Econ 221 MC Quiz 4b WS04



1.
The demand for items that go into the production of a final product is called
A.
marginal demand.
B.
aggregate demand.
C.
partial demand.
D.
derived demand.


2.
The following form of a demand curve will exhibit constant elasticity over its relevant range:
A.
Q = a - bP
B.
Q = a/Pb
C.
Q = aP-b
D.
none of the above


3.
As you move down a straight-line-downward-sloping demand curve, the price elasticity of demand
A.
becomes more inelastic.
B.
becomes more elastic.
C.
remains constant because the slope is constant
D.
may become more or less elastic depending on the slope of the demand curve.


4.
The government raises revenue to repair roads by taxing gasoline.   The government is going to increase the tax on gasoline to raise additional revenue for road repair. The government will be able to raise more revenue by raising the gasoline tax if the demand for gasoline is
A.
unitarily elastic.
B.
perfectly elastic.
C.
relatively inelastic.
D.
relatively elastic.


5.
The price of hot dogs increases by 22% and the quantity of hot dogs demanded falls by 25%. This indicates that demand for hot dogs is
A.
unitarily elastic.
B.
inelastic.
C.
elastic.
D.
perfectly elastic.


6.
Remembering that demand elasticity is defined as the percentage change in quantity divided by the percentage change in price, if price decreases and, in percentage terms, quantity rises more than price has dropped, total revenue will
A.
increase.
B.
decrease.
C.
remain the same.
D.
either increase or decrease.


7.
The owner of a produce store found that when the price of a head of lettuce was raised from 50 cents to $1, the quantity sold per hour fell from 18 to 8. The arc elasticity of demand for lettuce is
A.
-0.56.
B.
-1.15.
C.
-0.8.
D.
-1.57.


8.
An "inferior good" is one
A.
for which income elasticity of demand exceeds one.
B.
that can be used in place of another good.
C.
for which where consumption of that good rises income rises.
D.
for which consumption of that good declines as income rises.
E.
for which income elasticity of demand is positive but less than one.


9.
A "normal good" is defined as one
A.
for which consumption declines as income rises.
B.
that can be used in place of another good.
C.
for which consumption rises as income rises.
D.
for which income elasticity of demand exceeds one.
E.
for which income elasticity of demand is positive but less than one.


10.
The income elasticity of calculators is 0.2. A 5% increase in income will cause
A.
a 25% decrease in the quantity demanded of calculators.
B.
a 25% increase in the quantity demanded of calculators.
C.
a 1% increase in the quantity demanded of calculators.
D.
a 10% increase in the quantity demanded of calculators.



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