Question 1

When the price of milk increases,total revenue increases for milk retailers.From this information,we can conclude that:

Accepted Answer

A) the law of demand does not hold. 
B) the demand for milk is inelastic. 
C) the supply of milk is inelastic. 
D) corporations are greedy. 
A) the law of demand does not hold. 
B) the demand for milk is inelastic. 
C) the supply of milk is inelastic. 
D) corporations are greedy.

Question 2

If the demand for orange juice is elastic,then as the price falls,quantity demanded for orange juice will ________ and total revenue for orange suppliers will ________.

Accepted Answer

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

Question 3

Increasing cigarette prices has an impact on teenagers' consumption.Therefore,decreasing cigarette prices would:

Accepted Answer

A) increase teenagers' consumption. 
B) allow for more law enforcement. 
C) reduce teenagers' consumption. 
D) increase the revenue from cigarette sales. 
A) increase teenagers' consumption. 
B) allow for more law enforcement. 
C) reduce teenagers' consumption. 
D) increase the revenue from cigarette sales.

Question 4

If crude-oil prices increase as the total amount of gasoline increases,the supply curve for gasoline will be relatively steep and the price of elasticity of supply of gasoline will be:

Accepted Answer

A) relatively large. 
B) perfectly vertical. 
C) perfectly horizontal. 
D) relatively low. 
A) relatively large. 
B) perfectly vertical. 
C) perfectly horizontal. 
D) relatively low.

Question 5

If the price of organic milk increases by 10% and quantity demanded falls by 20%,then the price elasticity of demand for organic milk is 2.

Accepted Answer

A) True 
 B)False

Question 6

Studio clothing store knows that the price elasticity of demand for its jeans is 2.5.If the price of jeans were to increase by 10%:

Accepted Answer

A) quantity demanded of jeans would rise by 25%. 
B) quantity demanded of jeans would fall by 25%. 
C) quantity demanded of jeans would rise by 4%. 
D) quantity demanded of jeans would fall by 4%. 
A) quantity demanded of jeans would rise by 25%. 
B) quantity demanded of jeans would fall by 25%. 
C) quantity demanded of jeans would rise by 4%. 
D) quantity demanded of jeans would fall by 4%.

Question 7

The price elasticity of supply is measured by dividing the percentage change in price by the percentage change in quantity supplied.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is a TRUE statement?

Accepted Answer

A) If demand is inelastic and the price increases,the total revenue will decrease. 
B) If demand is inelastic and the price increases,the total revenue will increase. 
C) If demand is elastic and the price increases,the total revenue will increase. 
D) If demand is elastic and the price decreases,the quantity demanded will decrease. 
A) If demand is inelastic and the price increases,the total revenue will decrease. 
B) If demand is inelastic and the price increases,the total revenue will increase. 
C) If demand is elastic and the price increases,the total revenue will increase. 
D) If demand is elastic and the price decreases,the quantity demanded will decrease.

Question 9

-Refer to Figure 5.7.As the price of W increased,the demand for Y shifted from   to   .The cross-price elasticity of demand between W and Y is:

Accepted Answer

A) positive. 
B) negative. 
C) zero. 
D) indeterminate from this information. 
A) positive. 
B) negative. 
C) zero. 
D) indeterminate from this information.

Question 10

Price elasticity of demand remains unit elastic as you move up the demand curve.

Accepted Answer

A) True 
 B)False

Question 11

Which is likely to be more elastic: the demand for orange juice or the demand for a particular brand of orange juice? Explain.

Accepted Answer

The demand for a particular br

Question 12

If the elasticity of supply is .25,then a 10% increase in price will result in a 2.5% increase in quantity supplied.

Accepted Answer

A) True 
 B)False

Question 13

The price elasticity of demand for coffee is 2.2 and the price elasticity of supply for coffee is 1.8.If demand increases by 20%,the percentage change in the equilibrium price of coffee will:

Accepted Answer

A) rise by 5%. 
B) fall by 5%. 
C) rise by 0.2%. 
D) fall by 0.2%. 
A) rise by 5%. 
B) fall by 5%. 
C) rise by 0.2%. 
D) fall by 0.2%.

Question 14

Suppose that the price of a pound of potatoes increases from $0.75 to $0.90 and quantity demanded falls from 10,000 pounds to 8,000 pounds.Use the initial value method to calculate the price elasticity of demand.

Accepted Answer

% change in quantity demanded

Question 15

What does the income elasticity of demand measure? How is it calculated?

Accepted Answer

The income elasticity of demand measures

Question 16

-Refer to Figure 5.5.Using the midpoint method,if the price of a gardenburger is increased from $6 to $7,the price elasticity of demand equals:

Accepted Answer

A) 0.13. 
B) 0.33. 
C) 1.44. 
D) 13. 
A) 0.13. 
B) 0.33. 
C) 1.44. 
D) 13.

Question 17

What does elasticity measure?

Accepted Answer

Elasticity measures

Question 18

Using a supply and demand graph,how would you explain the cause of the price increase of Florida oranges in the 2005-2006 season?

