1. True or False - Whenever a determinant of supply other than price          changes, the supply curve shifts.

2. Elasticity is

a. a measure of how much buyers and sellers respond to changes in market conditions.

b. the study of how the allocation of resources affects economic well-being.

c. the maximum amount that a buyer will pay for a good.

d. the value of everything a seller must give up to produce a good.

3. If the price of milk rises, when is the price elasticity of demand likely to             be the lowest?

a. immediately after the price increase

b. one month after the price increase

c. three months after the price increase

d. one year after the price increase

4. Whether a good is a luxury or necessity depends on the

a. price of the good.

b. preferences of the buyer.

c. intrinsic properties of the good.

d. scarcity of the good.

5. When the price of a bracelet was $25 each, the jewelry shop sold 20 per            month. When it raised the price to $35 each, it sold 14 per month. Using          the midpoint method, the price elasticity of demand for bracelets is         about

a. 1.66.

b. 1.06.

c. 0.94.

d. 0.60.

6. When the price of used cds is $4, Daphne buys five per month. When the           price is $3, she buys nine per month. Daphne's demand for used cds is

a. elastic, and her demand curve would be relatively flat.

b. elastic, and her demand curve would be relatively steep.

c. inelastic, and her demand curve would be relatively flat.

d. inelastic, and her demand curve would be relatively steep.