FINANCE

4. Demand is said to be elastic if A) the price of the good responds substantially to changes in quantity demand. B) the quantity demanded responds substantially to changes in the price of the good. C) the price of the good responds only slightly to changes in quantity demand. D) the quantity demanded responds only slightly to changes in the price of the good. E) none of the above 15. When the price of bubble gum is $0.50, the quantity demanded is 400 packs per day. When the price falls to $0.40, the quantity demanded increases to 600. Given this information and using the total revenue method, you know that the demand for bubble gum is A) inelastic. B) elastic. C) unit elastic. D) perfectly inelastic. E) none of the above 16. Figure 1 (Questions 16-19) Combined Supply and Demand Schedule Price of a slice of pizza Quantity demanded Quantity supplied $.50 300 100 $1.00 250 150 $1.50 200 200 $2.00 150 250 $2.50 100 300 $3.00 50 350 In Figure 1, when the price of a slice of pizza is $2.50, how many slices are sold? A) 250 B) 200 C) 150 D) 100 E) 50 17. In Figure 1, what is the equilibrium price? A) $3.00 B) $2.00 C) $1.50 D) $1.00 E) not enough information 18. In Figure 1, when the price of a slice of pizza is $.50, which choice explains what is occuring the market? A) quantity demanded equals 200 B) there is a shortage of pizza C) the market is in equilibrium D) there is a surplus of pizza E) not enough information 19. In Figure 1, when the price of a slice of pizza is $2.50, what happens to the market? A) there is a shortage of pizza B) there is a price floor on pizza C) the quantity demanded equals 250 D) there is a surplus of pizza E) not enough information 20. Use Figure 2 for Questions 20-22 Refer to Figure 2. At a price of $15, A) there would be a shortage of 400 units. B) there would be a surplus of 400 units. C) there would be a shortage of 200 units. D) the market would be in equilibrium. E) none of the above 21. Refer to Figure 2. At the equilibrium price, A) 200 units would be supplied and demanded. B) 400 units would be supplied and demanded. C) 600 units would be supplied and demanded. D) 600 units would be supplied, but only 200 would be demanded. E) none of the above 22. Refer to Figure 2. At a price of $35, A) there would be a shortage of 400 units. B) there would be a surplus of 200 units. C) there would be a surplus of 400 units. D) the market would be in equilibrium. E) none of the above

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