1.) If a 35 percent increase in price of golf balls led to an 42 percent decreas
ID: 1237350 • Letter: 1
Question
1.) If a 35 percent increase in price of golf balls led to an 42 percent decrease in quantity demanded, then thedemand for golf balls is
A) unit-elastic. B) perfectly elastic. C) relatively inelastic. D) relatively elastic.
2.) Assuming that a black market is created, which of the following is not a result of imposing a rent ceiling?
I. There is a reduction in the quantity demanded of apartments.
II. Some producer surplus is converted to consumer surplus.
III. Consumers face a higher price than the competitive equilibrium price.
IV. The effect of rent ceiling on consumer surplus is ambiguous because although there are less apartments
available to consumers, they can rent an apartment at a low rent due to the rent ceiling.
A) Only II B) II and III C) I and III D) II and IV
3.) If the demand for a life-saving drug is perfectly inelastic and the price doubles the quantity demanded
A) also doubles. B) decreases by 50%. C) is cut in half. D) remains constant
4.) Bringing oil to the market is a relatively difficult and costly process. The whole process from exploration to
pumping significant amounts of oil can take years. Hence, the amount of oil that is ready and available to
consumers does not change much. What does this indicate about the price elasticity of supply for oil?
A) The elasticity is likely to be very high and supply is inelastic.
B) The elasticity is likely to be close to zero and supply is perfectly elastic.
C) The elasticity is likely to be low and supply is highly inelastic.
D) The elasticity is likely to be low and supply is highly elastic.
5.) Suppose the California Nurses Union successfully secured a 12 percent increase in the wages of registered
nurses. If a hospital responds by reducing the quantity of registered nurses hired and increasing the quantity of
physician's assistants hired, what conclusion can you draw?
A) Physician's assistants are more valuable in terms of their productivity.
B) The price elasticity of demand for registered nurses is negative while the price elasticity of demand for
physician's assistants is positive.
C) The cross-price elasticity of demand between registered nurses and physician's assistants is positive.
D) The cross-price elasticity of demand between registered nurses and physician's assistants is negative.
6.) Over longer periods of time, increases in oil prices provide firms with incentives to explore and recover oil.
What does this indicate about price elasticity of supply for oil in the long run?
A) The elasticity is likely to be higher in the long run than in the short run.
B) The elasticity is likely to be lower in the long run than in the short run.
C) The elasticity approaches 0 in the long run as supplies are depleted.
D) The elasticity is unstable in the long run because oil supplies may be depleted.
7.) A demand curve that is horizontal indicates that the commodity
A) has few substitutes. C) is a necessity.
B) must be very cheap. D) has a large number of very close substitutes.
8.) The highest price that consumers are willing to pay for one unit of a good is at a point where
A) the marginal benefit of consuming the product is equal to the marginal cost of consuming it.
B) the consumer surplus is equal to the producer surplus.
C) the marginal benefit of consuming the product is higher than the marginal cost of producing it.
D) the marginal benefit of consuming a product is equal to the highest price that they are willing to pay.
9.) Which of following statements is true regarding sensitivity to a price change?
A) Business travelers would be more sensitive to a change in flight tickets
Explanation / Answer
a c d d b a a b b d
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