ECO 365T Wk 3 - Apply Summative Assessment Quiz (2021 New)

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ECO 365T Wk 3 – Apply Summative Assessment Quiz (2021 New)

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›ECO 365–4

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ECO 365T Wk 3 – Apply Summative Assessment Quiz (2021 New)

Suppose that as the price of Y falls from $12 to $10, the quantity of Y demanded increases from 500 to 600. Then the absolute value of the price elasticity (using the midpoint formula) is approximately

Multiple Choice

50.

1.2.

0.83.

Answer the question based on the following data.

Price Per Unit Quantity Demanded Per Unit of Time

$ 20 12

18 17

16 20

14 24

12 30

10 36

8 40

6 44

4 48

What is the price elasticity of demand over the range of $4 to $6?

Multiple Choice

4.6

0.22

0.47

0.33

Alex, Kara, and Susie are the only three people in a community. Alex is willing to pay $20 for the fifth unit of a public good; Kara, $15; and Susie, $25. Government should produce the fifth unit of the public good if the marginal cost is less than or equal to

Multiple Choice

$60.

$20.

$15.

$45.

$25.

Answer the question based on the following information for a public good. Pa and Pb are the prices that individuals A and B are willing to pay for the last unit of a public good, rather than do without it. These people are the only two members of society.

Q Pa Pb

1 $ 3 $ 5

2 2 4

3 1 3

4 0 2

5 0 1

The collective willingness of this society to pay for the second unit of this public good is

Multiple Choice

If a firm finds that it can sell $32,000 worth of a product when its price is $8 per unit and $35,000 worth of it when its price is $10, then

Multiple Choice

the demand for the product is inelastic in the $10-$8 price range.

the demand for the product must have increased.

elasticity of demand is 1.67.

the demand for the product is elastic in the $10-$8 price range.

Suppose the price elasticity of supply for crude oil is 1.5. How much would price have to rise to increase production by 9 percent?

Multiple Choice

6 percent

13.5 percent

9 percent

15 percent

The price of season tickets to a performing arts theater decreases by 4 percent. As a result, the quantity demanded increases by 10 percent. The price elasticity of demand for season tickets is

Multiple Choice

0.4.

2.5.

0.25.

If the price elasticity of demand for a product is equal to 2.0, then a decrease in price of 4 percent will increase quantity demanded by

Multiple Choice

2 percent.

0.8 percent.

8 percent.

0.5 percent.

Suppose that the price of peanuts falls from $4 to $3 per bushel and that, as a result, the total revenue received by peanut farmers changes from $20 to $17 billion. Thus,

Multiple Choice

the demand for peanuts is elastic.

the demand for peanuts is inelastic.

the demand curve for peanuts has shifted to the left.

no inference can be made as to the elasticity of demand for peanuts.

Refer to the diagram and assume a single good. If the price of the good decreased from $6.30 to $5.70 along D1, the price elasticity of demand along this portion of the demand curve would be

Multiple Choice

0.83.

1.25.

1.2.

0.8.

Suppose that Mick and Cher are the only two members of society and are willing to pay $10 and $15, respectively, for the fifth unit of a public good. Also, assume that the marginal cost of the fifth unit is $23. We can conclude that

Multiple Choice

the fifth unit should be produced.

zero units should be produced.

just 4 units should be produced.

the fifth unit should not be produced.

You are the only seller of eggs in town, and the price-elasticity coefficient for eggs is known to be 1.25. If you want to increase your sales quantity by 4 percent through a price change, what should you do to the price?

Multiple Choice

reduce price by 3.2 percent

increase price by 3.2 percent

reduce price by 5 percent

increase price by 5 percent

The price elasticity of demand for widgets is 0.5. Assuming no change in the demand curve for widgets, an increase in sales of 8 percent implies a(n)

Multiple Choice

8 percent reduction in price.

4 percent reduction in price.

16 percent reduction in price.

12 percent reduction in price.

