AP Microeconomics Quiz

Assume that demand for bottled water is relatively price elastic. An increase in supply of bottled water will result in which of the following?

• A decrease in price, leading to an increase in total revenue

• A decrease in price, leading to a decrease in total revenue

• An excess supply of bottled water

• An excess demand for bottled water

• A relatively small decrease in price and no change in equilibrium quantity

If the price elasticity of supply for pickles is 2 and the price of pickles increases by 10 percent, then the quantity supplied of pickles will increase by

• 0.2%

• 5%

• 8%

• 12%

• 20%

If a 10 percent increase in the price of good X results in a 20 percent decrease in the quantity of good Y demanded, which of the following is true?

• Good X and good Y are complementary goods, and the cross-price elasticity is -0.5.

• Good X and good Y are substitute goods, and the income elasticity is +2.

• Good X and good Y are complementary goods, and the cross-price elasticity is -2.

• Good X and good Y are normal goods, and the income elasticity is +2.

• Good X and good Y are substitute goods, and the cross-price elasticity is -2.

A change in which of the following will cause a change in the supply of personal computers (PC's) in the short run?

• Technology

• Demand for PC's

• Price of disks, which are a complement to PC's

• Price of PC's

• Consumers' incomes

Moving from left to right along a downward-sloping linear demand curve, price elasticity varies in which of the following ways?

• First unit elastic, then inelastic throughout

• First unit elastic, then elastic throughout

• First inelastic, then unit elastic throughout

• First elastic, then unit elastic, and finally inelastic

• First inelastic, then unit elastic, and finally elastic

Which of the following statements about the price elasticity of demand is true?

• When demand is price inelastic, total revenue will decrease as price increases.

• When demand is price elastic, an increase in price will increase total revenue.

• Demand tends to be more elastic in the short run compared to the long run.

• As more close substitutes become available, demand tends to be more price elastic.

• As a good becomes viewed as a necessity, demand becomes more price elastic.

If a severe drought destroys a significant portion of the peanut crop and peanut farmers' revenues increase, which of the following is true over the observed range of prices?

• The demand for peanuts must be unit price elastic.

• The demand for peanuts must be price elastic.

• The demand for peanuts must be unit price inelastic.

• The supply of peanuts must be price inelastic.

• The supply of peanuts must be price elastic.

Assume that the price of orange juice increases by 40 percent following a crop failure. If the quantity demanded falls by 10 percent, which of the following is true?

• The demand for orange juice is elastic.

• The price of grapefruit juice, a substitute good, will fall.

• The absolute value of the price elasticity of demand for orange juice is 4.

• The absolute value of the price elasticity of demand for orange juice is 0.25.

• The absolute value of the price elasticity of demand for orange juice is 10.

The price elasticity of demand for a product is 0.5. If the price of the product increases by 20 percent, which of the following will occur?

• The quantity demanded of the good will increase by 10%.

• The quantity demanded of the good will increase by 20%.

• The quantity demanded of the good will increase by 40%.

• The quantity demanded of the good will decrease by 10%.

• The quantity demanded of the good will decrease by 40%.

If the demand for potatoes increases whenever a person's income increases, then potatoes are an example of

• An inferior good

• A free good

• A Giffen good

• A normal good

• A public good