101) Refer to Figure 4-4. Suppose the government imposes a tax of $0.60 per soft-drink purchased. The after-tax price received by the seller becomes
A) $1.80
B) $2.00
C) $2.20
D) $2.40
E) $2.60
102) Refer to Figure 4-4. Suppose the government imposes a tax of $0.60 per soft drink purchased. The change in total expenditure on soft drinks is
A) a decrease of $80.
B) a decrease of $160.
C) an increase of $320.
D) an increase of $480.
E) No change in total expenditure.
103) Refer to Figure 4-4. Suppose the government imposes a tax of $0.60 per soft drink purchased. Given the change in total expenditure on soft drinks after imposition of the excise tax, what do we know about the price elasticity of demand (η) for soft drinks?
A) η is equal to 1
B) η is equal to 0
C) η is greater than 1
D) η is less than 1
E) There is not enough information to determine
104) Refer to Figure 4-4. Suppose the government imposes a tax of $0.60 per soft drink purchased. Which of the following statements most accurately describes the economic incidence of this tax?
A) The consumer bears more of the burden because demand is elastic relative to supply.
B) The seller bears more of the burden because supply is inelastic relative to demand.
C) The consumer bears more of the burden because demand is inelastic relative to supply.
D) The seller bears more of the burden because supply is elastic relative to demand.
E) The burden is shared equally between consumer and seller because the slopes of the supply and demand curves are the same.
105) The formula for income elasticity of demand may be written as which of the following?
A)
B)
C)
D)
E)
106) Income elasticity measures the change in quantity demanded of some product with respect to changes in
A) the demand of the product.
B) the price of another related product.
C) its price.
D) the supply of the product.
E) households’ income.
107) Income elasticity of demand measures the extent to which
A) the price of a good changes when there is a change in income.
B) the quantity demanded of a good changes when income changes.
C) real household income changes when there is a change in the price of a good.
D) one household’s income changes when there is a change in the income of another household.
E) quantity demanded changes when there is a change in price.
108) If a product’s income elasticity of demand is -1.7, then we can conclude that
A) an increase in income will lead to an increase in demand for the product.
B) the product is certainly a necessity.
C) the product is a luxury good.
D) a decrease in income will lead to an increase in demand for the product.
E) the product is a normal good.
109) Nancy’s income has just risen from $950 per week to $1050 per week. As a result, she decides to double the number of movies she attends each week. Nancy’s demand for movies is
A) price elastic.
B) income elastic.
C) price inelastic.
D) income inelastic.
E) positively cross inelastic.
110) If the income elasticity of demand for some good is 2.4, a 10% increase in income results in
A) a 24% increase in the quantity demanded.
B) a 2.4% increase in the quantity demanded.
C) a 240% increase in the quantity demanded.
D) a 24% decrease in quantity demanded.
E) a 240% decrease in quantity demanded.
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