Question 1

The price elasticity of demand for a good will tend to be larger:

Accepted Answer

A) the longer the time available to adjust to price changes. 
B) the fewer number of substitute goods available. 
C) if it is a staple. 
D) if it is relatively inexpensive. 
A) the longer the time available to adjust to price changes. 
B) the fewer number of substitute goods available. 
C) if it is a staple. 
D) if it is relatively inexpensive. A

Question 2

Local cable companies recently increased the price of basic services.A news expert reporting on the increase stated,"While prices have increased 40%,the cable company reports only a 20% increase in revenue." This remark suggests the demand for basic cable service is elastic.

Accepted Answer

A) True 
 B)False  False

Question 3

An important determinant of the price elasticity of demand is:

Accepted Answer

A) time available to adjust to price changes. 
B) the price of related goods. 
C) the level of technology. 
D) the quantity of the good supplied. 
A) time available to adjust to price changes. 
B) the price of related goods. 
C) the level of technology. 
D) the quantity of the good supplied. A

Question 4

Use the following to answer question:  
-(Figure: The Linear Demand Curve II)Use Figure: Linear Demand Curve II.At prices greater than $7,demand is _____;at prices below $7,demand is _____;and at $7,demand is _____.

Accepted Answer

A) elastic;inelastic;unit-elastic 
B) inelastic;elastic;unit-elastic 
C) unit-elastic;inelastic;elastic 
D) equal to 0;elastic;inelastic 
A) elastic;inelastic;unit-elastic 
B) inelastic;elastic;unit-elastic 
C) unit-elastic;inelastic;elastic 
D) equal to 0;elastic;inelastic

Question 5

Demand for Wendy's hamburgers is more inelastic than the demand for all fast food.

Accepted Answer

A) True 
 B)False

Question 6

There is one gas station in a small rural town.The owner of the station claims that he will sell the same quantity of gas no matter how high or low the price.If he is correct in this assertion,the demand curve for gas at his station must be _____,with a price elasticity of _____.

Accepted Answer

A) vertical;zero 
B) vertical;infinity 
C) horizontal;zero 
D) horizontal;infinity 
A) vertical;zero 
B) vertical;infinity 
C) horizontal;zero 
D) horizontal;infinity

Question 7

If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year when your income increases from $19,000 to $21,000 a year,other things equal,for you,shoes are considered a(n)_____ good.

Accepted Answer

A) normal 
B) inferior 
C) complementary 
D) substitute 
A) normal 
B) inferior 
C) complementary 
D) substitute

Question 8

Total revenue will decrease if the price goes _____ and demand is _____.

Accepted Answer

A) up;perfectly price-inelastic 
B) up;price-inelastic 
C) down;price-elastic 
D) up;price-elastic 
A) up;perfectly price-inelastic 
B) up;price-inelastic 
C) down;price-elastic 
D) up;price-elastic

Question 9

If someone did not regard health care as very important,often using home remedies and other substitutes,his or her demand curve for health care would most likely be more _____ than that of other people.

Accepted Answer

A) price-elastic 
B) price-inelastic 
C) upward-sloping 
D) bowed-out 
A) price-elastic 
B) price-inelastic 
C) upward-sloping 
D) bowed-out

Question 10

If the income elasticity of demand for a good is positive,the good is said to be:

Accepted Answer

A) inferior. 
B) a substitute. 
C) normal. 
D) positive. 
A) inferior. 
B) a substitute. 
C) normal. 
D) positive.

Question 11

Use the following to answer question:  
-(Table: Price Elasticity)Use Table: Price Elasticity.What is the price elasticity of demand (using the midpoint formula)between $0.75 and $0.50?

Accepted Answer

A) 0.25 
B) 0.33 
C) 0.43 
D) 0.52 
A) 0.25 
B) 0.33 
C) 0.43 
D) 0.52

Question 12

A price ceiling below equilibrium will cause a larger shortage when demand is _____ and supply is _____.

Accepted Answer

A) elastic;inelastic 
B) inelastic;inelastic 
C) elastic;elastic 
D) perfectly inelastic;elastic 
A) elastic;inelastic 
B) inelastic;inelastic 
C) elastic;elastic 
D) perfectly inelastic;elastic

Question 13

For a normal demand curve,the price elasticity of demand will:

Accepted Answer

A) always be positive. 
B) always be greater than 1. 
C) usually be equal to 1. 
D) always be negative. 
A) always be positive. 
B) always be greater than 1. 
C) usually be equal to 1. 
D) always be negative.

Question 14

Use the following to answer question:  
-(Table: Price Elasticity)Use Table: Price Elasticity.What is the price elasticity of demand (using the midpoint formula)between $1.25 and $1.00?

Accepted Answer

A) 0.60 
B) 0.82 
C) 1.00 
D) 1.60 
A) 0.60 
B) 0.82 
C) 1.00 
D) 1.60

Question 15

If the price of chocolate-covered peanuts increases and the demand for strawberry licorice twists increases,this indicates that these two goods are _____ goods.

