Question 1

​An rational,optimizing,self interested consumer would consume up to the point where

Accepted Answer

A) ​the consumer surplus from the last unit is positive 
B) the consumer surplus from the last unit is negative 
C) the consumer surplus from the last unit is zero 
D) ​none of the above 
A) ​the consumer surplus from the last unit is positive 
B) the consumer surplus from the last unit is negative 
C) the consumer surplus from the last unit is zero 
D) ​none of the above

Question 2

​What is consumer surplus?

Accepted Answer

A) ​The maximum willingness to pay for a unit of a product 
B) The price that an individual pays in equilibrium for a product 
C) The difference between how much an individual is willing to pay for a product and how much he ends up paying 
D) ​How many units are traded in equilibrium 
A) ​The maximum willingness to pay for a unit of a product 
B) The price that an individual pays in equilibrium for a product 
C) The difference between how much an individual is willing to pay for a product and how much he ends up paying 
D) ​How many units are traded in equilibrium

Question 3

Lunch Counter
The Lunchbox is one of many options for workers in Lanford,IL to get a quick and tasty meal at reasonable prices.They wanted to raise prices but did not know if the demand would fall off too much.They decided to raise prices and wait and see before making the increases permanent.In the first week after they raised prices on the menu an average of 10%,they served fewer lunches but their revenue did not fall.Based on this,they decided to keep the new menu.Would you expect revenue to continue at this level?

Accepted Answer

Some customers do not patronize the Lunc

Question 4

If a decrease in the price of a good decreases the total revenue,the demand for the good is​

Accepted Answer

A) ​price elastic 
B) price inelastic 
C) income elastic 
D) ​income inelastic 
A) ​price elastic 
B) price inelastic 
C) income elastic 
D) ​income inelastic

Question 5

​The price elasticity of demand tells us about

Accepted Answer

A) ​The sensitivity of price to quantity 
B) The sensitivity of quantity to price 
C) The sensitivity of income to price 
D) ​The sensitivity of income to quantity 
A) ​The sensitivity of price to quantity 
B) The sensitivity of quantity to price 
C) The sensitivity of income to price 
D) ​The sensitivity of income to quantity

Question 6

​An owner of a local salon realized that by decreasing the prices that she charges for haircuts,her revenue has increased.This implies that

Accepted Answer

A) ​The demand for her haircuts is elastic 
B) The demand for her haircuts is inelastic 
C) The demand for her haircuts is unitary elastic 
D) ​The demand for her  haircuts is perfectly inelastic 
A) ​The demand for her haircuts is elastic 
B) The demand for her haircuts is inelastic 
C) The demand for her haircuts is unitary elastic 
D) ​The demand for her  haircuts is perfectly inelastic

Question 7

If quantity demanded for rice falls by 4% when price increases 8%,we know that the absolute value of the own-price elasticity of rice is:

Accepted Answer

A) ​2.5. 
B) 0.5. 
C) 2. 
D) ​0.40. 
A) ​2.5. 
B) 0.5. 
C) 2. 
D) ​0.40.

Question 8

​If the quantity demanded of good x rises by 3% and,in response,your income goes up by 2%,the income elasticity of demand would be:

Accepted Answer

A) ​1.5 
B) 6 
C) 3 
D) ​.20 
A) ​1.5 
B) 6 
C) 3 
D) ​.20

Question 9

​The demand for a product is more inelastic

Accepted Answer

A) ​When it has many close substitutes 
B) In the long-run 
C) When it has many complements 
D) ​None of the above 
A) ​When it has many close substitutes 
B) In the long-run 
C) When it has many complements 
D) ​None of the above

Question 10

​Use the following table for question
  
-If the government wants to decrease the quantity consumed of cigarettes 20%,what percentage of tax would they have to levy on cigarette consumption?​

Accepted Answer

A) ​20% 
B) 30% 
C) 40% 
D) ​50% 
A) ​20% 
B) 30% 
C) 40% 
D) ​50%

Question 11

​Which of the following statement is true?

Accepted Answer

A) ​The demand for Cheerios is less elastic than the demand for cereal 
B) The demand for gas is more elastic in the short-run than in the long-r 
C) The demand for puma shoes is more elastic than the demand for shoes 
D) ​Products with many complements have a more elastic demand 
A) ​The demand for Cheerios is less elastic than the demand for cereal 
B) The demand for gas is more elastic in the short-run than in the long-r 
C) The demand for puma shoes is more elastic than the demand for shoes 
D) ​Products with many complements have a more elastic demand

Question 12

​What is the most likely effect of the development of cell phones on the pay phone industry?

