IU Economics - B251, Gerhard Glomm
- Quiz 5 Q's, A's Questions and
Answers.
A Toyota Camry is a normal good in a community where
1. Most people are already rich enough to afford a Camry
2. Most people are not sufficiently wealthy to afford a Camry
3. The price of a Honda Civic is higher than the price of a Camry
4. The price of a Honda Civic is lower than the price of a Camry - Answer 2. Most people are
not sufficiently wealthy to afford a Camry
There are 4 brands of chainsaws available in various stores in Bloomington. One of the brands,
HacksawPlus, increases substantially in quality. This change in quality will
1. Decrease the elasticity of demand for HacksawPlus
2. Increase the elasticity of demand for HacKsawPlus
3. Keep the elasticity of demand for HacksawPlus constant
4. Decrease demand for HacksawPlus - Answer 1. Decrease the elasticity of demand for
HacksawPlus
The Hacksaw Chainsaw company can potentially sell two types of chainsaws, Hacksaw and
HacksawPlus, where HacksawPlus is better quality and sells at a higher price. If the company
switches from only selling Hacksaw to only selling HacksawPlus, company revenue might go
down if
1. The percentage change in drop of customers who cannot afford the more expensive chainsaw
is bigger than the percentage change in the price
2. The percentage change in the drop of customers who cannot afford the more expensive
chainsaw is smaller than the change in price
3. If the fraction and number of customers who buy the chainsaw stays constant
4. If the number of customers who buy the chainsaw goes up - Answer 1. The percentage
change in drop of customers who cannot afford the more expensive chainsaw is bigger than the
percentage change in the price
, 1. Decrease the quantity of washing machines sold in US
2. Increase the quantity of washing machines sold in US
3. Keep the quantity of washing machines sold in US constant
4. Increase the quality of washing machines - Answer 1. Decrease the quantity of washing
machines sold in US
In problem 4 (card above) above we would expect
1. The demand for dryers to decrease
2. The demand for dryers to increase
3. The demand for dryers to stay constant
4. The quality of dryers to increase - Answer 1. The demand for dryers to decrease
Fatty meats are inferior goods. As an economy goes into a recession we would expect
1. The demand for fatty meats to increase
2. The demand for fatty meats to decrease
3. The demand for fatty meats to stay constant
4. The demand for fatty meats to rise faster in the recovery than in the recession - Answer 1.
The demand for fatty meats to increase
The marginal benefit of hiking is given by MB = 20 - 3 s, where s is the number of hours spent
hiking. The marginal cost is given by MC = 2s The best rational number of hours spent hiking is
1. two
2. four
3. six
4. eight - Answer 2. four
Imagine that in problem 7 the temperature and humidity rise unexpectedly and drastically so
that the hike is far less enjoyable. Which one of the options below best expresses the new
situation?
- Quiz 5 Q's, A's Questions and
Answers.
A Toyota Camry is a normal good in a community where
1. Most people are already rich enough to afford a Camry
2. Most people are not sufficiently wealthy to afford a Camry
3. The price of a Honda Civic is higher than the price of a Camry
4. The price of a Honda Civic is lower than the price of a Camry - Answer 2. Most people are
not sufficiently wealthy to afford a Camry
There are 4 brands of chainsaws available in various stores in Bloomington. One of the brands,
HacksawPlus, increases substantially in quality. This change in quality will
1. Decrease the elasticity of demand for HacksawPlus
2. Increase the elasticity of demand for HacKsawPlus
3. Keep the elasticity of demand for HacksawPlus constant
4. Decrease demand for HacksawPlus - Answer 1. Decrease the elasticity of demand for
HacksawPlus
The Hacksaw Chainsaw company can potentially sell two types of chainsaws, Hacksaw and
HacksawPlus, where HacksawPlus is better quality and sells at a higher price. If the company
switches from only selling Hacksaw to only selling HacksawPlus, company revenue might go
down if
1. The percentage change in drop of customers who cannot afford the more expensive chainsaw
is bigger than the percentage change in the price
2. The percentage change in the drop of customers who cannot afford the more expensive
chainsaw is smaller than the change in price
3. If the fraction and number of customers who buy the chainsaw stays constant
4. If the number of customers who buy the chainsaw goes up - Answer 1. The percentage
change in drop of customers who cannot afford the more expensive chainsaw is bigger than the
percentage change in the price
, 1. Decrease the quantity of washing machines sold in US
2. Increase the quantity of washing machines sold in US
3. Keep the quantity of washing machines sold in US constant
4. Increase the quality of washing machines - Answer 1. Decrease the quantity of washing
machines sold in US
In problem 4 (card above) above we would expect
1. The demand for dryers to decrease
2. The demand for dryers to increase
3. The demand for dryers to stay constant
4. The quality of dryers to increase - Answer 1. The demand for dryers to decrease
Fatty meats are inferior goods. As an economy goes into a recession we would expect
1. The demand for fatty meats to increase
2. The demand for fatty meats to decrease
3. The demand for fatty meats to stay constant
4. The demand for fatty meats to rise faster in the recovery than in the recession - Answer 1.
The demand for fatty meats to increase
The marginal benefit of hiking is given by MB = 20 - 3 s, where s is the number of hours spent
hiking. The marginal cost is given by MC = 2s The best rational number of hours spent hiking is
1. two
2. four
3. six
4. eight - Answer 2. four
Imagine that in problem 7 the temperature and humidity rise unexpectedly and drastically so
that the hike is far less enjoyable. Which one of the options below best expresses the new
situation?
