Question 1

If a firm is in an antitrust court case being accused of monopolising a product,the firm would hire an economist to show

Accepted Answer

A)  the cross-price elasticity of demand between the firm's good and another is negative. 
B)  the cross-price elasticity of demand between the firm's good and another is positive. 
C)  the price elasticity of demand for the firm's good is highly inelastic. 
D)  the income elasticity of the firm's good is inferior. 
A)  the cross-price elasticity of demand between the firm's good and another is negative. 
B)  the cross-price elasticity of demand between the firm's good and another is positive. 
C)  the price elasticity of demand for the firm's good is highly inelastic. 
D)  the income elasticity of the firm's good is inferior.

Question 2

Which of the following explains why a firm would be interested in knowing the price elasticity of demand for a good it sells?

Accepted Answer

A)  The price elasticity of demand can be used to determine the impact of changes in income on quantity sold. 
B)  Knowing the price elasticity of demand allows the firm to determine how the cost of producing additional units of the good will change. 
C)  Knowing the price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total profit. 
D)  The price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total revenue. 
A)  The price elasticity of demand can be used to determine the impact of changes in income on quantity sold. 
B)  Knowing the price elasticity of demand allows the firm to determine how the cost of producing additional units of the good will change. 
C)  Knowing the price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total profit. 
D)  The price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total revenue.

Question 3

When there are few substitutes available for a good,demand tends to be relatively inelastic.

Accepted Answer

A) True 
 B)False

Question 4

If an 8 per cent decrease in the price of lobster leads to a 15 per cent decrease in the quantity supplied of lobster,then the supply of lobster is

Accepted Answer

A)  unit-elastic. 
B)  unitarily elastic. 
C)  elastic. 
D)  perfectly inelastic. 
A)  unit-elastic. 
B)  unitarily elastic. 
C)  elastic. 
D)  perfectly inelastic.

Question 5

Suppose the value of the price elasticity of demand is -3.What does this mean?

Accepted Answer

A)  A 1 per cent increase in the price of the good causes quantity demanded to increase by 3 per cent. 
B)  A 1 per cent increase in the price of the good causes quantity demanded to decrease by 3 per cent. 
C)  A 3 per cent increase in the price of the good causes quantity demanded to decrease by 1 per cent. 
D)  A $1 increase in price causes quantity demanded to fall by 3 units. 
A)  A 1 per cent increase in the price of the good causes quantity demanded to increase by 3 per cent. 
B)  A 1 per cent increase in the price of the good causes quantity demanded to decrease by 3 per cent. 
C)  A 3 per cent increase in the price of the good causes quantity demanded to decrease by 1 per cent. 
D)  A $1 increase in price causes quantity demanded to fall by 3 units.

Question 6

If the demand for a life-saving drug was perfectly inelastic and the price doubled,the quantity demanded would

Accepted Answer

A)  also double. 
B)  decrease by 50 per cent. 
C)  be cut in half. 
D)  remain constant. 
A)  also double. 
B)  decrease by 50 per cent. 
C)  be cut in half. 
D)  remain constant.

If a firm is in an antitrust court case being accused of monopolising a product,the firm would hire an economist to show

Which of the following explains why a firm would be interested in knowing the price elasticity of demand for a good it sells?

When there are few substitutes available for a good,demand tends to be relatively inelastic.

If an 8 per cent decrease in the price of lobster leads to a 15 per cent decrease in the quantity supplied of lobster,then the supply of lobster is

Suppose the value of the price elasticity of demand is -3.What does this mean?

If the demand for a life-saving drug was perfectly inelastic and the price doubled,the quantity demanded would

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

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Exam 4: Market Efficiency and Market Failure

If a firm is in an antitrust court case being accused of monopolising a product,the firm would hire an economist to show

Which of the following explains why a firm would be interested in knowing the price elasticity of demand for a good it sells?

When there are few substitutes available for a good,demand tends to be relatively inelastic.

If an 8 per cent decrease in the price of lobster leads to a 15 per cent decrease in the quantity supplied of lobster,then the supply of lobster is

Suppose the value of the price elasticity of demand is -3.What does this mean?

If the demand for a life-saving drug was perfectly inelastic and the price doubled,the quantity demanded would

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

The Economics of Healthcare

Firms,the Stock Market,and Corporate Governance

Consumer Choice and Elasticity

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Oligopoly

GDP: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System and Business Cycles

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Comparative Advantage, international Trade, and Exchange Rates

Filters