Economics Quiz

If the price of a product rises by 3%, the quantity demanded falls by 1.5%. Then the price elasticity of demand is?

• 1. 0.5

• -0.5

• 2

• -2

Suppose the price of good B increased from $10 to $12, and the quantity demanded of good A increased from 120 to 150 units. Calculate the cross-price elasticity of good A.

• 1

• 0.06

• 0.8

• 1.22

For an inferior good, the income elasticity of demand is -0.4. If income decreases by 8%, by what percentage would the quantity demanded of the inferior good change?

• 3.2

• -3.2

• 0.05

• -0.05

The price of good X is $10 per unit, and the quantity demanded of good Y is 200 units when the price of good Y is $5 per unit. If the price of good X increases to $15 per unit and the quantity demanded of good Y decreases to 150 units, calculate the cross-price elasticity of demand between goods X and Y.

• 5/7

• -5/7

• 2

• -2

Henry decides to spend 2 hours playing golf rather than working at his job which pays $8 per hour. What is Henry's tradeoff?

• the $16 he could have earned working for 2 hours

• nothing, because he enjoys playing golf more than working

• the increase in skill he obtains from playing golf for those 2 hours

• nothing, because he spent $16 for green fees to play golf

What do economists illustrate when they use the phrase "There is no such thing as a free lunch"?

• how inflation increases prices

• that to get one thing, we must give up something else

• that nothing is free in a market economy

• that if something looks too good to be true, it probably is

Economics is the study of

• how society manages its unlimited resources.

• how to reduce our wants until we are satisfied.

• how society manages its scarce resources.

• how to fully satisfy our unlimited wants.

A government is concerned about whether young children in a community are receiving enough healthcare. Which of the following is the LEAST likely to increase the amount of healthcare that people provide their children?

• Lowering regulations on who can provide healthcare, such as allowing nurses to provide healthcare rather than just doctors

• increase the price of healthcare

• subsidize healthcare

• Provide coupons for free healthcare

The average cost per seat on a bus trip from Montreal to Toronto is $140. Suppose no refreshments are served and 3 seats are empty. How could the bus company increase its profit?

• if it charged no less than $140 for the 3 remaining seats

• if it charged more than $140 for the 3 remaining seats

• if it charged any ticket price above $0 for the remaining seats

• if it left the seats empty

Which of the following best describes the law of demand?

• A) A decrease in consumers' income

• B) A decrease in the price of a complementary good

• C) A decrease in the price of a substitute good

• D) A decrease in the price of the good