Practice Test-2 on Elasticity and its Application
Question 1: The mainstream view among economists is that .......................
- no tradeoff exists between unemployment and inflation, either in the short run or in the long run.
- society faces a tradeoff between unemployment and inflation, but only in the short run.
- society faces a tradeoff between unemployment and inflation, but only in the long run.
- society faces a tradeoff between unemployment and inflation, both in the short run and in the long run.
Question 2: The negative relationship between price and quantity demanded .....................
- is represented by a downward-sloping demand curve.
- applies to most goods in the economy.
- is referred to as the law of demand.
- All of the above are correct.
Question 3: Which of the following would not be a determinant of the demand for a particular good?
- taxes
- income
- tastes
- prices of related goods
- the prices of the inputs used to produce the good
Question 4: If a good is normal, then an increase in income will result in ............................
- a decrease in the demand for the good.
- an increase in the demand for the good.
- a movement up and to the left along the demand curve for the good.
- a movement down and to the right along the demand curve for the good.
Question 5: Two goods are substitutes if a decrease in the price of one good ..............................
- decreases the quantity demanded of the other good.
- increases the demand for the other good
- decreases the demand for the other good.
- increases the quantity demanded of the other good.
Question 5: Two goods are complements if a decrease in the price of one good .........................
- increases the demand for the other good.
- decreases the quantity demanded of the other good.
- decreases the demand for the other good.
- increases the quantity demanded of the other good.
Question 6 : The movement from S to S1 in figure below is called
- an increase in supply.
- a decrease in supply.
- a decrease in quantity supplied.
- an increase in quantity supplied
Question 7: At what price would there be an excess demand amounting to 200 units of the good?
- $17
- $21
- $19
- $20
Question 8: Which of the four graphs represents the market for coffee after a major hurricane hits the coffee-growing area of the world?
- B
- D
- B
- C
Question 9: Which of the four graphs (see graphs in question 8) illustrates an increase in quantity supplied?
- B.
- C.
- D.
- A.
Question 10: The price elasticity of demand measures how much
- quantity demanded responds to a change in sales.
- quantity demanded responds to a change in price.
- price responds to a change in demand.
- demand responds to a change in both supply & demand.
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Date of last modification: 2021