Suppose we find that the price elasticity of demand for a product is 0.8 when its price is increased by 10 percent. We can conclude that quantity demanded

Multiple Choice

increased by 0.08 percent.

decreased by 8 percent.

decreased by 1.2 percent.

decreased by 0.08 percent.

Suppose that Katie and Kelly each expect to receive $500 worth of marginal benefits from a proposed new recreation center, whereas Kerry expects to receive only $100 worth. If the proposed tax levied on each for the center would be $300, a majority vote will

Multiple Choice

pass this project and resources will be underallocated to it.

pass this project and resources will be efficiently allocated to it.

defeat this project and resources will be underallocated to it.

pass this project and resources will be overallocated to it.

Answer the question based on the following table, which shows a demand schedule.

Price Quantity Demanded

$ 5 10

4 13

3 15

2 19

1 25

Total revenues will increase if price

Multiple Choice

rises from $4 to $5.

falls from $3 to $2.

falls from $4 to $3.

A 12 percent increase in the price of tea causes 3 percent increase in the demand for coffee. The cross elasticity of demand for coffee with respect to the price of tea is

Multiple Choice

-4.

-0.25.

0.25.

Suppose you are given the following data on demand for a product. The price elasticity of demand (based on the midpoint formula) when price decreases from $8 to $6 is

Price Quantity Demanded

$ 10 30

9 40

8 50

7 60

6 70

Multiple Choice

0.86.

0.33.

1.14.

1.33.

The coefficient of price-elasticity of supply for a product is 0.65 if

Multiple Choice

a 4 percent decrease in the price causes a 0.16 percent decrease in quantity supplied.

a 4 percent decrease in price causes a 0.65 percent decrease in quantity supplied.

a 4 percent decrease in price causes a 2.6 percent decrease in quantity supplied.

a 0.65 percent decrease in price causes a 0.65 percent decrease in quantity supplied.

Suppose the price elasticity of demand for beef is about 0.6. Other things equal, this means that a 20 percent increase in the price of beef will cause the quantity of beef demanded to

Multiple Choice

increase by approximately 12 percent.

decrease by approximately 12 percent.

decrease by approximately 32 percent.

decrease by approximately 26 percent.

The supply of product X is perfectly inelastic if the price of X rises by

Multiple Choice

3 percent and quantity supplied rises by 4 percent.

9 percent and quantity supplied rises by 9 percent.

2 percent and quantity supplied stays the same.

2 percent and quantity supplied rises by 1 percent.

Multiple Choice

$15.

$45.

$60.

$20.

$25.

The income elasticity of demand for food is roughly 1. Suppose a consumer’s monthly income is $2,000, of which 20 percent is spent on food. If the income of this consumer doubles, the amount she’ll spend on food will be

Multiple Choice

$400 per month.

$500 per month.

$800 per month.

$1,000 per month.

Suppose that an 8 percent increase in the price of normal good Y causes an 8 percent increase in the quantity demanded of normal good X. The coefficient of cross elasticity of demand is

Multiple Choice

negative, and therefore these goods are substitutes.

negative, and therefore these goods are complements.

positive, and therefore these goods are substitutes.

positive, and therefore these goods are complements.

Suppose the price elasticity of demand for bread is 2. If the price of bread falls by 8 percent, the quantity demanded will increase by

Multiple Choice

16 percent and total expenditures on bread will fall.

16 percent and total expenditures on bread will rise.

4 percent and total expenditures on bread will fall.

4 percent and total expenditures on bread will rise.

If the price elasticity of demand for a product is equal to 2.0, then a decrease in price of 4 percent will increase quantity demanded by

Multiple Choice

2 percent.

0.8 percent.

8 percent.

0.5 percent.

Suppose the income elasticity of demand for toys is +2.4. This means that

Multiple Choice

a 4 percent increase in income will increase the purchase of toys by 9.6 percent.

a 4 percent increase in income will increase the purchase of toys by 1.67 percent.

a 4 percent increase in income will decrease the purchase of toys by 9.6 percent.

toys are an inferior good.

