Econ 121 MC Quiz, Ch. 5f



1.
If the quantity demanded of tea increases by 2% when the price of coffee increases by 8%, the cross-price elasticity of demand between tea and coffee is
A.
4.
B.
-25.
C.
-4.
D.
0.25.


2.
A new fertilizer has led to an increase in the number of tomatoes harvested and a decrease in the income of tomato growers. Therefore, the demand for tomatoes must be
A.
unitarily elastic.
B.
elastic.
C.
inelastic.
D.
perfectly inelastic.


3.
A firm should always set price so that the firm
A.
is selling at the point of unitary elasticity because that is where total revenue is maximized.
B.
is selling in the inelastic portion of the demand curve.
C.
is selling in the elastic portion of the demand curve.
D.
is selling in either the elastic or inelastic portion of the demand curve, depending upon costs of production.


4.
The price of insulin increases by 5% and quantity demanded of insulin remains unchanged. The demand for insulin is
A.
income elastic.
B.
perfectly elastic.
C.
unitarily elastic.
D.
perfectly inelastic.


5.
If the price elasticity of demand is 0, then demand must be
A.
unitarily elastic.
B.
perfectly inelastic.
C.
perfectly elastic.
D.
revenue elastic.


6.
People scalping tickets for a rock concert will be successful
A.
when prices are too high.
B.
any time the rock group is popular.
C.
when the price set by the concert hall is less than the market equilibrium price.
D.
only when there is excess supply.


7.
Along line segment AB of the demand curve, the demand is,
A.
unitarily elastic.
B.
elastic.
C.
inelastic.
D.
either elastic or inelastic depending upon whether price increases or decreases.


8.
Consumer satisfaction is maximized if
A.
only superior goods are purchased.
B.
only normal goods are purchased.
C.
the last dollar spent on each item consumed yields the same marginal utility.
D.
only inferior goods are purchased.
E.
the same total utility is yielded by the consumption of each good.


9.
The price of gasoline increases by 20% and remains at the new higher level. Which of the following statements is true?
A.
Initially after the price change the price elasticity of demand will be less elastic than it will be a few years after the price change.
B.
Initially after the price change the price elasticity of demand will be more elastic than it will be a few years after the price change.
C.
Price elasticity of demand for gasoline will not be affected by the change in the price of gasoline over the long run.
D.
Demand for gasoline will increase after people adjust to the new higher price.


10.
A "budget line" represents
A.
the combinations of prices and consumption given a constant budget.
B.
all the possible combinations of two goods that can be purchased, given their prices and the consumer's income.
C.
the combinations of prices and incomes.
D.
all the possible incomes earned given prices and consumer's preferences.
E.
all the possible prices given consumer's preferences and incomes earned.


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