Question 1

The price elasticity of demand for gasoline is likely to be higher in the long run than in the short run.

Accepted Answer

A) True 
 B)False

Question 2

The price elasticity of demand for fresh tomatoes has been estimated to be 2.22.If a new insecticide and fertilizer treatment yields a 20% increase in the nation's fresh tomato crop,how will that affect total revenue from fresh tomatoes,all other things unchanged?

Accepted Answer

A) Total revenue will remain unchanged. 
B) Total revenue will fall. 
C) Total revenue will rise. 
D) The information is insufficient to answer the question. 
A) Total revenue will remain unchanged. 
B) Total revenue will fall. 
C) Total revenue will rise. 
D) The information is insufficient to answer the question.

Question 3

The price elasticity of demand measures the:

Accepted Answer

A) responsiveness of quantity demanded to a change in price. 
B) responsiveness of price to a change in quantity demanded. 
C) extent to which prices are flexible and respond to market forces. 
D) responsiveness of demand when price is held constant and demand increases or decreases. 
A) responsiveness of quantity demanded to a change in price. 
B) responsiveness of price to a change in quantity demanded. 
C) extent to which prices are flexible and respond to market forces. 
D) responsiveness of demand when price is held constant and demand increases or decreases.

Question 4

On a linear demand curve:

Accepted Answer

A) demand is elastic at high prices. 
B) demand is inelastic at high prices. 
C) elasticity is the same at all points on the demand curve. 
D) demand is elastic at low prices. 
A) demand is elastic at high prices. 
B) demand is inelastic at high prices. 
C) elasticity is the same at all points on the demand curve. 
D) demand is elastic at low prices.

Question 5

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

Accepted Answer

A) the longer the relevant time period for behavior change. 
B) the fewer the number of substitute goods available. 
C) if it is a staple or necessity with few substitutes. 
D) if the share of income spent on the good is small. 
A) the longer the relevant time period for behavior change. 
B) the fewer the number of substitute goods available. 
C) if it is a staple or necessity with few substitutes. 
D) if the share of income spent on the good is small.

Question 6

If funeral homes discover that the price elasticity of demand for caskets equals 0.55 at the current price,funeral homes could increase revenue by increasing the price.

Accepted Answer

A) True 
 B)False

Question 7

The percent change in quantity demanded of a good divided by the percent change in income,all other things unchanged,is the _____ elasticity of demand.

Accepted Answer

A) price 
B) quantity 
C) income 
D) cross-price 
A) price 
B) quantity 
C) income 
D) cross-price

Question 8

Assume the supply curve shifts to the right by a given amount at each price.The price in the market will decline the most if demand is more price-_____ and supply is more price-_____.

Accepted Answer

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

Question 9

The cross-price elasticity of demand of complementary goods is:

Accepted Answer

A) less than 0. 
B) equal to 0. 
C) greater than 0. 
D) between 0 and 1. 
A) less than 0. 
B) equal to 0. 
C) greater than 0. 
D) between 0 and 1.

Question 10

On a linear demand curve,demand at very low prices will be:

Accepted Answer

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

Question 11

Suppose the price of cereal rose by 25% and the quantity of milk sold decreased by 50%.We know that the:

Accepted Answer

A) cross-price elasticity between cereal and milk is -2. 
B) cross-price elasticity between cereal and milk is -0.5. 
C) price elasticity of demand for milk is 2. 
D) cross-price elasticity of demand between cereal and milk is 2. 
A) cross-price elasticity between cereal and milk is -2. 
B) cross-price elasticity between cereal and milk is -0.5. 
C) price elasticity of demand for milk is 2. 
D) cross-price elasticity of demand between cereal and milk is 2.

Question 12

After a price decrease,the quantity effect tends to:

Accepted Answer

A) decrease total revenue. 
B) increase total revenue. 
C) make the price effect stronger. 
D) make the price effect weaker. 
A) decrease total revenue. 
B) increase total revenue. 
C) make the price effect stronger. 
D) make the price effect weaker.

Question 13

We predict the long-run price elasticity of demand for gasoline to be _____ the short-run price elasticity of demand for it.

Accepted Answer

A) less than 
B) larger than 
C) equal to 
D) not comparable to 
A) less than 
B) larger than 
C) equal to 
D) not comparable to

Question 14

As you move down a linear demand curve,the price elasticity of demand will:

Accepted Answer

A) increase. 
B) decrease. 
C) increase and then decrease. 
D) decrease and then increase. 
A) increase. 
B) decrease. 
C) increase and then decrease. 
D) decrease and then increase.

