ECON312 Quiz Week 2

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ECON312 Quiz Week 2
(TCO 2) Suppose that tacos and pizza are substitutes and that soda…

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ECON312 Quiz Week 2

ECON312 Quiz Week 2

A+

(TCO 2) A demand curve (Points : 1)

Shows the relationship between price and quantity supplied

Indicates the quantity demanded at each price in a series of prices.

Graphs as an upsloping line.

Shows the relationship between income and spending.

(TCO 2) Which of the following will not cause the demand for product K to change? (Points : 1)

A change in the price of close-substitute product J

An increase in consumer incomes

A change in the price of K

A change in consumer tastes

(TCO 2) College students living off campus frequently consume large amounts of ramen noodles and boxed macaroni and cheese. When they finish school and start their careers, their consumption of both goods frequently declines. This suggests that ramen noodles and boxed macaroni and cheese are (Points : 1)

Inferior goods

Normal goods

Complementary goods

Substitute goods

(TCO 2) Suppose that tacos and pizza are substitutes and that soda and pizza are complements. We would expect an increase in the price of pizza to (Points : 1)

Reduce the demand for tacos and increase the demand for sodas

Reduce the demand for soda and increase the demand for tacos

Increase the demand for both soda and tacos

Reduce the demand for both soda and tacos

(TCO 2) A firm’s supply curve is upsloping because (Points : 1)

The expansion of production necessitates the use of qualitatively inferior inputs.

Mass production economies are associated with larger levels of output

Consumers envision a positive relationship between price and quality.

Beyond some point the production costs of additional units of output will rise

(TCO 2) If the demand for bacon is relatively elastic, a 10% decline in the price of bacon will (Points : 1)

Decrease the amount demanded by more than 10%.

Increase the amount demanded by more than 10%.

Decrease the amount demanded by less than 10%.

Increase the amount demanded by less than 10%.

(TCO 2) The price of product X is reduced from $100 to $90 and, as a result, the quantity demanded increases from 50 to 60 units. Therefore, demand for X in this price range (Points : 1)

has declined

is of unit elasticity

is inelastic

is elastic

(TCO 2) The concept of price elasticity of demand measures (Points : 1)

The slope of the demand curve.

The number of buyers in a market

The extent to which the demand curve shifts as the result of a price decline

The sensitivity of consumer purchases to price changes

(TCO 2) If the University Chamber Music Society decides to raise ticket prices to provide more funds to finance concerts, the Society is assuming that the demand for tickets is (Points : 1)

Parallel to the horizontal axis

Shifting to the left

Inelastic

Elastic

(TCO 2) The demand for autos is likely to be (Points : 1)

Less price elastic than the demand for Honda Accords

More price elastic than the demand for Honda Accords

Of the same price elasticity as the demand for Honda Accords

Perfectly inelastic

(TCO 2) What is the Law of Demand? Why does the demand curve slope downwards? (Points : 5)

The Law of Demand is the same thing as…

(TCO 2) Suppose the price of widgets rises from $7 to $9 and consumption of widgets falls from 25 widgets a month to 15 widgets. Calculate your price elasticity of demand of widgets. What can you say about your price elasticity of demand of widgets? Is it Elastic, Inelastic, or Unitary Elastic? Why? Use the Midpoint formula and please show your work. (Points : 5)

Relatively Elastic because 2.0 > 1….