Accepted Answer

A) an increase in demand 
B) an increase in supply 
C) a decrease in demand 
D) a decrease in supply 
A) an increase in demand 
B) an increase in supply 
C) a decrease in demand 
D) a decrease in supply

Question 19

-Refer to Figure 5.6.The demand for milkshakes is unitary elastic at point C.If the price of a milkshake is reduced from   to   ,total revenue:

Accepted Answer

A) will increase. 
B) will decrease. 
C) will remain constant. 
D) could either increase or decrease. 
A) will increase. 
B) will decrease. 
C) will remain constant. 
D) could either increase or decrease.

Question 20

The cross elasticity of demand between natural gas and electricity is 1.1.Therefore,electricity and natural gas must be substitutes.

Accepted Answer

A) True 
 B)False

When the price of milk increases,total revenue increases for milk retailers.From this information,we can conclude that:

If the demand for orange juice is elastic,then as the price falls,quantity demanded for orange juice will and total revenue for orange suppliers will .

Increasing cigarette prices has an impact on teenagers' consumption.Therefore,decreasing cigarette prices would:

If crude-oil prices increase as the total amount of gasoline increases,the supply curve for gasoline will be relatively steep and the price of elasticity of supply of gasoline will be:

If the price of organic milk increases by 10% and quantity demanded falls by 20%,then the price elasticity of demand for organic milk is 2.

Studio clothing store knows that the price elasticity of demand for its jeans is 2.5.If the price of jeans were to increase by 10%:

The price elasticity of supply is measured by dividing the percentage change in price by the percentage change in quantity supplied.

Which of the following is a TRUE statement?

-Refer to Figure 5.7.As the price of W increased,the demand for Y shifted from to .The cross-price elasticity of demand between W and Y is:

Price elasticity of demand remains unit elastic as you move up the demand curve.

Which is likely to be more elastic: the demand for orange juice or the demand for a particular brand of orange juice? Explain.

If the elasticity of supply is .25,then a 10% increase in price will result in a 2.5% increase in quantity supplied.

The price elasticity of demand for coffee is 2.2 and the price elasticity of supply for coffee is 1.8.If demand increases by 20%,the percentage change in the equilibrium price of coffee will:

Suppose that the price of a pound of potatoes increases from $0.75 to $0.90 and quantity demanded falls from 10,000 pounds to 8,000 pounds.Use the initial value method to calculate the price elasticity of demand.

What does the income elasticity of demand measure? How is it calculated?

-Refer to Figure 5.5.Using the midpoint method,if the price of a gardenburger is increased from $6 to $7,the price elasticity of demand equals:

What does elasticity measure?

Using a supply and demand graph,how would you explain the cause of the price increase of Florida oranges in the 2005-2006 season?

-Refer to Figure 5.6.The demand for milkshakes is unitary elastic at point C.If the price of a milkshake is reduced from to ,total revenue:

The cross elasticity of demand between natural gas and electricity is 1.1.Therefore,electricity and natural gas must be substitutes.

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 5: Elasticity: a Measure of Responsiveness

When the price of milk increases,total revenue increases for milk retailers.From this information,we can conclude that:

If the demand for orange juice is elastic,then as the price falls,quantity demanded for orange juice will ________ and total revenue for orange suppliers will ________.

Increasing cigarette prices has an impact on teenagers' consumption.Therefore,decreasing cigarette prices would:

If crude-oil prices increase as the total amount of gasoline increases,the supply curve for gasoline will be relatively steep and the price of elasticity of supply of gasoline will be:

If the price of organic milk increases by 10% and quantity demanded falls by 20%,then the price elasticity of demand for organic milk is 2.

Studio clothing store knows that the price elasticity of demand for its jeans is 2.5.If the price of jeans were to increase by 10%:

The price elasticity of supply is measured by dividing the percentage change in price by the percentage change in quantity supplied.

Which of the following is a TRUE statement?

-Refer to Figure 5.7.As the price of W increased,the demand for Y shifted from to .The cross-price elasticity of demand between W and Y is:

Price elasticity of demand remains unit elastic as you move up the demand curve.

Which is likely to be more elastic: the demand for orange juice or the demand for a particular brand of orange juice? Explain.

If the elasticity of supply is .25,then a 10% increase in price will result in a 2.5% increase in quantity supplied.

The price elasticity of demand for coffee is 2.2 and the price elasticity of supply for coffee is 1.8.If demand increases by 20%,the percentage change in the equilibrium price of coffee will:

Suppose that the price of a pound of potatoes increases from $0.75 to $0.90 and quantity demanded falls from 10,000 pounds to 8,000 pounds.Use the initial value method to calculate the price elasticity of demand.

What does the income elasticity of demand measure? How is it calculated?

-Refer to Figure 5.5.Using the midpoint method,if the price of a gardenburger is increased from $6 to $7,the price elasticity of demand equals:

What does elasticity measure?

Using a supply and demand graph,how would you explain the cause of the price increase of Florida oranges in the 2005-2006 season?

-Refer to Figure 5.6.The demand for milkshakes is unitary elastic at point C.If the price of a milkshake is reduced from to ,total revenue:

The cross elasticity of demand between natural gas and electricity is 1.1.Therefore,electricity and natural gas must be substitutes.

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand, supply, and Market Equilibrium

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

If the demand for orange juice is elastic,then as the price falls,quantity demanded for orange juice will and total revenue for orange suppliers will .