Question 1

The demand for cough medicine is Q = 10 - 2P.At a price of $2.50,the price elasticity of demand is:

Accepted Answer

A)   -2.0.
B)   -1.0.
C)   -2.5.
D)   -0.4.
E)   -1.5.F) C) and D)
G) A) and B)

Question 2

Total revenue decreases as output increases whenever:

Accepted Answer

A)   marginal revenue is less than average revenue.
B)   marginal revenue is greater than average revenue.
C)   average revenue is decreasing.
D)   marginal revenue is negative.
E)   average revenue is negative.F) All of the above
G) D) and E)

Question 3

The demand for answering machines is Q = 1,000 - 150P + 25I.Assume that per capita disposable income I is $200.When the price of answering machines is P = $10,the income elasticity of demand is:

Accepted Answer

A)   2.5.
B)   0.11.
C)   1.0.
D)   25.
E)   1.11.F) C) and D)
G) B) and E)

Question 4

Marginal revenue can be defined in terms of price (P) and elasticity (ç) as:

Accepted Answer

A)   MR = P( η\etaη  + 1/ η\etaη ) .
B)   P = MR(1/ η\etaη ) .
C)   MR = P η\etaη .
D)   MR = P(1 + 1/ η\etaη ) .
E)   P = MR(1 - 1/ η\etaη ) . F) A) and D)
G) A) and E)

Question 5

The formula for the income elasticity of demand can be written as:

Accepted Answer

A)    η\etaη I = ( Δ\DeltaΔ Q /  Δ\DeltaΔ I) (I / Q) .
B)    η\etaη I = ( Δ\DeltaΔ I /  Δ\DeltaΔ Q) (I / Q) .
C)    η\etaη I = ( Δ\DeltaΔ Q /  Δ\DeltaΔ I) (Q / I) .
D)   η\etaη I = ( Δ\DeltaΔ I /  Δ\DeltaΔ Q) (Q / I) .
E)   none of the above. F) A) and C)
G) C) and D)

Question 6

The demand for a product is more inelastic:

Accepted Answer

A)   the more narrowly defined the product.
B)   the longer the time period covered.
C)   the lower the average income of consumers.
D)   the better the available substitutes.
E)   the poorer the available substitutes.F) B) and E)
G) B) and D)

Question 7

The market demand schedule shows the quantities that would be purchased,holding all other factors constant,from a group of firms during a given time period:

Accepted Answer

A)   at varying prices.
B)   at varying advertising levels.
C)   at varying competitors' prices and advertising levels.
D)   at varying prices and advertising levels.
E)   over different time intervals.F) D) and E)
G) A) and D)

Question 8

A market demand curve is likely to shift to the right when:

Accepted Answer

A)   average income falls.
B)   prices fall.
C)   prices rise.
D)   population increases.
E)   new firms enter the market.F) A) and B)
G) C) and D)

Question 9

The demand for costume jewelry has been estimated to be Q = 100P -2E2,where E is the price of real gem jewelry.Costume jewelry and real gem jewelry are:

Accepted Answer

A)   substitute goods.
B)   complement goods.
C)   inferior goods.
D)   normal goods.
E)   unrelated goods.F) C) and D)
G) A) and B)

Question 10

In Russia,as per capita income rises from $1,980 to $2,020,everything else remaining constant,annual per capita consumption of vodka falls from 525 to 475 liters; this implies an income elasticity of demand for vodka of:

Accepted Answer

A)   -0.50.
B)   -5.0.
C)   2.0.
D)   5.0.
E)   0.50.F) None of the above
G) A) and E)

Question 11

A firm's demand curve is usually:

Accepted Answer

A)   to the right of the market demand curve.
B)   more inelastic than the market demand curve.
C)   the same as the market demand curve.
D)   drawn holding supply constant.
E)   more elastic than the market demand curve.F) B) and C)
G) B) and D)

Exam 2: Demand Theory

A firm's demand curve is usually:

Correct Answer
verified

The demand for a product is more inelastic:

Correct Answer
verified

Total revenue decreases as output increases whenever:

Correct Answer
verified

A market demand curve is likely to shift to the right when:

Correct Answer
verified

The market demand schedule shows the quantities that would be purchased,holding all other factors constant,from a group of firms during a given time period:

Correct Answer
verified

Marginal revenue can be defined in terms of price (P) and elasticity (ç) as:

Correct Answer
verified

The demand for cough medicine is Q = 10 - 2P.At a price of $2.50,the price elasticity of demand is:

Correct Answer
verified

The demand for answering machines is Q = 1,000 - 150P + 25I.Assume that per capita disposable income I is $200.When the price of answering machines is P = $10,the income elasticity of demand is:

Correct Answer
verified

The demand for costume jewelry has been estimated to be Q = 100P^-²E²,where E is the price of real gem jewelry.Costume jewelry and real gem jewelry are:

Correct Answer
verified

In Russia,as per capita income rises from $1,980 to $2,020,everything else remaining constant,annual per capita consumption of vodka falls from 525 to 475 liters; this implies an income elasticity of demand for vodka of:

Correct Answer
verified

The formula for the income elasticity of demand can be written as:

Correct Answer
verified

Exam 2: Demand Theory

A firm's demand curve is usually:

Correct AnswerverifiedShow Answer

The demand for a product is more inelastic:

Correct AnswerverifiedShow Answer

Total revenue decreases as output increases whenever:

Correct AnswerverifiedShow Answer

A market demand curve is likely to shift to the right when:

Correct AnswerverifiedShow Answer

The market demand schedule shows the quantities that would be purchased,holding all other factors constant,from a group of firms during a given time period:

Correct AnswerverifiedShow Answer

Marginal revenue can be defined in terms of price (P) and elasticity (ç) as:

Correct AnswerverifiedShow Answer

The demand for cough medicine is Q = 10 - 2P.At a price of $2.50,the price elasticity of demand is:

Correct AnswerverifiedShow Answer

The demand for answering machines is Q = 1,000 - 150P + 25I.Assume that per capita disposable income I is $200.When the price of answering machines is P = $10,the income elasticity of demand is:

Correct AnswerverifiedShow Answer

The demand for costume jewelry has been estimated to be Q = 100P -2E2,where E is the price of real gem jewelry.Costume jewelry and real gem jewelry are:

Correct AnswerverifiedShow Answer

In Russia,as per capita income rises from $1,980 to $2,020,everything else remaining constant,annual per capita consumption of vodka falls from 525 to 475 liters; this implies an income elasticity of demand for vodka of:

Correct AnswerverifiedShow Answer

The formula for the income elasticity of demand can be written as:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The demand for costume jewelry has been estimated to be Q = 100P^-²E²,where E is the price of real gem jewelry.Costume jewelry and real gem jewelry are:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified