Question 1

Assume a price elasticity of demand of 0.50.If the tobacco lobby is successful in reducing a tax on the price of cigarettes by 10 percent,the quantity demanded will:

Accepted Answer

A)  Decrease by 5 percent. 
B)  Decrease by 2 percent. 
C)  Increase by 5 percent. 
D)  Increase by 2 percent. 
A)  Decrease by 5 percent. 
B)  Decrease by 2 percent. 
C)  Increase by 5 percent. 
D)  Increase by 2 percent.

Question 2

Suppose a cosmetics company increases the price of eyeliner by 10 percent and as a result the quantity demanded of eyeliner decreases by 2.5 percent.The price elasticity of demand for eyeliner is:

Accepted Answer

A)  4.0. 
B)  2.5. 
C)  0.4. 
D)  0.25 
A)  4.0. 
B)  2.5. 
C)  0.4. 
D)  0.25

Question 3

Which of the following does NOT influence the price elasticity of demand?

Accepted Answer

A)  The availability of substitutes. 
B)  The price of the item relative to your budget. 
C)  The costs of production. 
D)  Successful advertising. 
A)  The availability of substitutes. 
B)  The price of the item relative to your budget. 
C)  The costs of production. 
D)  Successful advertising.

Question 4

People find it difficult to get along without necessities,therefore demand for necessities:

Accepted Answer

A)  Is relatively elastic. 
B)  Is relatively inelastic. 
C)  Is relatively unitary elastic. 
D)  Does not change with changes in price. 
A)  Is relatively elastic. 
B)  Is relatively inelastic. 
C)  Is relatively unitary elastic. 
D)  Does not change with changes in price.

Question 5

If the price elasticity of demand is 1.0 and a firm raises its price by 15 percent,the total revenue will:

Accepted Answer

A)  Rise by 15 percent. 
B)  Fall by 15 percent. 
C)  Rise by 6.67 percent. 
D)  Not change. 
A)  Rise by 15 percent. 
B)  Fall by 15 percent. 
C)  Rise by 6.67 percent. 
D)  Not change.

Question 6

In economic theory,total utility refers to:

Accepted Answer

A)  The additional utility from consuming the last unit of a good. 
B)  The amount of utility obtained from the entire consumption of a good. 
C)  The change in utility from the last unit sold. 
D)  How useful a good is to the consumer. 
A)  The additional utility from consuming the last unit of a good. 
B)  The amount of utility obtained from the entire consumption of a good. 
C)  The change in utility from the last unit sold. 
D)  How useful a good is to the consumer.

Question 7

One NEWS WIRE article states that an increase in cigarette prices of 10 percent reduced cigarette sales by about 4 percent.What is the effect of higher prices in the market for cigarettes?

Accepted Answer

A)  A leftward shift of the demand curve. 
B)  A rightward shift of the demand curve. 
C)  A movement up the demand curve. 
D)  A movement down the demand curve. 
A)  A leftward shift of the demand curve. 
B)  A rightward shift of the demand curve. 
C)  A movement up the demand curve. 
D)  A movement down the demand curve.

Question 8

Sociopsychiatric explanations of consumer behavior include:

Accepted Answer

A)  Desire for ego and status. 
B)  Level of income. 
C)  Level of wealth. 
D)  Prices of other goods. 
A)  Desire for ego and status. 
B)  Level of income. 
C)  Level of wealth. 
D)  Prices of other goods.

Question 9

The objective of advertising,from an economic perspective,is to shift the demand curve to the:

Accepted Answer

A)  Right and decrease the elasticity. 
B)  Right and increase the elasticity. 
C)  Left and decrease the elasticity. 
D)  Left and increase the elasticity. 
A)  Right and decrease the elasticity. 
B)  Right and increase the elasticity. 
C)  Left and decrease the elasticity. 
D)  Left and increase the elasticity.

Question 10

If the price elasticity of demand is 2.5,then a 40 percent decrease in the price of the good will lead to a _______ percent increase in the quantity demanded.

