Question 1

If the absolute value of the price elasticity of demand is greater than 1:

Accepted Answer

A) small percentage changes in the price will lead to much larger percentage changes in the quantity demanded. 
B) small percentage changes in the price will lead to even smaller changes in the percentage change in the quantity demanded. 
C) percentage changes in the price will lead to equal percentage changes in the quantity demanded. 
D) changes in the price will have no impact on changes in the quantity demanded. 
A) small percentage changes in the price will lead to much larger percentage changes in the quantity demanded. 
B) small percentage changes in the price will lead to even smaller changes in the percentage change in the quantity demanded. 
C) percentage changes in the price will lead to equal percentage changes in the quantity demanded. 
D) changes in the price will have no impact on changes in the quantity demanded.

Question 2

If two goods are substitutes,their cross-price elasticity of demand is:

Accepted Answer

A) less than 0. 
B) greater than 0. 
C) equal to 0. 
D) impossible to determine without more information. 
A) less than 0. 
B) greater than 0. 
C) equal to 0. 
D) impossible to determine without more information.

Question 3

If the cross-price elasticity of demand between hamburgers and cheese is positive,these two goods must be complements.

Accepted Answer

A) True 
 B)False

Question 4

If a good is a necessity with few substitutes,all others things equal,then demand will tend to:

Accepted Answer

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

Question 5

Suppose the price of Vanilla Coke increases by 9% and quantity demanded falls by 13% overall but only by 4% for loyal Coca-Cola customers.This means that for the general public there are _____ for Vanilla Coke,but for loyal Coca-Cola customers,Vanilla Coke is more of a _____.This means that Coca-Cola will enjoy an increase in total revenue only from _____.

Accepted Answer

A) several substitutes;necessity;loyal Coca-Cola customers 
B) few substitutes;luxury item;the general public 
C) no substitutes;necessity;the general public 
D) several substitutes;necessity;the general public 
A) several substitutes;necessity;loyal Coca-Cola customers 
B) few substitutes;luxury item;the general public 
C) no substitutes;necessity;the general public 
D) several substitutes;necessity;the general public

Question 6

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 $1.75 and $1.50?

Accepted Answer

A) 0.42 
B) 1.50 
C) 1.86 
D) 0.08 
A) 0.42 
B) 1.50 
C) 1.86 
D) 0.08

Question 7

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 $2.50 and $2.25?

Accepted Answer

A) 9 
B) 19 
C) 119 
D) 0.5 
A) 9 
B) 19 
C) 119 
D) 0.5

Question 8

If the quantity demanded of agricultural output is very unresponsive to a fall in price,the demand for agricultural output is:

Accepted Answer

A) price-elastic. 
B) price-inelastic. 
C) positively sloped. 
D) horizontal. 
A) price-elastic. 
B) price-inelastic. 
C) positively sloped. 
D) horizontal.

Question 9

The price of pretzels increases and the demand for tortilla chips decreases,so we can assume that these two goods are:

Accepted Answer

A) unrelated. 
B) inferior. 
C) complementary. 
D) substitutes. 
A) unrelated. 
B) inferior. 
C) complementary. 
D) substitutes.

Question 10

If the price of burritos increases from $4 to $6 and customers decrease their consumption from 20 to 10 burritos,what is the price elasticity of demand (by the midpoint method)?

Accepted Answer

A) 1.67 
B) 0.67 
C) 3 
D) 2 
A) 1.67 
B) 0.67 
C) 3 
D) 2

Question 11

The price elasticity of demand for ground beef has been estimated to be 1.0.If mad cow disease strikes the United States and a large percentage of the cattle are removed from the market,how will that affect total expenditures on ground beef,all other things equal?

Accepted Answer

A) Total expenditures will remain unchanged. 
B) Total expenditures will fall by more than 1%. 
C) Demand will fall by 1%,but total expenditures will fall by less than 1%. 
D) Total expenditures will rise. 
A) Total expenditures will remain unchanged. 
B) Total expenditures will fall by more than 1%. 
C) Demand will fall by 1%,but total expenditures will fall by less than 1%. 
D) Total expenditures will rise.

Question 12

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

Accepted Answer

A) coffee and tea. 
B) skis and ski boots. 
C) pizza and pepperoni. 
D) milk and cookies. 
A) coffee and tea. 
B) skis and ski boots. 
C) pizza and pepperoni. 
D) milk and cookies.

