ECON 201 Quiz 3
Name:
1. A group of buyers and sellers of a particular good or service is called a(n)
a. coalition.
b. economy.
c. market.
d. competition.
2. In a competitive market, the price of a product
a. is determined by buyers, and the quantity of the product produced is determined by sellers.
b. is determined by sellers, and the quantity of the product produced is determined by buyers.
c. and the quantity of the product produced are both determined by sellers.
d. None of the above is correct.
3. The following table contains a demand schedule for a good.
Price Quantity Demanded
$10 100
$20 Q1
If the law of demand applies to this good, then Q1 could be
a. 0.
b. 100.
c. 200.
d. 400.
4. Another term for equilibrium price is
a. dynamic price.
b. market-clearing price.
c. quantity-defining price.
d. balance price.
5. If the supply of a product decreases, then we would expect equilibrium price
a. to increase and equilibrium quantity to decrease.
b. to decrease and equilibrium quantity to increase.
c. and equilibrium quantity to both increase.
d. and equilibrium quantity to both decrease.
6. In general, elasticity is a measure of
a. the extent to which advances in technology are adopted by producers.
b. the extent to which a market is competitive.
c. how firms’ profits respond to changes in market prices.
d. how much buyers and sellers respond to changes in market conditions.
7. When consumers face rising gasoline prices, they typically
a. reduce their quantity demanded more in the long run than in the short run.
b. reduce their quantity demanded more in the short run than in the long run.
c. do not reduce their quantity demanded in the short run or the long run.
d. increase their quantity demanded in the short run but reduce their quantity demanded in the long
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8. Demand is said to be inelastic if the
a. quantity demanded changes proportionately more than price.
b. price changes proportionately more than income.
c. quantity demanded changes proportionately less than price.
d. quantity demanded changes proportionately the same as price.
9. Which of the following is likely to have the most price inelastic demand?
a. mint-flavored toothpaste
b. toothpaste
c. Colgate mint-flavored toothpaste
d. a generic mint-flavored toothpaste
10. Suppose the price of a bag of frozen chicken nuggets decreases from $6.50 to $5.75 and, as a result, the
quantity of bags demanded increases from 600 to 800. Using the midpoint method, the price elasticity of
demand for frozen chicken nuggets in the given price range is
a. 0.35.
b. 0.43.
c. 2.33.
d. 2.89.
11. When the price of an eBook is $15.00, the quantity demanded is 400 eBooks per day. When the price falls
to $10.00, the quantity demanded increases to 700. Given this information and using the midpoint method,
we know that the demand for eBooks is
a. inelastic.
b. elastic.
c. unit elastic.
d. perfectly inelastic.
12.
Go Price Elasticity of Demand
Ao 1.9
d
B 0.8
Which of the following is consistent with the elasticities given in Table above?
A is a luxury and B is a necessity.
A is a good after an increase in income and B is that same good after a decrease in income.
A has fewer substitutes than B.
A is a good immediately after a price increase and B is that same good 3 years after the price increase.
13 A key determinant of the price elasticity of supply is
a. the ability of sellers to change the price of the good they produce.
b. the ability of sellers to change the amount of the good they produce.
c. how responsive buyers are to changes in sellers' prices.
d. the slope of the demand curve.
14. The supply of a good will be more elastic, the
a. more the good is considered a luxury.
b. broader is the definition of the market for the good.
c. larger the number of close substitutes for the good.
d. longer the time period being considered.
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15. If the price elasticity of supply is 0.4, and a price increase led to a 5% increase in quantity supplied, then
the price increase is about
a. 0.25%.
b. 1.2%.
c. 2%.
d. 12.5%.
16. Jan heads to the store to buy burgers for dinner. Seeing a sale on hot dogs, she buys those instead. The
change in her demand for burgers is due to which factor?
A. Preferences
B. Income
C. Prices of related goods
D. Number of buyers
17. The supply schedule assumes that:
A. factors other than price remain the same.
B. factors other than price must change.
C. factors other than supply remain the same.
D. factors other than supply must change.
18. The supply curve is a __________ line that reflects the _______ relationship between price and quantity
supplied.
A. downward-sloping; inverse
B. upward-sloping; inverse
C. downward-sloping; direct
D. upward-sloping; direct
19. The price of chocolate chips has increased. For the producers of chocolate chip cookies, this means:
A. they can supply more at each price because some of the competition will drop out.
B. they can supply less at each price because the price of a main input has gone up.
C. they can supply more at each price because the price of a main input has gone up.
D. None of these statements is true.
20. According to the graph shown, at a price of $5, there is a:
A. shortage of 10.
B. shortage of 20.
C. shortage of 30.
D. surplus of 20.