Accepted Answer

A)  150.00 
B)  100.00 
C)  66.7 
D)  22. 
A)  150.00 
B)  100.00 
C)  66.7 
D)  22.

Question 11

The inverse relationship between quantity demanded and price for a good can be explained by the law of diminishing marginal utility.

Accepted Answer

A) True 
 B)False

Question 12

In recent years advertising expenditures in the United States have:

Accepted Answer

A)  Been less than $500 per consumer per year. 
B)  Totaled over $200 billion per year. 
C)  Not had any effect on consumer expenditures. 
D)  Shifted the demand curve for goods and services to the left. 
A)  Been less than $500 per consumer per year. 
B)  Totaled over $200 billion per year. 
C)  Not had any effect on consumer expenditures. 
D)  Shifted the demand curve for goods and services to the left.

Question 13

When a firm advertises,it is attempting to:

Accepted Answer

A)  Move consumers along the existing demand curve. 
B)  Decrease the marginal utility consumers receive from the product. 
C)  Decrease the price elasticity of demand for the product. 
D)  Shift the demand curve to the left. 
A)  Move consumers along the existing demand curve. 
B)  Decrease the marginal utility consumers receive from the product. 
C)  Decrease the price elasticity of demand for the product. 
D)  Shift the demand curve to the left.

Question 14

According to the law of diminishing marginal utility,with the consumption of each additional candy bar,for example,the total satisfaction decreases.

Accepted Answer

A) True 
 B)False

Question 15

According to the law of demand:

Accepted Answer

A)  If consumer's income increases,the demand curve will shift to the right. 
B)  As the price of a good rises,the quantity demanded will increase in a given time period,ceteris paribus. 
C)  As the price of a good falls,the quantity supplied will increase in a given time period,ceteris paribus. 
D)  As the price of a good falls,the quantity demanded will increase in a given time period,ceteris paribus. 
A)  If consumer's income increases,the demand curve will shift to the right. 
B)  As the price of a good rises,the quantity demanded will increase in a given time period,ceteris paribus. 
C)  As the price of a good falls,the quantity supplied will increase in a given time period,ceteris paribus. 
D)  As the price of a good falls,the quantity demanded will increase in a given time period,ceteris paribus.

Question 16

Table 4.1 - Utility schedule
Complete the table and then use the information to answer the question(s)below.  
-In Table 4.1,the marginal utility of the third unit is:

Accepted Answer

A)  5. 
B)  8. 
C)  12. 
D)  52 
A)  5. 
B)  8. 
C)  12. 
D)  52

Question 17

If marginal utility is rising,total utility must be falling.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following is most likely to be inelastic with respect to demand?

Accepted Answer

A)  Illegal drugs. 
B)  Airline travel in the long run. 
C)  New cars. 
D)  HDTV sets. 
A)  Illegal drugs. 
B)  Airline travel in the long run. 
C)  New cars. 
D)  HDTV sets.

Question 19

Table 4.2 - Demand schedule for automobiles
The following is a hypothetical demand schedule for automobiles.  
-In Table 4.2,as price decreases from $24,000 per car to $20,000 per car:

Accepted Answer

A)  The demand curve for cars shifts to the right. 
B)  Total revenue increases. 
C)  The quantity of cars demanded decreases. 
D)  The supply curve for cars shifts to the left. 
A)  The demand curve for cars shifts to the right. 
B)  Total revenue increases. 
C)  The quantity of cars demanded decreases. 
D)  The supply curve for cars shifts to the left.

Question 20

Ceteris paribus,a price increase will cause total revenue to decrease for a firm,if the demand for its product is:

Accepted Answer

A)  Inelastic. 
B)  Elastic. 
C)  Unitary elastic. 
D)  Normal elastic. 
A)  Inelastic. 
B)  Elastic. 
C)  Unitary elastic. 
D)  Normal elastic.

Assume a price elasticity of demand of 0.50.If the tobacco lobby is successful in reducing a tax on the price of cigarettes by 10 percent,the quantity demanded will:

Suppose a cosmetics company increases the price of eyeliner by 10 percent and as a result the quantity demanded of eyeliner decreases by 2.5 percent.The price elasticity of demand for eyeliner is:

Which of the following does NOT influence the price elasticity of demand?