Accepted Answer

A) ​the own price elasticity of pay phones increases 
B) the own price elasticity of pay phones decreases 
C) the price elasticity of home phones does not change 
D) ​none of the above 
A) ​the own price elasticity of pay phones increases 
B) the own price elasticity of pay phones decreases 
C) the price elasticity of home phones does not change 
D) ​none of the above

Question 13

​If cars are normal goods,a fall in income will

Accepted Answer

A) ​Increase the demand for cars 
B) Decrease the demand for cars 
C) Have no effect on the demand for cars 
D) ​None of the above 
A) ​Increase the demand for cars 
B) Decrease the demand for cars 
C) Have no effect on the demand for cars 
D) ​None of the above

Question 14

​A gas station opened up on the highway in a patch where there are no gas stations close by.It is more likely to be able to set higher prices because

Accepted Answer

A) ​the demand for its product is more inelastic due to an unavailability of substitutes 
B) the demand for its product is more elastic due to an unavailability of substitutes 
C) the demand for its product is more inelastic due to an availability of substitutes 
D) ​the demand for its product is more elastic due to an availability of substitutes 
A) ​the demand for its product is more inelastic due to an unavailability of substitutes 
B) the demand for its product is more elastic due to an unavailability of substitutes 
C) the demand for its product is more inelastic due to an availability of substitutes 
D) ​the demand for its product is more elastic due to an availability of substitutes

Question 15

​Which of the following is false?

Accepted Answer

A) ​Products with more close substitutes have more elastic demand 
B) The demand for any individual brand is less elastic than industry aggregate demand 
C) Products with many complements have less elastic demand 
D) ​In the long run,demand curves become more elastic 
A) ​Products with more close substitutes have more elastic demand 
B) The demand for any individual brand is less elastic than industry aggregate demand 
C) Products with many complements have less elastic demand 
D) ​In the long run,demand curves become more elastic

Question 16

​A price elasticity of demand of 2.3 implies

Accepted Answer

A) ​Demand is inelastic 
B) Demand is elastic 
C) Demand is unitary elastic 
D) ​Demand is perfectly elastic 
A) ​Demand is inelastic 
B) Demand is elastic 
C) Demand is unitary elastic 
D) ​Demand is perfectly elastic

Question 17

​Use the following table for question
  
-​If the government wants to decrease the quantity consumed of alcohol by 20%,what percentage of tax would they have to levy on alcohol consumption?

Accepted Answer

A) ​20% 
B) 30% 
C) 40% 
D) ​50% 
A) ​20% 
B) 30% 
C) 40% 
D) ​50%

Question 18

​If the price elasticity of demand is -0.8 and the firm increases price,revenue will

Accepted Answer

A) ​Increase 
B) Decrease 
C) Stay constant 
D) ​become zero,they would lose all their customers 
A) ​Increase 
B) Decrease 
C) Stay constant 
D) ​become zero,they would lose all their customers

Question 19

​Phil's filling station gas station operates on a patch on the highway in a patch where there were no gas stations close by.It enjoyed high profits.After a while,Glen's gas another gas station opened up close by.The profits for the first gas station are likely to decrease because

Accepted Answer

A) ​it has to lower prices,since its product is now more price elastic 
B) It has to lower prices since its product is now more price inelastic 
C) due to the increased availability of substitutes 
D) ​both A&C 
A) ​it has to lower prices,since its product is now more price elastic 
B) It has to lower prices since its product is now more price inelastic 
C) due to the increased availability of substitutes 
D) ​both A&C

Question 20

​A demand curves describes

Accepted Answer

A) ​the amount of units a consumer will purchase at a given price 
B) the amount of units a producer will sell at a given price 
C) both the amount of units that a consumer will buy and a producer will produce at a given price 
D) ​the amount of units supplied given a change in prices 
A) ​the amount of units a consumer will purchase at a given price 
B) the amount of units a producer will sell at a given price 
C) both the amount of units that a consumer will buy and a producer will produce at a given price 
D) ​the amount of units supplied given a change in prices

An rational,optimizing,self interested consumer would consume up to the point where

What is consumer surplus?

If a decrease in the price of a good decreases the total revenue,the demand for the good is

The price elasticity of demand tells us about

An owner of a local salon realized that by decreasing the prices that she charges for haircuts,her revenue has increased.This implies that

If quantity demanded for rice falls by 4% when price increases 8%,we know that the absolute value of the own-price elasticity of rice is:

If the quantity demanded of good x rises by 3% and,in response,your income goes up by 2%,the income elasticity of demand would be:

The demand for a product is more inelastic

Use the following table for question -If the government wants to decrease the quantity consumed of cigarettes 20%,what percentage of tax would they have to levy on cigarette consumption?

