6. If the demand for a good is estimated to be _____, then firms producing the g
ID: 1215498 • Letter: 6
Question
6. If the demand for a good is estimated to be _____, then firms producing the good will experience an increase in total revenue if prices fall.
A) .05
B) .75
C) 1
D) 2.5
7. When the demand curve for a good is unit elastic, raising the price of the good by 25 percent will change the revenue of the firm by:
A) 125 percent.
B) 100 percent.
C) 25 percent.
D) 0 percent.
8. Which one of the following products would tend to have inelastic demand?
A.) luxury sedans
B.) candy
C.) crude oil
D.) Black Angus T-bone steak
9. If the price of Good Y falls from $10 to $8, and the quantirty demanded of it rises from 1,000 to 1,200 units, the price elasticity of damand expressed in absolute value is:
A.) 1.00.
B.) 0.20.
C.) 0.82.
D.) 1.22.
10. If the demand for currenetly illegal recreational drugs is highly inelastic and these drugs became legal, prices would fall. An economist would expect which of the following to happen in response to the lower prices?
A.) Total spending on drugs would rise.
B.) No one would follow the laws of economics anymore.
C.) Many more people would become drug users
D.) Not many more people would become drug users.
11. The elasticity of demand for a good is -0.75. A 4 percent increase in price will cause a:
A.) 3 percent decrease in quantity demanded.
B.) 5.33 percent increase in quantity demanded.
C.) 5.33 percent decrease in quantity demanded.
D.) 0.19 percent decrease in quantity demanded.
12. Because of aging requirements it takes many years to make good Scotch. If a technology were invented that made it possible to create good Scotch literallt overnight how would the short-run supply of good Scotch change?
A.) It would become more elastic.
B.) It would become less elastice.
C.) Its elasticity would remain the same.
D.) It is impossible to say anything about the change.
Explanation / Answer
6. If the demand for a good is estimated to be _____, then firms producing the good will experience an increase in total revenue if prices fall.
D. 2.5.
7. When the demand curve for a good is unit elastic, raising the price of the good by 25 percent will change the revenue of the firm by
C. 25 percent.
8. Which one of the following products would tend to have inelastic demand?
C. crude oil.
9. If the price of Good Y falls from $10 to $8, and the quantity demanded of it rises from 1,000 to 1,200 units, the price elasticity of demand expressed in absolute value is:
A. 1.00.
10. If the demand for currently illegal recreational drugs is highly inelastic and these drugs became legal, prices would fall. An economist would expect which of the following to happen in response to the lower prices?
C) Many more people would become drug users.
11. The elasticity of demand for a good is -0.75. A 4 percent increase in price will cause a:
A.) 3 percent decrease in quantity demanded.
12. 12. Because of aging requirements it takes many years to make good Scotch. If a technology were invented that made it possible to create good Scotch literally overnight how would the short-run supply of good Scotch change?
A.) It would become more elastic.
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