Question 1

The supply curve will be more elastic if

Accepted Answer

A) the good has few substitutes 
B) the time the producer has to adjust is long 
C) the time frame for adjusting to price changes is short 
D) demand is elastic 
E) demand is inelastic 
A) the good has few substitutes 
B) the time the producer has to adjust is long 
C) the time frame for adjusting to price changes is short 
D) demand is elastic 
E) demand is inelastic

Question 2

Goods with an income elasticity of demand greater than 1 are called

Accepted Answer

A) necessities 
B) inferior goods 
C) normal goods 
D) luxuries 
E) complements 
A) necessities 
B) inferior goods 
C) normal goods 
D) luxuries 
E) complements

Question 3

Along a downward-sloping linear demand curve, total revenue is greatest if demand is

Accepted Answer

A) inelastic 
B) elastic 
C) inelastic when prices are high 
D) elastic when prices are high 
E) unit elastic 
A) inelastic 
B) elastic 
C) inelastic when prices are high 
D) elastic when prices are high 
E) unit elastic

Question 4

If income rises and the demand for a product remains unchanged, the income elasticity of demand for that product is unit elastic.

Accepted Answer

A) True 
 B)False

Question 5

Demand is inelastic only if

Accepted Answer

A) price elasticity has an absolute value of 1 
B) price elasticity has an absolute value greater than 1 
C) price elasticity has an absolute value less than 1 
D) price elasticity is negative 
E) consumers do not respond to a change in price 
A) price elasticity has an absolute value of 1 
B) price elasticity has an absolute value greater than 1 
C) price elasticity has an absolute value less than 1 
D) price elasticity is negative 
E) consumers do not respond to a change in price

Question 6

Exhibit 5-5   In Exhibit 5-5, what is the total revenue to the left of point a?

Accepted Answer

A) less than $50, if demand is price inelastic 
B) less than $50, if demand is price elastic 
C) $50 
D) more than $50, if demand is price elastic 
E) not enough information to tell 
A) less than $50, if demand is price inelastic 
B) less than $50, if demand is price elastic 
C) $50 
D) more than $50, if demand is price elastic 
E) not enough information to tell

Question 7

Exhibit 5-5   In Exhibit 5-5, what is the total revenue to the right of point a?

Accepted Answer

A) equal to $50, if demand is price inelastic 
B) less than $50, if demand is price elastic 
C) equal to $50, if demand is unitary elastic 
D) more than $50, if demand is price inelastic 
E) not enough information to tell 
A) equal to $50, if demand is price inelastic 
B) less than $50, if demand is price elastic 
C) equal to $50, if demand is unitary elastic 
D) more than $50, if demand is price inelastic 
E) not enough information to tell

Question 8

Along a straight-line downward-sloping demand curve, elasticity is

Accepted Answer

A) constant, but its value cannot be determined without measurement 
B) constant and equal to an absolute value of one 
C) greater at higher prices 
D) greater at lower prices 
E) greater in the middle 
A) constant, but its value cannot be determined without measurement 
B) constant and equal to an absolute value of one 
C) greater at higher prices 
D) greater at lower prices 
E) greater in the middle

Question 9

If the cross-price elasticity of demand is -3, then

Accepted Answer

A) the goods are substitutes 
B) one good is price inelastic 
C) one good is an inferior good 
D) one good is a luxury good 
E) the goods are complements 
A) the goods are substitutes 
B) one good is price inelastic 
C) one good is an inferior good 
D) one good is a luxury good 
E) the goods are complements

Question 10

It has been suggested that if NHL hockey teams would lower ticket prices, they could increase revenue from ticket sales.Which of the following assumptions forms the basis for this suggestion?

Accepted Answer

A) Both d and e are correct. 
B) All of the following are correct. 
C) Demand for NHL hockey is income inelastic. 
D) Demand for NHL hockey is price elastic. 
E) There are many substitutes for NHL hockey. 
A) Both d and e are correct. 
B) All of the following are correct. 
C) Demand for NHL hockey is income inelastic. 
D) Demand for NHL hockey is price elastic. 
E) There are many substitutes for NHL hockey.

Question 11

If a good is inferior, then the income elasticity of demand for that good is

Accepted Answer

A) positive and greater than 1 
B) negative 
C) positive and less than 1 
D) 0 
E) perfectly elastic 
A) positive and greater than 1 
B) negative 
C) positive and less than 1 
D) 0 
E) perfectly elastic

Question 12

Farm income has fallen in part because demand for farm products is price inelastic and income inelastic.

