Question 1(1 point)

Egg producers know that the elasticity of demand for eggs is 0.1. What would be the percentage decrease in the price of eggs if the quantity demanded increased by 5%?

Question 1 options:

	0.1%
	1%
	50%
	5%

Question 2(1 point)

The government wants to collect tax revenue but it is worried about deadweight loss. Considering demand only (assuming all other factors including the supply, equilibrium price, equilibrium quantity, tax, etc. are the same), a tax on which of the following goods would result in the smallest deadweight loss?

Question 2 options:

	medicine (price elasticity of demand = 0.4)
	tobacco (price elasticity of demand = 0.7
	Gasoline (price elasticity of demand = 0.5)
	restaurant meals (price elasticity of demand = 1.1)

Question 3(1 point)

Cars may be categorized as a normal good. Which of the following may represent the income elasticity of demand for cars?

Question 3 options:

	0.4
	-0.3
	-0.5
	All of the above

Question 4(1 point)

The incidence of an excise tax depends on the price elasticity of supply and the price elasticity of demand. If the price elasticity of demand is _______ and the price elasticity of supply is _______, then the excise tax is paid mainly by producers.

Question 4 options:

	Low (inelastic), Low (inelastic)
	Low (inelastic), high (elastic)
	High (elastic), high (elastic)
	High (elastic), low (inelastic)

Question 5 (1 point)

Number of Workers	Candles per hour
0	0
1	3
2	7
3	12
4	18
5	26

The table above provides the total number of workers and the resulting total output per hour for The Candles Company, holding all other inputs constant.

What is the TRUE about The Candles Company returns to labor?

Question 5 options:

	Diminishing returns to labor
	First increasing and then diminishing
	Constant returns to labor
	Increasing returns to labor

Question 6 (1 point)

Demand curves tend to be more ________ over a longer period of time.

Question 6 options:

	price-elastic
	steeply sloped
	inflexible
	price-inelastic

Question 7 (1 point)

Mary sells cakes from home to earn some extra money. She sells each cake for $10. The table below shows the total costs to Mary for selling different quantities of cake. What is optimal number of cakes Mary should sell?

Cakes	Total Cost of Making Cakes ($)
0	0
1	6
2	14
3	25
4	40
5	55

Question 7 options:

	4
	2
	0
	5

Question 8 (1 point)

The ________effect states that the larger the output, the greater the quantity of output over which fixed cost is divided into, leading to a lower average fixed cost.

Question 8 options:

	long-run
	diminishing returns
	spreading
	increasing returns