

Opportunity Cost

Economic Growth

Productive efficiency

All of the above

8. Points on the production possibilities frontier are *

3 points

Inefficient

Normative

Unattainable

Efficient

Consider the market of pizza with the given market data: When the price of pizza is $4, the quantity demanded of pizza is 60 slices and when the price of pizza is $2, the quantity demanded is 80 slices.

1. The percentage change in quantity demanded as price decreases from $4.00 to $2.00 is equal to (not in absolute value): *

3 points

28.57%

-28.57%

14.28%

-14.28%

2. Calculate the price elasticity of demand for pizza. *

3 points

4.2

0.42

0.047

0.47

3. Comment on the good's elasticity. *

3 points

Inelastic

Elastic

Perfectly Inelastic

Unit Elastic

4. What do you expect to happen for the total revenue of pizza if price decreased? *

3 points

TR will increase

TR will decrease

TR will remain the same

Cannot be determined from information given

5. What would you recommend the pizza's market to do in order to increase its revenues? *

3 points

Increases the pizza price in order to increase the TR.

Decreases the pizza price in order to increase the TR.

Increase the pizza Quantity in order to increase the TR.

Keep the pizza price the same in order to increase the TR.

Below is the demand for pizza in the market: Price Quantity product A Total revenue 10 80 800 9 90 810 8 100 800 110 770 120 130 650 4 140 560