Accepted Answer

A) True 
 B)False

Question 13

The larger the proportion of the consumer's budget that is spent on a product, the more elastic that consumer's demand for the product will be.

Accepted Answer

A) True 
 B)False

Question 14

The demands for wheat, soybeans, milk, and eggs tend to be

Accepted Answer

A) price inelastic 
B) price elastic 
C) price inelastic only in the long run 
D) price elastic only in the short run 
E) price elastic only in the long run 
A) price inelastic 
B) price elastic 
C) price inelastic only in the long run 
D) price elastic only in the short run 
E) price elastic only in the long run

Question 15

Income elasticity of demand is greater than zero for all of the following except

Accepted Answer

A) restaurant meals 
B) beer 
C) owner-occupied housing 
D) food 
E) rental housing 
A) restaurant meals 
B) beer 
C) owner-occupied housing 
D) food 
E) rental housing

Question 16

To ensure that we get the same result for price elasticity no matter which direction we move on the demand curve, we must take the average of the

Accepted Answer

A) initial price and the initial quantity demanded and the average of the new price and the new quantity demanded 
B) new price and the initial quantity demanded and the average of the new quantity demanded and the initial price 
C) initial price and the new price and the average of the initial quantity demanded and the new quantity demanded 
D) initial price and the new price only 
E) new quantity demanded and the initial quantity demanded only 
A) initial price and the initial quantity demanded and the average of the new price and the new quantity demanded 
B) new price and the initial quantity demanded and the average of the new quantity demanded and the initial price 
C) initial price and the new price and the average of the initial quantity demanded and the new quantity demanded 
D) initial price and the new price only 
E) new quantity demanded and the initial quantity demanded only

Question 17

The availability of substitutes makes the demand for a good less elastic.

Accepted Answer

A) True 
 B)False

Question 18

Perfectly elastic demand curves are

Accepted Answer

A) downward sloping 
B) upward sloping 
C) vertical 
D) horizontal 
E) steep 
A) downward sloping 
B) upward sloping 
C) vertical 
D) horizontal 
E) steep

Question 19

Exhibit 5-9   Between points a and b on the demand curve in Exhibit 5-9, demand is

Accepted Answer

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

Question 20

A successful advertising campaign would likely

Accepted Answer

A) increase price elasticity of demand by stressing the uniqueness of the product 
B) reduce price elasticity of demand by stressing the uniqueness of the product 
C) reduce price elasticity of demand by informing consumers of the availability of substitutes 
D) not alter the demand curve 
E) generally make the demand curve shift inward 
A) increase price elasticity of demand by stressing the uniqueness of the product 
B) reduce price elasticity of demand by stressing the uniqueness of the product 
C) reduce price elasticity of demand by informing consumers of the availability of substitutes 
D) not alter the demand curve 
E) generally make the demand curve shift inward

Exam 5: Elasticity of Demand and Supply

The supply curve will be more elastic if

Goods with an income elasticity of demand greater than 1 are called

Along a downward-sloping linear demand curve, total revenue is greatest if demand is

If income rises and the demand for a product remains unchanged, the income elasticity of demand for that product is unit elastic.

Demand is inelastic only if

Exhibit 5-5 In Exhibit 5-5, what is the total revenue to the left of point a?

Exhibit 5-5 In Exhibit 5-5, what is the total revenue to the right of point a?

Along a straight-line downward-sloping demand curve, elasticity is

If the cross-price elasticity of demand is -3, then

It has been suggested that if NHL hockey teams would lower ticket prices, they could increase revenue from ticket sales.Which of the following assumptions forms the basis for this suggestion?

If a good is inferior, then the income elasticity of demand for that good is

Farm income has fallen in part because demand for farm products is price inelastic and income inelastic.

The larger the proportion of the consumer's budget that is spent on a product, the more elastic that consumer's demand for the product will be.

The demands for wheat, soybeans, milk, and eggs tend to be

Income elasticity of demand is greater than zero for all of the following except

To ensure that we get the same result for price elasticity no matter which direction we move on the demand curve, we must take the average of the

The availability of substitutes makes the demand for a good less elastic.

Perfectly elastic demand curves are

Exhibit 5-9 Between points a and b on the demand curve in Exhibit 5-9, demand is

A successful advertising campaign would likely

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

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