ECON 2110 Exam 2 Clemson Study Questions with Verified Solutions

ECON 2110 Exam 2 Clemson Study Questions with Verified Solutions 1. If the demand for French bread is elastic and the baker holds a French bread sale, will sell a lot more bread may sell more bread, but not a lot more won't sell any more bread d will increase - ANSWER will sell a lot more bread 2. If we raise price by 10 cents and quantity demanded falls by 10,000 units, we would conclude that d is elastic d is inelastic d is unit elastic is not enough information to determine whether demand is elastic or not - ANSWER is not enough information to determine whether demand is elastic or not 3. If I tell you that the price of cameras has fallen and the number sold has fallen rather than risen, you would know that Law of Demand has been violated y is greater than demand d is greater than supply demand for cameras has decreased supply of cameras has decreased - ANSWER demand for cameras has decreased 4. Which of the following is true? a.It takes a higher price to get 75 units supplied than to get 75 units demanded b.It takes a higher price to get 75 units demanded than to get 75 units supplied c.75 units is the equilibrium quantity in the market d.All of the above. - ANSWER a.It takes a higher price to get 75 units supplied than to get 75 units demanded 5. Which of the following will lead to an increase in the demand for satellite TV? a.A fall in consumer income if satellite TV is a normal good b.A big satellite TV sale c.A rise in the price of Netflix (a substitute) d.All of the above - ANSWER c.A rise in the price of Netflix (a substitute) 6. What happens in the market for ink when the price of the lead used to make pencils rises? a.Demand increases b.Demand decreases c.Supply increases d.Supply decreases e.None of the above, because ink isn't used in lead - ANSWER a.Demand increases 7. 29.If the elasticity of demand for camera film is -2.6, and the price of film is raised by 10 percent, quantity demanded will fall by 2.6 percent quantity demanded will fall by 26 percent quantity demanded will fall by 260 percent quantity demanded must fall, but we need more information to determine by how much. - ANSWER quantity demanded will fall by 26 percent 8. If a good is a necessity, demand for that good will tend to be ic stic ic when price falls and inelastic when it rises elastic ontal - ANSWER stic 9. "Elasticity" measures the relationship between y and demand ity supplied and quantity demanded y and closeness of substitutes and quantity e.None of the above - ANSWER and quantity 10. A businesswoman says "No matter how much we cut price, we just don't seem to get many new customers." In other words, she thinks demand for her product is than the supply stic ic elastic - ANSWER stic 11. When the supply and demand for a good both increase, a.Equilibrium price will increase if we are dealing with a normal good b.Equilibrium price may increase, decrease, or remain unchanged c.Equilibrium price will increase d.Equilibrium price will decrease - ANSWER b.Equilibrium price may increase, decrease, or remain unchanged 12. When the price of a good or service changes, is a movement along the demand curve demand curve shifts in the opposite direction demand curve shifts in the same direction of the above, depending upon whether price increases or decreases - ANSWER is a movement along the demand curve 13. Good weather produces an unexpectedly abundant cocoa crop. What happens to the equilibrium price and quantity of chocolate (cocoa is an ingredient in chocolate production)? a.Price increases and quantity increases b.Price decreases and quantity increases c.Price increases and quantity decreases d.Price decreases and quantity decreases - ANSWER b.Price decreases and quantity increases