Answer the question based on the following information for four highway programs of increasing scope. All figures are in millions of dollars.

Program Total Cost Total Benefit

A $ 2 $ 9

B 6 16

C 12 21

D 20 23

Based on the data, we can say that the marginal costs of Program A are

Multiple Choice

Refer to the diagram and assume a single good. If the price of the good increased from $5.70 to $6.30 along D1, the price elasticity of demand along this portion of the demand curve would be

Multiple Choice

0.8.

1.2.

The supply of product X is inelastic (but not perfectly inelastic) if the price of X rises by

Multiple Choice

5 percent and quantity supplied rises by 7 percent.

8 percent and quantity supplied rises by 8 percent.

10 percent and quantity supplied remains the same.

7 percent and quantity supplied rises by 5 percent.

When the price of a product is increased 5 percent, the quantity demanded decreases 10 percent. The price-elasticity of demand coefficient for this product is

Multiple Choice

0.2.

0.5.

A consumer’s weekly income is $550, and the consumer buys 9 bars of chocolate per week. When weekly income increases to $600, the consumer buys 10 bars per week. The income elasticity of demand for chocolate by this consumer is about

Multiple Choice

1.82.

0.83.

1.21.

Suppose the price of local cable TV service increased from $15.00 to $20.00 and as a result the number of cable subscribers decreased from 248,000 to 200,000. Along this portion of the demand curve, using the midpoint method, price elasticity of demand is approximately

Multiple Choice

1.33.

0.72.

0.6.

Assume that Abby, Ben, Clara, Joe, and Matt are the only citizens in a community. A proposed public good has a total cost of $1,200. All five citizens will share an equal portion of this cost in taxes. The benefit of the public good is $220 to Abby, $210 to Ben, $210 to Clara, $180 to Joe, and $120 to Matt. In a majority vote, this proposal will most likely be

Multiple Choice

accepted, all 5 in favor.

accepted, 3 in favor, 2 against.In

defeated, 1 in favor, 4 against.

defeated, all 5 against

The following data are for a series of increasingly extensive flood-control projects.

Total Cost Per Year Total Benefit Per Year

Plan A = Levees $ 10,000 $ 16,000

Plan B = Small Reservoir 24,000 36,000

Plan C = Medium Reservoir 44,000 52,000

Plan D = Large Reservoir 72,000 64,000

For Plan A marginal costs and marginal benefits are

Multiple Choice

$20,000 and $16,000, respectively.

$16,000 and $26,000, respectively.

$20,000 and $32,000, respectively.

$10,000 and $16,000, respectively.

Answer the question based on the following table, which shows a demand schedule.

Price Quantity Demanded

$ 5 10

4 13

3 15

2 19

1 25

Total revenues will decrease if price

Multiple Choice

rises from $1 to $2.

falls from $5 to $4.

rises from $3 to $4.

falls from $4 to $3.

Multiple Choice

defeat this project.

pass this project.

pass this project and resources will be efficiently allocated to it.

defeat this project and resources will be underallocated to it.

The price elasticity of demand for widgets is 1. Assuming no change in the demand curve for widgets, a 10 percent decrease in sales implies a(n)

Multiple Choice

13.8 percent increase in price.

18 percent increase in price.

10 percent increase in price.

8 percent increase in price.

If the price elasticity of demand for a product is 2.5, then a price cut from $2.00 to $1.80 will

Multiple Choice

increase the quantity demanded by about 2.5 percent.

decrease the quantity demanded by about 2.5 percent.

increase the quantity demanded by about 25 percent.

increase the quantity demanded by about 250 percent.

Q Pa Pb

1 $ 3 $ 5

2 2 4

3 1 3

4 0 2

5 0 1

The collective willingness of this society to pay for the third unit of this public good is

Multiple Choice

$6.In