Question 1

The total revenue from selling trucks is equal to

Accepted Answer

A) the price of a truck times the quantity sold 
B) the change in quantity sold divided by the change in price 
C) average cost times quantity produced 
D) the price of a truck times the quantity produced 
E) the price of a truck times the price elasticity of demand 
A) the price of a truck times the quantity sold 
B) the change in quantity sold divided by the change in price 
C) average cost times quantity produced 
D) the price of a truck times the quantity produced 
E) the price of a truck times the price elasticity of demand

Question 2

If the administration raises tuition on our campus in order to increase revenue, it will

Accepted Answer

A) not be successful if the demand curve slopes downward 
B) be successful if demand is elastic 
C) be successful if demand is inelastic 
D) be successful if supply is elastic 
E) be successful if supply is inelastic 
A) not be successful if the demand curve slopes downward 
B) be successful if demand is elastic 
C) be successful if demand is inelastic 
D) be successful if supply is elastic 
E) be successful if supply is inelastic

Question 3

Both income elasticity of demand and cross-price elasticity of demand coefficients can take on negative, zero, or positive values.

Accepted Answer

A) True 
 B)False

Question 4

If the cross-price elasticity of demand is -3, then the goods are __________ and the consumers' responsiveness would be characterized as __________.

Accepted Answer

A) substitutes; inelastic 
B) substitutes; elastic 
C) substitutes; unit elastic 
D) complements; inelastic 
E) complements; elastic 
A) substitutes; inelastic 
B) substitutes; elastic 
C) substitutes; unit elastic 
D) complements; inelastic 
E) complements; elastic

Question 5

The value of price elasticity of demand for a good with no close substitutes

Accepted Answer

A) will tend to be greater than -1 
B) will tend to be less than -1 
C) will tend to be equal to -1 
D) will tend to be equal to 0 
E) cannot be determined without more information 
A) will tend to be greater than -1 
B) will tend to be less than -1 
C) will tend to be equal to -1 
D) will tend to be equal to 0 
E) cannot be determined without more information

Question 6

A 5 percent increase in income leads to a 10 percent decrease in quantity demanded for a service.This service is a(n)__________ good and demand is __________.

Accepted Answer

A) normal; elastic 
B) normal; inelastic 
C) normal; unit elastic 
D) inferior; elastic 
E) inferior; inelastic 
A) normal; elastic 
B) normal; inelastic 
C) normal; unit elastic 
D) inferior; elastic 
E) inferior; inelastic

Question 7

Exhibit 5-26   Refer to Exhibit 5-26.Between points A and B, price elasticity of demand is:

Accepted Answer

A) unitary 
B) elastic 
C) inelastic 
D) perfectly elastic 
E) perfectly inelastic 
A) unitary 
B) elastic 
C) inelastic 
D) perfectly elastic 
E) perfectly inelastic

Question 8

Exhibit 5-7   Between points b and c in Exhibit 5-7, price decreases by $1, quantity demanded increases by 10,

Accepted Answer

A) total revenue decreases by $1, and demand is elastic 
B) total revenue decreases by $1, and demand is inelastic 
C) total revenue increases by $40, and demand is elastic 
D) total revenue increases by $40, and demand is inelastic 
E) and total revenue increases by $80 
A) total revenue decreases by $1, and demand is elastic 
B) total revenue decreases by $1, and demand is inelastic 
C) total revenue increases by $40, and demand is elastic 
D) total revenue increases by $40, and demand is inelastic 
E) and total revenue increases by $80

Question 9

If a tripling of price triples the quantity of a good supplied, the price elasticity of supply is

Accepted Answer

A) 3 
B) 300 
C) 1 
D) -1 
E) -3 
A) 3 
B) 300 
C) 1 
D) -1 
E) -3

Question 10

If Katherine claims that when it comes to buying shoes, "price is no object, " her demand curve for shoes is likely to be

Accepted Answer

A) horizontal 
B) nonexistent 
C) upward sloping 
D) highly inelastic 
E) unit elastic 
A) horizontal 
B) nonexistent 
C) upward sloping 
D) highly inelastic 
E) unit elastic

Question 11

Luxury goods are

Accepted Answer

A) price inelastic 
B) income inelastic 
C) income elastic 
D) goods with negative income elasticity 
E) goods with positive price elasticity 
A) price inelastic 
B) income inelastic 
C) income elastic 
D) goods with negative income elasticity 
E) goods with positive price elasticity

Question 12

Necessities and luxuries are both types of normal goods.

