Question

Please answer all the questions

Question 1

In a world with many close substitutes for dark chocolate, dark chocolate will tend to have

Group of answer choices

a large price elasticity of demand

a small price elasticity of demand

a small price elasticity of supply

a price elasticity of demand equal to 0.5

Question 2

The price of widgets rises from $60 to $80, and the quantity demanded for widgets decreases from 100 to 47. The price elasticity of demand calculated with the midpoint method is approximately

Group of answer choices

0.38

0.40

2.52

2.65

Question 3

If demand is inelastic and price decreases:

Group of answer choices

total revenue is constant

total revenue increases

demand always becomes elastic

total revenue decreases

Question 4

_____ goods have income elasticities of demand less than zero and _____ goods have income elasticities of demand greater than zero.

Group of answer choices

Normal; normal

Inferior; normal

Inferior; inferior

Normal; inferior

Question 5

Potato chips and sparkling water are generally considered to be complements for one another, such that their cross-price elasticities will be

Group of answer choices

zero

positive

equal to 100

negative

Question 6

When demand is price inelastic:

Group of answer choices

demand curves appear to be fairly flatly sloped

the percentage change in quantity demanded resulting from a price change is greater than the percentage change in price

consumers are not very responsive to changes in price

price elasticity of demand is greater than 1

Question 7

Brad's Barber Shop knows that a 6-percent increase in the price of their haircuts results in an 18-percent decrease in the number of haircuts purchased. What is the price elasticity of demand facing Brad's Barber Shop?

Group of answer choices

2.00

3.00

6.00

0.15

Question 8

If the demand curve for a life-saving medicine is perfectly inelastic, then a decrease in supply will cause the equilibrium price to:

Group of answer choices

rise and the equilibrium quantity to stay the same.

decrease and the equilibrium quantity to stay the same.

stay the same and the equilibrium quantity to fall.

rise and the equilibrium quantity to rise.

Question 9

A 20-percent decrease in the price of lemonade leads to a 10 percent increase in the quantity of iced tea demanded. It appears that:

Group of answer choices

cross-price elasticity of demand for iced tea is 0.5.

cross-price elasticity of demand for iced tea is -0.5.

cross-price elasticity of demand for iced tea is 2.

cross-price elasticity of demand for iced tea is -2.

Question 10

A demand or supply curve with ______________ would be vertical in appearance.

Group of answer choices

zero elasticity

middle elasticity

infinite elasticity

unitary elasticity

Question 11

Jean has $50 per week in her entertainment budget. She splits her time between going to the movies and yoga classes. Each movie costs $10 while each yoga class costs $5. The total utility from each of these activities is set out in the table below. What is Kim's total utility maximizing point?

Movies	Total Utility	Yoga Classes	Total Utility
0	0	0	0
1	40	1	30
2	75	2	57
3	105	3	81
4	130	4	96
5	140	5	106
		6	114
		7	116
		8	117

Group of answer choices

1 movie, 5 yoga classes

3 movies, 4 yoga classes

5 movies, 8 yoga classes

2 movies, 2 yoga classes

Question 12

When Ariana chooses to only purchase a combination of goods that lie within her budget line, she:

Group of answer choices

must reduce the quantity

is maximizing utility

likely has negative savings

is decreasing utility

Question 13

One characteristic of "utils" is that

Group of answer choices

utils are not subjective to an individual.

you can't compare the level of utils between different people.

utils are measured consistently from person to person.

5 utils to me means the same thing as 5 utils to you.

Question 14

As a general rule, utility-maximizing choices between consumption goods occur where the:

Group of answer choices

combined marginal utilities of the goods is the highest.

marginal utility divided by price for one good is equal to the marginal utility divided by price for the other good.

combined marginal utilities of the goods is the lowest.

higher-income households have the greatest satisfaction.

Question 15

As more units of a good are consumed, marginal utility will tend to

Group of answer choices

be indeterminate.

decrease.

increase.

stay constant.

Question 16

Substitution and income effects of a change in price of a good may be used to explain the:

Group of answer choices

inverse relationship between price and quantity demanded.

direct relationship between price and quantity supplied.

direct relationship between price and quantity purchased.

direct relationship between income and demand.

Question 17

James has a part-time job in a book store to help pay for his college. He can work up to 35 hours each week at his job, which pays $9 per hour. The table below shows his utility from different levels of leisure and income. Troy currently works 20 hours per week. If he decides to work 35 hours instead, his marginal utility gain from the additional income is _____.

Hours of Leisure	Total Utility from Leisure	Income	Total Utility from Income
0	0	0	0
5	18	45	30
10	34	90	54
15	48	135	72
20	56	180	81
25	60	225	87
30	62	270	90
		315	92

Group of answer choices

6

11

3

9

Question 18

Suppose each semester you have at most $350 to spend on taking an elective course. Your options are a literature course which costs $300 or a creative writing course which costs $200. Your marginal utility for taking the literature course next semester is 1,500 and your marginal utility for taking the creative writing course next semester is 1,200. That means, next semester

Group of answer choices

you will take both courses.

you will not have a clear choice between the two courses.

you will choose to take the literature course.

you will choose to take the creative writing course.

Question 19

A normal good is a product:

Group of answer choices

that has an upward sloping demand curve.

for which demand decreases as income decreases.

for which there is no demand.

for which demand decreases as income increases.

Question 20

When adding more and more workers, but leaving other resources fixed, eventually the marginal product of each worker will

Group of answer choices

decrease.

reach infinity.

move indeterminately.

increase.

Answer 1

1) when there are many close substitutes then increase in the price of dark chocolate will lead to increase in quantity demand for substitute goods

So, elasticity is large. Hence, option A is correct.

2) mid point formula for elasticity of demand:-

(Q2- Q1 /Q2 +Q1)× (P1+P2/P2-P1) = 2.52

Hence option c is correct.

3) if demand is inelastic then decrease in price will not change quantity. Hence, total revenue decreases

So, option D is correct.

4) Normal goods have income elasticity greater than zero And inferior goods have income elasticity less than zero.

Hence, option D is correct.

5) if two goods are perfect complements to each other then increase in the price of one good will lead to decrease in price of complement good. hence, option D is correct that is elasticity is negative.

6)when demand id price inelastic, then consumers are not very responsive to the changes in price.

so, option C is correct.

7) price elasticity is defined as percentage change in quantity over percentage change in price. hence elasticity will 3.

so, option B is correct

8) inelatic demand curve means vertical line of demand. hence decrease in supply will cause increase in price and quantity will remain the same.

so, option A is correct.

9) here, cross elasticity is negative . and is equals to 0.5

so, option B is correct.

10) demand and supply curve would be vertical when elasticity is zero.

so, option A is correct