Question 1

The price elasticity of demand is measured by _____ the percentage change in _____ the percentage change in _____.

Accepted Answer

A) dividing;price by;quantity demanded 
B) dividing;quantity demanded by;price 
C) subtracting;price from;quantity demanded 
D) adding;price to;quantity demanded 
A) dividing;price by;quantity demanded 
B) dividing;quantity demanded by;price 
C) subtracting;price from;quantity demanded 
D) adding;price to;quantity demanded

Question 2

Other things being equal,the price elasticity of demand for a product will be lower:

Accepted Answer

A) if many substitutes are available. 
B) if it is a large part of the consumer's budget. 
C) in the long run than in the short run. 
D) if there are few or no substitutes available. 
A) if many substitutes are available. 
B) if it is a large part of the consumer's budget. 
C) in the long run than in the short run. 
D) if there are few or no substitutes available.

Question 3

If a good is very inexpensive but is a necessity,you predict that demand for the good:

Accepted Answer

A) is price-elastic. 
B) is price-inelastic. 
C) is price unit-elastic. 
D) has indeterminable price elasticity. 
A) is price-elastic. 
B) is price-inelastic. 
C) is price unit-elastic. 
D) has indeterminable price elasticity.

Question 4

When the price of chocolate-covered peanuts decreases from $1.10 to $0.95,the quantity demanded increases from 190 bags to 215 bags.If the price is $1.10,total revenue is _____,and if the price is $0.95,total revenue is _____.

Accepted Answer

A) $209;$204.25 
B) $209;$236.50 
C) $236.50;$209 
D) $180.50;$209 
A) $209;$204.25 
B) $209;$236.50 
C) $236.50;$209 
D) $180.50;$209

Question 5

If the price elasticity of demand equals 0,the demand curve is:

Accepted Answer

A) horizontal. 
B) vertical. 
C) upward sloping. 
D) unit-elastic. 
A) horizontal. 
B) vertical. 
C) upward sloping. 
D) unit-elastic.

Question 6

Which pair of goods is MOST likely to have a cross-price elasticity of demand that is greater than zero?

Accepted Answer

A) shoes and shoelaces 
B) apples and bananas 
C) pancakes and bacon 
D) gasoline and cars 
A) shoes and shoelaces 
B) apples and bananas 
C) pancakes and bacon 
D) gasoline and cars

Question 7

Suppose the cross-price elasticity between demand for Chipotle burritos and the price of Qdoba burritos is 0.8.If Qdoba increases the price of its burritos by 10%:

Accepted Answer

A) Chipotle will sell 10% more burritos. 
B) Chipotle will sell 8% more burritos. 
C) Chipotle will sell 8% fewer burritos. 
D) We cannot tell what will happen to Chipotle,but Qdoba will sell 8% fewer burritos. 
A) Chipotle will sell 10% more burritos. 
B) Chipotle will sell 8% more burritos. 
C) Chipotle will sell 8% fewer burritos. 
D) We cannot tell what will happen to Chipotle,but Qdoba will sell 8% fewer burritos.

Question 8

Sonik,a wireless phone company,tested the effect of a price reduction for text messaging.It lowered prices from $0.08 to $0.04 per message and found that the number of messages sent tripled.This means that the:

Accepted Answer

A) demand for text messaging is inelastic in this price range. 
B) demand curve for text messaging shifted to the right. 
C) supply curve for text messaging shifted to the left. 
D) demand for text messaging is elastic in this price range. 
A) demand for text messaging is inelastic in this price range. 
B) demand curve for text messaging shifted to the right. 
C) supply curve for text messaging shifted to the left. 
D) demand for text messaging is elastic in this price range.

Question 9

Use the following to answer question:  
-(Figure: Demand Curves)Use Figure: Demand Curves.Which graph shows a perfectly elastic demand curve?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 10

If the price of a good increases by 15% and quantity demanded changes by 20%,then the price elasticity of demand is equal to:

Accepted Answer

A) 0.75. 
B) approximately 0.33. 
C) approximately 1.33. 
D) 1. 
A) 0.75. 
B) approximately 0.33. 
C) approximately 1.33. 
D) 1.

Question 11

If the price of a good increases by 20% and the quantity demanded changes by 15%,then the price elasticity of demand is equal to:

Accepted Answer

A) 0.75. 
B) approximately 0.33. 
C) approximately 1.33. 
D) 1. 
A) 0.75. 
B) approximately 0.33. 
C) approximately 1.33. 
D) 1.

Question 12

If your purchases of good A decrease from 11 units per year to 9 units per year when the price of good B increases from $8 to $12,all other things equal,for you,good A and good B are considered _____ goods.

Accepted Answer

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

Question 13

Sometimes airlines raise ticket prices as the flight departure date approaches in the hope of increasing revenue on the assumption that consumer demand is:

Accepted Answer

A) steady in its price elasticity as departure time approaches. 
B) less price-elastic as departure time approaches. 
C) always unit elastic. 
D) very sensitive to price changes as the time of departure approaches. 
A) steady in its price elasticity as departure time approaches. 
B) less price-elastic as departure time approaches. 
C) always unit elastic. 
D) very sensitive to price changes as the time of departure approaches.

Question 14

Suppose the price of e-books is initially $20 but decreases to $15.The absolute value of the percentage change in price (by the midpoint method)is approximately _____%.

Accepted Answer

A) 28 
B) 10 
C) 5 
D) 15 
A) 28 
B) 10 
C) 5 
D) 15

Question 15

Use the following to answer question:  
-(Figure: The Demand for e-Books)If the price of e-Books decreases from $6 to $4,total revenue _____,which means that demand is _____.

