Prepare to take the Supply, Demand and Price Elasticity Quiz.
Week Two Quiz
Supply & DEMAND and Price Elasticity
Section One: Multiple Choice
1. If a 20% decrease in the price of long distance phone calls leads to a 35% increase in the quantity of calls demanded, we can conclude that the demand for phone calls is:
c. unit elastic.
d. stretchy elastic.
2. Which of the following pairs are examples of substitutes?
3. When we say that a price in a competitive market is too high to clear the market we usually mean that (given upward-sloping supply curves).
4. Which of the following statements is incorrect? Assume upward-sloping supply curves.
Section Two: Short Answer (250 words or less)
1. Define Elasticity of Demand. Give an example.
a) A technological breakthrough lowers the cost of producing tractors in India while there is an increase in incomes of all citizens in India. Market: tractors.
b) The United States imposes a ban on the sale of oil by companies that do business with Libya and Iran. At the same time, very surprisingly. A large reserve of drillable oil is discovered in Barrington, Rhode Island. Market: oil.
c) In the summer of 1996, many people watched the Atlanta Summer Olympics on NBC instead of going to the movies. At the same time, thinking that summer time is the peak season for movies, Hollywood released a record number of movies. Market: movie tickets.
d) After a promotional visit by Michael Jordan to France, a craze for Nike Air shoes develops, while workers in Nikes manufacturing plants in China go on strike decreasing the production of these shoes. Market: Nike shoes.
Name three types of market systems and give an example of each.
Define the Law of Demand and the Law of Supply. Give an example for each.
Examples for this will vary.
Excerpt from file: Economics Tutorial Week Two Quiz (ANSWER SHEET) SUPPLY & DEMAND AND PRICE ELASTICITY Section One: Multiple Choice 1. If a 20% decrease in the price of long distance phone calls leads to a 35% increase in the quantity of calls demanded, we can conclude that the demand for phone calls is: a. elastic.
Print Length: 3 Pages/Slides
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