AP Microeconomicssection 9 Practice Test

AP MicroeconomicsSection 9 Practice Test

1.When price goes down, the quantity demanded goes up. Price elasticity measures how:

a. / much the price goes down.
b. / much the quantity goes up.
c. / responsive the price change is in relation to the quantity change.
d. / responsive the quantity change is in relation to the price change.
e. / responsive the consumer income change is in relation to the price change.

2.The ratio of the percentage change in the quantity demanded to the percentage change in price is the:

a. / price elasticity of supply.
b. / quantity elasticity of demand.
c. / income elasticity of demand.
d. / cross-price elasticity of demand.
e. / price elasticity of demand.

3.The income effect of a price change is the effect on the consumption of a good due to a change in:

a. / income when all prices change in the same proportion.
b. / purchasing power caused by a change in the price of the good.
c. / income caused by a change in the price of labor.
d. / income sufficient to offset the effect of a price change.
e. / disposable income caused by a change in the marginal tax rates.

Figure 47-1: Demand for Shirts

4.(Figure 47-1: Demand for Shirts) The absolute value of the price elasticity of demand for the segment AB is:

a. / less than the price elasticity of demand for segment BC.
b. / is less than the price elasticity of demand for segment EF.
c. / is zero.
d. / is equal to the price elasticity of demand for segment BC.
e. / is greater than the price elasticity of demand for segment BC.

5.After you graduate from college, you open a business selling computers. There are many other businesses in your city that sell similar computers. Based on this information, the price elasticity of demand for the computers that your business sells will be:

a. / unitary elastic.
b. / equal to zero.
c. / highly elastic.
d. / highly inelastic.
e. / perfectly inelastic.

6.The price elasticity of demand along a demand curve with a constant slope:

a. / is equal to the slope.
b. / is greater than the slope.
c. / is less than the slope.
d. / increases in absolute value as the price rises.
e. / is equal to zero at the price where the demand curve intersects the vertical axis.

7.Suppose the cross-price elasticity of demand for butter and margarine is equal to 0.96 while the cross-price elasticity of demand for water and lemon is –0.13. This means that butter and margarine are ______while water and lemon are ______.

a. / complements; substitutes
b. / substitutes; complements
c. / inelastic goods; elastic goods
d. / elastic goods; complements
e. / luxury goods; necessity goods

8.To say that two goods are substitutes, their cross-price elasticities of demand should be:

a. / less than 0, but not less than -1.
b. / negative, yet almost equal to 0.
c. / equal to 0.
d. / greater than 0.
e. / less than -1.

9.If the income elasticity of demand for a good is negative, the good is said to be a(n):

a. / inferior good.
b. / negative good.
c. / positive good.
d. / normal good.
e. / substitute good.

10.Along a given demand curve, an increase in the price of a good will:

a. / increase consumer surplus.
b. / decrease consumer surplus.
c. / have no effect on consumer surplus.
d. / decrease producer surplus.
e. / increase the quantity of the good demanded.

11.Suppose the United States removes the current sugar quotas and the market price of sugar drops. In the candy bar market, we would expect:

a. / fewer candy bars to be consumed.
b. / the consumer surplus to decrease.
c. / the consumer surplus to be unchanged.
d. / the deadweight loss to increase.
e. / the consumer surplus to increase.
This table shows some Atlanta college students' willingness to pay to see The Nutty Nutcracker, by the Atlanta Ballet.
Student / Willingness to Pay
Lois / $100
Miguel / 90
Narum / 65
Oscar / 50
Pat / 15
Table 49-2: Consumer Surplus

12.(Table 49-2: Consumer Surplus) If the price of a ticket to see The Nutty Nutcracker is $75 and there is no other market for tickets, the total consumer surplus for the five students is:

a. / $190.
b. / $125.
c. / $40.
d. / $0.
e. / $150.

13.Suppose the government imposes a $10 excise tax on the sale of sweaters by charging suppliers $10 for each sweater sold. If the demand curve for sweaters is downward sloping, we would predict that:

a. / the price of sweaters will increase by $10.
b. / consumers of sweaters will bear the entire burden of the tax.
c. / the quantity of sweaters purchased will increase.
d. / the price of sweaters will decrease by $10.
e. / the price of sweaters will increase by less than $10.

14.The incidence of a tax:

a. / is a measure of the revenue the government receives from the tax.
b. / refers to who writes the check to the government.
c. / refers to the share of the tax paid by consumers and the share paid by sellers.
d. / is a measure of the deadweight loss from the tax.
e. / is the price elasticity of demand after the tax is paid.

15.Assume that the supply of shoes is upward sloping and the demand for shoes is downward sloping. If the government imposes a $5 excise tax on the sale of leather shoes collected from the supplier and the price of leather shoes increases by $2:

a. / the government will receive as tax revenue $2 for each pair of shoes sold.
b. / consumers are paying a larger share of the tax than the producers.
c. / producers are paying a larger share of the tax than are the consumers.
d. / the quantity of shoes sold will increase.
e. / the government will receive as tax revenue $3 for each pair of shoes sold.

16.An excise tax is a tax charged on:

a. / imports
b. / earnings.
c. / the ownership of real estate.
d. / the inheritance of assets.
e. / each unit of a good or service that is sold.

17.Xavier notices that the marginal utility of working with a tutor seems to fall with each hour the tutor helps him study. If Xavier keeps the tutor until his grade actually begins to fall, his marginal utility will be:

a. / diminishing and negative.
b. / positive, but rising more slowly.
c. / zero.
d. / positive, but rising more quickly.
e. / negative, but beginning to rise.

18.An individual gets five units of utility from one slice of pizza and nine units of utility from two slices of pizza. The principle of diminishing marginal utility implies that the total utility from three slices of pizza will be:

a. / exactly 12 units of utility.
b. / less than 13 units of utility.
c. / less than nine units of utility.
d. / more than 14 units of utility.
e. / between 13 and 20 units of utility.
Units / 0 / 1 / 2 / 3 / 4 / 5 / 6 / 7
Total Utility / 0 / 20 / 35 / 45 / 50 / 50 / 45 / 35
Table 51-1: Utility

19.(Table 51-1: Utility) Marginal utility first becomes negative at the ______unit.

a. / first
b. / second
c. / fifth
d. / sixth
e. / seventh
Hours of
Exercise / Total Utility
0 / 0
1 / 5
2 / 15
3 / 23
4 / 29
5 / 33
Table 51-2: Exercise and Total Utility

20.(Table 51-2: Exercise and Total Utility) The table shows a consumer's total utility from consuming hours of exercise at the gym. The principle of diminishing marginal utility is seen:

a. / nowhere, as marginal utility is always increasing.
b. / immediately, when the consumer exercises from the very first hour and beyond.
c. / when the consumer exercises between the first and second hours.
d. / when the consumer exercises more than two hours.
e. / only when the consumer exercises the fifth hour.