Question 13

(Table: Prices,Quantity Demanded,and Income for Jeremy)Use Table: Prices,Quantity Demanded,and Income for Jeremy.Between the two years listed,by the midpoint method,Jeremy's income elasticity of demand for coffee equals _____ and doughnuts are a(n)_____ good.

Accepted Answer

A) 0.20;inferior 
B) 2;normal 
C) 2;inferior 
D) 0.20;normal 
A) 0.20;inferior 
B) 2;normal 
C) 2;inferior 
D) 0.20;normal

Question 14

If the demand for golf is price-inelastic and your local public golf course increases the greens fees for using the course,you expect:

Accepted Answer

A) a decrease in total revenue received by the course. 
B) an increase in total revenue received by the course. 
C) an increase in the amount of golf played on the course. 
D) no change in the amount of golf played on the course. 
A) a decrease in total revenue received by the course. 
B) an increase in total revenue received by the course. 
C) an increase in the amount of golf played on the course. 
D) no change in the amount of golf played on the course.

Question 15

There are several close substitutes for Bayer aspirin but fewer substitutes for a complete medical examination.Therefore,all other things equal,you would expect the demand for:

Accepted Answer

A) medical examinations to be more price-elastic than is the demand for Bayer aspirin. 
B) Bayer aspirin to be more price-elastic than is the demand for medical examinations. 
C) Bayer aspirin to be more perfectly price-inelastic. 
D) the two to be equally price-elastic. 
A) medical examinations to be more price-elastic than is the demand for Bayer aspirin. 
B) Bayer aspirin to be more price-elastic than is the demand for medical examinations. 
C) Bayer aspirin to be more perfectly price-inelastic. 
D) the two to be equally price-elastic.

Question 16

If you wanted to make sure that your calculation of elasticity between two points was the same,regardless of your initial point,you would use:

Accepted Answer

A) the absolute value of elasticity. 
B) supply elasticity. 
C) the midpoint formula calculation of elasticity. 
D) the point formula calculation of elasticity. 
A) the absolute value of elasticity. 
B) supply elasticity. 
C) the midpoint formula calculation of elasticity. 
D) the point formula calculation of elasticity.

Question 17

If the estimated price elasticity of demand for foreign travel is 4:

Accepted Answer

A) a 20% decrease in the price of foreign travel will increase quantity demanded by 80%. 
B) the demand for foreign travel is inelastic. 
C) a 10% increase in the price of foreign travel will increase quantity demanded by 40%. 
D) a 20% increase in the price of foreign travel will increase quantity demanded by 80%. 
A) a 20% decrease in the price of foreign travel will increase quantity demanded by 80%. 
B) the demand for foreign travel is inelastic. 
C) a 10% increase in the price of foreign travel will increase quantity demanded by 40%. 
D) a 20% increase in the price of foreign travel will increase quantity demanded by 80%.

Question 18

Use the following to answer question:  
-(Figure: The Demand for e-Books)Use Figure: The Demand for e-Books.What is the price elasticity of demand (by the midpoint method)when the price increases from $6 to $8?

Accepted Answer

A) 0.55 
B) 0.5 
C) 2.33 
D) 0.67 
A) 0.55 
B) 0.5 
C) 2.33 
D) 0.67

Question 19

Suppose you manage a convenience mart and are in charge of ordering products,but the home office sets the prices.In your area,the income elasticity of demand for peanut butter is -0.5.Because of local factory closings,you expect local incomes to decrease by 20% on average in the next month.As a result,you should stock _____ peanut butter.

Accepted Answer

A) 20% more 
B) 5% more 
C) 10% more 
D) 10% less 
A) 20% more 
B) 5% more 
C) 10% more 
D) 10% less

Question 20

Use the following to answer question:  
-(Figure: The Linear Demand Curve II)Use Figure: Linear Demand Curve II.If price was initially set at $8 and then increased to $10,total revenue would:

Accepted Answer

A) decrease,as the price effect is dominated by the quantity effect. 
B) decrease,as the price effect dominates the quantity effect. 
C) stay the same,as both the price and quantity effects remain unchanged. 
D) increase,as the price effect is dominated by the quantity effect. 
A) decrease,as the price effect is dominated by the quantity effect. 
B) decrease,as the price effect dominates the quantity effect. 
C) stay the same,as both the price and quantity effects remain unchanged. 
D) increase,as the price effect is dominated by the quantity effect.