Accepted Answer

A) complementary 
B) normal 
C) inferior 
D) substitute 
A) complementary 
B) normal 
C) inferior 
D) substitute

Question 16

If a 20% price increase generates a 20% decrease in quantity demanded,then this is a(n)_____ response.

Accepted Answer

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

Question 17

The price elasticity of demand is computed as the percentage change in the _____ divided by the percentage change in _____.

Accepted Answer

A) quantity demanded;the quantity supplied 
B) price;the quantity demanded 
C) quantity demanded;income 
D) quantity demanded;the price 
A) quantity demanded;the quantity supplied 
B) price;the quantity demanded 
C) quantity demanded;income 
D) quantity demanded;the price

Question 18

If your income increases and your consumption of bagels increases,other things equal,bagels are considered a(n)_____ good.

Accepted Answer

A) negative 
B) positive 
C) inferior 
D) normal 
A) negative 
B) positive 
C) inferior 
D) normal

Question 19

A linear demand curve has:

Accepted Answer

A) a constant price elasticity of demand. 
B) a price elasticity of demand equal to one at all prices. 
C) a calculated price elasticity of demand that is positive. 
D) both elastic and inelastic price elasticities of demand. 
A) a constant price elasticity of demand. 
B) a price elasticity of demand equal to one at all prices. 
C) a calculated price elasticity of demand that is positive. 
D) both elastic and inelastic price elasticities of demand.

Question 20

If the price of emergency visits to the doctor rose,we would expect:

Accepted Answer

A) a large decline in the number of emergency visits to the doctor. 
B) only a slight decline in the number of emergency visits to the doctor. 
C) the number of emergency visits to the doctor to increase. 
D) the total income of doctors to fall dramatically. 
A) a large decline in the number of emergency visits to the doctor. 
B) only a slight decline in the number of emergency visits to the doctor. 
C) the number of emergency visits to the doctor to increase. 
D) the total income of doctors to fall dramatically.

Exam 6: Elasticity

The price elasticity of demand for a good will tend to be larger:

Local cable companies recently increased the price of basic services.A news expert reporting on the increase stated,"While prices have increased 40%,the cable company reports only a 20% increase in revenue." This remark suggests the demand for basic cable service is elastic.

An important determinant of the price elasticity of demand is:

Use the following to answer question: -(Figure: The Linear Demand Curve II)Use Figure: Linear Demand Curve II.At prices greater than $7,demand is _____;at prices below $7,demand is _____;and at $7,demand is _____.

Demand for Wendy's hamburgers is more inelastic than the demand for all fast food.

There is one gas station in a small rural town.The owner of the station claims that he will sell the same quantity of gas no matter how high or low the price.If he is correct in this assertion,the demand curve for gas at his station must be _____,with a price elasticity of _____.

If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year when your income increases from $19,000 to $21,000 a year,other things equal,for you,shoes are considered a(n)_____ good.

Total revenue will decrease if the price goes _____ and demand is _____.

If someone did not regard health care as very important,often using home remedies and other substitutes,his or her demand curve for health care would most likely be more _____ than that of other people.

If the income elasticity of demand for a good is positive,the good is said to be:

Use the following to answer question: -(Table: Price Elasticity)Use Table: Price Elasticity.What is the price elasticity of demand (using the midpoint formula)between $0.75 and $0.50?

A price ceiling below equilibrium will cause a larger shortage when demand is _____ and supply is _____.

For a normal demand curve,the price elasticity of demand will:

Use the following to answer question: -(Table: Price Elasticity)Use Table: Price Elasticity.What is the price elasticity of demand (using the midpoint formula)between $1.25 and $1.00?

If the price of chocolate-covered peanuts increases and the demand for strawberry licorice twists increases,this indicates that these two goods are _____ goods.

If a 20% price increase generates a 20% decrease in quantity demanded,then this is a(n)_____ response.

The price elasticity of demand is computed as the percentage change in the _____ divided by the percentage change in _____.

If your income increases and your consumption of bagels increases,other things equal,bagels are considered a(n)_____ good.

A linear demand curve has:

If the price of emergency visits to the doctor rose,we would expect:

First Principles

Economic Models: Trade-Offs and Trade

Consumer and Producer Surplus

Supply and Demand

Price Controls and Quotas: Meddling With Markets

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Graphs in Economics

Consumer Preferences and Consumer Choice

Filters

Use the following to answer question: -(Figure: The Linear Demand Curve II)Use Figure: Linear Demand Curve II.At prices greater than $7,demand is ___;at prices below $7,demand is _;and at $7,demand is ___.

There is one gas station in a small rural town.The owner of the station claims that he will sell the same quantity of gas no matter how high or low the price.If he is correct in this assertion,the demand curve for gas at his station must be _,with a price elasticity of _.

Total revenue will decrease if the price goes _ and demand is _.

A price ceiling below equilibrium will cause a larger shortage when demand is _ and supply is _.

The price elasticity of demand is computed as the percentage change in the _ divided by the percentage change in _.