The responsiveness by SUPPLIERS to produce more or fewer goods or services because of a price change is called:

Group of answer choices

price elasticity of supply.

supply elasticity of demand.

income elasticity of supply.

price elasticity of demand.

cross price elasticity of demand.

Flag question: Question 2Question 25 pts

As a result of a ten percent increase in the price of pretzels, the weekly quantity demanded of potato chips increases from 700 bags to 900 bags. The cross price elasticity of demand for potato chips is:

Group of answer choices

1.82

.10

2

3.33

.4

2.5

Flag question: Question 3Question 35 pts

If a product has an income elasticity of demand of -2.5 (minus 2.5), and buyers' incomes decrease by 50%, then:

Group of answer choices

purchases of this product will fall by 2.5%.

purchases of this product will increase by 125%.

purchases of this product will fall by 50%.

purchases of this product will fall by 75%.

purchases of this product will increase by 150%.

purchases of this product will increase by 20%.

Flag question: Question 4Question 45 pts

If airline companies were able to distinguish between groups of people with different price elasticities, it would charge the highest price to:

Group of answer choices

people with relatively low incomes, because lower income people have higher price elasticities of demand.

senior citizens, because senior citizens have positive price elasticities of demand.

government workers, because government workers have higher price elasticities of demand.

business people, because business people have lower price elasticities of demand.

Flag question: Question 5Question 55 pts

Suppose that 32,500 people attended a concert at a ticket price of $36. A week earlier 27,500 people attended the same concert at a ticket price of $44. Assuming no changes in other economic variables, the price elasticity of demand for tickets to this concert based on this example is:

Group of answer choices

6.7

.75

1.2

.83

1.33

Flag question: Question 6Question 65 pts

A local college's basketball program found that when it raised its ticket prices from $16 to $20, its revenue increased from $384,000 to $400,000. What is the price elasticity of demand for these games? (Note that total revenue is given, not quantity demanded).

Group of answer choices

2

1.22

.18

.82

5.44

.68

Flag question: Question 7Question 75 pts

Which of the following best explains the meaning of the term price elasticity of demand as used in economics?

Group of answer choices

the tendency of shortages to disappear in the long run.

the tendency of the market price to return to its equilibrium value if disturbed.

the extent to which consumers' purchases respond to a certain change in a product's price.

the extent to which an economy can adapt to changing world conditions.

Flag question: Question 8Question 85 pts

A business has variable inputs and fixed inputs. Later in the course, we will call the expense of the variable inputs "variable costs". The expense of the fixed inputs is called "fixed costs". Which of the following is the most typical example of a fixed input?

Group of answer choices

Gasoline to operate the machines and vehicles.

A large piece of machinery.

Energy to operate the machines that make the products.

Raw materials.

Labor.

Flag question: Question 9Question 95 pts

Let's say that a firm has a fixed number of machines, and a fixed space within which to work. As the firm hires workers to produce its output, it will observe that:

Group of answer choices

after a certain output, the additional output declines. However, there will always be increases as long as more workers are added.

after a certain output, the additional output increases. However, as more workers are added the additional output remains constant and the total output increases in proportionate increments.

after a certain output, the additional output declines. As more workers are added, it is possible that the total output declines as well.

there is a direct relationship between additional workers and additional output at all output levels.

none of the above.

Flag question: Question 10Question 105 pts

A small business owner claims that in a period of three months, she can comfortably expand her business and change all the inputs necessary for operation. Based on this, economists conclude that:

Group of answer choices

This business's short run is three months and shorter, and its long run is three months and longer.

The long run depends on the diminishing returns for the firm. We don't have this information, so the long run is unknown.

The long run period of time is unknown, because the long run is defined as a period during which all inputs can be doubled. We don't know when inputs can be doubled; only the business owner knows this.

This business's long run is less than four months, and its short run is exactly two months.

This business's short run is three months or longer, and its long run is six months or longer.

Flag question: Question 11Question 115 pts

Marginal production of labor is:

Group of answer choices

the total production divided by the number of workers.

the additional production per worker.

the total production per worker.

the difference between the average production of labor.

Flag question: Question 12Question 125 pts

If a nominal interest rate is 8 percent, and inflation is 8 percent, then the real interest rate is:

Group of answer choices

minus 2 percent.

8 percent.

16 percent.

0 percent.

Flag question: Question 13Question 135 pts

An economist calculates that the cross price elasticity of demand for product A relative to product B is .5 (plus point 5). Given this information, which of the following statements is correct?

Group of answer choices

Products A and B are substitute products.

Products A and B are complementary products.

When the price of product A rises, the demand for product B falls.

When the price of product A falls, the demand for product B rises.

Flag question: Question 14Question 145 pts

Let's say that a gasoline station discovers that it can sell 900 gallons of gasoline in one day when it charges $2.70, whereas it can sell 1,100 gallons in one day when it charges $2.50. What is the price elasticity of demand for gasoline for this gas station owner? If the owner's goal is to maximize revenue, do you recommend that this owner should lower the price to $2.50?

Group of answer choices

The price elasticity of demand is .38. The owner should lower the price in order to maximize revenue.

The price elasticity of demand is 10. The owner should not lower the price in order to maximize revenue.

The price elasticity of demand is 2.6. The owner should lower the price in order to maximize revenue.

The price elasticity of demand is .38. The owner should not lower the price in order to maximize revenue.

The price elasticity of demand is .10. The owner should lower the price in order to maximize revenue.

The price elasticity of demand is 2.6. The owner should not lower the price in order to maximize revenue.

Flag question: Question 15Question 155 pts

Apply your knowledge of the three determinants of price elasticity of demand and select one of the following products that has the lowest price elasticity of demand.

Group of answer choices

Diamonds sold by jeweler C in a mall that has 4 other jewelers selling similar jewelry.

Houses sold by builder D in a slow and competitive housing market.

Apples sold by farmer A at a farmer's market. There are 20 other fruit stands that sell apples at this farmer's market.

Gasoline sold by gasoline station B on the corner of main street in well-populated Pleasantville. There are no other gas stations in Pleasantville.

Gasoline sold at various gas stations in Maryland during a 5 year period of time (the elasticity is calculated over the 5 year period).

Flag question: Question 16Question 165 pts

Labor	Total Production	Marginal Production	Average Production
0	0
2	30
4		10
6			20
8	200
10		25

In the above table, the marginal production and the average production of the 7th and 8th workers (the values in the row for the 8th worker) are, respectively:

Group of answer choices

25; 25

25; 200

40; 25

20; 25

80; 100

80; 25

Flag question: Question 17Question 175 pts

Labor	Total Production	Marginal Production	Average Production
0	0
2	30
4		10
6			20
8	200
10		25

In the above table, the total production and the average production of the 3th and 4th workers (the values in the row for the 4th worker) are, respectively:

Group of answer choices

45; 15

40; 10

50; 12.5

25; 40

40; 12.5

40; 40

Flag question: Question 18Question 185 pts

A firm produces 100 products with 8 workers. It produces 220 products with 9 workers. It produces 400 products with 10 workers. It produces 650 products with 11 workers. It produces 850 products with 12 workers. It produces 1,000 products with 13 workers. Starting with which worker does the marginal production begin to decline?

Group of answer choices

Beginning with the 9th worker.

Beginning with the 10th worker.

Beginning with the 12th worker.

Beginning with the 11th worker.

Beginning with the 13th worker.

Flag question: Question 19Question 195 pts

You win $100,000 in the lottery! However, the state tells you that they can only pay you the money in 5 years from now. How much is this money worth to you today if the going interest rate is 7%?

Group of answer choices

$119,245.56

$91,615.38

$71,298.61

$80,400.39

$74,727.25

$140,250

Flag question: Question 20Question 205 pts

Which of the following demand curves has the lowest price elasticity of demand?

Group of answer choices

A demand curve that is nearly horizontal (slightly downward sloping).

A demand curve that is horizontal.

A demand curve that is nearly vertical (steeply downward sloping).

A demand curve that is slightly upward sloping.