Microeconomics For Today 9th Edition by Irvin B. Tucker - Test Bank Instant Download - Complete Test Bank With Answers Sample Questions Are Posted Below ac1. Suppose that a jewelry store found that when it increased prices by 10 percent, sales revenue increased by 3 percent. Which of the following is true …
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Microeconomics For Today 9th Edition by Irvin B. Tucker – Test Bank
Instant Download – Complete Test Bank With Answers
Sample Questions Are Posted Below
ac1. Suppose that a jewelry store found that when it increased prices by 10 percent, sales revenue increased by 3 percent. Which of the following is true about the price elasticity of demand for the store’s goods?
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2. Suppose an increase in symphony tickets prices reduces the total revenue. This is evidence that demand is:
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3. Suppose the Pleasant Corporation cuts the price of its American Girl dolls by 10 percent, and as a result, the quantity of the dolls sold increases by 25 percent. This indicates that the price elasticity of demand for the dolls over this range is:
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4. An increase in total revenue results occurs from which of the following?
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5. Suppose that Starbucks reduces the price of its premium coffee from $2.20 to $1.80 per cup, and as a result, the quantity sold per day increased from 350 to 450. Over this price range, the price elasticity of demand for Starbucks coffee is:
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6. Suppose you are the manager of a local water company, and you are instructed to get consumers to reduce their water consumption by 10 percent. If the price elasticity of demand for water is 0.25, by how much would you have to raise the price of water?
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7. If the quantity demanded increases by 20 percent in response to a 10 percent decrease in price, demand is classified as:
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8. A local Krispy Kreme doughnut shop reduced the price of its doughnuts from $4 per dozen to $3.50 per dozen, and as a result, the daily sales increased from 300 to 400 dozen. This indicates that the price elasticity of demand for the doughnuts was:
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9. If a demand curve for a good were completely vertical, it would be considered:
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10. If the demand for cigarettes is highly inelastic, this indicates that:
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11. The price elasticity of demand for gasoline measures the:
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12. When demand is price inelastic:
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13. If demand is inelastic, an increase in the price of a good will cause total revenue to:
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14. Price elasticity of demand refers to the ratio of the:
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15. Price elasticity of demand is defined as the ratio of the:
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16. Price elasticity of demand refers to the:
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17. If demand is price elastic, a decrease in price causes:
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18. If a decrease in the price of movie tickets increases the total revenue of movie theaters, this is evidence that demand is:
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19. A perfectly elastic demand curve has an elasticity coefficient of:
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20. Over the elastic portion of a demand curve, a decrease in price causes:
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21. Using the midpoints formula, what would be price elasticity of demand for a gallbladder operation if the number of operations fell from 6,000 to 4,000 per week after its price increased from $6,000 to $10,000?
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22. If the percentage change in the quantity demanded of a good is less than the percentage change in price, price elasticity of demand is:
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23. If the percentage change in the quantity demanded of a good is greater than the percentage change in price, price elasticity of demand is:
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24. If the percentage change in the quantity demanded of a good equals the percentage change in price, price elasticity of demand is:
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25. Along the elastic range of a demand curve, a decrease in price causes:
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26. If a decrease in the price of theater tickets increases the total revenue earned by the theater, this is evidence that demand is:
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27. Along the elastic range of a demand curve, a price change causes:
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28. Suppose the president of a college argues that a 25 percent tuition increase will raise revenues for the college. It can be concluded that the president thinks that demand to attend this college is:
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29. Suppose Good Food’s supermarket raises the price of its steak and finds its total revenue from steak sales does not change. This is evidence that price elasticity of demand for steak is:
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30. The price elasticity of demand for a vertical demand curve is:
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31. The president of Tucker Motors says, “Lowering the price won’t sell a single additional Tucker car.” The president believes that the price elasticity of demand is:
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32. If the price elasticity of demand is computed for two products, and product A measures .79, and product B measures 1.6, then:
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33. Demand price elasticity measures:
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| Exhibit 5-1 Demand curve
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34. In Exhibit 5-1, the demand curve between points a and b is:
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35. In Exhibit 5-1, the demand curve between points b and c is:
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36. In Exhibit 5-1, between points a and b, the price elasticity of demand measures:
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37. In Exhibit 5-1, between points b and c, the price elasticity of demand measures
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38. If demand price elasticity measures 2, this implies that consumers would:
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39. If the demand curve over a certain range is “price elastic,” this implies that the:
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40. If the demand curve is unit elastic, this implies that:
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41. Which of the statements below does not describe a demand curve that is unit elastic?
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42. Demand price elasticity is measured by the:
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43. If Sam, the Pizza Man, lowers the price of his pizzas from $6 to $5 and finds that sales increase from 400 to 600 pizzas per week, then the demand for Sam’s pizzas in this range is:
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44. If Herbert, the hair stylist, raises the price of his cuts from $13 to $15 and finds the number of cuts falls from 300 to 260, then the demand for Herbert’s cuts in this range is:
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45. If a 10 percent cut in price causes a 15 percent increase in sales, then:
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46. If Pete raises his price of muffins from $2 to $3 and his sales revenue increases from $35,000 to $38,000, then:
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47. You are part of a local community theater group. It is the goal of the group to increase the amount of revenue earned through ticket sales. Mary says the obvious solution is to increase ticket prices. Is Mary correct?
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48. Elasticity measures how “sensitive” consumers are by measuring their change in ____ as the price of the product changes.
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49. If the price elasticity of demand for a product measures .45,
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50. Suppose you are on a committee seeking to increase revenue from your city’s bus system. If demand is _______, you would recommend raising the fare.
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51. A _______ demand curve has a price elasticity of demand that is perfectly elastic.
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52. A _______ demand curve has a price elasticity of demand that is perfectly inelastic.
