Question 1

If a consumer purchases only two goods (X and Y )and the demand for X is elastic,then a rise in the price of X

Accepted Answer

A) will cause total spending on good Y to rise. 
B) will cause total spending on good Y to fall. 
C) will cause total spending on good Y to remain unchanged. 
D) will have an indeterminate effect on total spending on good Y. 
A) will cause total spending on good Y to rise. 
B) will cause total spending on good Y to fall. 
C) will cause total spending on good Y to remain unchanged. 
D) will have an indeterminate effect on total spending on good Y.

Question 2

If the income elasticity of demand is 0.5,the good is

Accepted Answer

A) a luxury. 
B) a normal good (but not a luxury). 
C) an inferior good. 
D) a Giffen good. 
A) a luxury. 
B) a normal good (but not a luxury). 
C) an inferior good. 
D) a Giffen good.

Question 3

The demand for gasoline is more elastic in the long run than in the short run because

Accepted Answer

A) other prices are more likely to change in the long run. 
B) incomes tend to rise over time. 
C) people can buy new cars in the long run. 
D) cars have become more expensive over time. 
A) other prices are more likely to change in the long run. 
B) incomes tend to rise over time. 
C) people can buy new cars in the long run. 
D) cars have become more expensive over time.

Question 4

A change in the distribution of income which leaves total income constant will not shift the market demand curve for a product if

Accepted Answer

A) everyone has an income elasticity of demand of zero for the product. 
B) everyone has the same income elasticity of demand for the product. 
C) individuals have differing income elasticities for the product,but the average income elasticity for income gainers is equal to the average income elasticity for income losers. 
D) any of the above conditions occur. 
A) everyone has an income elasticity of demand of zero for the product. 
B) everyone has the same income elasticity of demand for the product. 
C) individuals have differing income elasticities for the product,but the average income elasticity for income gainers is equal to the average income elasticity for income losers. 
D) any of the above conditions occur.

Question 5

If the income elasticity of demand is 2,the good is

Accepted Answer

A) a luxury. 
B) a normal good (but not a luxury). 
C) an inferior good. 
D) a Giffen good. 
A) a luxury. 
B) a normal good (but not a luxury). 
C) an inferior good. 
D) a Giffen good.

Question 6

Which of the following functional forms for utility suggests the greatest substitution effect when starting at the point where $\mathrm { P } _ { \mathrm { X } } = \mathrm { P } _ { \mathrm { Y } }$

Accepted Answer

A)  $\mathrm { U } = \min ( \mathrm { X } , \mathrm { Y } )$ 
B)  $U=X + X$ 
C)  $\mathrm { U } = \mathrm { X } ^ { 1 / 2 } \mathrm { Y } ^ { 1 / 2 }$ 
D) $\mathrm { U } = \mathrm { X } ^ { 1 / 4 } \mathrm { Y } ^ { 3 / 4 }$ 
A)  $\mathrm { U } = \min ( \mathrm { X } , \mathrm { Y } )$ 
B)  $U=X + X$ 
C)  $\mathrm { U } = \mathrm { X } ^ { 1 / 2 } \mathrm { Y } ^ { 1 / 2 }$ 
D) $\mathrm { U } = \mathrm { X } ^ { 1 / 4 } \mathrm { Y } ^ { 3 / 4 }$

Question 7

?   ?In the picture above the point A2 is half way between the origin and the quantity intercept of the demand curve. The price elasticity at point "3" is

Accepted Answer

A) 0 
B) between -? and -1 
C) -1 
D) between -1 and 0 
A) 0 
B) between -? and -1 
C) -1 
D) between -1 and 0

Question 8

Suppose demand can be written as $\mathrm { PQ } = 1000$ .The price elasticity of demand is

Accepted Answer

A) increasing as price rises. 
B) decreasing as price rises. 
C) constant regardless of prices and perfectly elastic. 
D) constant regardless of prices and unit elastic. 
A) increasing as price rises. 
B) decreasing as price rises. 
C) constant regardless of prices and perfectly elastic. 
D) constant regardless of prices and unit elastic.

Question 9

Suppose $U = \min ( X , Y )$ and the price of X is 1,the price of Y is 1 and income is $12.If the price of X increases to 2,the substitution effect is

Accepted Answer

A) 2 
B) -1 
C) 0 
D) -2 
A) 2 
B) -1 
C) 0 
D) -2

Question 10

The price elasticity of demand for any good must be less than or equal to zero unless

Accepted Answer

A) the good is a necessity. 
B) the good is a luxury. 
C) the good is a Giffen good. 
A) the good is a necessity. 
B) the good is a luxury. 
C) the good is a Giffen good.

Question 11

Suppose demand can be written as $Q = 5$ .The elasticity of demand is)

Accepted Answer

A) increasing as price rises. 
B) decreasing as price rises. 
C) constant regardless of prices and perfectly inelastic. 
D) constant regardless of prices and unit elastic. 
A) increasing as price rises. 
B) decreasing as price rises. 
C) constant regardless of prices and perfectly inelastic. 
D) constant regardless of prices and unit elastic.

