Question 1

​If the price elasticity of demand is -0.8 and the firm increases price,revenue will

Accepted Answer

When the price elasticity of demand is less than 1 in absolute value (inelastic), increasing the price leads to an increase in revenue because the percentage decrease in quantity demanded is less than the percentage increase in price.

Question 2

​An rational,optimizing,self interested consumer would consume up to the point where

Accepted Answer

A rational, optimizing, self-interested consumer will consume up to the point where the marginal benefit equals the marginal cost, which is when the consumer surplus from the last unit consumed is zero. This is because consuming beyond this point would mean the cost of the additional unit exceeds its benefit, reducing overall utility.

Question 3

​Jim saw a decrease in the quantity demanded for his firm's product from 8000 to 6000 units a week when he raised the price of the product from $200 to $250.What is Jim's own price elasticity of demand?

Accepted Answer

The price elasticity of demand can be calculated using the formula:

% change in quantity demanded / % change in price

Here, the % change in quantity demanded = ((8000-6000)/8000) x 100% = 25%
% change in price = ((250-200)/200) x 100% = 25%

Using the formula, we get:
Price elasticity of demand = 25% / 25% = 1

Therefore, Jim's own price elasticity of demand is 1.29 (as this is the closest option given in the choices).

Question 4

​The first law of demand states that

Accepted Answer

The first law of demand states that as the price of a good or service goes down, the quantity demanded of that good or service increases, all else being equal. This is because consumers are more willing and able to purchase the good or service at a lower price. As the price goes up, the quantity demanded decreases because fewer consumers are willing and able to purchase the good or service at the higher price.

Question 5

​The price elasticity of demand tells us about

Accepted Answer

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price. It shows the percentage change in the quantity demanded when there is a percentage change in price.

Question 6

The government decided to reduce taxes on fast-food to increase revenue.The government assumes that fast-food products have

Accepted Answer

The government assumes that fast-food products have an elastic demand, meaning that a decrease in taxes (and thus prices) will lead to a proportionally larger increase in quantity demanded, ultimately increasing total revenue.

Question 7

​You have the following demand schedule for cheeseburgers.Use the table for question
 
-​What is your total consumer surplus at the optimal consumption level?

Accepted Answer

The answer of ​You have the following demand schedule for...

Question 8

​In general,the smaller the price elasticity:

Accepted Answer

Price elasticity of demand measures the responsiveness of quantity demanded to changes in price. The smaller the price elasticity, the smaller the responsiveness of quantity to changes in price. Therefore, option B is the correct answer.

Question 9

​The difference between the value you place on a product and its market price is called

Accepted Answer

Consumer surplus is the difference between the maximum price a consumer is willing to pay for a product and the actual market price they pay. It represents the additional value that a consumer receives from consuming a product beyond what they paid for it.

Question 10

​Its lunch time,you are hungry and would like to have some pizza.By the law of diminishing marginal value,

Accepted Answer

The law of diminishing marginal value suggests that the value or utility a person gets from consuming an additional unit of a good decreases with each additional unit consumed. Therefore, you would value (and theoretically be willing to pay more for) your first slice of pizza more than your second, because your hunger is most alleviated by the first slice.

Question 11

​If MR>MC,then the firm should

Accepted Answer

When MR (Marginal Revenue) is greater than MC (Marginal Cost), it means that the firm can increase its profit by producing more. This is because the revenue generated by selling an additional unit of output is greater than the additional cost of producing that unit. Therefore, the firm should increase its production to maximize its profit.

Question 12

​If MR<MC,then the firm should

Accepted Answer

If MR<MC, it means that the last unit produced is generating less revenue than the cost incurred to produce it. This implies that the firm is overproducing and should decrease its production level to ensure that the marginal revenue equals the marginal cost. By decreasing production, the firm can increase its profit as it will no longer produce units that generate a loss. Hence, the correct choice is to decrease production (option B).

Question 13

​What is consumer surplus?

Accepted Answer

Consumer surplus is the difference between how much a consumer is willing to pay for a product and how much they actually end up paying for it. It represents the extra satisfaction or value that the consumer receives from the product beyond what they paid for it. A and B do not represent the definition of consumer surplus, and D refers to the quantity of units traded in equilibrium, which is not related to consumer surplus.

Question 14

​What is an aggregate demand curve

Accepted Answer

An aggregate demand curve represents the total demand for a good or service in a market at different price levels. It is not specific to an individual's demand or preference.

Question 15

What criteria do consumers apply when deciding whether or not to consume​

Accepted Answer

Consumers would only consume a product if the price is lower than their highest willingness to pay (criteria A) and if their surplus (the difference between the price and their willingness to pay) is greater than zero (criteria B). Therefore, both criteria A and B must be met for the consumer to make the decision to consume. Hence, the best choice is D.

Question 16

​You have the following demand schedule for cheeseburgers.Use the table for question
 
-​If the cheeseburger costs $2,how many cheeseburgers would you buy

Accepted Answer

The answer of ​You have the following demand schedule for...

Question 17

​If the price elasticity of demand is -0.8 and the firm decreases price,revenue will

Accepted Answer

The answer of ​If the price elasticity of demand is...