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53. If the quantity of bread demanded rises 2 percent when the price of bread declines 10 percent, then the price elasticity of demand is:
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54. If a straight-line demand curve slopes down, price elasticity will:
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55. As one moves down a straight-line, down-sloping demand curve, price elasticity will:
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56. Since it is always a negative number, economists use the convention of taking the absolute value of:
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57. Leo’s Bakery reduces the price of wheat bread from $3 to $1 and finds that quantity demanded increases from 100 to 122 loaves. Leo calculates that his price elasticity of demand for wheat bread is:
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58. Tara buys four music cassettes when the price is $10 and two cassettes when the price is $14. Her price elasticity of demand is:
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59. As price decreases and we move down further along a linear demand curve, the price elasticity of demand will:
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60. If the price elasticity of demand for football tickets is estimated to be 4.5, then a 10 percent increase in football ticket prices would be expected to cause a:
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61. A health club sells 50 memberships when the monthly price is $60 and 70 memberships when the monthly price is $40. The price elasticity of demand for memberships at this health club is (using the average values method):
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62. Within different price ranges along a linear demand curve, elasticities are:
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63. If demand for a good is price elastic, then the price elasticity will be:
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64. An economist estimates that .67 is the price elasticity of demand for disposable diapers. This suggests that disposable diaper producers could:
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65. If demand is price elastic, then when price decreases, total revenue:
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66. When a 2 percent increase in price generates a greater than 2 percent decrease in quantity demanded, then:
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67. The short-run price elasticity of demand for airline travel is .05, while the long-run elasticity is 2.36. This means that a significant increase in airline ticket prices will cause airline companies to:
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68. On a part of the demand curve where the price elasticity of demand is less than 1, a decrease in price:
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69. A public transit company finds that when it reduces the price of a bus ticket, total revenues remain the same. One can conclude from this that:
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70. It is Valentine’s Day and Jason is desperately looking all over town for a dozen roses to give to Judy. Most likely, Jason’s price elasticity of demand is:
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71. Sally is an average shopper, with average income. When she is in the store she buys a few items which cost more than $20, several items which cost between $5 and $20, and many items which cost less than $1. The price elasticity of Sally’s demand for these goods most likely ____.
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72. Elasticity has which special meaning for economists?
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73. Which statement about price elasticity of demand along a linear demand curve is true?
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74. Looking at the relationship between elasticity and total revenue, we can see that ____.
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75. Which of the following statements is true?
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76. Larissa is a famous attorney with a great reputation in court. She charges her clients $300 for each hour she spends working on their cases. If she earned $450,000 in hourly wages last year, and by raising her rates to $350 per hour her income increased to $490,000 what can we say about the elasticity of demand for Larissa’s legal services?
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77. Dana is an art historian who needs to travel to Italy to do research. Art historians usually don’t have a lot of money, and therefore are very sensitive to price changes. Dana’s funding agency pays her a fixed amount to travel. At current exchange rates, Dana can stay in Italy for 35 days. If the exchange rate improves by 10 percent, she can stay for 40 days. What is Dana’s price elasticity of demand for days spent in Italy?
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Exhibit 5-2 Price and quantity demanded data
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78. The data in Exhibit 5-2 shows that price elasticity of demand is:
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79. Using Exhibit 5-2, what is the price elasticity of demand when the price falls from five dollars to four?
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80. One of the reasons that price elasticities of demand are always stated as positive numbers is because:
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81. Avital and Joshua each have their own business selling lemonade in front of their houses. When they each charge 25 cents per glass, their total revenues are equal. However, when they each charge 40 cents per glass, Avital’s revenues are bigger than Joshua’s revenues. This is because:
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82. The price elastic portion of the linear demand curve lies:
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83. If a supplier faces a perfectly horizontal demand curve and sets his price slightly higher than the demand curve itself, he can expect:
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Exhibit 5-3 Demand curves for gallons of orange juice
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84. Using Exhibit 5-3, whose elasticity of demand is greatest when the price falls from $7 to $6?
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85. Using Exhibit 5-3, in general, whose demand for orange juice is the most inelastic?
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86. Using Exhibit 5-3, in general, whose demand for orange juice is the most elastic?
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87. Using Exhibit 5-3, whose “quantity demanded” experiences the largest percentage increase when the price falls from $2 to $1?
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88. If a revenue-maximizing firm is told that the price elasticity of demand is equal to one, it should:
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89. Another word for elasticity is:
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90. Firms would like to know the price elasticity of demand for their products because it helps determine the effect of price changes on the firms’:
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91. If the price of Pepsi-Cola increases from 40 cents to 50 cents per bottle and the quantity demanded decreases from 100 bottles to 50 bottles, then according to the averaging equation, the value of price elasticity of demand for Pepsi-Cola is:
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92. If the value of the price elasticity of demand is 0.2, this means that:
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93. If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then demand is:
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94. If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then according to the averaging equation, the value of price elasticity of demand in absolute terms is:
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95. If Stimpson University increases tuition in order to increase its revenue, it will:
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96. If New York City expects that an increase in bus fares will raise mass transit revenues, it must think that the demand for bus travel is:
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97. Which of the following describes a situation in which demand must be inelastic?
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98. Which of the following describes a situation in which demand must be elastic?
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99. A measure of sensitivity or responsiveness to changes in price or income is called:
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100. Elasticity is a measure of:
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101. Consider the market for bicycles. If a dealer cuts prices by 10 percent and sells 20 percent more bikes, then demand for bicycles is:
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102. The percentage change in the quantity demanded of film divided by the percentage change in the price of cameras indicates:
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103. Governments can use price elasticity of demand to estimate how changes in excise tax rates will affect:
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| Exhibit 5-4 Demand curves for silver
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104. Assume that a wealthy buyer, Mr. Hunt, declares that he will purchase any amount of silver at a price of $125 an ounce. In Exhibit 5-4, which graph illustrates the shape of the demand curve for silver?
