Question 1

If Camila's income rises by 20 percent, and, as a result, she purchases 40 percent more dresses, her income elasticity for dresses is

Accepted Answer

A)  0.5. 
B)  1.0. 
C)  2.0. 
D)  Not enough information is given to answer this question. 
A)  0.5. 
B)  1.0. 
C)  2.0. 
D)  Not enough information is given to answer this question.

Question 2

The demand curve for a good is very unlikely to be perfectly vertical because

Accepted Answer

A)  scarcity and limited income restrict the ability of consumers to afford goods as they become very expensive. 
B)  as the price of a good rises to high enough levels, the incentive for other suppliers to invent new substitutes for the good increases. 
C)  consumers generally do not care about the price of the goods they consume. 
D)  both a and b are true. 
A)  scarcity and limited income restrict the ability of consumers to afford goods as they become very expensive. 
B)  as the price of a good rises to high enough levels, the incentive for other suppliers to invent new substitutes for the good increases. 
C)  consumers generally do not care about the price of the goods they consume. 
D)  both a and b are true.

Question 3

"I'm tired of eating cold pizza for breakfast. Today I'm going to the make some oatmeal instead." This statement most clearly reflects the

Accepted Answer

A)  law of increasing returns to scale. 
B)  second law of demand. 
C)  law of diminishing marginal utility. 
D)  law of comparative advantage. 
A)  law of increasing returns to scale. 
B)  second law of demand. 
C)  law of diminishing marginal utility. 
D)  law of comparative advantage.

Question 4

If Melanie's marginal benefit as a consumer in the jeans market is larger than the price of a pair of jeans,

Accepted Answer

A)  Melanie will not purchase any more jeans. 
B)  Melanie can benefit by purchasing more jeans. 
C)  the opportunity cost of a pair of jeans is lower than the price. 
D)  Melanie will decrease her total utility by purchasing more jeans. 
A)  Melanie will not purchase any more jeans. 
B)  Melanie can benefit by purchasing more jeans. 
C)  the opportunity cost of a pair of jeans is lower than the price. 
D)  Melanie will decrease her total utility by purchasing more jeans.

Question 5

Ashley recently got a 15 percent raise. She now purchases 7.5 percent more coffee. Ashley's income elasticity for coffee is

Accepted Answer

A)  0.5. 
B)  0.75. 
C)  1.5 
D)  2. 
A)  0.5. 
B)  0.75. 
C)  1.5 
D)  2.

Question 6

A local restaurant offers an "all you can eat" ribs special. If a person pays $11.95, she can eat as many servings as she desires at no additional cost. Can you infer anything about her marginal utility from observing her eating behavior?

Accepted Answer

Since the marginal cost of consuming an

Question 7

A good is classified as inferior if

Accepted Answer

A)  consumers buy less when the price rises. 
B)  consumers buy less when income rises. 
C)  consumers buy less when the price falls. 
D)  consumers buy more when income rises. 
A)  consumers buy less when the price rises. 
B)  consumers buy less when income rises. 
C)  consumers buy less when the price falls. 
D)  consumers buy more when income rises.

Question 8

A local Krispy Kreme doughnut shop reduced the price of its doughnuts from $4 per dozen to $3.50 per dozen, and as a result, the daily sales increased from 300 to 400 dozen. This indicates that the price elasticity of demand for the doughnuts was

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  of unitary elasticity. 
D)  indeterminate; more information is needed to determine the price elasticity of demand. 
A)  elastic. 
B)  inelastic. 
C)  of unitary elasticity. 
D)  indeterminate; more information is needed to determine the price elasticity of demand.

Question 9

If Randy experiences a decrease in his income, we would expect that Randy's demand for

Accepted Answer

A)  each good he purchases will remain unchanged. 
B)  normal goods will decrease. 
C)  most goods will increase. 
D)  inferior goods will decrease. 
A)  each good he purchases will remain unchanged. 
B)  normal goods will decrease. 
C)  most goods will increase. 
D)  inferior goods will decrease.

Question 10

The market demand for an item is

Accepted Answer

A)  the sum of individual demands. 
B)  steeper for any given price change than the individual demand curves. 
C)  independent of the number of individuals in the market. 
D)  determined by dividing the quantity demanded by each individual by the number of individuals in the market. 
A)  the sum of individual demands. 
B)  steeper for any given price change than the individual demand curves. 
C)  independent of the number of individuals in the market. 
D)  determined by dividing the quantity demanded by each individual by the number of individuals in the market.