Question 12

In Sameslopia (all N people)have a different price at which they will start buying apples,but their reaction to a price change is the same so for each person i,individual demand is $\mathrm { P } = \mathrm { A } _ { \mathrm { i } } - \mathrm { Bq }$ At a price where they are all buying a positive amount,the slope of the market demand curve (with P as a function of Q)will be

Accepted Answer

A) -B 
B)  $\frac { - B } { N }$ 
C) -BN 
D) -N 
A) -B 
B)  $\frac { - B } { N }$ 
C) -BN 
D) -N

Question 13

Suppose the "poor" and "rich" have identical demand functions for good X but only differ in income (I) $q _ { X } = 1000 + I - 50 P _ { X } - 20 P _ { Y }$ .At a given price of X,the price elasticity of their individual demand curves is such that?

Accepted Answer

A) the rich person's demand is more elastic than the poor person's. 
B) the poor person's demand is more elastic than the rich person's. 
C) the poor person's demand is as elastic as the rich person's. 
A) the rich person's demand is more elastic than the poor person's. 
B) the poor person's demand is more elastic than the rich person's. 
C) the poor person's demand is as elastic as the rich person's.

Question 14

Assume X and Y are the only two goods a person consumes.If after a rise in $P _ { X }$ the quantity demanded of Y increases,one could say

Accepted Answer

A) the income effect dominates the substitution effect for Y. 
B) the substitution effect dominates the income effect for Y. 
C) it is impossible to determine whether the substitution or income effect dominates for Y. 
D) None of the above. 
A) the income effect dominates the substitution effect for Y. 
B) the substitution effect dominates the income effect for Y. 
C) it is impossible to determine whether the substitution or income effect dominates for Y. 
D) None of the above.

If a consumer purchases only two goods (X and Y )and the demand for X is elastic,then a rise in the price of X

If the income elasticity of demand is 0.5,the good is

The demand for gasoline is more elastic in the long run than in the short run because

A change in the distribution of income which leaves total income constant will not shift the market demand curve for a product if

If the income elasticity of demand is 2,the good is

Which of the following functional forms for utility suggests the greatest substitution effect when starting at the point where $\mathrm { P } _ { \mathrm { X } } = \mathrm { P } _ { \mathrm { Y } }$

? ?In the picture above the point A2 is half way between the origin and the quantity intercept of the demand curve. The price elasticity at point "3" is

Suppose demand can be written as $\mathrm { PQ } = 1000$ .The price elasticity of demand is

Suppose $U = \min ( X , Y )$ and the price of X is 1,the price of Y is 1 and income is $12.If the price of X increases to 2,the substitution effect is

The price elasticity of demand for any good must be less than or equal to zero unless

Suppose demand can be written as $Q = 5$ .The elasticity of demand is)

Suppose the "poor" and "rich" have identical demand functions for good X but only differ in income (I) $q _ { X } = 1000 + I - 50 P _ { X } - 20 P _ { Y }$ .At a given price of X,the price elasticity of their individual demand curves is such that?

Assume X and Y are the only two goods a person consumes.If after a rise in $P _ { X }$ the quantity demanded of Y increases,one could say

Economic Models

Utility and Choice

Uncertainty

Game Theory

Production

Costs

Profit Maximization and Supply

Perfect Competition in a Single Market

General Equilibrium and Welfare

Monopoly

Imperfect Competition

Pricing in Input Markets

Capital and Time

Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters

Exam 3: Demand Curves

If a consumer purchases only two goods (X and Y )and the demand for X is elastic,then a rise in the price of X

If the income elasticity of demand is 0.5,the good is

The demand for gasoline is more elastic in the long run than in the short run because

A change in the distribution of income which leaves total income constant will not shift the market demand curve for a product if

If the income elasticity of demand is 2,the good is

Which of the following functional forms for utility suggests the greatest substitution effect when starting at the point where PX=PY\mathrm { P } _ { \mathrm { X } } = \mathrm { P } _ { \mathrm { Y } }PX​=PY​

? ?In the picture above the point A2 is half way between the origin and the quantity intercept of the demand curve. The price elasticity at point "3" is

Suppose demand can be written as PQ=1000\mathrm { PQ } = 1000PQ=1000 .The price elasticity of demand is

Suppose U=min⁡(X,Y)U = \min ( X , Y )U=min(X,Y) and the price of X is 1,the price of Y is 1 and income is $12.If the price of X increases to 2,the substitution effect is

The price elasticity of demand for any good must be less than or equal to zero unless

Suppose demand can be written as Q=5Q = 5Q=5 .The elasticity of demand is)

Assume X and Y are the only two goods a person consumes.If after a rise in PXP _ { X }PX​ the quantity demanded of Y increases,one could say

Economic Models

Utility and Choice

Uncertainty

Game Theory

Production

Costs

Profit Maximization and Supply

Perfect Competition in a Single Market

General Equilibrium and Welfare

Monopoly

Imperfect Competition

Pricing in Input Markets

Capital and Time

Asymmetric Information

Externalities and Public Goods

Behavioral Economics

Filters

Which of the following functional forms for utility suggests the greatest substitution effect when starting at the point where $\mathrm { P } _ { \mathrm { X } } = \mathrm { P } _ { \mathrm { Y } }$

Suppose demand can be written as $\mathrm { PQ } = 1000$ .The price elasticity of demand is

Suppose $U = \min ( X , Y )$ and the price of X is 1,the price of Y is 1 and income is $12.If the price of X increases to 2,the substitution effect is

Suppose demand can be written as $Q = 5$ .The elasticity of demand is)

Assume X and Y are the only two goods a person consumes.If after a rise in $P _ { X }$ the quantity demanded of Y increases,one could say