When calculating the price elasticity of demand, which of the following conditions must be satisfied? A) All other factors that influence demand must be held constant. B) Prices of related goods must be held constant but all other factors must be allowed to vary. C) Prices of related goods must be allowed to vary but […]
Assume the demand for a good is price inelastic, i.e., ed < 1 (in absolute value). This means that if price decreases by 50 percent, quantity demanded will: A) increase by more than 50 percent. B) decrease by more than 50 percent. C) increase by less than 50 percent. D) decrease by less than 50 […]
According to the text, the price elasticity of demand for oranges has been estimated to be -0.62. This implies that a doubling of the price of oranges would cause the quantity demanded of oranges to: A) increase by 6.2 percent. B) decrease by 6.2 percent. C) increase by 62 percent. D) decrease by 62 percent. […]
The market structure that is characterized by a small number of large firms that have some market power is called: A) perfect competition. B) monopolistic competition. C) oligopoly. D) monopoly. ANSWER C
According to the text, the price elasticity of demand for bath tissue has been estimated to be -2.42. This implies that a 10 percent decrease in the price of bath tissue would cause the quantity demanded of bath tissue to: A) increase by 2.4 percent. B) decrease by 2.4 percent. C) increase by 24.2 percent. […]
Which of the following market structures is most similar to perfect competition? A) Monopsony. B) Monopolistic competition. C) Oligopoly. D) Monopoly. ANSWER B
A strong Japanese yen: A) induced Japanese auto manufacturers to increase their production of cars in Japan. B) induced Japanese auto manufacturers to shift their production of cars to the U.S. C) made Japanese exports more price competitive globally. D) had no meaningful impact on Japanese auto manufacturers. ANSWER B
The key characteristic of an oligopolistic market is: A) production of a homogeneous product. B) mutual interdependence among firms in the market. C) the absence of market power by any one firm. D) ease of entry into, and exit out of, the market. ANSWER B
Which of the following would be considered an example of a macroeconomic problem? A) Should Microsoft reduce the price of its Windows operating system? B) Should the federal government extend the eligibility period for unemployment benefits? C) Should Mitsubishi eliminate one of its production shifts? D) Should JP Morgan Chase increase the interest rate it […]
Information on the price elasticity of demand is particularly important to managerial decision making because: A) the higher the price elasticity of demand for a product is, the more profitable it will be to produce more of it. B) depending on the elasticity coefficient, decision makers will immediately know if a price change will cause […]
