Feedback Module 4 Quiz

You submitted this quiz on Sun 6 Oct 2013 3:55 PM PDT (UTC -0700). You got a score of 6.00 out of 15.00. You can attempt again, if you'd like.

Question 1
[Q#4003]

Demand is elastic when the absolute value of the price elasticity of demand is: Your Answer Score Explanation

equal to 1.

less than 1.

greater than 1.

Correct

1.00

0.

Total Question Explanation The correct answer is: "greater than 1."

1.00 / 1.00

Question 2
[Q#4007]

If demand is elastic, then a 5% increase in price will cause:

Your Answer

Score

Explanation

no change in quantity demanded.

a decrease in quantity demanded of exactly 5%.

a decrease in quantity demanded of more than 5%.

Correct

1.00

a decrease in quantity demanded of less than 5%.

Total Question Explanation

1.00 / 1.00

The correct answer is: "a decrease in quantity demanded of more than 5%."

Question 3
[Q#4009]

Following a price increase, total revenue will: Your Answer Score Explanation

decrease if demand is price inelastic.

always decrease.

increase if demand is price inelastic.

always increase.

Inorrect

0.00

See Video 2.2.

Total Question Explanation The correct answer is: "increase if demand is price inelastic."

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Question 4
[Q#4013]

If the price elasticity of demand for concert tickets is 2.12, then the demand is _____ and total revenue will ______ if the price of concert tickets increases. Your Answer Score Explanation

elastic; increase

Inorrect

0.00

See Video 2.2.

inelastic; increase

elastic; decrease

inelastic; decrease

Total Question Explanation

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The correct answer is: "elastic; decrease." Since the price elasticity of demand is larger than 1, the demand is elastic. This means that when the price increases, demand will be greatly affected, so total revenue will decrease.

Question 5
[Q#4021]

Along a demand curve with a constant slope, the price elasticity of demand: Your Answer Score Explanation

is always equal to 1.

Inorrect

0.00

See Video 2.4.

will be greater at lower prices than at higher prices.

will be greater at higher prices than at lower prices.

is constant.

Total Question Explanation

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The correct answer is: "will be greater at higher prices than at lower prices." With a linear demand curve, the demand is more elastic at higher price levels because it is more like a luxury good. A small change in price will cause a bigger change in the quantity demanded. However, the demand is more inelastic at lower price levels because it is more like a necessity. A small change in price will only result in small changes in the quantity demanded. Thus the price elasticity of demand will be greater at higher prices than at lower prices.

Question 6
[Q#4023]

We would say that sports cars are an inferior good if the ___________ for a sports car is __________ .

Your Answer

Score

Explanation

income elasticity of demand; positive.

price elasticity of demand; positive.

Inorrect

0.00

See Video 3.1.

income elasticity of demand; negative .

price elasticity of demand; negative.

Total Question Explanation The correct answer is: "income elasticity of demand; negative."

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Question 7
[Q#4026]

If two goods are substitutes, then the cross-price elasticity of demand between them is: Your Answer Score Explanation

infinite.

negative.

Inorrect

0.00

See Video 3.2.

positive.

zero.

Total Question Explanation The correct answer is: "positive."

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Question 8
[Q#4030]

If a 20 percent decrease in the price of sapphires causes a 15 percent decrease in the quantity of diamonds demanded, then the cross-price elasticity of demand between sapphires and diamonds is: Your Answer Score Explanation

4.00

1.33

0.75

0.60

Inorrect

0.00

See Video 3.2.

Total Question Explanation The correct answer is: "0.75."

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Question 9

[Q#4038]

If supply is price elastic, then a 5 percent increase in the price of the good would cause _________ in the quantity supplied. Your Answer Score Explanation

exactly a 5 percent increase

no change

more than a 5 percent increase

Correct

1.00

less than a 5 percent increase

Total Question Explanation The correct answer is: "more than a 5 percent increase."

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Question 10
[Q#4039]

When an excise tax is imposed on sellers, this will cause the ________ curve to shift __________. Your Answer Score Explanation

demand; leftward.

demand; rightward.

supply; up and to the left.

Correct

1.00

supply; down and to the right.

Total Question Explanation The correct answer is: "supply; up and to the left."

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Question 11
[Q#4041]

The burden of an excise tax falls mainly on consumers when: Your Answer Score Explanation

the price elasticity of demand is high and the price elasticity of supply is low.

both the price elasticity of demand and the price elasticity of supply are high.

the price elasticity of demand is low and the price elasticity of supply is high.

Correct

1.00

both the price elasticity of demand and the price elasticity of supply are low.

Total

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Question Explanation The correct answer is: "the price elasticity of demand is low and the price elasticity of supply is high." Low price elasticity of demand and high price elasticity of supply mean that consumers have a harder time adjusting than sellers. That is, when the price increases, consumers dont really switch product; when price decreases, suppliers have the option of not supplying. So the tax burden falls on consumers more.

Question 12
[Q#4045]

If a $2 excise tax is collected from pumpkin farmers on each pumpkin sold, then the supply curve for pumpkins will shift __________ by $2, thereby _________ the equilibrium price. Your Answer Score Explanation

rightward; increasing.

rightward; decreasing.

leftward; increasing.

leftward; decreasing.

Inorrect

0.00

See Video 5.1.

Total Question Explanation The correct answer is: "leftward; increasing."

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Question 13
[Q#4052]

Assume that a $5 excise tax is collected from the consumers of Internet service. Following

imposition of the tax, the price of monthly internet service falls from $32 to $30. How much of the tax is actually paid by producers? Your Answer Score Explanation

$10

$5

Inorrect

0.00

How much less are the suppliers collecting from each customer? See Video 5.1.

$2

$3

Total

0.00 / 1.00

Question Explanation The correct answer is: "$2."

Question 14
[Q#4054]

An excise tax will cause a loss of total surplus because it: Your Answer Score Explanation

gives too much power to sellers

results in an inefficiently high quality of a good.

Inorrect

0.00

The tax will cause a reduction in the quantity of the good sold. See Video 5.2.

prevents mutually beneficial transactions.

results in an inefficiently high quantity of a good.

Total

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Question Explanation The correct answer is: "prevents mutually beneficial transactions."

Question 15
[Q#4055]

Which of the following would result in a smaller deadweight loss from a given tax? Your Answer Score Explanation

a relatively flat demand curve

a relatively elastic supply

a relatively inelastic demand

Correct

1.00

a relatively elastic demand

Total Question Explanation The correct answer is: "a relatively inelastic demand."

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