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105. If the quantity of concert tickets sold decreases by 10 percent when the price increases by 5 percent, the price elasticity of demand over this range of the demand curve is:
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106. \Suppose the quantity demanded of steak is 200 million pounds per year when the price is $6 per pound and 400 million pounds per year when the price is $2 per pound. The price elasticity of demand for steak over this range is:
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107. Suppose the Good Food supermarket increases the price of a pound of bananas from $.75 to $1.25 and finds that the quantity of bananas it sells per month drops from 1,500 to 1,000. The price elasticity of demand coefficient for bananas in this price range is:
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108. Suppose the quantity demanded is 1,000 million bushels of peaches per year when the price is $3 per bushel and 1,500 million bushels when the price is $1 per bushel. The price elasticity of demand in this range of the demand curve is:
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109. If a 5 percent decrease in the price of a good produces a 5 percent increase in the quantity demanded, the price elasticity of demand is:
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110. Suppose there is no change in total revenue when the price changes. The demand curve for this good is:
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111. Any change in price along a perfectly inelastic demand curve produces:
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112. A perfectly elastic demand curve has a price elasticity of demand coefficient of:
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113. A demand curve that has constant price elasticity of demand coefficient equals to one at all points is a(n):
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| Exhibit 5-5 Demand curve for computers
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114. In Exhibit 5-5, if the area OABC equals the area ODEF, the demand curve is:
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115. In Exhibit 5-5, the change in total revenue resulting from a change in price from A to D indicates that the demand curve is:
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116. In Exhibit 5-5, the total revenue at point B on the demand curve equals:
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117. In Exhibit 5-5, the total revenue at point E on the demand curve equals:
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118. You are on a campus committee which sets the ticket prices for basketball games. The committee wants to increase the total money generated from ticket sales. When should the committee choose to lower its ticket prices?
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119. A 10 percent rise in the price of housing reduces the quantity demanded of housing by 3 percent. We can conclude that the demand for housing is:
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120. Suppose an oil company wants to make its total revenue as large as possible. It should charge a price at which the demand for oil is:
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121. If a decrease in the price of football tickets increases the total revenue of the athletic department, this is evidence that demand is:
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122. If the percentage change in the quantity demanded of a good is greater than the percentage change in price, price elasticity of demand is:
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123. Suppose the president of a textbook publisher argues that a 10 percent increase in the price of textbooks will raise total revenue for the publisher. It can be concluded that the company president thinks that demand for textbooks is:
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124. If the quantity of tickets to the fair sold decreases by 10 percent when the price increases by 5 percent, the price elasticity of demand over this range of the demand curve is:
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125. There is no change in total revenue when the demand curve for a good is:
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126. If a good has a price elasticity of demand coefficient less than one, then:
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127. If the price elasticity of demand coefficient equals 2 then:
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128. Which of the following statements is true?
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| Exhibit 5-6 Demand curve for concert tickets
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129. In Exhibit 5-6, suppose promoters charge a price of $30 per ticket. How much total revenue will their sales generate?
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130. In Exhibit 5-6, if promoters lower their ticket price form $30 to $20, then:
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131. In Exhibit 5-6, the demand curve for concert tickets shown above is classified as:
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| Exhibit 5-7 Demand curve for concert tickets
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132. According to Exhibit 5-7, the demand for concert tickets is:
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133. In Exhibit 5-7, if promoters charge a price of $10 per ticket, then their total revenue is:
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134. In Exhibit 5-7, if promoters raise their prices from $10 to $40 per ticket, then their total revenue will:
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135. The demand for a product is likely to be more elastic:
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136. Which of the following factors is associated with products with a highly price elastic demand?
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137. Other things constant, the price elasticity of demand for a product will be smaller (more inelastic) if:
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138. A product would be more demand price elastic:
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139. A product would be more demand price inelastic:
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140. The longer the time period under study,
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141. Demand sensitivity depends on all of the following except:
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142. In the short run, consumers typically ____ to price changes (when compared to the long run).
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143. Which of the following events would increase the price elasticity of demand for Chicago Bears tickets that sell at a price of $20?
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144. The price elasticity of demand for a particular good is influenced by which of the following factors?
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145. If the short-run price elasticity of demand for hospital care is .27, then the long-run price elasticity is expected to be:
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146. The long-run price elasticity of demand is usually larger than the short-run price elasticity of demand because:
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147. A lower price elasticity of demand coefficient occurs when:
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148. In the long run, price elasticities of demand are usually ____.
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149. The price elasticity of demand coefficient for a good will be greater:
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150. Which of the following goods is likely to have the most elastic demand curve?
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151. If the price elasticity of demand is elastic, then:
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152. Which of the following statements is not true?
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153. In differentiating between the short- and long-run elasticities, when economists talk about short-run elasticities,
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154. A lower price elasticity of demand coefficient occurs when:
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155. The price elasticity of demand coefficient for a good will be greater:
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156. The price elasticity of demand coefficient for a good will be lower:
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157. Which of the following is true for a lower price elasticity of demand coefficient?
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158. Sally recently got a 15 percent raise. She now purchases 7.5 percent more steak dinners. Sally’s income elasticity for steak dinners is:
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159. The sign of the price elasticity coefficient for a normal good will:
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160. If the income elasticity of demand for a good is negative, this means that:
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161. A study of consumers in an area found that as family income increased from $25,000 per year to $35, 000 per year, other factors held constant, the number of houses purchased increased from 7,000 per year to 11,000 per year. This finding indicates an income elasticity of demand coefficient for housing over this family income range of:
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162. If bus travel is an inferior good, then its income elasticity of demand will be:
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163. For which of the following medical goods or services is the income elasticity of demand largest?
