Question 1

Recall the application regarding how changing beer taxes affected highway deaths.What has happened to the beer tax since 1951?

Accepted Answer

A) It has increased. 
B) It has decreased. 
C) It has stayed the same. 
D) The topic was not mentioned. 
A) It has increased. 
B) It has decreased. 
C) It has stayed the same. 
D) The topic was not mentioned.

Question 2

At a price of $25,a store can sell 28 picture frames a day.If the price falls to $20,the store can sell 35 picture frames a day.Using the initial-value method,the price elasticity of demand is:

Accepted Answer

A) 1.9. 
B) 2.5. 
C) 0.8. 
D) 1.25. 
A) 1.9. 
B) 2.5. 
C) 0.8. 
D) 1.25.

Question 3

Compared to the short run,the elasticity of demand in the long run is likely to:

Accepted Answer

A) decrease. 
B) remain unitary elastic. 
C) increase. 
D) remain unchanged. 
A) decrease. 
B) remain unitary elastic. 
C) increase. 
D) remain unchanged.

Question 4

When the price of a car is $25,000,car sales are 10,000 per month.When the price of a car increases to $29,000,car sales fall to 8,000 per month.Since the demand for cars is ________,the car company can expect revenue to ________ when they increase the price of a car.

Accepted Answer

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

Question 5

If the price elasticity of supply is .5,then a 10% increase in price will result in how much of a percentage change in quantity supplied? Will quantity supplied increase or decrease?

Accepted Answer

[percentage change i

Question 6

A perfectly elastic demand curve is shown as a:

Accepted Answer

A) horizontal line. 
B) vertical line. 
C) positively sloped line. 
D) negatively sloped line. 
A) horizontal line. 
B) vertical line. 
C) positively sloped line. 
D) negatively sloped line.

Question 7

List two determinants of price elasticity of demand.

Accepted Answer

Any two of the following: The

Question 8

Using the information in the article the price elasticity of demand for citrus can be determined to be:

Accepted Answer

A) relatively inelastic. 
B) relatively elastic. 
C) perfectly elastic. 
D) perfectly inelastic. 
A) relatively inelastic. 
B) relatively elastic. 
C) perfectly elastic. 
D) perfectly inelastic.

Question 9

Total revenue will decrease if price:

Accepted Answer

A) increases and demand is inelastic. 
B) increases and demand is elastic. 
C) decreases and demand is elastic. 
D) decreases and demand is unitarily elastic. 
A) increases and demand is inelastic. 
B) increases and demand is elastic. 
C) decreases and demand is elastic. 
D) decreases and demand is unitarily elastic.

Question 10

A perfectly inelastic supply is represented by a ________ supply curve.

Accepted Answer

A) vertical 
B) downward sloping 
C) horizontal 
D) upward sloping 
A) vertical 
B) downward sloping 
C) horizontal 
D) upward sloping

Question 11

When the price of a car is $25,000,car sales are 10,000 per month.When the price of a car increases to $29,000,car sales fall to 8,000 per month.Therefore,using initial value,a 1% increase in the price of the car will result in a ________ in the quantity demanded of cars.

Accepted Answer

A) 1.67% decrease 
B) 1.25% decrease 
C) 0.8% decrease 
D) 0.8% increase 
A) 1.67% decrease 
B) 1.25% decrease 
C) 0.8% decrease 
D) 0.8% increase

Question 12

If the demand for water is inelastic,then as the price of water falls,quantity demanded of water will ________ and total revenue 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 13

The price elasticity of supply is determined by how rapidly production costs increases as the total output of the industry increases.

Accepted Answer

A) True 
 B)False

Question 14

If the price elasticity of demand is 3 then this means that a one-percentage increase in quantity demanded will cause a three-percentage decrease in the price of the good.

Accepted Answer

A) True 
 B)False

Question 15

If the price elasticity of supply is 1.2,then a 15% decrease in price will result in how much of a percentage change in quantity supplied? Will quantity supplied increase or decrease?

Accepted Answer

[percentage change i

Question 16

Assume Sarah is a CPA who earns $85,000 a year and her favorite entertainment magazine costs her $15 a year.For her,the price elasticity of demand for the magazine is likely to be:

Accepted Answer

A) elastic. 
B) inelastic. 
C) perfectly elastic. 
D) none of the above. 
A) elastic. 
B) inelastic. 
C) perfectly elastic. 
D) none of the above.

Question 17

An art museum raises its admission price and ends up with a decrease in its total revenue.How could you explain this situation to the museum director?

Accepted Answer

If price goes up,quantity demanded will

Question 18

Recall the Application about how changes in supply affect the price of gasoline,suppose that the price elasticity of demand for gasoline is 0.20 and the price elasticity of supply for gasoline is 0.70.What will happen to the equilibrium price if the demand goes down by 30%?

Accepted Answer

A) The equilibrium price will increase by 3%. 
B) The equilibrium price will decrease by 3%. 
C) The equilibrium price will increase by 33.33%. 
D) The equilibrium price will decrease by.33.33% 
A) The equilibrium price will increase by 3%. 
B) The equilibrium price will decrease by 3%. 
C) The equilibrium price will increase by 33.33%. 
D) The equilibrium price will decrease by.33.33%

Question 19

When the price of bread rises from $1.25 to $1.50 per loaf,quantity demanded falls from 5,800 per week to 5,500.Calculate total revenue both before and after the price change.What can we tell about the price elasticity of demand for bread?

