Question

Fall 2019 Economics 2100 MY9 Section First Exam - Version A 19. Suppose that the MTA raises the subway fare by 25% and its total revenue rises by 15% This implies that the price elasticity of demand is: c) unit elastic elastic but not perfectly elastic perfectly inelastic inelastic but not perfectly inelastic d) 20. At the equilibrium price for a good: the quantity may rise or fall there may be excess demand for a product but not excess supply there may be excess supply for a product but not excess demand the quantity supplied of the commodity must equal the quantity demanded 21. Suppose that consumers are indifferent to eating any type of green vegetable. While they wish to have a green vegetable for dinner, any one will do. This implies that the demand curve for asparagus is likely to be: b) very elastic very inelastic perfectly inelastic unit elastic d) 22. Which of the following statements is true? b) the dollar is partially backed by gold but the euro is not backed by gold the euro is partially backed by gold but the dollar is not backed by gold neither the dollar nor the euro are backed by gold the dollar and the euro are partially backed by gold 23. The Federal Reserve influences the U.S. money supply by buying: Federal government debt municipal (state and local) government debt corporate debt foreign government debt 24. The Federal Reserve can raise the U.S. money supply by: purchasing government debt raising the required reserve ratio raising the discount rate raising the federal funds rate

Answer 1

19. In case of inelastic demand, Change in price doesn't affect quantity demanded that much and therefore change in price and change in total revenue moves in the same direction.

If raising the subway fare increases total revenue, it means price elasticity of demand is inelastic but not perfectly inelastic(if demand is perfectly inelastic, percentage change in total revenue will be equal to percentage change in price).

Answer: option D

20. At the equilibrium price for a good, quantity demanded for a commodity must equal to the quantity supplied of that good.

Answer: option D