Question 1

The pair of items that is likely to have the HIGHEST cross-price elasticity of demand is:

Accepted Answer

A) baseball and baseball glove. 
B) spaghetti and meatballs. 
C) coffee and tea. 
D) peanut butter and jelly. 
A) baseball and baseball glove. 
B) spaghetti and meatballs. 
C) coffee and tea. 
D) peanut butter and jelly.

Question 2

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 $1 and $2 is approximately:

Accepted Answer

A) 0.18. 
B) 0.56. 
C) 1.80. 
D) 5.67. 
A) 0.18. 
B) 0.56. 
C) 1.80. 
D) 5.67.

Question 3

The percentage change in quantity demanded of one good or service divided by the percentage change in the price of a related good or service is the _____ of demand.

Accepted Answer

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

Question 4

Which good is likely to have the LARGEST price elasticity of demand?

Accepted Answer

A) a bicycle 
B) a mountain bike 
C) a Cannondale mountain bike 
D) a green Cannondale mountain bike 
A) a bicycle 
B) a mountain bike 
C) a Cannondale mountain bike 
D) a green Cannondale mountain bike

Question 5

The price elasticity of demand for fresh zucchini has been estimated to be 2.25.A new irrigation system yields a 25% increase in the nation's crop of fresh zucchini.Which statement BEST describes how this will affect total expenditures on zucchini,all other things equal?

Accepted Answer

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

Question 6

In the market for computers,if the demand curve is elastic and the price of a computer decreases,we expect total revenue to _____.If the demand curve is inelastic and the price of a computer decreases,we expect total revenue to _____.

Accepted Answer

A) increase;decrease 
B) increase;increase 
C) decrease;increase 
D) decrease;decrease 
A) increase;decrease 
B) increase;increase 
C) decrease;increase 
D) decrease;decrease

Question 7

Use the following to answer question:  
-(Figure: The Demand for e-Books)Use Figure: The Demand for e-Books.The demand schedule _____ when the price increases from $4 to $6 _____ when it increases from $6 to $8.

Accepted Answer

A) is less elastic;than 
B) is more elastic;than 
C) has the same elasticity;as 
D) is unit-elastic;and 
A) is less elastic;than 
B) is more elastic;than 
C) has the same elasticity;as 
D) is unit-elastic;and

Question 8

Use the following to answer question:  
-(Figure: Estimating Price Elasticity)Use Figure: Estimating Price Elasticity.Between the two prices,P1 and P2,which demand curve has the HIGHEST price elasticity?

Accepted Answer

A) D1 
B) D2 
C) D3 
D) D4 
A) D1 
B) D2 
C) D3 
D) D4

Question 9

Determining the price elasticity of demand does NOT involve:

Accepted Answer

A) the slope of the supply curve. 
B) the proportion of the budget spent on the item. 
C) time available to adjust to price changes. 
D) the number of available substitutes. 
A) the slope of the supply curve. 
B) the proportion of the budget spent on the item. 
C) time available to adjust to price changes. 
D) the number of available substitutes.

Question 10

There are several close substitutes for Quaker State oil but fewer substitutes for a complete checkup of your car's engine.We can expect the demand for:

Accepted Answer

A) Quaker State oil to be more price-inelastic than is demand for engine checkups. 
B) the two to be equally price-elastic. 
C) car checkups to be more price-elastic than is demand for Quaker State oil. 
D) Quaker State oil to be more price-elastic than is demand for engine checkups. 
A) Quaker State oil to be more price-inelastic than is demand for engine checkups. 
B) the two to be equally price-elastic. 
C) car checkups to be more price-elastic than is demand for Quaker State oil. 
D) Quaker State oil to be more price-elastic than is demand for engine checkups.

Question 11

If a good is a necessity with few substitutes,then demand will tend to:

Accepted Answer

A) be relatively price-elastic. 
B) be relatively price-inelastic. 
C) have price elasticity equal to 1. 
D) be the same as that of a luxury good. 
A) be relatively price-elastic. 
B) be relatively price-inelastic. 
C) have price elasticity equal to 1. 
D) be the same as that of a luxury good.

Question 12

Use the following to answer question:  
-(Figure: The Market for Lattes)Use Figure: The Market for Lattes.What is the price elasticity of demand between $2 and $2.50 per cup,using the midpoint formula?

Accepted Answer

A) 0.33 
B) 1.00 
C) 2.51 
D) 3.00 
A) 0.33 
B) 1.00 
C) 2.51 
D) 3.00

Question 13

Suppose the price elasticity of demand for blueberries is 1.5.If climate change destroys one-fourth of the nation's blueberry crop,how will that affect total revenue for blueberry producers,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 14

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

Accepted Answer

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

Question 15

Kayla and Jada are roommates in New York City.Both Kayla and Jada recently received raises.Kayla now purchases more mp3 albums online than before,but Jada buys fewer.Kayla behaves as if mp3 albums are _____ goods,and Jada's income elasticity of demand for mp3 albums is _____.