Accepted Answer

A) changes from $60 to $90;elastic 
B) remains constant;unit-elastic 
C) changes from $240 to $360;elastic 
D) changes from $40 to $50;inelastic 
A) changes from $60 to $90;elastic 
B) remains constant;unit-elastic 
C) changes from $240 to $360;elastic 
D) changes from $40 to $50;inelastic

Question 16

A newspaper typically consumes a smaller fraction of a consumer's budget than a home entertainment system.Therefore,you would expect the demand for:

Accepted Answer

A) a home entertainment system to be more price-elastic. 
B) a home entertainment system to be more price-inelastic. 
C) newspapers to be more price-elastic. 
D) the two to be equally price-elastic. 
A) a home entertainment system to be more price-elastic. 
B) a home entertainment system to be more price-inelastic. 
C) newspapers to be more price-elastic. 
D) the two to be equally price-elastic.

Question 17

The price elasticity of the supply of paintings by Rembrandt is greater than 1.

Accepted Answer

A) True 
 B)False

Question 18

The price elasticity of demand for gasoline in the short run has been estimated to be 0.4.If a war in the Middle East causes the price of oil (from which gasoline is made)to increase,how will that affect total revenue from gasoline in the short run,all other things unchanged?

Accepted Answer

A) Quantity demanded will stay the same;total revenue will fall. 
B) Quantity demanded will decrease;total revenue will rise. 
C) Total revenue will remain unchanged. 
D) Quantity demanded will not change;total revenue will rise. 
A) Quantity demanded will stay the same;total revenue will fall. 
B) Quantity demanded will decrease;total revenue will rise. 
C) Total revenue will remain unchanged. 
D) Quantity demanded will not change;total revenue will rise.

Question 19

The demand for strawberry ice cream tends to be relatively price-elastic because:

Accepted Answer

A) for most people,there are many close substitutes for strawberry ice cream. 
B) it costs so little. 
C) it has to be consumed very quickly. 
D) it is only popular in the summer. 
A) for most people,there are many close substitutes for strawberry ice cream. 
B) it costs so little. 
C) it has to be consumed very quickly. 
D) it is only popular in the summer.

Question 20

Use the following to answer question:  
-(Figure: The Demand Curve)Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $3 and $4 is approximately:

Accepted Answer

A) 0.19. 
B) 0.54. 
C) 1.00 
D) 1.86. 
A) 0.19. 
B) 0.54. 
C) 1.00 
D) 1.86.

Exam 6: Elasticity

The price elasticity of demand is measured by _____ the percentage change in _____ the percentage change in _____.

Other things being equal,the price elasticity of demand for a product will be lower:

If a good is very inexpensive but is a necessity,you predict that demand for the good:

When the price of chocolate-covered peanuts decreases from $1.10 to $0.95,the quantity demanded increases from 190 bags to 215 bags.If the price is $1.10,total revenue is _____,and if the price is $0.95,total revenue is _____.

If the price elasticity of demand equals 0,the demand curve is:

Which pair of goods is MOST likely to have a cross-price elasticity of demand that is greater than zero?

Suppose the cross-price elasticity between demand for Chipotle burritos and the price of Qdoba burritos is 0.8.If Qdoba increases the price of its burritos by 10%:

Sonik,a wireless phone company,tested the effect of a price reduction for text messaging.It lowered prices from $0.08 to $0.04 per message and found that the number of messages sent tripled.This means that the:

Use the following to answer question: -(Figure: Demand Curves)Use Figure: Demand Curves.Which graph shows a perfectly elastic demand curve?

If the price of a good increases by 15% and quantity demanded changes by 20%,then the price elasticity of demand is equal to:

If the price of a good increases by 20% and the quantity demanded changes by 15%,then the price elasticity of demand is equal to:

If your purchases of good A decrease from 11 units per year to 9 units per year when the price of good B increases from $8 to $12,all other things equal,for you,good A and good B are considered _____ goods.

Sometimes airlines raise ticket prices as the flight departure date approaches in the hope of increasing revenue on the assumption that consumer demand is:

Suppose the price of e-books is initially $20 but decreases to $15.The absolute value of the percentage change in price (by the midpoint method)is approximately _____%.

Use the following to answer question: -(Figure: The Demand for e-Books)If the price of e-Books decreases from $6 to $4,total revenue _____,which means that demand is _____.

A newspaper typically consumes a smaller fraction of a consumer's budget than a home entertainment system.Therefore,you would expect the demand for:

The price elasticity of the supply of paintings by Rembrandt is greater than 1.

The price elasticity of demand for gasoline in the short run has been estimated to be 0.4.If a war in the Middle East causes the price of oil (from which gasoline is made)to increase,how will that affect total revenue from gasoline in the short run,all other things unchanged?

The demand for strawberry ice cream tends to be relatively price-elastic because:

Use the following to answer question: -(Figure: The Demand Curve)Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $3 and $4 is approximately:

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

The price elasticity of demand is measured by ___ the percentage change in _ the percentage change in ___.

When the price of chocolate-covered peanuts decreases from $1.10 to $0.95,the quantity demanded increases from 190 bags to 215 bags.If the price is $1.10,total revenue is _,and if the price is $0.95,total revenue is _.

Use the following to answer question: -(Figure: The Demand for e-Books)If the price of e-Books decreases from $6 to $4,total revenue _,which means that demand is _.