If the absolute value of the price elasticity of demand is greater than 1:

If two goods are substitutes,their cross-price elasticity of demand is:

If the cross-price elasticity of demand between hamburgers and cheese is positive,these two goods must be complements.

If a good is a necessity with few substitutes,all others things equal,then demand will tend to:

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 $1.75 and $1.50?

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 $2.50 and $2.25?

If the quantity demanded of agricultural output is very unresponsive to a fall in price,the demand for agricultural output is:

The price of pretzels increases and the demand for tortilla chips decreases,so we can assume that these two goods are:

If the price of burritos increases from $4 to $6 and customers decrease their consumption from 20 to 10 burritos,what is the price elasticity of demand (by the midpoint method)?

The price elasticity of demand for ground beef has been estimated to be 1.0.If mad cow disease strikes the United States and a large percentage of the cattle are removed from the market,how will that affect total expenditures on ground beef,all other things equal?

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

(Table: Prices,Quantity Demanded,and Income for Jeremy)Use Table: Prices,Quantity Demanded,and Income for Jeremy.Between the two years listed,by the midpoint method,Jeremy's income elasticity of demand for coffee equals _ and doughnuts are a(n)_ good.

If the demand for golf is price-inelastic and your local public golf course increases the greens fees for using the course,you expect:

There are several close substitutes for Bayer aspirin but fewer substitutes for a complete medical examination.Therefore,all other things equal,you would expect the demand for:

If you wanted to make sure that your calculation of elasticity between two points was the same,regardless of your initial point,you would use:

If the estimated price elasticity of demand for foreign travel is 4:

Use the following to answer question: -(Figure: The Demand for e-Books)Use Figure: The Demand for e-Books.What is the price elasticity of demand (by the midpoint method)when the price increases from $6 to $8?

Use the following to answer question: -(Figure: The Linear Demand Curve II)Use Figure: Linear Demand Curve II.If price was initially set at $8 and then increased to $10,total revenue would:

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

Exam 6: Elasticity

If the absolute value of the price elasticity of demand is greater than 1:

If two goods are substitutes,their cross-price elasticity of demand is:

If the cross-price elasticity of demand between hamburgers and cheese is positive,these two goods must be complements.

If a good is a necessity with few substitutes,all others things equal,then demand will tend to:

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 $1.75 and $1.50?

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 $2.50 and $2.25?

If the quantity demanded of agricultural output is very unresponsive to a fall in price,the demand for agricultural output is:

The price of pretzels increases and the demand for tortilla chips decreases,so we can assume that these two goods are:

If the price of burritos increases from $4 to $6 and customers decrease their consumption from 20 to 10 burritos,what is the price elasticity of demand (by the midpoint method)?

The price elasticity of demand for ground beef has been estimated to be 1.0.If mad cow disease strikes the United States and a large percentage of the cattle are removed from the market,how will that affect total expenditures on ground beef,all other things equal?

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

(Table: Prices,Quantity Demanded,and Income for Jeremy)Use Table: Prices,Quantity Demanded,and Income for Jeremy.Between the two years listed,by the midpoint method,Jeremy's income elasticity of demand for coffee equals _____ and doughnuts are a(n)_____ good.

If the demand for golf is price-inelastic and your local public golf course increases the greens fees for using the course,you expect:

There are several close substitutes for Bayer aspirin but fewer substitutes for a complete medical examination.Therefore,all other things equal,you would expect the demand for:

If you wanted to make sure that your calculation of elasticity between two points was the same,regardless of your initial point,you would use:

If the estimated price elasticity of demand for foreign travel is 4:

Use the following to answer question: -(Figure: The Demand for e-Books)Use Figure: The Demand for e-Books.What is the price elasticity of demand (by the midpoint method)when the price increases from $6 to $8?

Use the following to answer question: -(Figure: The Linear Demand Curve II)Use Figure: Linear Demand Curve II.If price was initially set at $8 and then increased to $10,total revenue would:

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

(Table: Prices,Quantity Demanded,and Income for Jeremy)Use Table: Prices,Quantity Demanded,and Income for Jeremy.Between the two years listed,by the midpoint method,Jeremy's income elasticity of demand for coffee equals _ and doughnuts are a(n)_ good.