Question 1

Which of the following makes demand less elastic?

Accepted Answer

A)  the existence of many close substitutes for the good 
B)  spending a large proportion of income on the good 
C)  a short time elapsing since the product's price changed 
D)  All of the above answers are correct. 
A)  the existence of many close substitutes for the good 
B)  spending a large proportion of income on the good 
C)  a short time elapsing since the product's price changed 
D)  All of the above answers are correct.

Question 2

Which of the following is likely to have the smallest price elasticity of demand?

Accepted Answer

A)  an automobile 
B)  a new automobile 
C)  a new Ford automobile 
D)  a new Ford Mustang 
A)  an automobile 
B)  a new automobile 
C)  a new Ford automobile 
D)  a new Ford Mustang

Question 3

Last year, Jack's income was $15,000 and he bought 50 bags of potato chips. This year his income is $18,000 and he buys 55 bags of potato chips. Therefore, Jack's

Accepted Answer

A)  income elasticity of demand for potato chips is 0.52. 
B)  price elasticity of demand for potato chips is 0.52. 
C)  income elasticity of demand for potato chips is 1.66. 
D)  price elasticity of demand for potato chips is 1.66. 
A)  income elasticity of demand for potato chips is 0.52. 
B)  price elasticity of demand for potato chips is 0.52. 
C)  income elasticity of demand for potato chips is 1.66. 
D)  price elasticity of demand for potato chips is 1.66.

Question 4

If the price of suntan lotion increases from $6 to $8 per bottle and quantity demanded decreases from 900,000 bottles to 845,000 bottles, using the midpoint method, what is the price elasticity of demand for suntan lotion?

Accepted Answer

The price elasticity of demand = (percen

Question 5

A good with a vertical demand curve has a price elasticity of demand that ________ .

Accepted Answer

A)  is equal to 1 
B)  is equal to infinite 
C)  is equal to zero 
D)  varies between 0 and 1 
A)  is equal to 1 
B)  is equal to infinite 
C)  is equal to zero 
D)  varies between 0 and 1

Question 6

If a 10 percent increase in income results in an 8 percent increase in the quantity demanded of a good, the income elasticity of demand equals ________ and the good is ________ good.

Accepted Answer

A)  0.80; an inferior 
B)  1.2; a normal 
C)  0.80; a normal 
D)  -1.2; an inferior 
A)  0.80; an inferior 
B)  1.2; a normal 
C)  0.80; a normal 
D)  -1.2; an inferior

Question 7

Suppose Carol's Candid Cameras wants to increase its total revenue. If the firm lowers the price of cameras by 2 percent, Carol must be predicting that the quantity

Accepted Answer

A)  supplied will increase by more than 2 percent. 
B)  demanded will increase by more than 2 percent. 
C)  demanded will decrease by less than 2 percent. 
D)  supply will decrease by less than 2 percent. 
A)  supplied will increase by more than 2 percent. 
B)  demanded will increase by more than 2 percent. 
C)  demanded will decrease by less than 2 percent. 
D)  supply will decrease by less than 2 percent.

Question 8

Moving up (to the left) along a linear demand curve, the price elasticity of demand

Accepted Answer

A)  decreases. 
B)  does not change. 
C)  increases. 
D)  at first increases and then decreases. 
A)  decreases. 
B)  does not change. 
C)  increases. 
D)  at first increases and then decreases.

Question 9

-The table above gives Sharon's demand for ground beef at two different income levels. Use the midpoint method in this problem.
a) What is the percentage change in Sharon's income?
b) What is the percentage change in the quantity demanded?
c) What is Sharon's income elasticity of demand for ground beef?
d) Is ground beef a normal or an inferior good for Sharon?

Accepted Answer

a) The percentage change in Sharon's inc

Question 10

A rise in the price of cabbage from $14 to $18 per bushel increases the quantity supplied from 4,000 to 6,000 bushels. The elasticity of supply is

Accepted Answer

A)  0.6. 
B)  0.8. 
C)  1.0. 
D)  1.6. 
A)  0.6. 
B)  0.8. 
C)  1.0. 
D)  1.6.

Question 11

The price elasticity of demand for purses is measured in what units?

Accepted Answer

A)  dollars 
B)  purses 
C)  dollars per purse 
D)  The price elasticity of demand is a unitless measure. 
A)  dollars 
B)  purses 
C)  dollars per purse 
D)  The price elasticity of demand is a unitless measure.

Question 12

The price elasticity of demand for oranges ________ change if the units of the quantity was changed from pounds to kilograms and ________ change if the units of the price was changed from dollars to cents.

Accepted Answer

A)  would; would 
B)  would; would not 
C)  would not; would 
D)  would not; would not 
A)  would; would 
B)  would; would not 
C)  would not; would 
D)  would not; would not

Question 13

-The figure above illustrates a linear demand curve. If the price rises from $6 to $8 demand is ________ and if the price falls from $8 to $6 demand is ________.

Accepted Answer

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

Question 14

If a 20 percent increase in the price of a used car results in a 10 percent decrease in the quantity of used cars demanded, then the price elasticity of demand equals

Accepted Answer

A)  0.5. 
B)  1.0. 
C)  2.0. 
D)  10.0. 
A)  0.5. 
B)  1.0. 
C)  2.0. 
D)  10.0.

