2. If Portuguese wines are an inferior good, then higher incomes will cause: (Points : 2) an increase in the demand for Portuguese wines. a decrease in the demand for Portuguese wines. an increase in the quantity demanded for Portuguese wines. a decrease in the quantity demanded for Portuguese wines.3. Which of the following would be expected to cause the supply of wool to decrease? (Points : 2) a decrease in the price of wool. an increase in the number of wool producers. an increase in the cost of raising sheep. a decrease in wages paid to workers in the wool industry.4. When marginal utility is negative, total utility is: (Points : 2) increasing. negative. zero. decreasing.6. When the ratios of the marginal utility to the price of goods are equal, you're maximizing utility. (Points : 2) True False 8. According to the principle of rational choice, a consumer should spend money on those goods that give the most marginal utility per dollar. (Points : 2) True False 9. A marketing student observes that when the price of ice cream rises by 10%, the quantity of ice cream a supplier is willing to sells rises by 5%. The student correctly concludes that the elasticity of supply for ice cream is: (Points : 2) .2. .5. 2. 5.10. If pizzas and quesadillas are substitutes, and the price of pizzas increases, then we would expect to see: (Points : 2) an increase in the demand for quesadillas. a decrease in the demand for quesadillas. an increase in the quantity demanded for quesadillas but no change in demand. a decrease in the quantity demanded for quesadillas but no change in demand.11. Susan's price elasticity of restaurant meals is 2.27. If the price of a restaurant meal falls by 2% then the quantity of restaurant meals Susan demands will: (Points : 2) increase by 2.27%. fall by 2.27%. increase by 4.54%. increase by 22.7%.12. As the price of beachfront cottages in Florida was raised from $400,000 to $500,000, their quantity supplied rose from 2000 to 2100. The elasticity of supply of beach front cottages is: (Points : 2) 0.4. 0.2. 1.0. 4.6.13. A decrease in the price of an input for a good will shift the supply curve for that good to the left. (Points : 2) True False 14. In 1997, the Federal government reinstated a 10% excise tax on airline tickets. The industry tried to pass on the full 10% ticket tax to consumers but was only able to boost fares by 4%. From this you can conclude that the: (Points : 2) demand for airline tickets is perfectly inelastic. supply of airline tickets is perfectly inelastic. demand elasticity for airline tickets is greater than zero in absolute value. supply elasticity of airline tickets is less than infinity.15. Tickets to the Super Bowl game are generally sold out well in advance of game day. The original ticket price is the regulated price that you could legally buy a ticket at. This shortage of tickets implies that: (Points : 2) the original ticket price is set above equilibrium. the original ticket price is set below equilibrium. a price floor is set on Super Bowl tickets. the law of demand does not apply to Super Bowl tickets.16. A price floor causes excess demand, resulting in the need to ration by some means other than price. (Points : 2) True False 17. A price ceiling is in essence an implicit tax on producers and an implicit subsidy to consumers. (Points : 2) True False 18. Suppose that when you consume the third piece of chicken, total utility rises from 420 to 520. Marginal utility for the third piece of chicken is: (Points : 2) 520. 420. 140. 100.19. The price of a McDonald's dinner is $5; the price of a Burger King dinner is $5. The marginal utility you would get from the next McDonald's dinner is 15; the marginal utility you would get from the next Burger King dinner is 20. You should: (Points : 2) consume more McDonald's Dinners. consume more Burger King dinners. don't consume either Burger King or McDonald's dinners. realize you cannot make a rational decision.20. Suppose that the total utility of consuming the first piece of chewing gum in a packet is 30. This means that marginal utility of consuming the first piece of gum is: (Points : 2) zero. less than 30. 30. more than 30.21. When quantity demanded is greater than quantity supplied, the resulting shortage causes the price to fall. (Points : 2) True False 22. The area underneath the demand curve and above the price the consumer has to pay for a product is referred to as: (Points : 2) market surplus. market shortage. consumer surplus. producer surplus.23. Given the same price elasticity of supply, sellers would be able to pass along the largest portion of a 10% tax on which item? (Points : 2) Beef with a price elasticity of demand of .62 Pork with a price elasticity of demand of .73 Chicken with a price elasticity of demand of .32 Fish with a price elasticity of demand of .1224. The cross-price elasticity of demand is the percentage change in price divided by the percentage change in price of another good. (Points : 2) True False 25. If the supply curve and the demand curve for lettuce both shift to the left by an equal amount, what can we say about the resulting changes in equilibrium price and quantity? (Points : 2) The price will increase, but the quantity may increase or decrease. The price will increase, and the quantity will increase. The price will decrease, and the quantity will increase. The price will stay the same, but the quantity will decrease.27. The law of supply states