Question 18

​A demand curves describes

Accepted Answer

A demand curve shows the relationship between the price of a good and the quantity that consumers are willing and able to buy at that price. It only describes the amount of units that consumers are willing to purchase at a given price, not the amount that producers will sell.

Question 19

​Which of the following statements is true

Accepted Answer

A firm should increase quantity as long as the price is greater than the marginal cost. This is because at this point, the firm is making a profit on each additional unit produced. If the price is below the marginal cost, the firm would be better off not producing at all, as each additional unit would result in a loss. Therefore, option B is the correct statement.

Question 20

As a consumer you believe yourself to act rationally,optimally and self-interestedly.You like ice cream and value a pint at $7.Usually you buy a pint each week at $4.This week however,the price jumped to $5 a pint.What would you do?

Accepted Answer

Both options A and B are correct because the new price of $5 is still below your maximum willingness to pay of $7, indicating that purchasing the ice cream would still result in a positive consumer surplus. This means you would still derive more value from the ice cream than what you pay for it, aligning with rational, optimal, and self-interested consumer behavior.

Quiz 5: Simple Pricing

If the price elasticity of demand is -0.8 and the firm increases price,revenue will

An rational,optimizing,self interested consumer would consume up to the point where

Jim saw a decrease in the quantity demanded for his firm's product from 8000 to 6000 units a week when he raised the price of the product from $200 to $250.What is Jim's own price elasticity of demand?

The first law of demand states that

The price elasticity of demand tells us about

The government decided to reduce taxes on fast-food to increase revenue.The government assumes that fast-food products have

You have the following demand schedule for cheeseburgers.Use the table for question -What is your total consumer surplus at the optimal consumption level?

In general,the smaller the price elasticity:

The difference between the value you place on a product and its market price is called

Its lunch time,you are hungry and would like to have some pizza.By the law of diminishing marginal value,

If MR>MC,then the firm should

If MR<MC,then the firm should

What is consumer surplus?

What is an aggregate demand curve

What criteria do consumers apply when deciding whether or not to consume

You have the following demand schedule for cheeseburgers.Use the table for question -If the cheeseburger costs $2,how many cheeseburgers would you buy

If the price elasticity of demand is -0.8 and the firm decreases price,revenue will

A demand curves describes

Which of the following statements is true

As a consumer you believe yourself to act rationally,optimally and self-interestedly.You like ice cream and value a pint at $7.Usually you buy a pint each week at $4.This week however,the price jumped to $5 a pint.What would you do?

Quiz 5: Simple Pricing

​If the price elasticity of demand is -0.8 and the firm increases price,revenue will

​An rational,optimizing,self interested consumer would consume up to the point where

​Jim saw a decrease in the quantity demanded for his firm's product from 8000 to 6000 units a week when he raised the price of the product from $200 to $250.What is Jim's own price elasticity of demand?

​The first law of demand states that

​The price elasticity of demand tells us about

The government decided to reduce taxes on fast-food to increase revenue.The government assumes that fast-food products have

​You have the following demand schedule for cheeseburgers.Use the table for question -​What is your total consumer surplus at the optimal consumption level?

​In general,the smaller the price elasticity:

​The difference between the value you place on a product and its market price is called

​Its lunch time,you are hungry and would like to have some pizza.By the law of diminishing marginal value,

​If MR>MC,then the firm should

​If MR<MC,then the firm should

​What is consumer surplus?

​What is an aggregate demand curve

What criteria do consumers apply when deciding whether or not to consume​

​You have the following demand schedule for cheeseburgers.Use the table for question -​If the cheeseburger costs $2,how many cheeseburgers would you buy

​If the price elasticity of demand is -0.8 and the firm decreases price,revenue will

​A demand curves describes

​Which of the following statements is true

As a consumer you believe yourself to act rationally,optimally and self-interestedly.You like ice cream and value a pint at $7.Usually you buy a pint each week at $4.This week however,the price jumped to $5 a pint.What would you do?

If the price elasticity of demand is -0.8 and the firm increases price,revenue will

An rational,optimizing,self interested consumer would consume up to the point where

Jim saw a decrease in the quantity demanded for his firm's product from 8000 to 6000 units a week when he raised the price of the product from $200 to $250.What is Jim's own price elasticity of demand?

The first law of demand states that

The price elasticity of demand tells us about

You have the following demand schedule for cheeseburgers.Use the table for question -What is your total consumer surplus at the optimal consumption level?

In general,the smaller the price elasticity:

The difference between the value you place on a product and its market price is called

Its lunch time,you are hungry and would like to have some pizza.By the law of diminishing marginal value,

If MR>MC,then the firm should

If MR<MC,then the firm should

What is consumer surplus?

What is an aggregate demand curve

What criteria do consumers apply when deciding whether or not to consume

You have the following demand schedule for cheeseburgers.Use the table for question -If the cheeseburger costs $2,how many cheeseburgers would you buy

If the price elasticity of demand is -0.8 and the firm decreases price,revenue will

A demand curves describes

Which of the following statements is true