Question 15

If hot dog vendors at baseball games want to maximize their total sales revenue, they will have to

Accepted Answer

A)  be willing to experience reduced hot dog expenditure by baseball fans. 
B)  set the price of their hot dogs so that the demand is unit elastic. 
C)  sell as many hot dogs as they can, even if it means lowering price. 
D)  raise their price, even if it means selling fewer hot dogs. 
A)  be willing to experience reduced hot dog expenditure by baseball fans. 
B)  set the price of their hot dogs so that the demand is unit elastic. 
C)  sell as many hot dogs as they can, even if it means lowering price. 
D)  raise their price, even if it means selling fewer hot dogs.

Question 16

Apple, the consumer electronics giant, on Tuesday rolled out new versions of its popular iPod music player. CEO Steve Jobs also unveiled cheaper models of its Touch music player, a touchscreen-only device. An 8-gigabyte version now costs $230, down from $300. A 32-gigabyte model costs $400, down from $500. Calculate the price elasticity of demand for a 32 gigabyte Touch player if the quantity demanded increases from 850,000 to 950,000 the month after the price decrease.

Accepted Answer

A)  0.5 
B)  1.5 
C)  1 
D)  0.75 
A)  0.5 
B)  1.5 
C)  1 
D)  0.75

Question 17

What effect does a price increase have on producers' total revenue?

Accepted Answer

The effect of a price increase in total

Question 18

By reviewing its sales records, Dell economists discover that when Dell lowers the price of its personal computers, the total revenue Dell obtains from the sale of its personal computers rises. Hence

Accepted Answer

A)  supply of Dell personal computers is elastic. 
B)  demand for Dell personal computers is elastic. 
C)  supply of Dell personal computers is inelastic. 
D)  demand for Dell personal computers is inelastic. 
A)  supply of Dell personal computers is elastic. 
B)  demand for Dell personal computers is elastic. 
C)  supply of Dell personal computers is inelastic. 
D)  demand for Dell personal computers is inelastic.

Question 19

Of the following, demand is likely to be the least elastic for

Accepted Answer

A)  diamonds. 
B)  insulin for diabetics. 
C)  iceberg lettuce. 
D)  pink grapefruit. 
A)  diamonds. 
B)  insulin for diabetics. 
C)  iceberg lettuce. 
D)  pink grapefruit.

Question 20

-The increase in the demand for widgets, shown in the figure above, is the result of an increase in the price of McBoover devices from $9 to $11. Therefore, the cross-price elasticity for these two products is

Accepted Answer

A)  -2.0. 
B)  -0.5. 
C)  0.5. 
D)  2.0. 
A)  -2.0. 
B)  -0.5. 
C)  0.5. 
D)  2.0.

Exam 4: Elasticity

Which of the following makes demand less elastic?

Which of the following is likely to have the smallest price elasticity of demand?

Last year, Jack's income was $15,000 and he bought 50 bags of potato chips. This year his income is $18,000 and he buys 55 bags of potato chips. Therefore, Jack's

If the price of suntan lotion increases from $6 to $8 per bottle and quantity demanded decreases from 900,000 bottles to 845,000 bottles, using the midpoint method, what is the price elasticity of demand for suntan lotion?

A good with a vertical demand curve has a price elasticity of demand that ________ .

If a 10 percent increase in income results in an 8 percent increase in the quantity demanded of a good, the income elasticity of demand equals ________ and the good is ________ good.

Suppose Carol's Candid Cameras wants to increase its total revenue. If the firm lowers the price of cameras by 2 percent, Carol must be predicting that the quantity

Moving up (to the left) along a linear demand curve, the price elasticity of demand

A rise in the price of cabbage from $14 to $18 per bushel increases the quantity supplied from 4,000 to 6,000 bushels. The elasticity of supply is

The price elasticity of demand for purses is measured in what units?

The price elasticity of demand for oranges ________ change if the units of the quantity was changed from pounds to kilograms and ________ change if the units of the price was changed from dollars to cents.

-The figure above illustrates a linear demand curve. If the price rises from $6 to $8 demand is ________ and if the price falls from $8 to $6 demand is ________.

If a 20 percent increase in the price of a used car results in a 10 percent decrease in the quantity of used cars demanded, then the price elasticity of demand equals

If hot dog vendors at baseball games want to maximize their total sales revenue, they will have to

What effect does a price increase have on producers' total revenue?

By reviewing its sales records, Dell economists discover that when Dell lowers the price of its personal computers, the total revenue Dell obtains from the sale of its personal computers rises. Hence

Of the following, demand is likely to be the least elastic for

-The increase in the demand for widgets, shown in the figure above, is the result of an increase in the price of McBoover devices from $9 to $11. Therefore, the cross-price elasticity for these two products 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

If a 10 percent increase in income results in an 8 percent increase in the quantity demanded of a good, the income elasticity of demand equals and the good is good.

The price elasticity of demand for oranges change if the units of the quantity was changed from pounds to kilograms and change if the units of the price was changed from dollars to cents.

-The figure above illustrates a linear demand curve. If the price rises from $6 to $8 demand is and if the price falls from $8 to $6 demand is .