04 Jun 11. Three points on a demand curve can be d
Question
11. Three points on a demand curve can be derived from the price consumption curve drawn perpendicular to the X-axis, as shown in the adjoining graph. From this graph, we can see that a. the demand for X is unit elastic. b. the demand for Y is unit elastic. c. the demand for X is infinitely elastic. d. the demand for Y is infinitely elastic. e. the demand for X is completely inelastic.
12. Three points on a demand curve can be derived from the price consumption curve drawn parallel to the X- axis, as shown in the adjoining graph. From this graph, we can see that a. the demand for Y is unit elastic. b. the demand for X is unit elastic. c. the demand for Y is infinitely elastic. d. the demand for X is infinitely elastic. e. the demand for Y is completely inelastic.
ECON 3070 Intermediate Microeconomic Theory: Practice Multiple-Choice Questions 14
13. If the demand for gasoline is relatively but not completely price inelastic, then it follows that a. people would be willing to pay any price to drive. b. a decrease in the price of gasoline would increase the supply of gasoline. c. a decrease in the price of gasoline would reduce the total amount spent on gasoline. d. gasoline consumption could not be cut without rationing. e. an increase in the price of gasoline would not cause the quantity demanded of gasoline to fall.
14. The most important determinant of price elasticity is a. the slope of the demand curve. b. the availability of substitutes. c. the price of other goods. d. the income of the consumer. e. the price of complements.
15. If consumers spend $15 million a month on CDs, regardless of whether the price they pay goes up or down, that implies that their price elasticity of demand for CDs is a. 0. b. 1. c. infinite. d. 15. e. cannot be determined.
16. Which of the following will not be a determinant of the price elasticity of demand for a commodity? a. The absence of substitute for the good. b. The presence of substitutes for the good. c. The importance of the commodity in consumers’’ budgets. d. The length of time period to which the demand curve pertains. e. The cost of producing the commodity.
17. In 1976, a frost in Brazil killed over 500 million coffee trees and damaged many more. A civil war in Angola, a major supplier of coffee, cut back its crop. And, an earthquake in Guatemala disrupted the flow of coffee. In spite of these calamities, these three producers reported an increase in export earnings. On the basis of this information, which of the following must be true? a. The demand for coffee is price elastic. b. The supply of coffee is price elastic. c. The demand for coffee is price inelastic. d. The supply of coffee is price inelastic. e. The demand for coffee is unit elastic.
18. If the demand for emeralds is elastic, then a. emeralds will have a high price. b. a reduction in price will lead to an increase in the expenditure on emeralds. c. the slope of the demand curve for emeralds must be greater than one. d. a price reduction will not appreciably affect sales. e. the slope of the price consumption curve for emeralds must be greater than one.
19. The market demand for a product is found by a. horizontally summing the individual demand curves. b. vertically summing the individual demand curves. c. both horizontally and vertically summing the individual demand curves. d. none of the above.
20. The price elasticity of demand will increase with the length of the period to which the demand curve pertains because a. consumers’ incomes will increase. b. the demand curve will shift outward. c. all prices will increase over time. d. consumers will be better able to find substitutes. e. firms will be better able to produce the good for less.
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