People find it difficult to get along without necessities,therefore demand for necessities:

If the price elasticity of demand is 1.0 and a firm raises its price by 15 percent,the total revenue will:

In economic theory,total utility refers to:

One NEWS WIRE article states that an increase in cigarette prices of 10 percent reduced cigarette sales by about 4 percent.What is the effect of higher prices in the market for cigarettes?

Sociopsychiatric explanations of consumer behavior include:

The objective of advertising,from an economic perspective,is to shift the demand curve to the:

If the price elasticity of demand is 2.5,then a 40 percent decrease in the price of the good will lead to a _______ percent increase in the quantity demanded.

The inverse relationship between quantity demanded and price for a good can be explained by the law of diminishing marginal utility.

In recent years advertising expenditures in the United States have:

When a firm advertises,it is attempting to:

According to the law of diminishing marginal utility,with the consumption of each additional candy bar,for example,the total satisfaction decreases.

According to the law of demand:

Table 4.1 - Utility schedule Complete the table and then use the information to answer the question(s)below. -In Table 4.1,the marginal utility of the third unit is:

If marginal utility is rising,total utility must be falling.

Which of the following is most likely to be inelastic with respect to demand?

Table 4.2 - Demand schedule for automobiles The following is a hypothetical demand schedule for automobiles. -In Table 4.2,as price decreases from $24,000 per car to $20,000 per car:

Ceteris paribus,a price increase will cause total revenue to decrease for a firm,if the demand for its product is:

The Challenge of Economics

The US Economy

Supply and Demand

Supply Decisions

Competition

Monopoly

The Labor Market

Government Intervention

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

Theory and Reality

International Trade

Filters

Exam 4: Consumer Demand

Assume a price elasticity of demand of 0.50.If the tobacco lobby is successful in reducing a tax on the price of cigarettes by 10 percent,the quantity demanded will:

Suppose a cosmetics company increases the price of eyeliner by 10 percent and as a result the quantity demanded of eyeliner decreases by 2.5 percent.The price elasticity of demand for eyeliner is:

Which of the following does NOT influence the price elasticity of demand?

People find it difficult to get along without necessities,therefore demand for necessities:

If the price elasticity of demand is 1.0 and a firm raises its price by 15 percent,the total revenue will:

In economic theory,total utility refers to:

One NEWS WIRE article states that an increase in cigarette prices of 10 percent reduced cigarette sales by about 4 percent.What is the effect of higher prices in the market for cigarettes?

Sociopsychiatric explanations of consumer behavior include:

The objective of advertising,from an economic perspective,is to shift the demand curve to the:

If the price elasticity of demand is 2.5,then a 40 percent decrease in the price of the good will lead to a _______ percent increase in the quantity demanded.

The inverse relationship between quantity demanded and price for a good can be explained by the law of diminishing marginal utility.

In recent years advertising expenditures in the United States have:

When a firm advertises,it is attempting to:

According to the law of diminishing marginal utility,with the consumption of each additional candy bar,for example,the total satisfaction decreases.

According to the law of demand:

Table 4.1 - Utility schedule Complete the table and then use the information to answer the question(s)below. -In Table 4.1,the marginal utility of the third unit is:

If marginal utility is rising,total utility must be falling.

Which of the following is most likely to be inelastic with respect to demand?

Table 4.2 - Demand schedule for automobiles The following is a hypothetical demand schedule for automobiles. -In Table 4.2,as price decreases from $24,000 per car to $20,000 per car:

Ceteris paribus,a price increase will cause total revenue to decrease for a firm,if the demand for its product is:

The Challenge of Economics

The US Economy

Supply and Demand

Supply Decisions

Competition

Monopoly

The Labor Market

Government Intervention

The Business Cycle

Aggregate Supply and Demand

Fiscal Policy

Money and Banks

Monetary Policy

Economic Growth

Theory and Reality

International Trade

Filters