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164. The income elasticity of demand for shoes is estimated to be 1.50. We can conclude that shoes:
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165. The number of CDs purchased increased by 50 percent when consumer income increased by 10 percent. Assuming other factors are held constant, CDs would be classified as:
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166. A good is classified as inferior if:
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167. If a good is inferior in an economic sense, income elasticity will:
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168. If we measure the income elasticity of a good as −1.8, this means this good is a(n):
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169. If a consumer’s purchases of a product increases as income increases, this good is classified as a(n):
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170. When economists look at the percentage change in quantity demanded generated by a change in income, they are looking at:
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171. If a 1 percent change in income generates a greater than 1 percent change in quantity demanded of boating expenditures, then boating is an:
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172. Suppose the value of income elasticity of demand for a private college education is equal to 1.5. This means that:
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173. If the income elasticity of demand for a good is .59, then it is what type of good?
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174. The Smith family buys much more macaroni when someone in the family is laid off. This means that the Smiths’ ____ is negative.
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175. If the income elasticity for a particular good is 0.8, we would expect to see more of that good:
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176. If the cross-elasticity of demand for two goods is negative, this means that:
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177. If the cross-elasticity of demand for two goods is positive, this means that the goods are:
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178. The number of satellite dishes increased by 50 percent when the average monthly price of cable TV increased by 10 percent. Assuming that other factors are held constant, satellite dishes and cable TV are classified as:
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179. The number of cases of Coca-Cola bought increased by 50 percent when the price of pretzels declined by 10 percent. Assuming other factors are held constant, Coca-Cola and pretzels are classified as:
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180. The number of computers bought increased by 20 percent when the price of on-line services declined by 10 percent. Assuming other factors are held constant, computers and on-line services are classified as:
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181. To determine whether two goods are substitutes or complements, an economist would estimate the:
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182. If automobiles and gasoline are complements, then their cross-elasticity coefficient will be:
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183. The cross elasticity of demand for substitute products must:
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184. The cross elasticity of demand for complementary products must:
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185. If a 1 percent decrease in the price of product A brings about a 3 percent increase in the sales of product B, then:
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186. If a 10 percent decrease in the price of product A brings about a 3 percent increase in the sales of product B, then:
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187. Two goods are complementary if:
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188. If a good is inferior in an economic sense:
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189. If John purchases 10 percent more compact discs when his income increases 5 percent, then:
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190. If Coke and Pepsi are close substitutes, then if:
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191. If Jackie needs special film to go with her new camera, then for her these two goods have what type of relationship?
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192. The cross elasticity between Rolaids and Tums is expected to be:
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193. We would expect the cross elasticity between tennis racquets and tennis balls to be:
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194. The cross elasticity between two goods, X and Y, is positive. From this, we can conclude that goods X and Y are:
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195. If two goods were to become even stronger substitutes than before, an economist would expect the cross elasticity to become:
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196. When the price of bread increases by 3 percent, the quantity demanded of crackers increases by 2 percent. The cross elasticity of demand between crackers and bread is:
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197. Which of the following pairs is most likely to represent substitute goods?
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198. Which of the following pairs is most likely to represent complementary goods?
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199. An increase in the price of good X causes the demand for good Y to shift inward. One can conclude that X and Y are:
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200. The cross elasticity between two goods is 2.5. These goods are:
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201. There are three goods you are interested in purchasing, X, Y and Z. You notice that the price of Z has fallen. Given that the cross price elasticity between Z and Y is −1.5; the cross price elasticity between Y and X is 3.0, and the cross price elasticity between Z and X is 0.50. It would make sense that:
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202. If goods X and Y are such that the cross price elasticity between them is negative, and if the income elasticity of X is negative, then these goods are:
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203. The cross price elasticities among substitute goods will be extremely high when:
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204. Inferior goods have an income elasticity of demand that is:
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205. An inferior good is:
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206. As cities prospered and per-capita incomes increased, the demand for bus travel diminished. This suggests that:
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207. If the economy is in recession and the number of used baby clothing stores increases, then:
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208. As the economy recovers from a recession, we should expect that demand for:
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209. The value of cross elasticity of demand between orange soda and grape soda is:
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210. The price elasticity of demand between rifles and bullets is likely to be:
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211. The price elasticity of demand between milk and soda is likely to be:
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212. Computers and software programs are:
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213. In order to prove that Dr. Pepper and 7-Up are substitutes, the FTC should test the ____ and get a ____.
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214. Suppose that the quantity of apples sold increases by 30 percent after the price of pears increases by 15 percent. What is the coefficient of cross elasticity of demand?
