If the price of orange juice rises 10%, and as a result the quantity demanded falls by 10%, then one can conclude that the demand for orange juice A) is perfectly elastic. B) is inelastic. C) has a unitary elasticity. D) has a constant elasticity. ANSWER C
Date: September 9th, 2020
The current price floor in the agricultural lettuce market makes it such that the price of lettuce is 25% higher than the equilibrium price and that 100 heads of lettuce are demanded. Assuming that the elasticity of demand for lettuce is -0.50, how much would revenue (P Q) change for the lettuce company if […]
Date: September 9th, 2020
The number of vehicle types available in the United States has increased dramatically over the past thirty years. Everything else equal, this would make A) the demand for individual vehicle types to become less elastic. B) the demand for individual vehicle types to become more elastic. C) the demand for all vehicle types to become […]
Date: September 9th, 2020
How will a decrease in price affect a firm’s revenues? A) It depends on the price elasticity of demand. B) Revenues will stay the same. C) Revenues will decrease. D) Revenues will increase. ANSWER A
Date: September 9th, 2020
The market demand for wheat is Q = 100 – 2p + 1pb + 2Y. If the price of wheat, p, is $2, and the price of barley, pb, is $3, and income, Y, is $1000, the income elasticity of wheat A) is 2 (1000/2099). B) is 2. C) is 1/2 (1000/2099). D) […]
Date: September 9th, 2020
On a linear demand curve, the lower the price, A) the less elastic is demand. B) the more elastic is demand. C) the elasticity equals -1. D) the elasticity equals zero. ANSWER A
Date: September 9th, 2020
The elasticity of demand for employees is -0.50. It is also estimated that the existing minimum wage (price floor) has increased the raise the wage by 25% above equilibrium wage. How much would the employment change if the price floor was eliminated? A) Employment would decrease by 12.5%. B) Employment would increase by 12.5%. C) […]
Date: September 9th, 2020
A horizontal demand curve for a good could arise because consumers A) are irrational. B) are not sensitive to price changes. C) view this good as identical to another good. D) have no equivalent substitutes for this good. ANSWER C
Date: September 9th, 2020
Suppose the demand function for a good is expressed as Q = 100 – 4p. If the good currently sells for $10, then the price elasticity of demand equals A) -1.5. B) -0.67. C) -4. D) -2.5. ANSWER B
Date: September 9th, 2020
If the demand function for orange juice is expressed as Q = 2000 – 500p, where Q is quantity in gallons and p is price per gallon measured in dollars, then the demand for orange juice has a unitary elasticity when price equals A) $0. B) $1. C) $2. D) $4. ANSWER C
Date: September 9th, 2020
