Question 1

Blue pens and black pens are close substitutes. The cross elasticity of demand for black pens with respect to the price of blue pens is ________.

Accepted Answer

A)  positive 
B)  negative 
C)  equal to 1 
D)  zero 
A)  positive 
B)  negative 
C)  equal to 1 
D)  zero

Question 2

-The figure shows the demand curve for popsicles. The price elasticity of demand when the price of a popsicle increases from $0.30 to $0.50 is ________.

Accepted Answer

A)  0 
B)  1 
C)  1/2 
D)  2 
A)  0 
B)  1 
C)  1/2 
D)  2

Question 3

-The above figure shows the demand curve for movie rentals from Blockbuster. If Blockbuster lowered its price from $4.00 to $3.50, then total revenue would ________ because demand is ________.

Accepted Answer

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

Question 4

A 10 percent decrease in income decreases the quantity demanded of pizza by 3 percent. The income elasticity of demand for pizza is

Accepted Answer

A)  -0.3. 
B)  0.3. 
C)  3.3. 
D)  10.0. 
A)  -0.3. 
B)  0.3. 
C)  3.3. 
D)  10.0.

Question 5

If the demand for farm products is income elastic, that would mean that farm products were a necessity.

Accepted Answer

A) True 
 B)False

Question 6

Demand is price inelastic if a relatively ________ price increase leads to a relatively ________ in the quantity demanded.

Accepted Answer

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

Question 7

If the demand for KFC chicken is price elastic, a fall in the price of KFC chicken will raise the total revenue.

Accepted Answer

A) True 
 B)False

Question 8

If a 1 percent decrease in the price of a pound of oranges results in a smaller percentage decrease in the quantity supplied,

Accepted Answer

A)  demand is elastic. 
B)  demand is inelastic. 
C)  supply is elastic. 
D)  supply is inelastic. 
A)  demand is elastic. 
B)  demand is inelastic. 
C)  supply is elastic. 
D)  supply is inelastic.

Question 9

If the cross elasticity of demand for good x with respect to the price of good y is positive, then goods x and y are

Accepted Answer

A)  normal goods. 
B)  inferior goods. 
C)  complements. 
D)  substitutes. 
A)  normal goods. 
B)  inferior goods. 
C)  complements. 
D)  substitutes.

Question 10

Because Product X has a large positive income elasticity, it is likely that the product

Accepted Answer

A)  has many good substitutes. 
B)  has few good complements. 
C)  is a necessity. 
D)  is a luxury. 
A)  has many good substitutes. 
B)  has few good complements. 
C)  is a necessity. 
D)  is a luxury.

Question 11

At the midpoint of a downward sloping straight-line demand curve, the demand

Accepted Answer

A)  is elastic. 
B)  is unit elastic. 
C)  is inelastic. 
D)  has an elasticity exactly equal to zero. 
A)  is elastic. 
B)  is unit elastic. 
C)  is inelastic. 
D)  has an elasticity exactly equal to zero.

Question 12

Water is considered a necessity. So, is the demand for water elastic or inelastic?

Accepted Answer

The demand for neces

Question 13

Supply is elastic if

Accepted Answer

A)  a 1 percent change in price leads to a larger percentage change in quantity supplied. 
B)  a 1 percent change in price leads to a smaller percentage change in quantity supplied. 
C)  the slope of the supply curve is positive. 
D)  the good in question is a normal good. 
A)  a 1 percent change in price leads to a larger percentage change in quantity supplied. 
B)  a 1 percent change in price leads to a smaller percentage change in quantity supplied. 
C)  the slope of the supply curve is positive. 
D)  the good in question is a normal good.

Question 14

The supply of lettuce in the short run will be ________ than the supply in the long run and ________ than the supply today.

Accepted Answer

A)  more elastic; less elastic 
B)  more elastic; more elastic 
C)  less elastic; more elastic 
D)  less elastic; less elastic 
A)  more elastic; less elastic 
B)  more elastic; more elastic 
C)  less elastic; more elastic 
D)  less elastic; less elastic

Question 15

The quantity of new cars increases by 10 percent. If the price elasticity of demand for new cars is 1.25, the price of new cars will fall by

Accepted Answer

A)  2.5 percent. 
B)  8 percent. 
C)  10 percent. 
D)  12.5 percent. 
A)  2.5 percent. 
B)  8 percent. 
C)  10 percent. 
D)  12.5 percent.