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215. As the period for firms to expand output is lengthened, the elasticity of the market supply curve will:
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216. All things equal, the price elasticity of supply:
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217. If the price elasticity is supply coefficient is greater than one, then supply is:
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218. A perfectly elastic supply curve is expressed graphically as a(n):
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219. In the very short-run period,
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220. If the price elasticity of supply equals zero, this implies that:
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221. The responsiveness of suppliers to changing prices is called the:
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222. Suppose that when price is $10, quantity supplied is 20. When price is $6, quantity supplied is 12 units. The price elasticity of supply is:
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223. Price elasticities of supply are always:
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224. If a tripling of price triples the quantity of a good supplied, the price elasticity of supply for this good is:
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| Exhibit 5-8 Supply and demand curves for good X
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225. As shown in Exhibit 5-8, the price elasticity of demand for good X between points E and Z is:
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226. As shown in Exhibit 5-8, the price elasticity of supply for good X between points E and X is:
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227. As shown in Exhibit 5-8, assuming good X is a normal good, a decrease in consumer income, other factors held constant, will move the equilibrium from point E to point:
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228. As shown in Exhibit 5-8, assuming good X is an inferior good, a decrease in consumer income, other factors held constant, will move the equilibrium from point E to point:
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229. As shown in Exhibit 5-8, assuming goods X and Y are substitutes, a decrease in the price of Y, other factors held constant, will move the equilibrium from point E to point:
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230. In Exhibit 5-8, the price elasticity of supply for good X between points Y and E is:
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231. In Exhibit 5-8, the price elasticity of supply for good X between points E and X is:
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232. If the quantity of rental units increases by 10 percent when the monthly rental price doubles, the supply of rental units, other factors held constant, is:
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233. Assume 300 billion pounds of Ostrich meat is produced per year when the price is 50 cents per pound, and 500 billion pounds when the price is 60 cents per pound. The supply of Ostrich meat, other factors held constant, is:
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| Exhibit 5-9 Supply and demand curves for good X
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234. As shown in Exhibit 5-9, the price elasticity of demand for good X between points E and B is:
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235. As shown in Exhibit 5-9, the price elasticity of demand for good X between points E and D is:
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| 236. As shown in Exhibit 5-9, assuming good X is a normal good, an increase in consumer income, other factors held constant, could move the equilibrium from point E to point:
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| 237. As shown in Exhibit 5-9, assuming good X is an inferior good, an increase in consumer income, other factors held constant, could move the equilibrium from point E to point:
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| 238. As shown in Exhibit 5-9, assuming goods X and Y are substitutes, an increase in the price of Y, other factors held constant, could move the equilibrium from point E to point:
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239. In Exhibit 5-9, the price elasticity of supply for good X between points A and E is:
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240. In Exhibit 5-9, the price elasticity of supply for good X between points E and C is:
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241. If the federal government placed a 50 cent per pack excise tax on cigarette manufacturers, and if as a result, the price to consumers of a pack of cigarettes went up by 40 cents, the:
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242. An excise tax levied on a product will impose a smaller relative burden on consumers (and a larger relative burden on sellers) when:
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243. The more elastic the supply of a product, the more the actual burden of a tax on the product will:
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244. The more inelastic the demand for a product, the more the actual burden of a tax on the product will:
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245. Using supply and demand analysis, which of the following is true?
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246. If the government wants to raise tax revenue and shift most of the tax burden to the consumers, it would impose a tax on a good with a:
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247. If the government wants to raise tax revenue and shift most of the tax burden to the sellers it would impose a tax on a good with a:
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248. A law requiring sellers to pay the government a tax per pack on cigarettes has the effect of:
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249. Assuming the demand curve is more elastic (flatter) than the supply curve, which of the following is true?
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250. If the government wants to raise tax revenue and shift most of the tax burden to the sellers, it would impose a tax on a good with a:
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251. If a government tax has as its purpose the raising of revenue, it would be best to place the tax on a product which:
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252. To raise the most tax revenue, governments should consider taxing goods with:
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253. Good A has a price elasticity of demand of .27, while good B has a price elasticity of demand of 2.9. To raise the most tax revenue, the government should:
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254. In the country of Bora Bora, consumers buy large quantities of alcohol, tobacco, and coffee. Last year, the prices of these goods each increased by 10 percent. The quantities demanded for these goods fell by 10, 3, and 8 percent, respectively. If the government is thinking about imposing a unit tax on one of these goods, which good should they choose to tax to raise the most tax revenue, and why?
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255. If an excise tax is placed on a product that has a perfectly inelastic demand, then:
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| 256.
Exhibit 3-10 Supply and demand curves for cigarettes As shown in Exhibit 3-10, assume the government places a $1 per pack sales tax on cigarettes. The percentage of the burden of taxation paid by consumers of a pack of cigarettes is:
|
257. As shown in Exhibit 3-10, assume the government places a $1 per pack sales tax on cigarettes. The percentage of the burden of taxation paid by tobacco sellers is:
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258. As shown in Exhibit 3-10, the $1 per pack tax on cigarettes raises tax revenue per day totaling:
|
| 259. The price elasticity of demand measures consumer responsiveness to a price change.
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| 260. If the price elasticity of demand for a good is elastic, then consumers are relatively unresponsive with respect to the quantity purchased when the price changes.
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| 261. If the price elasticity of demand coefficient equals 2, this means a 10 percent increase in price will result in a 20 percent decrease in the quantity demanded.
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| 262. A horizontal demand curve indicates perfectly elastic demand.
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| 263. If the managers of the bus system found that revenues increase when fares are raised, they would conclude that price elasticity demand for subway service is inelastic.
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| 264. Price elasticity remains constant along a straight-line demand curve.
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| 265. If demand is perfectly inelastic, then the demand curve will be vertical.
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| 266. If a 10 percent price increase causes the quantity demanded for a good to decrease by 20 percent, demand is elastic.
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| 267. If a 10 percent price increase causes the quantity demanded for a good to decrease by 5 percent, demand is elastic.
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| 268. If a 10 percent price increase causes the quantity demanded for a good to decrease by 10 percent, demand is unitary elastic.
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| 269. If the demand curve for a good is elastic, consumers will spend more on that good when its price increases.
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| 270. Suppose an economist found that total revenues increase for the bus system when fares were raised, the conclusion is that the price elasticity demand for subway services over the range of fare increase is inelastic.
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| 271. A horizontal demand curve is perfectly elastic.
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| 272. If a good has a price elasticity of demand coefficient greater than 1, total revenue can be increased by raising the price.
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| 273. Other factors held constant, if there are few close substitutes for a good, demand is more elastic for it.
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| 274. The fewer the substitutes for a good the greater will be the value of the price elasticity of demand coefficient.
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| 275. Goods with few available substitutes tend to have inelastic demand curves.
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| 276. If demand for a good is price elastic, it must also be income elastic.