that, other things constant, there is: (Points : 2) an inverse relation between price and the quantity supplied. an inverse relation between price and supply. a direct relation between price and the quantity supplied. a direct relation between price and supply.28. According to the law of demand an increase in the price of gasoline will: (Points : 2) increase the quantity demanded of gasoline, other things constant. decrease the quantity demanded of gasoline, other things constant. increase the demand for gasoline. decrease the demand for gasoline.29. The law of demand states that the quantity demanded of a good is inversely related to the price of that good. Therefore, as the price of a good goes: (Points : 2) up, the quantity demanded also goes up. up, the quantity demanded goes down. down, the quantity demanded goes down. down, the quantity demanded stays the same.30. A per unit tax on coffee paid by the seller causes the: (Points : 2) supply of coffee curve to shift upward by the amount of the per unit tax. supply of coffee curve to shift downward by the amount of the per unit tax. demand for coffee curve to shift upward by the amount of the per unit tax. demand for coffee curve to shift downward by the amount of the per unit tax.32. Effective rent controls: (Points : 2) are examples of price floors. cause the quantity of rental occupied housing demanded to exceed the quantity supplied. create a greater amount of higher quality housing to be made available to renters. create a surplus of rental occupied housing.33. The problems created by price controls become greatest as time goes by when: (Points : 2) supply becomes more inelastic and demand becomes more elastic. demand becomes more elastic and supply becomes more inelastic. demand and supply become more elastic. demand and supply become more inelastic.34. An increase in price and an indeterminate change in quantity are consistent with a: (Points : 2) leftward shift in demand and no shift in supply. leftward shift in supply and no shift in demand. rightward shift in supply and a leftward shift in demand. leftward shift in supply and a rightward shift in demand.35. Which statement is inconsistent with the law of supply? (Points : 2) More of a good will be supplied, the higher the price, other things constant. Less of a good will be supplied, the lower the price, other things constant. Quantity supplied of a good is directly related to the good's price. Quantity supplied of a good is inversely related to the good's price.36. A demand curve is downward-sloping because as the price of a good falls, demanders will substitute some other good in place of that good whose price has fallen. (Points : 2) True False 38. If total utility went from 36 to 44, then marginal utility must be? (Points : 2) 6 8 50 4439. Suppose the demand for margarine increases from 800 to 1000 pounds when income falls from $40,000 to 30,000. Income elasticity is: (Points : 2) 0.02. 50. -0.77. 0.10.40. When workers are paid higher wages, production costs: (Points : 2) rise, supply shifts leftward, and product prices fall. fall, supply shifts rightward, and product prices fall. rise, supply shifts leftward, and product prices rise. rise, supply shifts rightward, and product prices rise.41. If quantity demanded does not change when the price changes, the demand: (Points : 2) is elastic. is inelastic. has unit elasticity. is perfectly inelastic.42. If an economist observed that higher hotdog prices lead to a decrease in the demand for chili, she would most likely conclude: (Points : 2) chili and hotdogs are complements. chili and hotdogs are substitutes. chili and hotdogs are both inferior goods chili and hotdogs are both normal goods.43. If the elasticity of demand for restaurant meals is 2.27, the demand for restaurant meals is: (Points : 2) elastic. inelastic. unitary elastic. perfectly inelastic.44. If good A is a normal good, an increase in income will: (Points : 2) shift the demand curve for good A leftward. shift the demand curve for good A rightward. not affect the demand for good A. result in a surplus of good A.45. The demand for a good is price inelastic. Which of the following would be the most likely explanation for this? (Points : 2) The good is narrowly defined. The good is broadly defined. The good is a large portion of one's total income. The time interval considered is long.46. Those with more inelastic demands will bear a larger burden of a tax because they: (Points : 2) have more buying power. have more income. will switch to other products with a higher tax. have fewer substitutes for that good.48. George Davis and Michael Wohlgenant estimate that for every 1 percent increase in the price of Christmas trees, quantity demanded falls by 0.6%. The demand for Christmas trees is: (Points : 2) inelastic. elastic. perfectly inelastic. unitary elastic.49. When demand is perfectly inelastic, there is no change in quantity demanded following a change in price. (Points : 2) True False 50. If government were to issue a fixed number of licenses (as what happened with taxi cab medallions), this would likely: (Points : 2) lower the price of the good or service to consumers. lower the wage/profits received by those who have licenses. increase the wage/profits received by those who have licenses. increase the demand for the good or service to consumers.
This question was answered on: May 23, 2022
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