Question 1

Exhibit 5-11   Refer to Exhibit 5-11.What can be said of the price elasticity of demand for this good?

Accepted Answer

A) Demand is inelastic. 
B) Demand is unit elastic. 
C) Demand is elastic. 
D) Demand is perfectly elastic. 
E) Not enough information is given to determine elasticity. 
A) Demand is inelastic. 
B) Demand is unit elastic. 
C) Demand is elastic. 
D) Demand is perfectly elastic. 
E) Not enough information is given to determine elasticity.

Question 2

The cross-price elasticity of demand between pancakes and waffles is positive.This indicates all of the following except one.Which is the exception?

Accepted Answer

A) Pancakes and waffles are substitutes. 
B) An increase in the price of pancakes will shift the demand curve for waffles to the right. 
C) An increase in the price of waffles will shift the demand curve for pancakes to the right. 
D) A decrease in the supply of waffles will shift the demand curve for pancakes to the right. 
E) Pancake demand and waffle demand are price elastic. 
A) Pancakes and waffles are substitutes. 
B) An increase in the price of pancakes will shift the demand curve for waffles to the right. 
C) An increase in the price of waffles will shift the demand curve for pancakes to the right. 
D) A decrease in the supply of waffles will shift the demand curve for pancakes to the right. 
E) Pancake demand and waffle demand are price elastic.

Question 3

Exhibit 5-8   In Exhibit 5-8, which of the following statements is true at a quantity of 10?

Accepted Answer

A) Demand is elastic. 
B) Demand is inelastic. 
C) Demand is unit elastic. 
D) We cannot tell anything about elasticity of demand because this is a total revenue curve. 
E) Demand is perfectly elastic. 
A) Demand is elastic. 
B) Demand is inelastic. 
C) Demand is unit elastic. 
D) We cannot tell anything about elasticity of demand because this is a total revenue curve. 
E) Demand is perfectly elastic.

Question 4

Price elasticity of demand is typically negative because

Accepted Answer

A) as price decreases, quantity demanded decreases 
B) as price decreases, quantity demanded increases 
C) as price decreases, demand decreases 
D) as price decreases, demand increases 
E) consumers rarely respond to a change in price 
A) as price decreases, quantity demanded decreases 
B) as price decreases, quantity demanded increases 
C) as price decreases, demand decreases 
D) as price decreases, demand increases 
E) consumers rarely respond to a change in price

Question 5

A demand curve that is unit elastic everywhere is

Accepted Answer

A) linear and slopes downward 
B) linear and slopes upward 
C) vertical 
D) horizontal 
E) nonlinear 
A) linear and slopes downward 
B) linear and slopes upward 
C) vertical 
D) horizontal 
E) nonlinear

Question 6

In order to prove that Coca Cola and 7-Up are substitutes, one should test the __________ and get a __________.

Accepted Answer

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

Question 7

Price elasticity of demand is useful because it measures __________ responsiveness to changes in __________.

Accepted Answer

A) taxpayers'; demand 
B) producers'; supply 
C) consumers'; price 
D) consumers'; demand 
E) producers'; income 
A) taxpayers'; demand 
B) producers'; supply 
C) consumers'; price 
D) consumers'; demand 
E) producers'; income

Question 8

Exhibit 5-23   Refer to Exhibit 5-23.Demand curve D is an example of a(n)

Accepted Answer

A) curvilinear demand curve 
B) linear demand curve 
C) linear supply curve 
D) unit-elastic demand curve 
E) total revenue curve 
A) curvilinear demand curve 
B) linear demand curve 
C) linear supply curve 
D) unit-elastic demand curve 
E) total revenue curve

Question 9

Today's supply curve of dorm rooms on campus is likely to be

Accepted Answer

A) downward sloping 
B) relatively flat 
C) vertical 
D) horizontal 
E) price elastic 
A) downward sloping 
B) relatively flat 
C) vertical 
D) horizontal 
E) price elastic

Question 10

Exhibit 5-27   Consider Exhibit 5-27.Which graph depicts neither a perfectly elastic nor a perfectly inelastic demand?

Accepted Answer

A) Graph A 
B) Graph B 
C) Graph C 
D) Graph D 
E) both graphs A and B 
A) Graph A 
B) Graph B 
C) Graph C 
D) Graph D 
E) both graphs A and B

Question 11

Exhibit 5-24   Refer to Exhibit 5-24.The demand curve that best illustrates how consumers will respond to a change in price over a very long time period is:

Accepted Answer

A) curve D(1) 
B) curve D(2) 
C) curve D(4) 
D) curve D(3) 
E) either curve D(1)or D(4) 
A) curve D(1) 
B) curve D(2) 
C) curve D(4) 
D) curve D(3) 
E) either curve D(1)or D(4)

Question 12

If a 5% increase in price leads to an 8% decrease in quantity demanded, demand is

Accepted Answer

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

Question 13

Exhibit 5-21   What is the price elasticity of supply between $20 and $40 on supply curve S' in Exhibit 5-21?

Accepted Answer

A) 0 
B) infinity 
C) 1 
D) 2 
E) 10 
A) 0 
B) infinity 
C) 1 
D) 2 
E) 10

Question 14

Exhibit 5-26   Refer to Exhibit 5-26.As you move down the demand curve from A to B to C to D, which of the following describes what happens to the price elasticity of demand?