Which of the following statement is true?

What is the most likely effect of the development of cell phones on the pay phone industry?

If cars are normal goods,a fall in income will

A gas station opened up on the highway in a patch where there are no gas stations close by.It is more likely to be able to set higher prices because

Which of the following is false?

A price elasticity of demand of 2.3 implies

Use the following table for question -If the government wants to decrease the quantity consumed of alcohol by 20%,what percentage of tax would they have to levy on alcohol consumption?

If the price elasticity of demand is -0.8 and the firm increases price,revenue will

Phil's filling station gas station operates on a patch on the highway in a patch where there were no gas stations close by.It enjoyed high profits.After a while,Glen's gas another gas station opened up close by.The profits for the first gas station are likely to decrease because

A demand curves describes

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Much Decisions

Investment Decisions: Look Ahead and Reason Back

Economies of Scale and Scope

Understanding Markets and Industry Changes

Market Structure and Long Run Equilibrium

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, Trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination

Strategic Games

Bargaining

Making Decisions With Uncertainty

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Employees to Work in the Firms Best Interest

Getting Divisions to Work in the Firms Best Interest

Managing Vertical Relationships

Filters

Exam 5: Simple Pricing

​An rational,optimizing,self interested consumer would consume up to the point where

​What is consumer surplus?

If a decrease in the price of a good decreases the total revenue,the demand for the good is​

​The price elasticity of demand tells us about

​An owner of a local salon realized that by decreasing the prices that she charges for haircuts,her revenue has increased.This implies that

If quantity demanded for rice falls by 4% when price increases 8%,we know that the absolute value of the own-price elasticity of rice is:

​If the quantity demanded of good x rises by 3% and,in response,your income goes up by 2%,the income elasticity of demand would be:

​The demand for a product is more inelastic

​Use the following table for question -If the government wants to decrease the quantity consumed of cigarettes 20%,what percentage of tax would they have to levy on cigarette consumption?​

​Which of the following statement is true?

​What is the most likely effect of the development of cell phones on the pay phone industry?

​If cars are normal goods,a fall in income will

​A gas station opened up on the highway in a patch where there are no gas stations close by.It is more likely to be able to set higher prices because

​Which of the following is false?

​A price elasticity of demand of 2.3 implies

​Use the following table for question -​If the government wants to decrease the quantity consumed of alcohol by 20%,what percentage of tax would they have to levy on alcohol consumption?

​If the price elasticity of demand is -0.8 and the firm increases price,revenue will

​Phil's filling station gas station operates on a patch on the highway in a patch where there were no gas stations close by.It enjoyed high profits.After a while,Glen's gas another gas station opened up close by.The profits for the first gas station are likely to decrease because

​A demand curves describes

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Much Decisions

Investment Decisions: Look Ahead and Reason Back

Economies of Scale and Scope

Understanding Markets and Industry Changes

Market Structure and Long Run Equilibrium

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, Trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination

Strategic Games

Bargaining

Making Decisions With Uncertainty

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Employees to Work in the Firms Best Interest

Getting Divisions to Work in the Firms Best Interest

Managing Vertical Relationships

Filters

An rational,optimizing,self interested consumer would consume up to the point where

What is consumer surplus?

If a decrease in the price of a good decreases the total revenue,the demand for the good is

The price elasticity of demand tells us about

An owner of a local salon realized that by decreasing the prices that she charges for haircuts,her revenue has increased.This implies that

If the quantity demanded of good x rises by 3% and,in response,your income goes up by 2%,the income elasticity of demand would be:

The demand for a product is more inelastic

Use the following table for question -If the government wants to decrease the quantity consumed of cigarettes 20%,what percentage of tax would they have to levy on cigarette consumption?

Which of the following statement is true?

What is the most likely effect of the development of cell phones on the pay phone industry?

If cars are normal goods,a fall in income will

A gas station opened up on the highway in a patch where there are no gas stations close by.It is more likely to be able to set higher prices because

Which of the following is false?

A price elasticity of demand of 2.3 implies

Use the following table for question -If the government wants to decrease the quantity consumed of alcohol by 20%,what percentage of tax would they have to levy on alcohol consumption?

If the price elasticity of demand is -0.8 and the firm increases price,revenue will

Phil's filling station gas station operates on a patch on the highway in a patch where there were no gas stations close by.It enjoyed high profits.After a while,Glen's gas another gas station opened up close by.The profits for the first gas station are likely to decrease because

A demand curves describes