exam 2 fall 2007 version a
Econ 102 Version A
Fall 2007 Exam 2
There are 25 questions. Please make sure you have them all.
1. When the price of bubble gum is $0.50, the quantity demanded is 400 packs per day. When the price falls to $0.40, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for bubble gum is
a. inelastic.
b. elastic.
c. unit elastic.
d. perfectly inelastic.
2. Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 0.78. Which of the following events is consistent with a 4.68 percent decrease in the quantity of the good demanded?
a. a 3.65 increase in the price of the good
b. a 16.67 percent increase in the price of the good
c. an increase in the price of the good from $48.00 to $50.97
d. an increase in the price of the good from $65.00 to $66.98
3. Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the
a. steeper the demand curve will be.
b. flatter the demand curve will be.
c. further to the right the demand curve will sit.
d. closer to the vertical axis the demand curve will sit.
4. You are in charge of the local city-owned golf course. You need to increase the revenue generated by the golf course in order to meet expenses. The mayor advises you to increase the price of a round of golf. The city manager recommends reducing the price of a round of golf. You realize that
a. the mayor thinks demand is elastic and the city manager thinks demand is inelastic.
b. both the mayor and the city manager think that demand is elastic.
c. both the mayor and the city manager think that demand is inelastic.
d. the mayor thinks demand is inelastic and the city manager thinks demand is elastic.
5. In January the price of widgets was $2.00 and Wendy's Widgets produced 80 widgets. In February the price of widgets was $2.50 and Wendy's Widgets produced 110 widgets. In March the price of
Fall 2007 Exam 2
There are 25 questions. Please make sure you have them all.
1. When the price of bubble gum is $0.50, the quantity demanded is 400 packs per day. When the price falls to $0.40, the quantity demanded increases to 600. Given this information and using the midpoint method, we know that the demand for bubble gum is
a. inelastic.
b. elastic.
c. unit elastic.
d. perfectly inelastic.
2. Using the midpoint method, the price elasticity of demand for a good is computed to be approximately 0.78. Which of the following events is consistent with a 4.68 percent decrease in the quantity of the good demanded?
a. a 3.65 increase in the price of the good
b. a 16.67 percent increase in the price of the good
c. an increase in the price of the good from $48.00 to $50.97
d. an increase in the price of the good from $65.00 to $66.98
3. Elasticity of demand is closely related to the slope of the demand curve. The more responsive buyers are to a change in price, the
a. steeper the demand curve will be.
b. flatter the demand curve will be.
c. further to the right the demand curve will sit.
d. closer to the vertical axis the demand curve will sit.
4. You are in charge of the local city-owned golf course. You need to increase the revenue generated by the golf course in order to meet expenses. The mayor advises you to increase the price of a round of golf. The city manager recommends reducing the price of a round of golf. You realize that
a. the mayor thinks demand is elastic and the city manager thinks demand is inelastic.
b. both the mayor and the city manager think that demand is elastic.
c. both the mayor and the city manager think that demand is inelastic.
d. the mayor thinks demand is inelastic and the city manager thinks demand is elastic.
5. In January the price of widgets was $2.00 and Wendy's Widgets produced 80 widgets. In February the price of widgets was $2.50 and Wendy's Widgets produced 110 widgets. In March the price of