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| 277. If the income elasticity of demand for a good is negative, the good is an inferior good.
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| 278. If the income elasticity of demand for a good is positive, the good is a normal good.
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| 279. For an inferior good, the income elasticity of demand is negative.
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| 280. In response to a price change for good Y, if the cross-elasticity of demand for good Y is negative, good X and good Y are substitutes.
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| 281. In response to a price change for good Y, if the cross-elasticity of demand for good Y is positive, good X and good Y are complements.
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| 282. If a supply curve has a constant slope throughout its length, it must have a constant price elasticity throughout its length.
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| 283. If the supply of a good is inelastic, a decrease in price must increase total revenue.
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| 284. Applying supply and demand analysis, other factors held constant, the steeper the supply curve (more inelastic), the larger the burden of a sales tax that is borne by the sellers.
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| 285. When the government imposes a tax, sellers raise their price by the full amount of the tax.
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| 286. Supply-demand analysis shows that a tax collected from sellers is always fully shifted to buyers.
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| 287. Applying supply and demand analysis, other factors held constant, the steeper the supply curve (more elastic), the larger the burden of a sales tax that is borne by the sellers.
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288. What does the “price elasticity of demand” measure? What does a price elasticity of demand coefficient of 1.2 mean? Does the product have an elastic, unitary elastic or inelastic demand?
|
289. What happens to total revenue given a price increase and demand is inelastic? Why?
|
1. Which of the following market transactions of final goods and services are excluded from the computation of U.S. GDP?
|
2. Which of the following is added to arrive at GDP?
|
3. Gross domestic product is equal to the market value of all final goods and services:
|
4. Gross domestic product is the sum of the purchase price multiplied by the quantity of:
|
5. Which of the following is true?
|
6. Which one of the following transactions would be included in GDP?
|
7. GDP is a measure of:
|
8. The GDP of a country can be derived by summing the:
|
9. Gross domestic product is officially measured by adding together the:
|
10. Which of the following would be counted as a final good for inclusion in GDP?
|
11. Which of the following items is included in the calculation of GDP?
|
12. Which of the following expenditures would not be included in GDP?
|
13. Payments to households not in exchange for goods and services currently produced are:
|
14. Gross domestic product (GDP) includes:
|
15. Which of the following expenditures would be included in GDP for this year?
|
16. Intermediate goods are goods and services used:
|
17. GDP measures the economy’s production of:
|
18. Which of the following purchases would be counted as a final good in the GDP calculation?
|
19. GDP:
|
20. Gross domestic product (GDP) is defined as:
|
21. Gross domestic product (GDP) does not include:
|
22. Payments to households not in exchange for goods and services currently produced are:
|
23. Personal consumption expenditures include:
|
24. Personal consumption expenditures:
|
25. Gross private domestic investment or simply business investment spending (I):
|
26. Net exports:
|
27. The market value of all final goods and services in an economy produced by resources owned by people of that economy is:
|
28. Activities that are directly included in GDP accounts include:
|
29. Which of the following activities would be calculated as part of GDP accounts?
|
30. The unreported or illegal production of goods and services in the economy that is not counted in GDP is termed:
|
31. GDP includes:
|
32. Consumption spending includes:
|
33. When net exports are negative,
|
34. Depreciation or consumption of fixed capital depreciation measures:
|
35. The largest component of household consumption spending is expenditures on:
|
36. The three components of personal consumption expenditures are:
|
37. Gross private domestic investment includes business:
|
38. Which of the following would be classified as a personal consumption expenditure?
|
39. The largest component of GDP is:
|
40. Gross domestic product is a measure of:
|
41. The portion of the four-sector circular flow model which shows the flow of funds from savers to borrowers is the:
|
42. The circular flow of economic activity is a model of the:
|
43. The lower portion of the circular flow model contains factor markets in which households provide:
|
44. Based on the circular flow model, money flows from households to businesses in:
|
45. Based on the circular flow model, goods and services flow from:
|
46. The circular flow model assumes:
|
47. The circular flow model represents the establishment of market value for:
|
48. The lower portion of the circular flow model contains factor markets in which households provide:
|
49. Economic values that are measured in units per period of time are referred to as:
|
50. In the circular flow model,
|
51. Which one of the following is an example of the circular flow model and shows the interdependence of households and firms?
|
52. Resources that flow through the circular flow model include all of the following except:
|
53. In the circular flow model, money flows from the business sector to the household sector through the:
|
54. Which one of the following statements is true?
|
55. Which one of the following statements is true in the four-sector circular model?
|
56. Which one of the following statements is true?
|
57. Which one of the following statements is true?
|
58. In the four-sector circular flow model, households will use their incomes to do all but which one of the following?
|
| Exhibit 5-1 Use the information below to answer the following question(s).
|
59. Refer to Exhibit 5-1. What is this country’s net exports?
|
60. Refer to Exhibit 5-1. What is this country’s gross domestic product?
|
61. The largest component of GDP as measured by the expenditure approach is:
|
62. Which one of the following would count as investment in the GDP accounts?
|
63. Which of the following would be included in the government expenditures component of GDP?
|
64. Which of the following would count as an investment expenditure in the GDP expenditures approach?
|
65. GDP does count:
|
66. Using the expenditure approach, total spending by households for durable goods, nondurable goods, and services is a category called:
