ECON 300 EXAM #1 QUESTIONS WITH
CORRECT ANSWERS
Suppose the University of Arizona announces it is doubling the number of students it
is admitting to its Tucson campus in one semester.
When will the price elasticity of supply be the least elastic? - ANSWER-In the first
semester after the change.
There is a sharp increase in the price of aluminum. The supply of aluminum in the
short run will be ________ than the supply in the long. - ANSWER-More elastic
Shortage as a percentage of equilibrium = - ANSWER-|%change Q supplied| + |
%change Q demanded|
The price charged by a toll bridge increases. We would expect the price elasticity of
demand to be more elastic in the - ANSWER-long run
The economy goes into recession. The refrigerator market will be affected the most
in the _______ because the income elasticity of demand is more elastic in the
_______. - ANSWER-Short-run, short-run
Bob's burgers wants to increase total revenue. If demand is elastic what should it
do? - ANSWER-Decrease price
To maximize total revenue for a good when demand is inelastic, should you raise or
lower prices? - ANSWER-Raise prices
It has been estimated that the price elasticity of demand for _______ is about -4.0
while the price elasticity of _______ is around -1.3. - ANSWER-Chevrolets,
automobiles. Chevrolets have more substitutes than all automobiles.
Suppose the price elasticity of demand for wheat is -0.25. The invention of a new
inexpensive herbicide which kills a weed known to reduce wheat yields will cause: -
ANSWER-1. Increase in market equilibrium quantity of wheat.
2. Decrease in combined total revenue earned by wheat farmers (total expenditures
by consumers).
Suppose the price of gas increases sharply. Demand for gas this week will be
______ (more, less) elastic than demand in a year from now. - ANSWER-less
Suppose the price of automobiles increases sharply. Demand for autos this week will
be ______ (more, less) elastic than demand in a year from now. - ANSWER-more
When cross-price elasticity of demand > 0... - ANSWER-The goods are substitutes
When cross-price elasticity of demand < 0... - ANSWER-The goods are
complements
CORRECT ANSWERS
Suppose the University of Arizona announces it is doubling the number of students it
is admitting to its Tucson campus in one semester.
When will the price elasticity of supply be the least elastic? - ANSWER-In the first
semester after the change.
There is a sharp increase in the price of aluminum. The supply of aluminum in the
short run will be ________ than the supply in the long. - ANSWER-More elastic
Shortage as a percentage of equilibrium = - ANSWER-|%change Q supplied| + |
%change Q demanded|
The price charged by a toll bridge increases. We would expect the price elasticity of
demand to be more elastic in the - ANSWER-long run
The economy goes into recession. The refrigerator market will be affected the most
in the _______ because the income elasticity of demand is more elastic in the
_______. - ANSWER-Short-run, short-run
Bob's burgers wants to increase total revenue. If demand is elastic what should it
do? - ANSWER-Decrease price
To maximize total revenue for a good when demand is inelastic, should you raise or
lower prices? - ANSWER-Raise prices
It has been estimated that the price elasticity of demand for _______ is about -4.0
while the price elasticity of _______ is around -1.3. - ANSWER-Chevrolets,
automobiles. Chevrolets have more substitutes than all automobiles.
Suppose the price elasticity of demand for wheat is -0.25. The invention of a new
inexpensive herbicide which kills a weed known to reduce wheat yields will cause: -
ANSWER-1. Increase in market equilibrium quantity of wheat.
2. Decrease in combined total revenue earned by wheat farmers (total expenditures
by consumers).
Suppose the price of gas increases sharply. Demand for gas this week will be
______ (more, less) elastic than demand in a year from now. - ANSWER-less
Suppose the price of automobiles increases sharply. Demand for autos this week will
be ______ (more, less) elastic than demand in a year from now. - ANSWER-more
When cross-price elasticity of demand > 0... - ANSWER-The goods are substitutes
When cross-price elasticity of demand < 0... - ANSWER-The goods are
complements