Accepted Answer

A) nothing 
B) goes from elastic at A and gets increasingly inelastic as you go to B and C and D 
C) goes from perfectly inelastic at A and gets increasingly elastic as you go to B and C and D 
D) goes from inelastic at A and gets increasingly elastic as you go to B and C and D 
E) goes from inelastic at A and gets increasingly elastic as you go to B but then gets increasingly inelastic as you go to C and D 
A) nothing 
B) goes from elastic at A and gets increasingly inelastic as you go to B and C and D 
C) goes from perfectly inelastic at A and gets increasingly elastic as you go to B and C and D 
D) goes from inelastic at A and gets increasingly elastic as you go to B and C and D 
E) goes from inelastic at A and gets increasingly elastic as you go to B but then gets increasingly inelastic as you go to C and D

Question 15

If price increases from $45 to $55, the market quantity supplied increases from 20 units per week to 30 units per week.The price elasticity of supply is

Accepted Answer

A) 1/2 = 0.5 
B) 1.0 
C) 11/6 = 1.8333 
D) 9/4 = 2.25 
E) 2.0 
A) 1/2 = 0.5 
B) 1.0 
C) 11/6 = 1.8333 
D) 9/4 = 2.25 
E) 2.0

Question 16

The more broadly a good is defined

Accepted Answer

A) the more substitutes it has, so demand will be more price-elastic 
B) the less substitutes it has, so demand will be more price-elastic 
C) the more substitutes it has, so demand will be less price-elastic 
D) the less substitutes it has, so demand will be less price-elastic 
E) has no effect on the good's price elasticity of demand 
A) the more substitutes it has, so demand will be more price-elastic 
B) the less substitutes it has, so demand will be more price-elastic 
C) the more substitutes it has, so demand will be less price-elastic 
D) the less substitutes it has, so demand will be less price-elastic 
E) has no effect on the good's price elasticity of demand

Question 17

When demand is elastic, an increase in price will lead to an increase in total revenue

Accepted Answer

A) True 
 B)False

Question 18

The demand for flounder (a specific type of fish)is

Accepted Answer

A) more elastic than the demand for fish because there are more substitutes for flounder than for fish in general 
B) less elastic than the demand for fish because there are more substitutes for flounder than for fish in general 
C) more elastic than the demand for fish because there are more substitutes for fish in general than for flounder 
D) less elastic than the demand for fish because there are more substitutes for fish in general than for flounder 
E) more elastic than the demand for fish because flounder is one of the less expensive kinds of fish 
A) more elastic than the demand for fish because there are more substitutes for flounder than for fish in general 
B) less elastic than the demand for fish because there are more substitutes for flounder than for fish in general 
C) more elastic than the demand for fish because there are more substitutes for fish in general than for flounder 
D) less elastic than the demand for fish because there are more substitutes for fish in general than for flounder 
E) more elastic than the demand for fish because flounder is one of the less expensive kinds of fish

Question 19

If the demand for a product is price inelastic,

Accepted Answer

A) producers' revenues will increase if supply increases 
B) producers' revenues will increase if supply decreases 
C) a small change in price will cause a large shift in the demand curve 
D) a large change in price will cause a small shift in the demand curve 
E) a small change in price will cause a small shift in the demand curve 
A) producers' revenues will increase if supply increases 
B) producers' revenues will increase if supply decreases 
C) a small change in price will cause a large shift in the demand curve 
D) a large change in price will cause a small shift in the demand curve 
E) a small change in price will cause a small shift in the demand curve

Question 20

Elasticity rises as price falls along a linear, downward-sloping demand curve.

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity of Demand and Supply

Exhibit 5-11 Refer to Exhibit 5-11.What can be said of the price elasticity of demand for this good?

The cross-price elasticity of demand between pancakes and waffles is positive.This indicates all of the following except one.Which is the exception?

Exhibit 5-8 In Exhibit 5-8, which of the following statements is true at a quantity of 10?

Price elasticity of demand is typically negative because

A demand curve that is unit elastic everywhere is

In order to prove that Coca Cola and 7-Up are substitutes, one should test the __________ and get a __________.

Price elasticity of demand is useful because it measures __________ responsiveness to changes in __________.

Exhibit 5-23 Refer to Exhibit 5-23.Demand curve D is an example of a(n)

Today's supply curve of dorm rooms on campus is likely to be

Exhibit 5-27 Consider Exhibit 5-27.Which graph depicts neither a perfectly elastic nor a perfectly inelastic demand?

Exhibit 5-24 Refer to Exhibit 5-24.The demand curve that best illustrates how consumers will respond to a change in price over a very long time period is:

If a 5% increase in price leads to an 8% decrease in quantity demanded, demand is

Exhibit 5-21 What is the price elasticity of supply between $20 and $40 on supply curve S' in Exhibit 5-21?

Exhibit 5-26 Refer to Exhibit 5-26.As you move down the demand curve from A to B to C to D, which of the following describes what happens to the price elasticity of demand?

If price increases from $45 to $55, the market quantity supplied increases from 20 units per week to 30 units per week.The price elasticity of supply is

The more broadly a good is defined

When demand is elastic, an increase in price will lead to an increase in total revenue

The demand for flounder (a specific type of fish)is

If the demand for a product is price inelastic,

Elasticity rises as price falls along a linear, downward-sloping demand curve.

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

In order to prove that Coca Cola and 7-Up are substitutes, one should test the and get a .

Price elasticity of demand is useful because it measures responsiveness to changes in .