iVAT Chapter 6

A  Peanut butter and jelly.

B  Coffee and sugar.

C  Mercedes-Benz and BMW automobiles.

D  Business suits and ties.

A  Louis Vuitton Shoes.

B  Spam.

C  Payless Shoes.

D  Instant Coffee.

A  disequilibrium.

B  price discrimination where the carrier charges those with greater elasticity a higher fare.

C  a price control where the carrier charges those with greater elasticity an equal fare

D  a price control where the carrier charges those with greater elasticity a higher fare

E  price discrimination where the carrier charges those with greater elasticity a lower fare.

A  TR will initially decrease, but will then subsequently increase.

B  TR will stay constant.

C  TR will decrease.

D  TR will increase.

A  Raise revenue in both the short and long run.

B  Decrease revenue in both the short and long run.

C  Decrease revenue in the short run but raise revenue in the long run.

D  Decrease revenue only in the short run.

E  Raise revenue in the short run but decrease revenue in the long run.

A  TR will stay the same.

B  TR will decrease.

C  TR will increase.

D  TR will initially increase, but will subsequently decrease.

A  In the State of California is greater than the price elasticity of demand for Sacramento.

B  In Sacramento is less than the price elasticity of demand for the State of California.

C  In Sacramento is equal to the price elasticity of demand for the State of California.

D  In Sacramento is greater than the price elasticity of demand for the State of California.

A  Luxury watch.

B  Wheelchair.

C  Sunglasses.

D  Apple Computer.

A  The higher the marginal cost of production.

B  The higher the equilibrium.

C  The lower the marginal cost of production.

D  The fewer the options available for consumers to change consumption.

E  The fewer options that are available for producers to change production.

A  The coffee market’s equilibrium price will drop by a greater amount, in percentage terms, relative to the luxury watch market.

B  The luxury watch market’s equilibrium price will drop by an equal amount, in percentage terms, relative to the coffee market.

C  The luxury watch market’s equilibrium price will drop by a greater amount, in percentage terms, relative to the coffee market.

D  The coffee market’s equilibrium price will drop by a lesser amount, in percentage terms, relative to the luxury watch market.

A  The price elasticity of demand moves toward being hyper-elastic.

B  None of the available answers.

C  The price elasticity of demand moves toward being inelastic.

D  The price elasticity of demand moves toward being elastic.

A  In equilibrium

B  Inelastic

C  Perfectly elastic

D  Elastic

E  Perfectly inelastic

A  Perfectly elastic

B  Elastic

C  In equilibrium

D  inelastic

E  Perfectly inelastic

A  Because you will get differing quantity figures depending on whether you are analyzing a price increase or price decrease.

B  None of the available answers.

C  Because you will get differing elasticity figures depending on whether you are analyzing supply or demand.

D  Because you will get differing elasticity figures depending on whether you are analyzing a price increase or price decrease.

A  Fall by 18.6%.

B  Rise by 40%.

C  Rise by 0.93%.

D  Fall by 0.93%.

E  Rise by 49%.

A  quantity demanded changes 1.2% for each 2% change in price.

B  quantity demanded changes for each 9% for each 1% change in price.

C  quantity demanded changes 8 units for every $1 change in price.

D  quantity demanded changes .6 units for every $1 change in price.

E  quantity demanded changes 6% for each 1% change in price.

A  Because it causes the demand curve to invert.

B  Because it enables a greater variety of units.

C  Because it complicates the analysis.

D  Because it enables us to compare the price sensitivities of various markets.

A  Greater than 1.

B  Equal to 1.

C  Is elastic in the short run and inelastic in the long run.

D  Between 0 and 1.5.

E  Less than 1.

A  Change in quantity above the equilibrium

B  Change in quantity demanded divided by the change in price.

C  Percentage change in quantity demanded divided by percentage change in price.

D  Percentage change in price divided by the percentage change in quantity demanded.

E  Change in price divided by the change in quantity demanded.