ECON 528 Midterm Review questions with answers

ECON 528 Midterm Review questions
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with answers |\




If the price of music downloads was to decrease, then
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Select one: |\




a.
the demand for MP3 players would increase.
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b.
the supply of MP3 players would increase.
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c.
the demand for MP3 players would decrease.
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d.
the quantity demanded of MP3 players would decrease. -
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CORRECT ANSWERS ✔✔a. |\ |\




the demand for MP3 players would increase.
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A change in all of the following variables will change the
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market demand for a product except
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Select one: |\




a.
the price of the product.
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,b.
population and demographics. |\ |\




c.
tastes.
d.
income. - CORRECT ANSWERS ✔✔a.
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the price of the product.
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If the percentage increase in price is 15 percent and the
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value of the price elasticity of demand is -3, then quantity
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demanded
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Select one: |\




a.
will increase by 5 percent.
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b.
will increase by 45 percent.
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c.
will decrease by 5 percent.
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d.
will decrease by 45 percent. - CORRECT ANSWERS ✔✔d.
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will decrease by 45 percent.
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,Linesha, a college student working part-time receives a
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wage increase. An avid movie buff, she increased her
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purchases of Blu-ray discs and reduced her purchases of |\ |\ |\ |\ |\ |\ |\ |\ |\



DVDs. Based on this information
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Select one: |\




a.
the cross-price elasticity between DVDs and Blu-ray discs
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is negative.
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b.
DVDs and Blu-ray discs are normal goods.
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c.
Blu-ray discs are normal goods and DVDs are inferior
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goods.
d.
DVDs and Blu-ray discs are substitutes. - CORRECT
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ANSWERS ✔✔c. |\




Blu-ray discs are normal goods and DVDs are inferior
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goods.


Last year, Sefton purchased 60 pounds of potatoes to
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feed his family of five when his household income was
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$30,000. This year, his household income fell to $20,000
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and Sefton purchased 80 pounds of potatoes. All else
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constant, Sefton's income elasticity of demand for |\ |\ |\ |\ |\ |\ |\



potatoes is |\

, Select one: |\




a.
positive, so Sefton considers potatoes to be a normal
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good and a necessity.
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b.
negative, so Sefton considers potatoes to be a normal
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good.
c.
positive, so Sefton considers potatoes to be an inferior
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good.
d.
negative, so Sefton considers potatoes to be an inferior
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good. - CORRECT ANSWERS ✔✔d.
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negative, so Sefton considers potatoes to be an inferior
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good.


If the price of steel increases drastically, the quantity of
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steel demanded by the building industry will fall
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significantly over the long run because |\ |\ |\ |\ |\




Select one: |\




a.
sales revenue in the building industry will fall sharply.
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b.