Question 11

As people have more time to adjust to a price change,

Accepted Answer

A)  demand becomes more elastic, and supply becomes less elastic. 
B)  demand becomes less elastic, and supply becomes more elastic. 
C)  both supply and demand become less elastic. 
D)  both supply and demand become more elastic. 
E)  elasticity of both demand and supply tends toward unity. 
A)  demand becomes more elastic, and supply becomes less elastic. 
B)  demand becomes less elastic, and supply becomes more elastic. 
C)  both supply and demand become less elastic. 
D)  both supply and demand become more elastic. 
E)  elasticity of both demand and supply tends toward unity.

Question 12

If governments provide free healthcare services,

Accepted Answer

A)  this illustrates that governments can provide healthcare more economically than private firms. 
B)  output and consumption of other goods will not be sacrificed. 
C)  resources with alternative uses are allocated to healthcare and there is an opportunity cost of these resources. 
D)  the opportunity cost of the resources used to supply healthcare is zero. 
A)  this illustrates that governments can provide healthcare more economically than private firms. 
B)  output and consumption of other goods will not be sacrificed. 
C)  resources with alternative uses are allocated to healthcare and there is an opportunity cost of these resources. 
D)  the opportunity cost of the resources used to supply healthcare is zero.

Question 13

Figure 7-12  
-Refer to Figure 7-12. An increase in price from $20 to $30 would

Accepted Answer

A)  increase total revenue by $2,000. 
B)  decrease total revenue by $2,000. 
C)  increase total revenue by $1,000. 
D)  decrease total revenue by $1,000. 
A)  increase total revenue by $2,000. 
B)  decrease total revenue by $2,000. 
C)  increase total revenue by $1,000. 
D)  decrease total revenue by $1,000.

Question 14

The Patient Protection and Affordable Care Act will require

Accepted Answer

A)  health insurers to provide coverage to applicants regardless of prior health conditions. 
B)  all Americans to purchase an approved health insurance policy or pay a tax-penalty for failing to do so. 
C)  employers with more than 50 full-time employees to either provide approved health insurance for their employees or pay a fine for the failure to do so. 
D)  all of the above. 
A)  health insurers to provide coverage to applicants regardless of prior health conditions. 
B)  all Americans to purchase an approved health insurance policy or pay a tax-penalty for failing to do so. 
C)  employers with more than 50 full-time employees to either provide approved health insurance for their employees or pay a fine for the failure to do so. 
D)  all of the above.

Question 15

If the price of tuna fish increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the tuna fish producer could increase its total revenue by

Accepted Answer

A)  lowering price. 
B)  decreasing quantity supplied. 
C)  leaving price the same. 
D)  raising price. 
E)  decreasing supply. 
A)  lowering price. 
B)  decreasing quantity supplied. 
C)  leaving price the same. 
D)  raising price. 
E)  decreasing supply.

Question 16

Which of the following is true about health care?

Accepted Answer

A)  Health care in Canada and most of the European countries is a socialized industry. 
B)  Socialization of the healthcare industry eliminates the problem of scarcity in the healthcare industry. 
C)  The high-income countries of Europe are able to provide as much healthcare, free of charge, as their citizens want. 
D)  All of the above are true. 
A)  Health care in Canada and most of the European countries is a socialized industry. 
B)  Socialization of the healthcare industry eliminates the problem of scarcity in the healthcare industry. 
C)  The high-income countries of Europe are able to provide as much healthcare, free of charge, as their citizens want. 
D)  All of the above are true.

Question 17

A 2.9 percent payroll tax (1.45 percent levied on both the employee and the employer) imposed on current workers is used to finance the

Accepted Answer

A)  Medicaid program that provides healthcare for the poor. 
B)  hospitalization costs of Medicare beneficiaries. 
C)  cost of physician services supplied to the elderly. 
D)  healthcare costs of both the elderly and the poor. 
A)  Medicaid program that provides healthcare for the poor. 
B)  hospitalization costs of Medicare beneficiaries. 
C)  cost of physician services supplied to the elderly. 
D)  healthcare costs of both the elderly and the poor.

Question 18

After eating six chocolate candy bars in ten minutes, Mia says, "You would have to pay me to eat another chocolate candy bar!" This statement best illustrates

Accepted Answer

A)  the law of demand. 
B)  the substitutability among goods. 
C)  the law of diminishing marginal utility. 
D)  that chocolate candy bars are an inferior good. 
A)  the law of demand. 
B)  the substitutability among goods. 
C)  the law of diminishing marginal utility. 
D)  that chocolate candy bars are an inferior good.

