QUESTION 1 Assume 300 billion pounds of Ostrich meat is produced per year when the price is 50 cents per pound, and 500 billion pounds when the price is 60 cents per pound supply of Ostrich meat, other factors held constant, is: a. price inelastic b. income elastic c. income inelastic d. price elastic QUESTION 2 If a demand curve for a good were completely vertical, it would be considered: a relatively inelastic b. perfectly inelastic cc perfectly elastic d. unitary elastic QUESTION 3 If a 10 percent increase in the price of product A brings about a 3 percent increase in the sales of product B, then: a, the demand for these products is inelastic. b.products A and B are substitutes. c. products A and B are complementary, Od the cross elasticity of demand between these two products is positive. QUESTION 4 If a tripling of price triples the quantity of a good supplied, the price elasticity of supply for this good is: a.-1 b. 1 C. 3 d. 300 QUESTION 5 Exhibit 5-7 Demand curve for concert tickets 40 30 Price per ticket (dollars) 20 10 0 Demand curve 10 20 30 40 Quantity of tickets per concert (thousands) In Exhibit 5-7, if promoters raise their prices from $10 to $40 per ticket, then their total revenue will: a, increase because demand is elastic in this price range. b. decrease because demand is inelastic in this price range, c increase because demand is inelastic in this price range, d. decrease because demand is elastic in this price range. QUESTION 6 If Pete raises his price of muffins from $2 to $3 and his total revenue increases from $35,000 to $38,000, then: a. the demand for Pete's muffins in this range is inelastic. b. the demand for Pete's muffins in this range is elastic. c. the demand for Pete's muffins in this range is unit elastic. d. the percentage change in quantity demanded must exceed the percentage change in product price YULJTON Good A has a price elasticity of demand of 27, while good B has a price elasticity of demand of 2.9. To raise the most tax revenue, the government should: a, place a unit tax on good A. b.place a unit tax on good B c. raise the price elasticity of demand for good A de subsidize the production of good B. QUESTION 8 Exhibit 5-9 Supply and Demand Curves for Good X SUPPLY 400 300 D lo Price per unit (dollars) 200 100 0 DEMAND 50 100 150 200 250 Quantity of output (units per time period) As shown in Exhibit 5-9, the $200 per unit tax on Good X raises tax revenue per time period totaling a $60,000 6.530,000 c. $10,000 d. $20,000 QUESTION 9 If a government tax has as its purpose the raising of revenue, it would be best to place the tax on a product which: a. is a non-essential b. has many good substitutes. c. has a highly elastic demand. d. has a highly inelastic demand. QUESTION 10 If Stimpson University increases tuition in order to increase its revenue, it will: a. be successful if supply is elastic. b. be successful if demand is inelastic. c. be successful if demand is elastic. d. not be successful if the demand curve slopes downward. QUESTION 11 An increase in total revenue results occurs from which of the following? a Price decreases when demand is elastic. b. Price increases when demand is elastic. c Price increases when demand is unitary elastic. d. Price decreases when demand is inelastic. QUESTION 12 If a straight-line demand curve slopes down, price elasticity will: a. remain the same at all points on the demand curve. b.change between any two points along the demand curve. c. always be greater than one. d. always equal one. QUESTION 13 A good is classified as inferior if: a.consumers buy less when income rises. b.consumers buy less when the price falls. C. consumers buy more when income rises. d. consumers buy less when the price rises, QUESTION 14 As the economy recovers from a recession, we should expect that demand for: a inferior goods will rise and demand for non-inferior goods will fall. b. inferior goods will fall and demand for normal goods will rise. c. all goods will rise. d. all goods will fall. QUESTION 15 Exhibit 5-1 Demand curve 10 8 Price per unit (dollars) 6 Demand 20 25 30 Quantity If demand price elasticity is 2, consumers would: a, buy twice as much of the product in response to a 10 percent decrease in prie b. buy twice as much of the product in response to a 1 percent decrease in price c. require a 2 percent drop in price to increase their purchases by 1 percent. d. buy 2 percent more of the product in response to a 1 percent decrease in price. QUESTION 16 If a consumer's purchases of a product increase as income increases, this good is classified as a(n): a normal good b.complementary good substitute good d. inferior good QUESTION 17 All things equal, the price elasticity of supply: a. will be greater in the long run than in the short run. b. is the same for the short run and the long run. C will be greater in the short run than in the long run. d. approaches zero in the long run. QUESTION 18 A perfectly elastic supply curve is expressed graphically as a(n): a. upward sloping line or curve. b. horizontal line. c. downward sloping line or curve. d. vertical line. QUESTION 19 Exhibit 5-8 Supply and demand curves for good X 800 Price 600 per unit (dollars) 400 200 0 100 200 300 400 500 Quantity of output (units per time period) In Exhibit 5-8, the price elasticity of supply for good X between points E and X is: a. 7/5 = 1.40 b.1/5 -0.20 c57-0.71 d. 1. QUESTION 20 If an increase in the price of a product from S1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then demand is: O a clastic b, unitary elastic c. inelastic d horizontal