Econ 101 practice question for Exam 1 (answer key at the end) 1. Each month Jacquelyn spends exactly $50 on ice cream regardless of the price. Jacquelyn's price elasticity of demand for ice cream is:
C) greater than one.
D) less than one, but greater than zero.
2. Egg producers know that the elasticity of demand for eggs is 0.1. The hens went crazy and laid 5% more eggs than usual. To sell all those additional eggs, they will have to lower price by: A)
3. Nations can gain from trade with other nations even if they are less productive in all industries than the nations they trade with.
4. If demand is perfectly inelastic, the deadweight loss caused by a tax will be zero. A) True
5. Suppose apartments rent for $1,600 in Boston. If the City of Boston forces each landlord to charge $1,200, there will be:
A) a decrease in producer surplus for each landlord.
B) a shortage of new apartments in Boston.
C) an increase in consumer surplus for Bostonians who can find apartments for $1,200. D) all of the above.
6. The demand for textbooks is price inelastic. Which of the following would explain this? A) Many alternative textbooks can be used as substitutes.
B) Students have a lot of time to adjust to price changes.
C) Textbook purchases consume a large portion of most students' income. D) The good is a necessity.
7. A major state university in the South recently raised tuition by 12%. An economics professor at this university asked his students, “Due to the increase in tuition, how many of you will transfer to another university?” One student out of about 300 said that he or she would transfer. Based on this information, the price elasticity of demand for education at this university is: A)
Use the following to answer questions 8-10:
Figure: Market for Hamburgers
8. (Figure: Market for...
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