Question 1

When a hair salon charged $18 for a haircut it served 260 customers in a day.When it increased the price to $22, it served 220 customers in a day.What is the price elasticity of demand (in absolute value)?

Group of answer choices

1.00

0.83

1.20

1.25

0.67

Question 2

When consumers respond to a price change and the percentage change in quantity demanded (in absolute value) is equal to the percentage change in price (in absolute value), the demand is described as being _______.

Group of answer choices

elastic

inelastic

perfectly inelastic

perfectly elastic

unit elastic

Question 3

Which of the following is correct regarding indifference curves and budget lines?

Group of answer choices

A decrease in the consumer's budget causes an indifference curve to shift left.

The actual combination chosen by a consumer is found where an indifference curve crosses over the budget line.

Higher levels of total utility are represented with indifference curves that lie down/left.

Along an indifference curve the consumer's total utility is constant.

An increase in the consumer's budget causes the budget line to rotate counter-clockwise.

Question 4

Decreases in demand are graphed as leftward shifts of the demand curve.Similarly, decreases in supply are graphed as leftward shifts of the supply curve.

Group of answer choices

True

False

Question 5

A minimum wage is an example of a price floor and results in higher rates of unemployment.

Group of answer choices

True

False

Question 6

Assume that a firm is considering using another hour of labor at a cost of $35.The marginal product of this additional hour of labor is 15 units.The selling price is $2 per unit.Which of the following correctly identifies what the firm should do and for the correct reason?

Group of answer choices

The firm should use the additional hour of labor because the firm's MRP is greater than the wage rate.

The firm should use the additional hour of labor because the firm's total product will increase.

The firm should use the additional hour of labor because the marginal product is positive.

The firm should not use the additional hour of labor because the MRP is less than the wage rate.

Question 7

A recent news broadcast made the following statement: "A decrease in the price of gasoline has caused an increase in the demand for gasoline."Would an economist agree with this statement?(Carefully look at the wording.)

Group of answer choices

No, an economist would not agree with this statement.

Yes, an economist would agree with this statement.

Question 8

Which of the following statements is correct regarding cost curves?There is more than one correct answer to this question.You must mark all of the correct answers to receive full credit for this question.

Group of answer choices

The total variable cost curve and total cost curve have exactly the same shape.

The average total cost curve and average variable cost curve get closer to each other as you move from left to right in the graph.

The marginal cost curve passes through the minimum points of the average variable cost curve and average total cost curve.

The average fixed cost curve is horizontal.

The slope of the total cost curve is average variable cost.

Question 9

Which of the following would cause a definite leftward shift of the demand curve?

Group of answer choices

an expectation by consumers of lower income and an increase in the price of a substitute

a negative change in consumer tastes and an increase the price of a complement

a decrease in income and a positive change in consumer tastes

a decrease in the number of consumers and a decrease in income (assume an inferior good)

Question 10

A life-saving medication that has no substitutes is likely to have _______ demand and a price elasticity of demand that is _______ in absolute value.

Group of answer choices

inelastic, less than one

inelastic, greater than one

elastic, greater than one

elastic, less than one

Question 11

Which of the following is NOT a problem typically encountered with a price floor?

Group of answer choices

persistent surpluses

overinvestment in the industry

None of the choices correctly answers this question - that is, they are all problems typically encountered with a price floor.

storage/disposal problems

decreased consumption

Question 12

In the last few years, California raised taxes on businesses.In addition, the cost of labor has increased due to increases in the minimum wage.Based on this information, you would expect a decrease in supply.

Group of answer choices

True

False

Question 13

Assuming nothing else changes, when the cost of an input increases, a firm's per-unit profit _______ and the firm will offer _______ amounts for sale at every price.

Group of answer choices

decreases, decreased

increases, decreased

decreases, increased

increases, increased

Question 14

While a decrease in the price of a substitute causes the _______ curve to shift _______ a decrease in the price of a substitute in production causes the _______ curve to shift _______.

Group of answer choices

demand, right, supply, right

demand, right, supply, left

demand, left, supply, left

demand left, supply, right

Question 15

Opportunity cost is defined as the value of the next-best alternative forgone when a decision is made or a course of action is followed.

Group of answer choices

True

False