Question 19

An inferior good is a good whose quantity demanded

Accepted Answer

A)  rises when its price falls. 
B)  falls when the price of a related good falls. 
C)  falls when the consumer's total utility rises. 
D)  rises when the consumer's income falls. 
A)  rises when its price falls. 
B)  falls when the price of a related good falls. 
C)  falls when the consumer's total utility rises. 
D)  rises when the consumer's income falls.

Question 20

When economists say the price elasticity of supply is elastic, they mean that

Accepted Answer

A)  suppliers are willing to produce much larger amounts of their good. 
B)  suppliers are willing to produce only a small amount more of their good. 
C)  consumers are willing to purchase much larger quantities of the good. 
D)  the change in quantity supplied is relatively small compared to the change in price. 
A)  suppliers are willing to produce much larger amounts of their good. 
B)  suppliers are willing to produce only a small amount more of their good. 
C)  consumers are willing to purchase much larger quantities of the good. 
D)  the change in quantity supplied is relatively small compared to the change in price.

If Camila's income rises by 20 percent, and, as a result, she purchases 40 percent more dresses, her income elasticity for dresses is

The demand curve for a good is very unlikely to be perfectly vertical because

"I'm tired of eating cold pizza for breakfast. Today I'm going to the make some oatmeal instead." This statement most clearly reflects the

If Melanie's marginal benefit as a consumer in the jeans market is larger than the price of a pair of jeans,

Ashley recently got a 15 percent raise. She now purchases 7.5 percent more coffee. Ashley's income elasticity for coffee is

A local restaurant offers an "all you can eat" ribs special. If a person pays $11.95, she can eat as many servings as she desires at no additional cost. Can you infer anything about her marginal utility from observing her eating behavior?

A good is classified as inferior if

A local Krispy Kreme doughnut shop reduced the price of its doughnuts from $4 per dozen to $3.50 per dozen, and as a result, the daily sales increased from 300 to 400 dozen. This indicates that the price elasticity of demand for the doughnuts was

If Randy experiences a decrease in his income, we would expect that Randy's demand for

The market demand for an item is

As people have more time to adjust to a price change,

If governments provide free healthcare services,

Figure 7-12 -Refer to Figure 7-12. An increase in price from $20 to $30 would

The Patient Protection and Affordable Care Act will require

If the price of tuna fish increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the tuna fish producer could increase its total revenue by

Which of the following is true about health care?

A 2.9 percent payroll tax (1.45 percent levied on both the employee and the employer) imposed on current workers is used to finance the

After eating six chocolate candy bars in ten minutes, Mia says, "You would have to pay me to eat another chocolate candy bar!" This statement best illustrates

An inferior good is a good whose quantity demanded

When economists say the price elasticity of supply is elastic, they mean that

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters

Exam 7: Consumer Choice and Elasticity

If Camila's income rises by 20 percent, and, as a result, she purchases 40 percent more dresses, her income elasticity for dresses is

The demand curve for a good is very unlikely to be perfectly vertical because

"I'm tired of eating cold pizza for breakfast. Today I'm going to the make some oatmeal instead." This statement most clearly reflects the

If Melanie's marginal benefit as a consumer in the jeans market is larger than the price of a pair of jeans,

Ashley recently got a 15 percent raise. She now purchases 7.5 percent more coffee. Ashley's income elasticity for coffee is

A local restaurant offers an "all you can eat" ribs special. If a person pays $11.95, she can eat as many servings as she desires at no additional cost. Can you infer anything about her marginal utility from observing her eating behavior?

A good is classified as inferior if

A local Krispy Kreme doughnut shop reduced the price of its doughnuts from $4 per dozen to $3.50 per dozen, and as a result, the daily sales increased from 300 to 400 dozen. This indicates that the price elasticity of demand for the doughnuts was

If Randy experiences a decrease in his income, we would expect that Randy's demand for

The market demand for an item is

As people have more time to adjust to a price change,

If governments provide free healthcare services,

Figure 7-12 -Refer to Figure 7-12. An increase in price from $20 to $30 would

The Patient Protection and Affordable Care Act will require

If the price of tuna fish increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the tuna fish producer could increase its total revenue by

Which of the following is true about health care?

A 2.9 percent payroll tax (1.45 percent levied on both the employee and the employer) imposed on current workers is used to finance the

After eating six chocolate candy bars in ten minutes, Mia says, "You would have to pay me to eat another chocolate candy bar!" This statement best illustrates

An inferior good is a good whose quantity demanded

When economists say the price elasticity of supply is elastic, they mean that

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters