1.If the income elasticity of demand for laptops is 3.5 you know that laptops ar

ID: 1189896 • Letter: 1

Question

1.If the income elasticity of demand for laptops is 3.5 you know that laptops are a(n)

a. substitute good

b. inferior good

c. luxury good

d. complement good

e. necessity good

2.Suppose the price of IBM computers falls from $2500 to 2000 and the quantity demanded increases from 10,000 to 20,000. Calculate the price elasticity of demand.

a.1

b. -3

c. 0

d. 1/3=0.33

3.Refer to the accompanying table. The price elasticity of demand of erasers is when the price is lowered from $1.50 to 1.00. Sellers of erasers will their total revenue from this price.

a. perfectly elastic; not change

b. elastic; raise

c. Inelastic; raise

d. Inelastic; lower

e. elastic; lower

4.We would expect to see a positive cross-price elasticity between:

a. basketballs and steak

b. ice cream and frozen yogurt

c. computers and iPods

d. peanut butter and jelly

e. sneakers and socks

5.Refer to the following figure to answer the question

In the figure, point A is

a. an inefficient point

b. an efficient point

c. the equilibrium

d. unattainable with current resources

e. the point where society would prefer to consume

6.Refer to the accompanying figure. When the price changes from P1 to P2, we will see a(n):

a. increase in quantity supplied from Q2 to Q1.
b. decrease in quantity supplied from Q1 to Q2.
c. decrease in supply from Q1 to Q2 .
d. shift of the supply curve.

e. increase in supply from Q1 to Q2 .

7.Given the production possibilities frontier (PPF) shown in the figure

Given current resources and technology the attainable range is best described as:

a. only area o: points outside the PPF

b. Area o: points outside the PPF and points on the PPF

c. Area I: points inside the PPF and points on the PPF

d. points on the PPF only

e. only area I: points inside the PPF

Explanation / Answer

The option in bold and italics is the answer: