Quiz 3.pdf

6/7/2021 Quiz 3
https://sb.lms.athabascau.ca/mod/quiz/review.php?attempt=395325 1/31

Started on Friday, 2 April 2021, 4:45 PM MDT
State Finished
Completed on Saturday, 10 April 2021, 12:48 AM MDT
Time taken 7 days 8 hours
Marks 30.00/30.00
Grade 100.00 out of 100.00

6/7/2021 Quiz 3
Question 1
Correct Mark 1.00 out of 1.00
How do most economists report the elasticity of demand?
Your answer is correct.
The correct answer is: as the absolute value of the actual number
Select one:
a. as the absolute value of the actual number 
b. as a dollar amount, since we are measuring the change in price
c. as a negative number, since price and quantity demanded move in opposite directions
d. as a percentage, since both the numerator and denominator are percentages

6/7/2021 Quiz 3
Question 2
Using the midpoint method, what would be the price elasticity of demand for orthodontics procedures if the number of procedures fell from
6,000 to 4,000 per week after its price increased from $6,000 to $10,000?
The correct answer is: 0.80
Select one:
a. 0.80 
b. 0.45
c. 2.22
d. 1.80

6/7/2021 Quiz 3
Question 3
Refer to the figure below. Without the price ceiling in this market for gasoline, what will happen to the price when the supply curve shifts from
S1 to S2?
The correct answer is: It will increase to P3, and the market will clear.
Select one:
a. It will eventually move to P2 without government assistance.
b. It will increase to P3, and the market will clear. 
c. It will increase to P3, but a shortage will still exist.
d. It will remain at P1, and a shortage will still exist.

6/7/2021 Quiz 3
Question 4
The price elasticity of demand measures how responsive
The correct answer is: buyers are to a change in price.
Select one:
a. sellers are to a change in buyers’ incomes.
b. buyers are to a change in income.
c. buyers are to a change in price. 
d. sellers are to a change in price.

6/7/2021 Quiz 3
Question 5
What happens as elasticity of supply rises?
The correct answer is: The supply curve gets flatter.
Select one:
a. The supply curve gets flatter. 
b. The quantity supplied falls.
c. The supply curve gets steeper.
d. The quantity supplied increases.

6/7/2021 Quiz 3
Question 6
Under rent control, tenants can expect
The correct answer is: lower rent and lower quality housing.
Select one:
a. higher rent and higher quality housing.
b. lower rent and higher quality housing.
c. lower rent and lower quality housing. 
d. higher rent and lower quality housing.

6/7/2021 Quiz 3
Question 7
A binding price floor causes
The correct answer is: a surplus.
Select one:
a. excess demand.
b. a surplus. 
c. a drop in the equilibrium price.
d. a shortage.

6/7/2021 Quiz 3
Question 8
What is a key determinant of the elasticity of supply?
The correct answer is: the ability of sellers to change the amount of the good they produce
Select one:
a. the number of firms in the market
b. the ability of sellers to change the price of the good they produce
c. the responsiveness of buyers to changes in sellers’ prices
d. the ability of sellers to change the amount of the good they produce 

6/7/2021 Quiz 3
Question 9
Which statement best describes a price ceiling?
The correct answer is: A price ceiling is a legal maximum on the price at which a good can be sold.
Select one:
a. A price ceiling is a legal minimum on the price at which a good can be sold.
b. A price ceiling occurs when the price in the market is temporarily above equilibrium.
c. A price ceiling occurs when the price in the market is subsidized by the government.
d. A price ceiling is a legal maximum on the price at which a good can be sold. 

6/7/2021 Quiz 3
Question 10
If two goods are substitutes, their cross-price elasticity of demand will be
The correct answer is: positive.
Select one:
a. positive. 
b. negative.
c. zero.
d. one.

6/7/2021 Quiz 3
Question 11
Suppose there is a 3% increase in the price of good X and a resulting 4% decrease in the quantity of X demanded. What is the price elasticity of
demand for X?
The correct answer is: 1.33
Select one:
a. 1
b. 0.75
c. 1.33 
d. infinite

6/7/2021 Quiz 3
Question 12
When binding price ceilings are imposed on benefit buyers,
The correct answer is: some buyers will not be able to buy any of the products.
Select one:
a. every buyer in the market benefits because of lower prices.
b. some buyers will not be able to buy any of the products. 
c. sellers in the market will also benefit from price ceilings.
d. the quantity sellers want to sell will equal the quantity buyers want to buy.

6/7/2021 Quiz 3
Question 13
How does total revenue change as one moves down a linear demand curve?
The correct answer is: It first increases and then decreases.
Select one:
a. It first decreases and then increases.
b. It first increases and then decreases. 
c. It increases.
d. It decreases.

6/7/2021 Quiz 3
Question 14
When her income increased from $40,000 to $50,000, Cindy’s consumption of macaroni and soy burgers increased from three kilograms to four
kilograms for both goods. What can we conclude for Cindy?
The correct answer is: Macaroni and soy burgers are both normal goods with income elasticities greater than 1.
Select one:
a. Macaroni and soy burgers are both normal goods with income elasticities greater than 1. 
b. Macaroni is an inferior good and soy burgers are a normal good; both have income elasticities of 1.
c. Macaroni is an inferior good with an income elasticity of –1, and soy burgers are a normal good with an income elasticity of 1.
d. Macaroni and soy burgers are both inferior goods with income elasticities equal to –1.

6/7/2021 Quiz 3
Question 15
What effect does a tax on buyers of coffee have on the equilibrium price (for buyers) and quantity?
The correct answer is: It increases the equilibrium price of coffee and reduces the equilibrium quantity.
Select one:
a. It reduces the equilibrium price of coffee and reduces the equilibrium quantity.
b. It increases the equilibrium price of coffee and reduces the equilibrium quantity. 
c. It increases the equilibrium price of coffee and increases the equilibrium quantity.
d. It reduces the equilibrium price of coffee and increases the equilibrium quantity.

6/7/2021 Quiz 3
Question 16
A perfectly elastic demand implies that
The correct answer is: any rise in price above that represented by the demand curve will result in no output demanded.
Select one:
a. buyers will not respond to any change in price.
b. any rise in price above that represented by the demand curve will result in no output demanded. 
c. price will rise by an infinite amount when there is a change in quantity demanded.
d. price and quantity demanded respond proportionally.

6/7/2021 Quiz 3
Question 17
Refer to the figure below. What is the slope and elasticity between point A and point B?
The correct answer is: The slope is equal to –0.33, and elasticity is equal to 1.
Select one:
a. The slope is equal to –3, and elasticity is equal to 1.
b. The slope is equal to –0.33, and elasticity is equal to 1. 
c. The slope is equal to 0.33, and elasticity is equal to 1.33.
d. The slope is equal to –3, and elasticity is equal to 1.33.
e. The slope is equal to –2/3, and elasticity is equal to 1/4.

6/7/2021 Quiz 3
Question 18
When demand is elastic, what is the price elasticity, and how do price and total revenue behave?
The correct answer is: greater than 1, and price and total revenue will move in opposite directions
Select one:
a. less than 1, and price and total revenue will move in the same direction
b. greater than 1, and price and total revenue will move in opposite directions 
c. less than 1, and price and total revenue will move in opposite directions
d. greater than 1, and price and total revenue will move in the same direction

6/7/2021 Quiz 3
Question 19
Rent control is best characterized as
The correct answer is: a common example of a price ceiling.
Select one:
a. the most effective way to provide affordable housing.
b. the most efficient way to allocate housing.
c. a common example of a price ceiling. 
d. a common example of a social problem solved by government regulation.

6/7/2021 Quiz 3
Question 20
The initial effect of a tax on the buyers of a good appears
The correct answer is: on the demand for the good.
Select one:
a. on the demand for the good. 
b. on the equilibrium quantity of the good.
c. on the equilibrium price of the good.
d. on the supply of the good.

6/7/2021 Quiz 3
Question 21
What is the main reason for using the midpoint method?
The correct answer is: It gives the same answer regardless of the direction of change.
Select one:
a. It gives the same answer regardless of the direction of change. 
b. It rounds quantities to the nearest whole unit.
c. It uses fewer numbers.
d. It rounds prices to the nearest dollar.

6/7/2021 Quiz 3
Question 22
Suppose that the demand for digital pianos is price inelastic, and the supply of digital pianos is price elastic. By what amount will a tax of $1.00
per digital piano levied on buyers of digital pianos increase the equilibrium price paid by buyers of digital pianos?
The correct answer is: by more than $0.50 but less than $1.00
Select one:
a. by less than $0.50
b. by more than $0.50 but less than $1.00 
c. by $1.00
d. by more than $1.00

6/7/2021 Quiz 3
Question 23
If the value of cross-elasticity of demand for two goods is negative, this implies that
The correct answer is: the goods are complements.
Select one:
a. they are inferior goods.
b. the goods are substitutes.
c. they are normal goods.
d. the goods are complements. 

6/7/2021 Quiz 3
Question 24
Price elasticities of demand are always stated as positive numbers because
The correct answer is: price elasticities are always negative, so we ignore the sign.
Select one:
a. the numerators and denominators of the formula are both negative.
b. price increases always lead to increases in quantity demanded.
c. price decreases always lead to decreases in quantity demanded.
d. price elasticities are always negative, so we ignore the sign. 

6/7/2021 Quiz 3
Question 25
If a tax is imposed on the buyer of a product, the demand curve will shift
The correct answer is: downward by the amount of the tax.
Select one:
a. downward by the amount of the tax. 
b. upward by the amount of the tax.
c. downward by less than the amount of the tax.
d. upward by more than the amount of the tax.

6/7/2021 Quiz 3
Question 26
If sellers respond substantially to changes in price,
The correct answer is: the sellers are considered to be relatively price sensitive.
Select one:
a. the supply curve will shift substantially when the price rises.
b. the sellers are considered to be relatively price sensitive. 
c. the price elasticity of supply equals 1.
d. the sellers are considered to be relatively price insensitive.

6/7/2021 Quiz 3
Question 27
When the local used bookstore prices economics books at $95 each, they generally sell 70 per month. If they lower the price to $65 each, they
sell 90. Given this information, the elasticity of demand for economics books is _________. What action should the store take?
The correct answer is: 0.67; the store should raise prices to raise total revenue.
Select one:
a. 0.67; the store should raise prices to raise total revenue. 
b. 1.50; the store should lower prices to raise total revenue.
c. 1.50; the store should raise prices to raise total revenue.
d. 0.67; the store should lower prices to raise total revenue.

6/7/2021 Quiz 3
Question 28
If a tax is imposed on the buyer of a product, the demand curve will shift
The correct answer is: downward by the amount of the tax.
Select one:
a. upward by more than the amount of the tax.
b. downward by less than the amount of the tax.
c. upward by the amount of the tax.
d. downward by the amount of the tax. 

6/7/2021 Quiz 3
Question 29
Moving up a linear demand curve, what happens to total revenue?
The correct answer is: It increases, then decreases.
Select one:
a. It increases, then decreases. 
b. It decreases.
c. It decreases, then increases.
d. It increases.

6/7/2021 Quiz 3
Question 30
What is the role of price controls in the market economy?
The correct answer is: Price controls are used by governments to reallocate resources more equitably.
Select one:
a. Price controls are a tool used by business firms to fix prices.
b. Price controls are used to make markets more efficient.
c. Price controls are used by governments to reallocate resources more equitably. 
d. Price controls are nearly always effective in eliminating shortages.
◄ Unit 3: The Elasticity of Demand and Supply Jump to...
Unit 4: Markets and Economic Welfare ►

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