ECON 2000 Exam 2

Which of the following could be the price elasticity of demand if an increase in price caused an increase in TR?

• 0

• .8

• 1

• 1.45

If the price of bracelets increased from $40 to $55 and the quantity supplied increased from 60 to 70 units, the Price Elasticity of Supply is equal to-

• 2.05

• .76

• 1.54

• .49

Assume that income increased by 55% and the quantity demanded for Great Value Cereal decreased by 20%. 

Calculate the income elasticity of Great Value Crackers?

• -.36

• .36

• -2.75

• 2.75

If the government places a price ceiling at $2 on Milk, there will be a-

• Surplus of 2100 Gallons

• Shortage of 1400 Gallons

• Shortage of 2100 Gallons

• Surplus of 1400 Gallons

Jessica consumes 40% more bowls of guacamole when the price of chips decreases by 25%. For Jessica, guacamole and chips are _____, and the cross-price elasticity of demand is _____.

• -1.6, Complements

• 1.6 Substitutes

• -.625, Complements

• -1.6, Substitutes

If the Price decreased from $24 to $12, total revenue would-

• Decrease by $9,600

• Increase by $9,600

• Increase by $4,800

• Decrease by $4,800

A Ferrari is a good that most would consider a luxury. You would therefore expect its demand to be-

• Inelastic

• Perfectly Elastic

• Elastic

• Unit Elastic

A binding price ceiling is represented by-

• A Price of $25

• A Price of $50

• A Price of $10

• A Price of $75

If the Price changes from $50 to $75, what is your deadweight loss? What is your new TS?

• Deadweight Loss- $3750

  TS-12,500

• Deadweight Loss- $7500

  TS-$20,000

• Deadweight Loss- $7500

  TS- $12,500

• Deadweight Loss-

  $3500

  TS- $10,000

Is minimum wage a price ceiling or price floor?

• Price Ceiling

• Price Floor