|
67. Using the expenditure approach, “gross private domestic investment” is the sum of:
|
68. All final goods and services that make up GDP can be expressed in the form:
|
69. The expenditure approach to GDP accounting includes:
|
70. The expenditure approach for the calculation of GDP includes spending on:
|
71. Which one of the following is not a component of GDP, as measured using the expenditure approach?
|
72. Durable and nondurable goods and services lumped together in the expenditure approach to measuring GDP are called:
|
73. Your purchase of a Gucci purse made in Italy would be classified as:
|
74. To construct GDP, exports:
|
75. If net exports are a negative number, then:
|
76. Gross private domestic investment does not include:
|
77. New residential housing is counted in GDP as a(n):
|
78. According to the expenditure approach, the largest component of GDP is:
|
79. If you buy a brand new, American-made laptop computer to use for taking notes in your economics class, then it will be counted as:
|
80. If you buy a book of U.S. postage stamps to use to mail love letters to your sweetheart, the purchase is considered part of:
|
81. If you buy a commemorative Princess Diana stamp issued by the British government, the purchase is considered part of:
|
82. If exports rise and imports fall, then:
|
83. Which of the following would not be included in the gross private domestic investment (I) category of GDP?
|
84. Which of the following would not be included in the government consumption expenditures and gross investment (G) category of GDP?
|
85. Using the expenditure approach, GDP equals:
|
Exhibit 5-2 Gross domestic product data
|
86. As shown in Exhibit 5-2, total expenditures by households for domestically produced goods is:
|
87. As shown in Exhibit 5-2, total expenditures by businesses for fixed investment and inventories is:
|
88. As shown in Exhibit 5-2, total spending by government is:
|
89. As shown in Exhibit 5-2, net exports are:
|
90. Using the expenditure approach in Exhibit 5-2, gross domestic product (GDP) is:
|
Exhibit 5-3 Expenditure approach
|
91. As shown in Exhibit 5-3, total expenditures by households for domestically produced goods is:
|
92. As shown in Exhibit 5-3, total expenditures by businesses for fixed investment (capital) and inventories is:
|
93. As shown in Exhibit 5-3, net exports is:
|
94. As shown in Exhibit 5-3, using the expenditure approach, GDP is:
|
95. The Department of Commerce sums the payments made to resources to arrive at GDP in the form of wages, rents, interest, profits, indirect taxes, and depreciation. This method of deriving GDP is called the:
|
96. Using the income approach, the largest component in the calculation of GDP is:
|
97. Using the income approach, the smallest component in the calculation of GDP is:
|
98. Using the income approach, an estimate of the value of capital worn out producing GDP is:
|
99. Using the income approach, an indirect business tax is a(n):
|
100. Taxes collected by businesses and sent to the government are:
|
101. When GDP is measured as the total payments made to households that furnish the resources used to produce the final goods and services, it is known as:
|
102. More than 70 percent of national income can be attributed to:
|
103. Compensation of employees:
|
104. Using the income approach, general sales taxes, excise taxes, customs duties, business property taxes, and license fees are termed:
|
105. To calculate GDP using the income approach, add:
|
106. The income approach to measuring GDP includes:
|
107. Using the income approach, indirect business taxes have to be added to get gross domestic product because the:
|
108. Using the income approach, the largest portion of GDP is:
|
109. According to the income approach, the largest component of national income is:
|
110. Which approach to calculating GDP is computed using compensation of employees, rental income, profits, net interest, indirect business taxes, and depreciation?
|
Exhibit 5-4 Gross domestic product data
|
111. As shown in Exhibit 5-4, using the income approach, gross domestic product (GDP) is:
|
112. As shown in Exhibit 5-4, national income (NI) is:
|
Exhibit 5-5 Gross domestic product data
|
113. As shown in Exhibit 5-5, using the income approach, gross domestic product (GDP) is:
|
114. As shown in Exhibit 5-5, national income (NI) is:
|
115. Which of the following is the most likely side effect of an increase in the relative size of the underground economy with the passage of time?
|
116. GDP overstates the productive capacity of a country when:
|
117. Which of the following is a shortcoming of GDP?
|
118. Which of the following is a shortcoming of GDP?
|
119. Which of the following is a shortcoming of GDP?
|
120. GDP does not count:
|
121. In recent years, people have benefited from greater amounts of leisure time. This trend:
|
122. If the underground economy is sizable, then GDP will:
|
123. Because of transactions which take place in the underground economy, the:
|
124. Because GDP does not account for improvements in the quality of goods, the GDP calculation:
|
125. If a man marries his hired housekeeper, the value of GDP:
|
126. GDP underestimates our economic well-being:
|
127. National income (NI) is calculated by adjusting GDP for:
|
128. National income is calculated as GDP:
|
129. National income is derived from gross domestic product by subtracting:
|
130. National income:
|
131. National income is equal to gross domestic product minus:
|
132. When depreciation is subtracted from:
|
133. The sum of payments made to resource owners for the use of their resources is:
|
134. National income is calculated by subtracting ____ from GDP.
|
135. National income:
|
136. In order to compute national income from GDP,
|
137. The income that people earn in resource or factor markets is called:
|
138. Personal income equals disposable personal income plus:
|
139. Personal income is:
|
140. To get personal income from national income, one must:
|
141. Which of the following is included in personal income but not in national income?
|
142. The income that people receive is called:
|
143. Disposable personal income:
|
144. Personal income minus personal taxes is:
|
145. Income received minus personal taxes is called:
|
146. Which national income account should be examined to discover trends in the after-tax income that people have to save and spend?
|
147. Which of the following statements is true?
|
148. Nominal gross domestic product is based on:
|
149. Gross domestic product that is based on existing prices is called:
|
150. Real GDP means GDP:
|
151. The equation for determining real GDP for year X is:
|
152. Increased production, but not increased inflation, will result in higher:
|
153. In an economy with persistent inflation,
|
154. Which of the following statements is true?
|
155. Why is it important to use real GDP rather than nominal GDP figures when making comparisons of output across time periods?
|
156. In contrast with nominal GDP, real GDP refers to nominal GDP:
|
157. When economists speak of changes in GDP measured in constant dollars, they mean that:
|
158. The GDP chain price index is designed to adjust nominal GDP for changes in:
|
| Exhibit 5-6 Use the table below to answer the following question(s).