Accepted Answer

Total revenue (before price change)= $1.

Question 20

Is supply more elastic in the short run or the long run? Why?

Accepted Answer

Supply is more elastic in the

Recall the application regarding how changing beer taxes affected highway deaths.What has happened to the beer tax since 1951?

At a price of $25,a store can sell 28 picture frames a day.If the price falls to $20,the store can sell 35 picture frames a day.Using the initial-value method,the price elasticity of demand is:

Compared to the short run,the elasticity of demand in the long run is likely to:

When the price of a car is $25,000,car sales are 10,000 per month.When the price of a car increases to $29,000,car sales fall to 8,000 per month.Since the demand for cars is ,the car company can expect revenue to when they increase the price of a car.

If the price elasticity of supply is .5,then a 10% increase in price will result in how much of a percentage change in quantity supplied? Will quantity supplied increase or decrease?

A perfectly elastic demand curve is shown as a:

List two determinants of price elasticity of demand.

Using the information in the article the price elasticity of demand for citrus can be determined to be:

Total revenue will decrease if price:

A perfectly inelastic supply is represented by a ________ supply curve.

When the price of a car is $25,000,car sales are 10,000 per month.When the price of a car increases to $29,000,car sales fall to 8,000 per month.Therefore,using initial value,a 1% increase in the price of the car will result in a ________ in the quantity demanded of cars.

If the demand for water is inelastic,then as the price of water falls,quantity demanded of water will and total revenue will .

The price elasticity of supply is determined by how rapidly production costs increases as the total output of the industry increases.

If the price elasticity of demand is 3 then this means that a one-percentage increase in quantity demanded will cause a three-percentage decrease in the price of the good.

If the price elasticity of supply is 1.2,then a 15% decrease in price will result in how much of a percentage change in quantity supplied? Will quantity supplied increase or decrease?

Assume Sarah is a CPA who earns $85,000 a year and her favorite entertainment magazine costs her $15 a year.For her,the price elasticity of demand for the magazine is likely to be:

An art museum raises its admission price and ends up with a decrease in its total revenue.How could you explain this situation to the museum director?

Recall the Application about how changes in supply affect the price of gasoline,suppose that the price elasticity of demand for gasoline is 0.20 and the price elasticity of supply for gasoline is 0.70.What will happen to the equilibrium price if the demand goes down by 30%?

When the price of bread rises from $1.25 to $1.50 per loaf,quantity demanded falls from 5,800 per week to 5,500.Calculate total revenue both before and after the price change.What can we tell about the price elasticity of demand for bread?

Is supply more elastic in the short run or the long run? Why?

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

Recall the application regarding how changing beer taxes affected highway deaths.What has happened to the beer tax since 1951?

At a price of $25,a store can sell 28 picture frames a day.If the price falls to $20,the store can sell 35 picture frames a day.Using the initial-value method,the price elasticity of demand is:

Compared to the short run,the elasticity of demand in the long run is likely to:

When the price of a car is $25,000,car sales are 10,000 per month.When the price of a car increases to $29,000,car sales fall to 8,000 per month.Since the demand for cars is ________,the car company can expect revenue to ________ when they increase the price of a car.

If the price elasticity of supply is .5,then a 10% increase in price will result in how much of a percentage change in quantity supplied? Will quantity supplied increase or decrease?

A perfectly elastic demand curve is shown as a:

List two determinants of price elasticity of demand.

Using the information in the article the price elasticity of demand for citrus can be determined to be:

Total revenue will decrease if price:

A perfectly inelastic supply is represented by a ________ supply curve.

When the price of a car is $25,000,car sales are 10,000 per month.When the price of a car increases to $29,000,car sales fall to 8,000 per month.Therefore,using initial value,a 1% increase in the price of the car will result in a ________ in the quantity demanded of cars.

If the demand for water is inelastic,then as the price of water falls,quantity demanded of water will ________ and total revenue will ________.

The price elasticity of supply is determined by how rapidly production costs increases as the total output of the industry increases.

If the price elasticity of demand is 3 then this means that a one-percentage increase in quantity demanded will cause a three-percentage decrease in the price of the good.

If the price elasticity of supply is 1.2,then a 15% decrease in price will result in how much of a percentage change in quantity supplied? Will quantity supplied increase or decrease?

Assume Sarah is a CPA who earns $85,000 a year and her favorite entertainment magazine costs her $15 a year.For her,the price elasticity of demand for the magazine is likely to be:

An art museum raises its admission price and ends up with a decrease in its total revenue.How could you explain this situation to the museum director?

Recall the Application about how changes in supply affect the price of gasoline,suppose that the price elasticity of demand for gasoline is 0.20 and the price elasticity of supply for gasoline is 0.70.What will happen to the equilibrium price if the demand goes down by 30%?

When the price of bread rises from $1.25 to $1.50 per loaf,quantity demanded falls from 5,800 per week to 5,500.Calculate total revenue both before and after the price change.What can we tell about the price elasticity of demand for bread?

Is supply more elastic in the short run or the long run? Why?

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

When the price of a car is $25,000,car sales are 10,000 per month.When the price of a car increases to $29,000,car sales fall to 8,000 per month.Since the demand for cars is ,the car company can expect revenue to when they increase the price of a car.

If the demand for water is inelastic,then as the price of water falls,quantity demanded of water will and total revenue will .