ECP3704 Microeconomics Final Exam (Chapters 2–
6) COMPLETE EXAM LATEST VERSION 2026-2027
QUESTIONS AND ANSWERS
If the income elasticity for lobster is 0.4, a 40% increase in income will lead to a:
-10% drop in demand for lobster
-16% increase in demand for lobster -20%
increase in demand for lobster
-4% increase in demand for lobster - answer>>16% increase in demand for lobster
If the price of pork chops falls from $8 to $6, and this leads to an increase in demand for apple sauce
from 100 to 140 jars, what is the cross price elasticity of apple sauce and pork chops at a pork chop price
of $6 (Hint you will need to use the Arc Elasticity formula) a. 1.7 b 2.71 c .42
d. -.86 - answer>>-1.17
If the price increase from $5 to $7 causes quantity demanded to fall from 150 to 100, what is the
absolute value of the own-price elasticity at a price of $7?
-.57
-1.75
-.02
-1.2 - answer>>1.2
The demand for good X has been estimated by Q^xd = 12-3Px+4Py. Supposed that good X sells at $2 per
unit and good y sells for $1 per unit. Calculate the own price elasticity when the price of x increases to
$3.
a. -17/15
b. -15/17
,c. -3/85
d. -85/3
e. 1-
f. 7 - answer>>-15/17
You are the manager of a supermarket, and know that the income elasticity of peanut butter is exactly
0.7. Due to the recession, you expect incomes to drop by 15% next year. How should you adjust your
purchase of peanut butter?
- Buy 10.5% more peanut butter
- Buy 2.14% more peanut butter
- Buy 6.2% less peanut butter
- Buy 9.8% less peanut butter - answer>>Buy 10.5% more peanut butter
An income elasticity less than zero tells us that the good is:
- a normal good
- a giffen good
-an inferior good
-an inelastic good - answer>>an inferior good
The elasticity that measures the responsiveness of consumer demand to changes in income is the:
-Income elasticity
-Own-price elasticity
-Cross-price elasticity
-Neither the income elasticity, own-price elasticity nor the cross-price elasticty - answer>>Income
elasticity
If the cross-price elasticity between ketchup and hamburgers is -1.2, a 4% increase in the price of
ketchup will lead to a 4.8%:
-drop in quantity demanded of ketchup
, -drop in quantity demanded of hamburgers
-Increase in quantity demanded of ketchup
-Increase in quantity demanded of hamburgers - answer>>drop in quantity demanded of hamburgers
If the cross-price elasticity between good A and B is negative, we know the goods are:
-inferior goods
-complements
-inelastic
-substitutes - answer>>complements
Lemonade, a good with many close substitutes, should have an own-price elasticity that is:
-Unitary
-Relatively elastic
-Relatively inelastic
-Perfectly inelastic - answer>>Relatively elastic
Demand is more inelastic in the short-term because consumers:
-Are impatient
-Have no time to find available substitutes
-Are present-oriented
-Are neither impatient, have not time to find available substitutes nor are present-oriented -
answer>>Have no time to find available substitutes
Which of the following is true for a monopoly in equilibrium? - answer>>P>MC
If a monopolistically competitive firm's marginal cost increases, then in order to maximize profits the
firm will - answer>>Reduce output and increase price
Which of the following is true? - answer>>In the short run a monopolist will shutdown if P<AVC
6) COMPLETE EXAM LATEST VERSION 2026-2027
QUESTIONS AND ANSWERS
If the income elasticity for lobster is 0.4, a 40% increase in income will lead to a:
-10% drop in demand for lobster
-16% increase in demand for lobster -20%
increase in demand for lobster
-4% increase in demand for lobster - answer>>16% increase in demand for lobster
If the price of pork chops falls from $8 to $6, and this leads to an increase in demand for apple sauce
from 100 to 140 jars, what is the cross price elasticity of apple sauce and pork chops at a pork chop price
of $6 (Hint you will need to use the Arc Elasticity formula) a. 1.7 b 2.71 c .42
d. -.86 - answer>>-1.17
If the price increase from $5 to $7 causes quantity demanded to fall from 150 to 100, what is the
absolute value of the own-price elasticity at a price of $7?
-.57
-1.75
-.02
-1.2 - answer>>1.2
The demand for good X has been estimated by Q^xd = 12-3Px+4Py. Supposed that good X sells at $2 per
unit and good y sells for $1 per unit. Calculate the own price elasticity when the price of x increases to
$3.
a. -17/15
b. -15/17
,c. -3/85
d. -85/3
e. 1-
f. 7 - answer>>-15/17
You are the manager of a supermarket, and know that the income elasticity of peanut butter is exactly
0.7. Due to the recession, you expect incomes to drop by 15% next year. How should you adjust your
purchase of peanut butter?
- Buy 10.5% more peanut butter
- Buy 2.14% more peanut butter
- Buy 6.2% less peanut butter
- Buy 9.8% less peanut butter - answer>>Buy 10.5% more peanut butter
An income elasticity less than zero tells us that the good is:
- a normal good
- a giffen good
-an inferior good
-an inelastic good - answer>>an inferior good
The elasticity that measures the responsiveness of consumer demand to changes in income is the:
-Income elasticity
-Own-price elasticity
-Cross-price elasticity
-Neither the income elasticity, own-price elasticity nor the cross-price elasticty - answer>>Income
elasticity
If the cross-price elasticity between ketchup and hamburgers is -1.2, a 4% increase in the price of
ketchup will lead to a 4.8%:
-drop in quantity demanded of ketchup
, -drop in quantity demanded of hamburgers
-Increase in quantity demanded of ketchup
-Increase in quantity demanded of hamburgers - answer>>drop in quantity demanded of hamburgers
If the cross-price elasticity between good A and B is negative, we know the goods are:
-inferior goods
-complements
-inelastic
-substitutes - answer>>complements
Lemonade, a good with many close substitutes, should have an own-price elasticity that is:
-Unitary
-Relatively elastic
-Relatively inelastic
-Perfectly inelastic - answer>>Relatively elastic
Demand is more inelastic in the short-term because consumers:
-Are impatient
-Have no time to find available substitutes
-Are present-oriented
-Are neither impatient, have not time to find available substitutes nor are present-oriented -
answer>>Have no time to find available substitutes
Which of the following is true for a monopoly in equilibrium? - answer>>P>MC
If a monopolistically competitive firm's marginal cost increases, then in order to maximize profits the
firm will - answer>>Reduce output and increase price
Which of the following is true? - answer>>In the short run a monopolist will shutdown if P<AVC