|
159. Refer to Exhibit 5-6. Between Year 1 and Year 2, the general level of prices increased by approximately:
|
160. Refer to Exhibit 5-6. Measured in terms of Year 1 prices, real GDP in Year 2 was:
|
161. The most broadly based price index is the:
|
162. In a given year, U.S. nominal GDP was $527 billion and the GDP chain price index for that year is 23.3. Real GDP in 1996 dollars is:
|
163. In 1990, U.S. nominal GDP was $5,744 billion and the GDP chain price index is 93.6. Real GDP is:
|
164. Suppose in a given year, GDP was $7,242 billion and the GDP chain price index for that year is 117.5. Real GDP is:
|
165. In a given year, U.S. nominal GDP was $2,784 billion and the GDP chain price index for that year is 60.4. Real GDP is:
|
Exhibit 5-7 GDP data (billions of dollars)
|
166. In Exhibit 5-7, and using the expenditures approach, gross domestic product (GDP) is:
|
167. In Exhibit 5-7, national income (NI) is:
|
168. In Exhibit 5-7, personal income (PI) is:
|
169. In Exhibit 5-7, disposable personal income (DI) is:
|
Exhibit 5-8 GDP data (billions of dollars)
|
170. In Exhibit 5-8, and using the expenditures approach, gross domestic product (GDP) equals:
|
171. In Exhibit 5-8, personal income (PI) equals:
|
172. In Exhibit 5-8, disposable personal income (PI) is:
|
173. In Exhibit 5-8, national income (NI) equals:
|
Exhibit 5-9 GDP data (billions of dollars)
|
174. In Exhibit 5-9, and using the expenditures approach, gross domestic product (GDP) equals:
|
175. In Exhibit 5-9, national income (NI) equals:
|
176. In Exhibit 5-9, personal income (PI) equals:
|
177. In Exhibit 5-9, personal disposable personal income (DI) equals:
|
Exhibit 5-10 GDP data (billions of dollars)
|
178. In Exhibit 5-10, and using the expenditures approach, compute gross domestic product (GDP). Which of the following is correct?
|
179. In Exhibit 5-10, and using the expenditures approach, compute personal consumption expenditures. Which of the following is correct?
|
180. In Exhibit 5-10, using the expenditure approach, compute business investment spending (I). Which of the following is correct?
|
181. In Exhibit 5-10, and using the expenditures approach, compute net exports (NX). Which of the following is correct?
|
182. In Exhibit 5-10, compute national income (NI). Which of the following is correct?
|
183. In Exhibit 5-10, compute personal income (PI). Which of the following is correct?
|
184. In Exhibit 5-10, compute disposable personal income (DI). Which of the following is correct?
|
Exhibit 5-11 GDP data (billions of dollars)
|
185. In Exhibit 5-11, and using the expenditures approach, gross domestic product (GDP) equals:
|
186. In Exhibit 5-11, national income (NI) equals:
|
187. In Exhibit 5-11, personal income (PI) is:
|
188. In Exhibit 5-11, disposable personal income (DI) equals:
|
189. Intermediate goods are included and final goods are not included in calculating gross domestic product.
|
190. Fixed investment refers to investment in stocks, bonds, and improvements to land.
|
191. Capital goods, like factories and machinery, are classified as intermediate goods.
|
192. The government (G) category of gross domestic product (GDP) excludes welfare and other transfer payments.
|
193. Gross domestic product is the total dollar value at current prices of all final and intermediate goods produced by a nation during a given time period.
|
194. The circular flow model illustrates that aggregate spending in the product markets equals 70 percent of aggregate income earned in the factor markets.
|
195. Personal consumption expenditures are the largest component of GDP.
|
196. Net exports equal imports minus exports.
|
197. Personal consumption expenditures is the smallest component of total spending.
|
198. The expenditure approach measures GDP by adding the spending of households, businesses, government, and foreigners.
|
199. Compensation of employees is the largest component of GDP using the income approach.
|
200. Gross domestic product (GDP) is a satisfactory measure of both economic “goods” and “bads”.
|
201. The value of child-rearing and other household production are not included in GDP.
|
202. GDP provides substantial information about an economy’s income distribution.
|
203. National income (NI) is the total income earned by resource owners, including wages, rents, interest, and profits.
|
204. Social Security payments are included in personal income.
|
205. Disposable personal income measures the after-tax income received by households.
|
206. Personal income minus personal taxes equals disposable personal income.
|
207. Nominal gross domestic product is based on the existing prices at which final goods are actually sold.
|
208. In any year, nominal GDP divided by the GDP chain price index times 100 equals real GDP.
|
209. Real GDP, as opposed to money (nominal) GDP, has been adjusted for changes in the general level of prices.
|
210. Nominal values are values measured in terms of the prices at which goods and services are actually sold.
|
211. All changes in nominal GDP are due to price changes.
|
212. If the GDP chain price index in a given year is less than 100, real GDP in that year would be greater than nominal GDP.
|
213. A GDP price chain price index number of 120.0 for a given year indicates that prices in that year are 20 percent higher than prices in the base year.
|
214. If the GDP chain price index in a given year is greater than 100, real GDP in that year would be greater than nominal GDP.
|
215. Nominal GDP is greater than GDP because of the effects of inflation as measured by the GDP chain price index.
|
216. In any year, nominal GDP divided by the GDP chain price index equals real GDP.
|
217. Discuss the components of GDP using the expenditure approach.
|
218. Explain why GDP was never intended to be a measure of social well being.
|
219. Discuss how economists calculate NI, PI and DI.
|
220. Why is it important to distinguish nominal GDP from real GDP?
|
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
