ECON 102 MCQs

Example:

A firm sells 600 units at a price of $3 each. What is the Total Revenue received by the firm?

Correct: Type in 1800

Incorrect: Type in 1,800

Incorrect: Type in $1800

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1. (IMAGE ATTACHED)

For the next 6 questions, use the graph above. USING THE MIDPOINT METHOD, what is the absolute value of the price elasticity of demand between and ?

A)

0.3333

B)

0.5

C)

0.75

D)

1

E)

1.5

F)

2

G)

2.5

H)

3

I)

3.5

2.The value found in the above question is considered to be:A)

elastic

B)

unit elastic

C)

inelastic

3.Suppose that at this point, producers raised the price by 5%. What would happen to quantity demanded as a result?A)

it would rise by 5%

B)

it would fall by 5%

C)

it would rise by more than 5%

D)

it would fall by more than 5%

E)

it would rise by less than 5%

F)

it would fall by less than 5%

4.USING THE MIDPOINT METHOD, what is the absolute value of the price elasticity of demand between and ?A)

0.3333

B)

0.5

C)

0.75

D)

1

E)

1.5

F)

2

G)

2.5

H)

3

I)

3.5

5.The value found in the above question is considered to be:A)

elastic

B)

unit elastic

C)

inelastic

6.Suppose that at this point, producers raised the price by 5%. What would happen to quantity demanded as a result?A)

it would rise by 5%

B)

it would fall by 5%

C)

it would rise by more than 5%

D)

it would fall by more than 5%

E)

it would rise by less than 5%

F)

it would fall by less than 5%

7.(IMAGE ATTACHED)

The following graph below represents a linear demand function.

Use the graph below to answer the following questions. Elasticity values are greater than 1 (in absolute value) in the portion of the graph described by letter _____.

A)

a

B)

b

C)

c

8.Elasticity values are less than 1 (in absolute value) in the portion of the graph described by letter _____.A)

a

B)

b

C)

c

9.Elasticity values are exactly equal to 1 in absolute value in the portion of the graph described by letter _____.A)

a

B)

b

C)

c

10.The inelastic portion of the graph is the area described by letter _____.A)

a

B)

b

C)

c

11.The unit elastic portion of the graph is the area described by letter _____.A)

a

B)

b

C)

c

12.The elastic portion of the graph is the area described by letter _____.A)

a

B)

b

C)

c

13.Total revenue is maximized over the portion of the graph described by letter ______.A)

a

B)

b

C)

c

14.Suppose we are somewhere in portion “c” on the graph and the firm raises the price of the good by a small amount. What happens to total revenue?A)

Total revenue will increase

B)

Total revenue will decrease

C)

Total revenue will stay the same

15.Suppose we are somewhere in portion “a” on the graph and the firm raises the price of the good by a small amount. What happens to total revenue?A)

Total revenue will increase

B)

Total revenue will decrease

C)

Total revenue will stay the same

16.Suppose that the firm lowered prices by 2%, and in response, consumers purchased 6% more of the good. We know that we are somewhere on the portion labeled by letter _________.A)

a

B)

b

C)

c

D)

not enough information to answer

17.For the next 5 questions, consider the following market for Blu-Ray players.

Demand: Qd = 400 – 3P

Supply: Qs = –100 + 2PGiven these equations, what are the equilibrium price and quantity?Equilibrium price is Equilibrium quantity is

18.Suppose the actual market price of Blu-Ray players is $92. What is the quantity demanded and quantity supplied at this price?Quantity demanded is Quantity supplied is

19.At this price of $92, will there be a shortage or a surplus of Blu-Ray players?A)

Shortage

B)

Surplus

20.

What is the amount of this shortage or surplus?

The shortage or surplus is Blu-Ray players.

21.Over time, do you expect the price of Blu-Ray players to rise or fall?A)

expect the price to rise

B)

expect the price to fall

22.For the next 5 questions, consider the following market for digital cameras.

Demand: Qd = 500 – 2P

Supply: Qs = –80 + 3PGiven these equations, what are the equilibrium price and quantity?Equilibrium price is Equilibrium quantity is

23.Suppose the actual market price of digital cameras is $128. What is the quantity demanded and quantity supplied at this price?Quantity demanded is Quantity supplied is

24.At this price of $128, will there be a shortage or a surplus of digital cameras?A)

Shortage

B)

Surplus

25.

What is the amount of this shortage or surplus?

The shortage or surplus is digital cameras.

26.Over time, do you expect the price of digital cameras to rise or fall?A)

expect the price to rise

B)

expect the price to fall

27.Suppose guitars and guitar strings are complements in consumption. What will happen in the market for guitars if the price of guitar strings decreases?A)

There will be an increase in quantity demanded for guitars

B)

There will be a decrease in quantity demanded for guitars

C)

There will be an increase in demand for guitars

D)

There will be a decrease in demand for guitars

28.Based on your answer, what will happen to the equilibrium price of guitars?A)

increase

B)

decrease

C)

remain the same

D)

could do any of the above

29.What will happen to the equilibrium quantity of guitars?A)

increase

B)

decrease

C)

remain the same

D)

could do any of the above

30.Consider another good, bread. Which of the following would cause a leftward shift in the demand for bread?A)

an increase in the production costs involved in making bread

B)

a decrease in consumer income, assuming that bread is a normal good

C)

an increase in consumer income, assuming that bread is a normal good

D)

a decrease in the price of jelly, which is a complement to bread

31.

Watch the following video (made by Dave Brown from Penn State Economics). Link here: https://www.youtube.com/watch?.

The video details the complexities that can arise if there are simultaneous shifts in demand and supply. Based on the analysis done in the video, what is the net effect on equilibrium price if there is a simultaneous increase in demand and an increase in supply?

A)

Equilibrium price will always go up

B)

Equilibrium price will always go down

C)

Equilibrium price could go up or down

32.Based on the analysis done in the video, what is the net effect on equilibrium quantity if there is a simultaneous increase in demand and an increase in supply?A)

Equilibrium quantity will always increase

B)

Equilibrium quantity will always decrease

C)

Equilibrium quantity could increase or decrease

33.Using the same analysis done in the video, draw for yourself the situation of a simultaneous decrease in demand and increase in supply. Based on your graphs, what is the net effect on equilibrium price?A)

Equilibrium price will always go up

B)

Equilibrium price will always go down

C)

Equilibrium price could go up or down

34.Using the same analysis done in the video, draw for yourself the situation of a simultaneous decrease in demand and increase in supply. Based on your graphs, what is the net effect on equilibrium quantity?A)

Equilibrium quantity will always increase

B)

Equilibrium quantity will always decrease

C)

Equilibrium quantity could increase or decrease