Question 16

The price elasticity of demand depends on

Accepted Answer

A)  the units used to measure price and the units used to measure quantity. 
B)  the units used to measure price but not the units used to measure quantity. 
C)  the units used to measure quantity but not the units used to measure price. 
D)  neither the units used to measure price nor the units used to measure quantity. 
A)  the units used to measure price and the units used to measure quantity. 
B)  the units used to measure price but not the units used to measure quantity. 
C)  the units used to measure quantity but not the units used to measure price. 
D)  neither the units used to measure price nor the units used to measure quantity.

Question 17

If the price of a burger decreases by 5 percent and as a result the quantity of burgers demanded increases by 8 percent, the price elasticity of demand equals

Accepted Answer

A)  0.60. 
B)  0.40. 
C)  1.60. 
D)  0.625. 
A)  0.60. 
B)  0.40. 
C)  1.60. 
D)  0.625.

Question 18

-In the above figure, if the two goods A and B, are complements, which of the following is true?

Accepted Answer

A)  The shift from D0 to D1 for good B leads to a shift from S0 to S1 for good A. 
B)  The shift from S0 to S1 for good A leads to the shift from D0 to D1 for good B. 
C)  The law of demand is violated in both markets. 
D)  The cross elasticity of demand between them is positive. 
A)  The shift from D0 to D1 for good B leads to a shift from S0 to S1 for good A. 
B)  The shift from S0 to S1 for good A leads to the shift from D0 to D1 for good B. 
C)  The law of demand is violated in both markets. 
D)  The cross elasticity of demand between them is positive.

Question 19

If the supply curve is vertical, then supply is

Accepted Answer

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

Question 20

-The figure above illustrates a linear demand curve. By comparing the price elasticity in the $2 to $4 price range with the elasticity in the $8 to $10 range, you can conclude that the elasticity is

Accepted Answer

A)  greater in the $8 to $10 range. 
B)  greater in the $2 to $4 range. 
C)  the same in both price ranges. 
D)  greater in the $8 to $10 range when the price rises but greater in the $2 to $4 range when the price falls. 
A)  greater in the $8 to $10 range. 
B)  greater in the $2 to $4 range. 
C)  the same in both price ranges. 
D)  greater in the $8 to $10 range when the price rises but greater in the $2 to $4 range when the price falls.

Exam 4: Elasticity

Blue pens and black pens are close substitutes. The cross elasticity of demand for black pens with respect to the price of blue pens is ________.

-The figure shows the demand curve for popsicles. The price elasticity of demand when the price of a popsicle increases from $0.30 to $0.50 is ________.

-The above figure shows the demand curve for movie rentals from Blockbuster. If Blockbuster lowered its price from $4.00 to $3.50, then total revenue would ________ because demand is ________.

A 10 percent decrease in income decreases the quantity demanded of pizza by 3 percent. The income elasticity of demand for pizza is

If the demand for farm products is income elastic, that would mean that farm products were a necessity.

Demand is price inelastic if a relatively ________ price increase leads to a relatively ________ in the quantity demanded.

If the demand for KFC chicken is price elastic, a fall in the price of KFC chicken will raise the total revenue.

If a 1 percent decrease in the price of a pound of oranges results in a smaller percentage decrease in the quantity supplied,

If the cross elasticity of demand for good x with respect to the price of good y is positive, then goods x and y are

Because Product X has a large positive income elasticity, it is likely that the product

At the midpoint of a downward sloping straight-line demand curve, the demand

Water is considered a necessity. So, is the demand for water elastic or inelastic?

Supply is elastic if

The supply of lettuce in the short run will be ________ than the supply in the long run and ________ than the supply today.

The quantity of new cars increases by 10 percent. If the price elasticity of demand for new cars is 1.25, the price of new cars will fall by

The price elasticity of demand depends on

If the price of a burger decreases by 5 percent and as a result the quantity of burgers demanded increases by 8 percent, the price elasticity of demand equals

-In the above figure, if the two goods A and B, are complements, which of the following is true?

If the supply curve is vertical, then supply is

-The figure above illustrates a linear demand curve. By comparing the price elasticity in the $2 to $4 price range with the elasticity in the $8 to $10 range, you can conclude that the elasticity is

What Is Economics

The Economic Problem

Demand and Supply

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices and Public Goods

Externalities and the Environment

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Extension A: Review

Extension B: Review

Extension C: Review

Extension D: Review

Extension E: Review

Extension F: Review

Filters

-The above figure shows the demand curve for movie rentals from Blockbuster. If Blockbuster lowered its price from $4.00 to $3.50, then total revenue would because demand is .

Demand is price inelastic if a relatively price increase leads to a relatively in the quantity demanded.

The supply of lettuce in the short run will be than the supply in the long run and than the supply today.