Accepted Answer

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

Question 16

Suppose at $10 the quantity demanded is 100.When the price falls to $8,the quantity demanded increases to 130.The price elasticity of demand (using the midpoint formula)between $10 and $8 is approximately:

Accepted Answer

A) 1.17. 
B) 1.50. 
C) 0.85. 
D) 1.00. 
A) 1.17. 
B) 1.50. 
C) 0.85. 
D) 1.00.

Question 17

Use the following to answer question:  
-(Figure: The Market for Lattes)Use Figure: The Market for Lattes.What is the price elasticity of supply between the prices of $2 and $2.50 per cup,using the midpoint formula?

Accepted Answer

A) 0.33 
B) 1.00 
C) 1.51 
D) 3.00 
A) 0.33 
B) 1.00 
C) 1.51 
D) 3.00

Question 18

A group of dairy farmers is trying to raise milk prices by 10%.If the price elasticity of demand for milk is 0.75 and the price elasticity of supply for milk is 0,by how much should farmers reduce their milk production to obtain the 10% increase?

Accepted Answer

A) 10% 
B) 7.5% 
C) 15% 
D) 13% 
A) 10% 
B) 7.5% 
C) 15% 
D) 13%

Question 19

Given a price increase for any good,the price effect on revenue is always larger than the quantity effect on revenue.

Accepted Answer

A) True 
 B)False

Question 20

If total revenue goes up when the price falls,demand is said to:

Accepted Answer

A) be price-inelastic. 
B) be price unit-elastic. 
C) be price-elastic. 
D) have positive price elasticity. 
A) be price-inelastic. 
B) be price unit-elastic. 
C) be price-elastic. 
D) have positive price elasticity.

Exam 6: Elasticity

The pair of items that is likely to have the HIGHEST cross-price elasticity of demand is:

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 $1 and $2 is approximately:

The percentage change in quantity demanded of one good or service divided by the percentage change in the price of a related good or service is the _____ of demand.

Which good is likely to have the LARGEST price elasticity of demand?

The price elasticity of demand for fresh zucchini has been estimated to be 2.25.A new irrigation system yields a 25% increase in the nation's crop of fresh zucchini.Which statement BEST describes how this will affect total expenditures on zucchini,all other things equal?

In the market for computers,if the demand curve is elastic and the price of a computer decreases,we expect total revenue to _____.If the demand curve is inelastic and the price of a computer decreases,we expect total revenue to _____.

Use the following to answer question: -(Figure: The Demand for e-Books)Use Figure: The Demand for e-Books.The demand schedule _____ when the price increases from $4 to $6 _____ when it increases from $6 to $8.

Use the following to answer question: -(Figure: Estimating Price Elasticity)Use Figure: Estimating Price Elasticity.Between the two prices,P1 and P2,which demand curve has the HIGHEST price elasticity?

Determining the price elasticity of demand does NOT involve:

There are several close substitutes for Quaker State oil but fewer substitutes for a complete checkup of your car's engine.We can expect the demand for:

If a good is a necessity with few substitutes,then demand will tend to:

Use the following to answer question: -(Figure: The Market for Lattes)Use Figure: The Market for Lattes.What is the price elasticity of demand between $2 and $2.50 per cup,using the midpoint formula?

Suppose the price elasticity of demand for blueberries is 1.5.If climate change destroys one-fourth of the nation's blueberry crop,how will that affect total revenue for blueberry producers,all other things unchanged?

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

Kayla and Jada are roommates in New York City.Both Kayla and Jada recently received raises.Kayla now purchases more mp3 albums online than before,but Jada buys fewer.Kayla behaves as if mp3 albums are _____ goods,and Jada's income elasticity of demand for mp3 albums is _____.

Suppose at $10 the quantity demanded is 100.When the price falls to $8,the quantity demanded increases to 130.The price elasticity of demand (using the midpoint formula)between $10 and $8 is approximately:

Use the following to answer question: -(Figure: The Market for Lattes)Use Figure: The Market for Lattes.What is the price elasticity of supply between the prices of $2 and $2.50 per cup,using the midpoint formula?

A group of dairy farmers is trying to raise milk prices by 10%.If the price elasticity of demand for milk is 0.75 and the price elasticity of supply for milk is 0,by how much should farmers reduce their milk production to obtain the 10% increase?

Given a price increase for any good,the price effect on revenue is always larger than the quantity effect on revenue.

If total revenue goes up when the price falls,demand is said to:

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

In the market for computers,if the demand curve is elastic and the price of a computer decreases,we expect total revenue to _.If the demand curve is inelastic and the price of a computer decreases,we expect total revenue to _.

Use the following to answer question: -(Figure: The Demand for e-Books)Use Figure: The Demand for e-Books.The demand schedule _ when the price increases from $4 to $6 _ when it increases from $6 to $8.

Use the following to answer question: -(Figure: Estimating Price Elasticity)Use Figure: Estimating Price Elasticity.Between the two prices,P₁ and P₂,which demand curve has the HIGHEST price elasticity?

Kayla and Jada are roommates in New York City.Both Kayla and Jada recently received raises.Kayla now purchases more mp3 albums online than before,but Jada buys fewer.Kayla behaves as if mp3 albums are _ goods,and Jada's income elasticity of demand for mp3 albums is _.