Elasticity MCQs and Key Concepts môn Kinh tế vi mô | Trường Đại học Kinh Tế Quốc Dân

ELASTICTY Multiple Choice M2
Typically, what main economic factor(s) affect demand?
a. Price is the overriding factor.
b. Advertising is the overriding factor.
c. Demographic and population shifts. d.
Multiple factors including price and income. e.
Primarily growth in consumer income. M3
If the price of a substitute good increases significantly, demand for the competing good will a. Increase b. Remain unchanged. c. Decrease
d. Increase or decrease, depending on the difference between the two prices.
e. The effect is uncertain. It depends on the price elasticity of demand. M4
When the price of smart phones decreases, the demand for data plans will a. Increase. b. Remain unchanged. c. Decrease.
d. Increase or decrease, depending on the difference between the two prices.
e. The effect is uncertain. It depends on the price elasticity of demand. M5
Which of the following is the best description of a normal good?
a. An increase in income lowers the price of the product.
b. An increase in the price of a rival good increases its demand.
c. An increase in income increases its unit sales.
d. A decrease in income spurs greater advertising on the good.
e. A decrease in price raises its unit sales. M6
Which of the following pairs of goods are complements? a. Hot dogs and hamburgers. b. Coffee and tea. c. Coffee and soft drinks.
d. Airline seats and train seats. e. Coffee and sugar. M7
A good’s price is $15 and its sales are 400 units. When the price is increased to $18, sales
fall to 350 units. The point elasticity at P = $15 is a. -1.25. b. -1.00. c. -.625. d. -.50. e. -.22. M8
A good’s demand is given by: Q = 500 - 50P. At P = $5, the point price elasticity is a. -8.0 b. -5.0 c. -1.5 d. -1.0 e. -.5 M9
Suppose that the current price for a good is $20 and quantity sold is 400 units. If the price
elasticity is -2.5, and price is raised to $21, what is the new quantity sold? a. 360 b. 300 c. 280 d. 350 e. 450
M10 Which of the following best describes the meaning of “inelastic demand”?
a. Demand is relatively unresponsive to price.
b. Demand is completely unresponsive to price.
c. Demand is fairly responsive to price.
d. Demand is highly responsive to price.
e. The percentage change in quantity is equal (and opposite) to the percentage change in price.
M11 In which case is demand likely to be more elastic, the long run or the short run?
a. The long run, because there are fewer chances to find substitutes.
b. The short run, because buyers are able to adjust quickly to changes.
c. The long run, because buyers can find more numerous substitutes.
d. The short run, because in the long run there are fewer substitutes
e. The long run because income increases will tend to outweigh price changes.
M12 If the cross price elasticity between two goods is -2.5, how are the two goods related?
a. The goods are strong substitutes. b. The goods are unrelated.
c. The goods are strong complements.
d. The goods are weak substitutes.
e. The goods are weak complements.
M13 For a particular good, EP = -2 and EY = 1.5. If price increases by 15% and income
increases by 5%, the predicted change in unit sales is a. -30%. b. -22.5%. c. -7.5%. d. 0%. e. 7.5%.
M14 If the price of a good is in the inelastic range and the firm raises price,
a. Quantity will be unchanged and revenue will increase.
b. Quantity will fall just enough to leave revenue unchanged.
c. Quantity will fall, but revenue will increase.
d. Quantity will fall, but the revenue change cannot be determined without more information.
e. None of the above answers is correct.
Short Problems and Questions S1
Distinguish between a movement along the firm’s demand curve and a shift in the
demand curve. Explain what kind of variables induces a move along the curve, and what
variables induce a shift in the demand curve. S3
Sandy Wiches sells fresh sandwiches at a beach location. Management has determined
that on a typical day, demand can be described by the following demand equation: Q = 1,200 - 200P. a.
If P = $3.00, determine the number of sandwiches sold and the elasticity of demand at this price. b.
If price is increased to $4.00, determine the elasticity of demand at this new price.
Is demand more or less elastic after the price increase? S4
What factors affect price elasticity? S5 a.
A firm faces the demand curve: P = 800 - 25Q. What is the firm’s revenue maximizing price? b.
Demand changes to: P = 960 - 40Q. Now, what price maximizes revenue?
Longer Problems and Discussion Questions L2
The Sioux Valley Parakeets, a minor league baseball team, has hired you as a consultant
to predict ticket sales for the upcoming season, and to advise on changes in ticket prices.
a. The elasticity of ticket sales with respect to the local population is estimated to be
about .9. If the local population increases from 130,000 to 140,000, what is the
predicted change in ticket sales?
b. The current price is $7.50. If EP is -.85, predict the percentage change in tickets if
price is raised to $8.50. Will revenue rise or fall? How does your answer change if elasticity is -1.1?
c. You have estimated income elasticity to be: EY = .75. Explain what this means,
and why it is important for management.