Question 15

Suppose the price elasticity of demand for oranges is 1.8.If a fall frost destroys one-third of the nation's orange crop,how will that affect total revenue from oranges,all other things unchanged?

Accepted Answer

A) Total revenue will rise. 
B) Total revenue will fall. 
C) Total revenue will remain unchanged. 
D) The information is insufficient to answer the question. 
A) Total revenue will rise. 
B) Total revenue will fall. 
C) Total revenue will remain unchanged. 
D) The information is insufficient to answer the question.

Question 16

For which goods is the cross-price elasticity of demand MOST likely a large positive number?

Accepted Answer

A) hockey pucks and hockey sticks 
B) DVDs and milk 
C) french fries and onion rings 
D) all of these because the cross-price elasticity is always a positive number 
A) hockey pucks and hockey sticks 
B) DVDs and milk 
C) french fries and onion rings 
D) all of these because the cross-price elasticity is always a positive number

Question 17

Yovanka has diabetes,and she will pay any amount of money for insulin.What is the BEST characterization of Yovanka's demand for insulin?

Accepted Answer

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

Question 18

Suppose the cross-price elasticity between two goods is 1.5.If the price of one good increases by 10%,then the quantity demanded of the other good will:

Accepted Answer

A) decrease by 15%. 
B) increase by 15%. 
C) decrease by 1.5%. 
D) increase by 1.5%. 
A) decrease by 15%. 
B) increase by 15%. 
C) decrease by 1.5%. 
D) increase by 1.5%.

Question 19

The pair of items that is MOST likely to have a negative cross-price elasticity of demand is:

Accepted Answer

A) cashews and peanuts. 
B) hamburgers and ketchup. 
C) coffee and tea. 
D) mustard and aspirin. 
A) cashews and peanuts. 
B) hamburgers and ketchup. 
C) coffee and tea. 
D) mustard and aspirin.

Question 20

When the price of pencils decreases from $3 to $1,the quantity demanded increases from 100 to 200 pencils.By the midpoint method,the price elasticity of demand equals:

Accepted Answer

A) 0.17. 
B) 0.5. 
C) 0.67. 
D) 1.5. 
A) 0.17. 
B) 0.5. 
C) 0.67. 
D) 1.5.

Exam 6: Elasticity

The price elasticity of demand for gasoline is likely to be higher in the long run than in the short run.

The price elasticity of demand for fresh tomatoes has been estimated to be 2.22.If a new insecticide and fertilizer treatment yields a 20% increase in the nation's fresh tomato crop,how will that affect total revenue from fresh tomatoes,all other things unchanged?

The price elasticity of demand measures the:

On a linear demand curve:

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

If funeral homes discover that the price elasticity of demand for caskets equals 0.55 at the current price,funeral homes could increase revenue by increasing the price.

The percent change in quantity demanded of a good divided by the percent change in income,all other things unchanged,is the _____ elasticity of demand.

Assume the supply curve shifts to the right by a given amount at each price.The price in the market will decline the most if demand is more price-_____ and supply is more price-_____.

The cross-price elasticity of demand of complementary goods is:

On a linear demand curve,demand at very low prices will be:

Suppose the price of cereal rose by 25% and the quantity of milk sold decreased by 50%.We know that the:

After a price decrease,the quantity effect tends to:

We predict the long-run price elasticity of demand for gasoline to be _____ the short-run price elasticity of demand for it.

As you move down a linear demand curve,the price elasticity of demand will:

Suppose the price elasticity of demand for oranges is 1.8.If a fall frost destroys one-third of the nation's orange crop,how will that affect total revenue from oranges,all other things unchanged?

For which goods is the cross-price elasticity of demand MOST likely a large positive number?

Yovanka has diabetes,and she will pay any amount of money for insulin.What is the BEST characterization of Yovanka's demand for insulin?

Suppose the cross-price elasticity between two goods is 1.5.If the price of one good increases by 10%,then the quantity demanded of the other good will:

The pair of items that is MOST likely to have a negative cross-price elasticity of demand is:

When the price of pencils decreases from $3 to $1,the quantity demanded increases from 100 to 200 pencils.By the midpoint method,the price elasticity of demand equals:

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

Assume the supply curve shifts to the right by a given amount at each price.The price in the market will decline the most if demand is more price-_ and supply is more price-_.