1- The demand for hamburger buns is known to be elastic. This means that if the price of the product increases,
a) total revenue will rise.
b) total revenue will stay the same.
c) the quantity demanded will rise.
d) total revenue will fall.

2- Which product will have the most elastic demand curve?
a) Thread
b) Heating oil
c) A new automobile
d) Cigarettes

3- Which of the following characteristics would describe a product with an inelastic demand?

a) The good is considered a necessity and many substitutes for the product exist.
b) The good is considered a necessity and few substitutes for the product exist.
c) The good is considered a luxury and many substitutes for the product exist.
d) The good is considered a luxury and few substitutes for the product exist.

4- If the own price elasticity of demand for tongue depressors is 0.5,

a) a 10% rise in the price of tongue depressors will lower quantity demanded by 50%.
b) an increase in the price of tongue depressors will lower total revenue for sellers.
c) a 10% increase in the price of tongue depressors will not change its total revenue.
d) a 10% fall in the price of tongue depressors will raise quantity demanded by 5%.

5- When demand is inelastic

a) the percentage change in quantity demanded is less than the percentage change in price.
b) the buyer is insensitive to price changes.
c) the elasticity coefficient is greater than zero, but less than one.
d) all of these statement statements are true.

6- If price were lowered from $10 to $8 and quantity demanded rose from 50 to 51, demand is
a) elastic.
b) unit elastic.
c) inelastic.
d) upward sloping.

7- In general, the more unique an advertiser can make a product seem to the buyer

a) the more elastic the demand for the good.
b) the more inelastic the demand for the good.
c) the more sensitive the buyer is to the price of the good.
d) the less demand for the good.

8- How much is the above tax?

a) $6.00
b) $4.50
c) d$3.00
d) $1.50
e) $0
f) $2.00

9- The most important determinant of the degree of elasticity of demand is

a) whether the item is a big ticket item.
b) whether the item is a luxury or not.
c) how many uses the product has.
d) the availability of substitutes.

10- If a 1 percent change in price leads to a 0.5 percent change in quantity demanded, then own price elasticity of demand is

a) 0.5.
b) 1.0.
c) 1.5.
d) 5.

11- If demand is inelastic and price is lowered, total revenue will

a) rise.
b) fall.
c) stay the same.
d) possibly rise or possibly fall.

12- Demand is elastic when

a) percentage change in price is greater than percentage change in quantity.
b) percentage change in quantity is greater than percentage change in price.
c) the demand curve is vertical.
d) total revenue rises when price is raised.

13- If consumers are price sensitive, then

a) they will have elastic demand curves.
b) they will have inelastic demand curves.
c) they will have no demand curve.
d) they will not shop around very much.
e) they likely perceive no close substitutes.

14- If more substitutes become available demand tends to become _ elastic and over time demand tends to become _ elastic.

a) more, more
b) less, less
c) more, less
d) less, more

15- The demand for heroin addicts among users is known to be almost perfectly inelastic. This means that if the price of heroin increases

a) total revenue for drug dealers will rise.
b) total revenue for drug dealers will stay the same.
c) total revenue for drug dealers will fall.

16- In general taxes on goods and services

a) are borne mainly by consumers.
b) are borne mainly by sellers.
c) are borne equally by consumers and sellers.
d) may be paid mainly or entirely by buyers or it may be paid mainly or entirely by sellers, or may be paid equally by buyers and sellers.
17- If total revenue declines when price is lowered, demand

a) must be inelastic.
b) may be inelastic.
c) must be elastic.
d) may be elastic.

18- If the own price elasticity of demand is zero for all prices, the demand curve is

a) horizontal.
b) vertical.
c) neither horizontal nor vertical.
19-Cross price elasticity is defined as the ____.
a) percentage change in price of a one good (A), divided by the percentage change in the quantity demanded of a related good (B)
b) percentage change in quantity demanded for one good (A), divided by the percentage change in the price of a related good (B)
c) dpercentage change in quantity demanded for one good (A), divided by the percentage change in the price of that good (A)
d) change in quantity demanded for one good (A), divided by the change in the price of a related good (B)

20- You and your college roommate eat three packages of Ramen noodles each week. After graduation, last month, both of you were hired at several times your college income. You still enjoy Ramen noodles very much and buy even more, but your roommate plans to buy fewer Ramen noodles in favor of foods she prefers more. When looking at the income elasticity of demand for Ramen noodles, yours would
a) be negative, and your roommates would be positive.
b) be positive, and your roommate’s would be negative.
c)be zero, and your roommates would approach infinity.
d)approach infinity, and your roommates would be zero.

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