1. If the demand for a product is highly elastic, a decrease in the price, all other...
Question:
1. If the demand for a product is highly elastic, a decrease in the price, all other things being equal, will result in:
a. An increase in the quantity demanded and a decrease in the total revenue
b. A decrease in the quantity demanded and a decrease in the total revenue
c. An increase in the quantity demanded and an increase in the total revenue
d. A decrease in the quantity demanded and an increase in total revenue
e. An increase in the quantity demanded and no change in total revenue.
2. Which of the following would you expect to have an elastic demand?
a. Salt
b. Health care
c. MICHIGAN apples
d. Bread
e. None of the above
3. If a government’s objective in levying excise taxes on commodities is maximum yield of revenue, this objective is most likely to be achieved by taxing:
a. Goods with high prices
b. Goods with low prices
c. Goods that are price inelastic
d. Goods that are price elastic
e. Only imported goods.
4. A major coffee-exporting country in South America routinely destroyed part of its coffee crop. This practice is most likely to have short-run economic benefits to coffee growers:
a. If coffee has price inelastic demand
b. If coffee has elastic demand
c. If demand for coffee is increasing
d. If demand for coffee is decreasing
e. If demand for coffee is unchanged
5. As a railroad raised its commuter fares from $5.00 to $7.00, the number of passengers per hour declined from 5,000 to 2,000. Using the simple formula, the demand elasticity was:
a. 1.33
b. 0.75
c. 1.5
d. 3.0
e. None of the above