Question 1

Given the availability of California oranges, demand for Florida oranges will

Accepted Answer

A) be less elastic than if there were no California oranges 
B) be more elastic than if there were no California oranges 
C) have the same elasticity as it would if there were no California oranges 
D) be perfectly elastic 
E) be perfectly inelastic 
A) be less elastic than if there were no California oranges 
B) be more elastic than if there were no California oranges 
C) have the same elasticity as it would if there were no California oranges 
D) be perfectly elastic 
E) be perfectly inelastic

Question 2

The greater the availability of close substitutes for a product, the greater the price elasticity of demand for that product.

Accepted Answer

A) True 
 B)False

Question 3

Along a linear demand curve,

Accepted Answer

A) both the slope and price elasticity are constant 
B) the price elasticity is constant, but the slope varies 
C) total revenues are constant 
D) the slope is constant, but the price elasticity varies 
E) total revenues are negative 
A) both the slope and price elasticity are constant 
B) the price elasticity is constant, but the slope varies 
C) total revenues are constant 
D) the slope is constant, but the price elasticity varies 
E) total revenues are negative

Question 4

If we wanted to prove that macaroni is an inferior good, we would test the __________ of macaroni and get a __________.

Accepted Answer

A) cross-price elasticity; negative number 
B) income elasticity; number less than 1 
C) income elasticity; positive number 
D) price elasticity of demand; number greater than negative 1 
E) income elasticity; negative number 
A) cross-price elasticity; negative number 
B) income elasticity; number less than 1 
C) income elasticity; positive number 
D) price elasticity of demand; number greater than negative 1 
E) income elasticity; negative number

Question 5

Exhibit 5-15   Which demand curve in Exhibit 5-15 is perfectly 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 6

Exhibit 5-4   What is the price elasticity of demand in Exhibit 5-4?

Accepted Answer

A) 0 
B) -1 
C) negative infinity 
D) 1 
E) -100 
A) 0 
B) -1 
C) negative infinity 
D) 1 
E) -100

Question 7

The value of cross-price elasticity of demand between orange soda and grape soda is

Accepted Answer

A) negative 
B) positive 
C) 0 
D) between -1 and 0 
E) less than -1 
A) negative 
B) positive 
C) 0 
D) between -1 and 0 
E) less than -1

Question 8

Suppose the cross-price elasticity of demand between quinces and muskmelons is 5.Which of the following must be true?

Accepted Answer

A) Quinces are normal goods. 
B) Muskmelons are normal goods. 
C) If the price of quinces rises by $5, the demand for muskmelons will increase by 1. 
D) If the price of muskmelons rises by $5, the demand for quinces will increase by 1. 
E) Quinces and muskmelons are substitutes. 
A) Quinces are normal goods. 
B) Muskmelons are normal goods. 
C) If the price of quinces rises by $5, the demand for muskmelons will increase by 1. 
D) If the price of muskmelons rises by $5, the demand for quinces will increase by 1. 
E) Quinces and muskmelons are substitutes.

Question 9

Substitutes are pairs of goods that have a positive cross-price elasticity of demand.

Accepted Answer

A) True 
 B)False

Question 10

Exhibit 5-14   Which of the following is true of the demand curve in Exhibit 5-14?

Accepted Answer

A) Its slope is 0, and the value of elasticity is negative infinity. 
B) Its slope is infinite, and the value of elasticity is 0. 
C) Both its slope and the value of elasticity are 0. 
D) Both its slope and the value of elasticity are negative infinity. 
E) Its slope is 0, and demand is perfectly inelastic. 
A) Its slope is 0, and the value of elasticity is negative infinity. 
B) Its slope is infinite, and the value of elasticity is 0. 
C) Both its slope and the value of elasticity are 0. 
D) Both its slope and the value of elasticity are negative infinity. 
E) Its slope is 0, and demand is perfectly inelastic.

Question 11

If an increase in the price of a product from $100 to $200 per unit leads to a decrease in the quantity demanded from 10 to 8 units, then demand is

Accepted Answer

A) elastic 
B) inelastic 
C) unit elastic 
D) 0 
E) inferior 
A) elastic 
B) inelastic 
C) unit elastic 
D) 0 
E) inferior

Question 12

A normal good is defined as a product for which quantity demanded increases as price decreases.

