[trying1207]

Multiple choice questions are one point each.

1. Which of the following is consistent with the law of supply?
a. As the price of calculators rises, the supply of calculators increases, ceteris paribus.
b. As the price of calculators falls, the supply of calculators increases, ceteris paribus.
c. As the price of calculators rises, the quantity supplied of calculators increases, ceteris paribus.
d. As the price of calculators rises, the quantity supplied of calculators decreases, ceteris paribus.

2. DVDs and DVD Players are complements. An increase in the price of DVD Players would cause which of the following in the market for DVDs?
a. The equilibrium price and quantity of DVDs would increase.
b. The equilibrium price and quantity of DVDs would decrease.
c. The equilibrium price of DVDs would increase and the equilibrium quantity would decrease.
d. The equilibrium price of DVDs would decrease and the equilibrium quantity would increase.

5. If total revenue increases after a price increase, demand is
a. inelastic.
b. unitarily elastic.
c. perfectly elastic.
d. elastic.

6. Substitutes are goods that people buy
a. more of when their incomes increase.
b. less of when their incomes increase.
c. instead of another product whose price has increased.
d. to use with another product.

7. If an increase in the price of accordions does not change total revenue from accordion sales, what can we infer about the price elasticity of demand for accordions?
a. Elastic
b. Inelastic
c. Unit elastic
d. Perfectly elastic
e. Perfectly Inelastic

8. (2 points) We would expect the elasticity of demand for diamonds to be very high (elastic). Give at least two reasons.

9. (6 points) Define the “Law of Demand” and the “Law of Supply”. Give an example for each.

[Curlyben]

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