Quiz 2 Old Exam Questions

Question 1

At a price of $10 in Figure 2, there is a. a surplus of 30 million bushels of wheat. b. a shortage of 30 million bushels of wheat. c. a surplus of 20 million bushels of wheat. d. a shortage of 20 million bushels of wheat.

Answer 1

A- a surplus of 30 million bushels of wheat

Question 2

At a price of $10, the quantity demanded of wine is 1,250 bottles. When the price increases to $20, the quantity demanded of wine is 750 bottles. Then the price elasticity of demand for wine is a. 3/4 b. 2/5 c. 1/3 d. 4/3

Answer 2

A- 3/4

Question 3

If the population increases at the same time that the price of resources used as inputs in autos increases, ceteris paribus, then in the market for autos a. the equilibrium price falls and the equilibrium quantity cannot be determined. b. the equilibrium quantity falls and the equilibrium price cannot be determined. c. the equilibrium quantity rises and the equilibrium price cannot be determined. d. the equilibrium price rises, and the equilibrium quantity cannot be determined.

Answer 3

D-equilibrium price rises and the quantity cannot be determined.

Question 4

A perfectly inelastic demand curve usually implies that this commodity a. has few close substitutes. b. is a necessary product. c. takes a small part of the consumer’s income. d. all of the above.

Answer 4

D- all the above

Question 5

If a 10 percent increase in the price of a used car results in a 20 percent decrease in the quantity of used cars demanded, then the price elasticity of demand is a. inelastic b. elastic c. unitary d. cannot be determined.

Answer 5

B-elastic

Question 6

If the demand for a commodity is inelastic at the current price, a 2 % price cut will a. increase the quantity sold by less than 2 percent and total revenue will increase. b. increase the quantity sold by less than 2 percent and total revenue will decrease. c. increase the quantity sold by more than 2 percent and thus total revenue will increase. d. increase the quantity sold by more than 2 percent and thus total revenue will decrease.

Answer 6

b-increase the quantity sold by less than 2 percent and total revenue will decrease