Accepted Answer

A) True 
 B)False

Question 13

Along a linear demand curve, total revenue is maximized when demand is

Accepted Answer

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

Question 14

Total revenue is maximized where demand is inelastic.

Accepted Answer

A) True 
 B)False

Question 15

The midpoint quantity between 100 and 300 units is

Accepted Answer

A) 100 units 
B) 200 units 
C) 300 units 
D) 150 units 
E) 20, 000 units 
A) 100 units 
B) 200 units 
C) 300 units 
D) 150 units 
E) 20, 000 units

Question 16

The price elasticity of demand

Accepted Answer

A) is of no use to producers 
B) tells producers what will happen to total profit if they change product price 
C) tells producers what will happen to quantity supplied if they change product price 
D) tells producers what will happen to total revenue if they change product price 
E) tells producers what will happen to price in the following time period 
A) is of no use to producers 
B) tells producers what will happen to total profit if they change product price 
C) tells producers what will happen to quantity supplied if they change product price 
D) tells producers what will happen to total revenue if they change product price 
E) tells producers what will happen to price in the following time period

Question 17

If the cross-price elasticity of demand between two goods is 0,

Accepted Answer

A) a price change for one good will be exactly offset by a price change for the other 
B) neither demand curve would shift following a change in the price of one of the goods 
C) there is no income effect between the two goods 
D) the demand for each good is price inelastic 
E) the demand for each good is price elastic 
A) a price change for one good will be exactly offset by a price change for the other 
B) neither demand curve would shift following a change in the price of one of the goods 
C) there is no income effect between the two goods 
D) the demand for each good is price inelastic 
E) the demand for each good is price elastic

Question 18

Exhibit 5-18   Use the information in Exhibit 5-18 to calculate the price elasticity of supply for restaurant meals.

Accepted Answer

A) 7 
B) 2 
C) 1/2 
D) 3/5 
E) 5/3 
A) 7 
B) 2 
C) 1/2 
D) 3/5 
E) 5/3

Question 19

If a firm facing a perfectly elastic demand curve raises its price,

Accepted Answer

A) it will still sell exactly the same amount of output as it did at the lower price 
B) it will lose some, but not all, of its sales 
C) its sales will decrease to zero 
D) its sales will increase 
E) it is impossible to predict what will happen to its sales 
A) it will still sell exactly the same amount of output as it did at the lower price 
B) it will lose some, but not all, of its sales 
C) its sales will decrease to zero 
D) its sales will increase 
E) it is impossible to predict what will happen to its sales

Question 20

Cross-price elasticity measures the responsiveness of the price of good A to a change in the price of good

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity of Demand and Supply

Given the availability of California oranges, demand for Florida oranges will

The greater the availability of close substitutes for a product, the greater the price elasticity of demand for that product.

Along a linear demand curve,

If we wanted to prove that macaroni is an inferior good, we would test the __________ of macaroni and get a __________.

Exhibit 5-15 Which demand curve in Exhibit 5-15 is perfectly elastic?

Exhibit 5-4 What is the price elasticity of demand in Exhibit 5-4?

The value of cross-price elasticity of demand between orange soda and grape soda is

Suppose the cross-price elasticity of demand between quinces and muskmelons is 5.Which of the following must be true?

Substitutes are pairs of goods that have a positive cross-price elasticity of demand.

Exhibit 5-14 Which of the following is true of the demand curve in Exhibit 5-14?

If an increase in the price of a product from $100 to $200 per unit leads to a decrease in the quantity demanded from 10 to 8 units, then demand is

A normal good is defined as a product for which quantity demanded increases as price decreases.

Along a linear demand curve, total revenue is maximized when demand is

Total revenue is maximized where demand is inelastic.

The midpoint quantity between 100 and 300 units is

The price elasticity of demand

If the cross-price elasticity of demand between two goods is 0,

Exhibit 5-18 Use the information in Exhibit 5-18 to calculate the price elasticity of supply for restaurant meals.

If a firm facing a perfectly elastic demand curve raises its price,

Cross-price elasticity measures the responsiveness of the price of good A to a change in the price of good

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 we wanted to prove that macaroni is an inferior good, we would test the of macaroni and get a .