Microeconomics quiz 2 Test Questions
with Answers Graded A
Suppose that Bobo purchases 1 pizza per month when the price is $19 and 3 pizzas per
month when the price is $15. What is the price elasticity of Bobo's demand curve? -
Ans -4.25
A 10 percent increase in income leads to a 15% decrease in the quantity of macaroni and
cheese demanded but no change in the price of macaroni and cheese. From this
information, we can assume: - Ans -macaroni is an inferior good and price elasticity
of supply is infinite.
If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in
supply will cause the equilibrium price to: - Ans -rise and the equilibrium quantity to
stay the same.
Billy Bob's Barber Shop knows that a 5 percent increase in the price of their haircuts results
in a 15 percent decrease in the number of haircuts purchased. What is the elasticity of
demand facing Billy Bob's Barber Shop? - Ans -3.0
The price elasticity of demand for tickets to local baseball games is estimated to be equal
to 0.89. In order to boost ticket revenues, an economist would advise - Ans -
increasing the price of game tickets because demand is inelastic.
Price elasticity of demand is defined as: - Ans -the percentage change in quantity
demanded divided by the percentage change in price.
Taxes on goods with __________ demand curves will tend to raise more tax revenue for the
government than taxes on goods with __________ demand curves. - Ans -inelastic;
1
elastic
Page
with Answers Graded A
Suppose that Bobo purchases 1 pizza per month when the price is $19 and 3 pizzas per
month when the price is $15. What is the price elasticity of Bobo's demand curve? -
Ans -4.25
A 10 percent increase in income leads to a 15% decrease in the quantity of macaroni and
cheese demanded but no change in the price of macaroni and cheese. From this
information, we can assume: - Ans -macaroni is an inferior good and price elasticity
of supply is infinite.
If the demand curve for a life-saving medicine is perfectly inelastic, then a reduction in
supply will cause the equilibrium price to: - Ans -rise and the equilibrium quantity to
stay the same.
Billy Bob's Barber Shop knows that a 5 percent increase in the price of their haircuts results
in a 15 percent decrease in the number of haircuts purchased. What is the elasticity of
demand facing Billy Bob's Barber Shop? - Ans -3.0
The price elasticity of demand for tickets to local baseball games is estimated to be equal
to 0.89. In order to boost ticket revenues, an economist would advise - Ans -
increasing the price of game tickets because demand is inelastic.
Price elasticity of demand is defined as: - Ans -the percentage change in quantity
demanded divided by the percentage change in price.
Taxes on goods with __________ demand curves will tend to raise more tax revenue for the
government than taxes on goods with __________ demand curves. - Ans -inelastic;
1
elastic
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