Accepted Answer

A) True 
 B)False

Question 13

Exhibit 5-28   Consider Exhibit 5-28.Between points c and d, demand would be said to be

Accepted Answer

A) perfecly price inelastic 
B) price inelastic 
C) perfectly price elastic 
D) price elastic 
E) unitary elastic 
A) perfecly price inelastic 
B) price inelastic 
C) perfectly price elastic 
D) price elastic 
E) unitary elastic

Question 14

If people have more time to adjust to a price change, the price elasticity of demand for that good is likely to

Accepted Answer

A) increase 
B) decrease 
C) fall to zero 
D) become equal to -1 
E) remain unchanged 
A) increase 
B) decrease 
C) fall to zero 
D) become equal to -1 
E) remain unchanged

Question 15

Exhibit 5-15   Which of the demand curves in Exhibit 5-15 is unit elastic?

Accepted Answer

A) the curve in graph a 
B) the curve in graph b 
C) the curve in graph c 
D) the curve in graph d 
E) the curve in graph e 
A) the curve in graph a 
B) the curve in graph b 
C) the curve in graph c 
D) the curve in graph d 
E) the curve in graph e

Question 16

The more narrowly a product is defined, the less elastic the demand for that product will be.

Accepted Answer

A) True 
 B)False

Question 17

The demand for Olin skis is likely to be

Accepted Answer

A) less elastic than the demand for skis in general 
B) more elastic than the demand for skis in general 
C) unit elastic relative to the demand for skis in general 
D) as elastic as the demand for skis in general 
E) greater than the demand for skis in general 
A) less elastic than the demand for skis in general 
B) more elastic than the demand for skis in general 
C) unit elastic relative to the demand for skis in general 
D) as elastic as the demand for skis in general 
E) greater than the demand for skis in general

Question 18

Exhibit 5-19   The curve shown in Exhibit 5-19 could represent

Accepted Answer

A) perfectly elastic demand or supply 
B) perfectly inelastic supply or perfectly elastic demand 
C) perfectly elastic supply or perfectly inelastic demand 
D) perfectly inelastic supply or demand 
E) perfectly inelastic supply or demand which is unit elastic 
A) perfectly elastic demand or supply 
B) perfectly inelastic supply or perfectly elastic demand 
C) perfectly elastic supply or perfectly inelastic demand 
D) perfectly inelastic supply or demand 
E) perfectly inelastic supply or demand which is unit elastic

Question 19

A good synonym for elasticity would be

Accepted Answer

A) stability 
B) volatility 
C) stickiness 
D) demand 
E) responsiveness 
A) stability 
B) volatility 
C) stickiness 
D) demand 
E) responsiveness

Question 20

Any supply curve that is a straight line passing through the graph's origin is unit elastic.

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity of Demand and Supply

The total revenue from selling trucks is equal to

If the administration raises tuition on our campus in order to increase revenue, it will

Both income elasticity of demand and cross-price elasticity of demand coefficients can take on negative, zero, or positive values.

If the cross-price elasticity of demand is -3, then the goods are __________ and the consumers' responsiveness would be characterized as __________.

The value of price elasticity of demand for a good with no close substitutes

A 5 percent increase in income leads to a 10 percent decrease in quantity demanded for a service.This service is a(n)__________ good and demand is __________.

Exhibit 5-26 Refer to Exhibit 5-26.Between points A and B, price elasticity of demand is:

Exhibit 5-7 Between points b and c in Exhibit 5-7, price decreases by $1, quantity demanded increases by 10,

If a tripling of price triples the quantity of a good supplied, the price elasticity of supply is

If Katherine claims that when it comes to buying shoes, "price is no object, " her demand curve for shoes is likely to be

Luxury goods are

Necessities and luxuries are both types of normal goods.

Exhibit 5-28 Consider Exhibit 5-28.Between points c and d, demand would be said to be

If people have more time to adjust to a price change, the price elasticity of demand for that good is likely to

Exhibit 5-15 Which of the demand curves in Exhibit 5-15 is unit elastic?

The more narrowly a product is defined, the less elastic the demand for that product will be.

The demand for Olin skis is likely to be

Exhibit 5-19 The curve shown in Exhibit 5-19 could represent

A good synonym for elasticity would be

Any supply curve that is a straight line passing through the graph's origin is unit elastic.

The Art and Science of Economic Analysis

Appendix--Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Appendix--Price Elasticity and Tax Incidence

Consumer Choice and Demand

Appendix--Indifference Curves and Utility Maximization

Production and Cost in the Firm

A--Perfect Competition

B--Perfect Competition

A--Monopoly

B--Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

Filters

If the cross-price elasticity of demand is -3, then the goods are and the consumers' responsiveness would be characterized as .

A 5 percent increase in income leads to a 10 percent decrease in quantity demanded for a service.This service is a(n) good and demand is .