Question 1

Other things being equal, the demand for a product is less elastic if

Accepted Answer

A)  the product has a very small ticket price. 
B)  the product has more substitutes. 
C)  the product has more complements. 
D)  consumers have more time to adjust for any price change. 
E)  the product's cost of production is higher. 
A)  the product has a very small ticket price. 
B)  the product has more substitutes. 
C)  the product has more complements. 
D)  consumers have more time to adjust for any price change. 
E)  the product's cost of production is higher.

Question 2

If a 1 percent decrease in the price of steak results in a 2 percent increase in the quantity demanded for steak, then the price elasticity of the demand for steak is

Accepted Answer

A)  2 cents. 
B)  2 pounds of steak. 
C)  2 percent. 
D)  $2. 
E)  2. 
A)  2 cents. 
B)  2 pounds of steak. 
C)  2 percent. 
D)  $2. 
E)  2.

Question 3

A product has elastic demand if, when price rises, total revenue falls.

Accepted Answer

A) True 
 B)False

Question 4

One of the results of a price ceiling is a decline in the quality of the good sold.

Accepted Answer

A) True 
 B)False

Question 5

The demand for gasoline should be

Accepted Answer

A)  less elastic in the long run than in the short run. 
B)  more elastic in the long run than in the short run. 
C)  equally elastic in the long run as in the short run. 
D)  perfectly inelastic in the long run and perfectly elastic in the short run. 
E)  unit elastic in both the long run and the short run. 
A)  less elastic in the long run than in the short run. 
B)  more elastic in the long run than in the short run. 
C)  equally elastic in the long run as in the short run. 
D)  perfectly inelastic in the long run and perfectly elastic in the short run. 
E)  unit elastic in both the long run and the short run.

Question 6

If a price ceiling is imposed on a good, then a shortage for that good will occur.

Accepted Answer

A) True 
 B)False

Question 7

Calculate the price elasticity of demand if a .8 percent change in the price of a product results in a .25 percent change in quantity demanded, and indicate whether demand is elastic, inelastic, or unit elastic.

Accepted Answer

0.25/.8 =

Question 8

The size of the price elasticity of demand is important to determine how much market price will change in response to a shift in the supply.

Accepted Answer

A) True 
 B)False

Question 9

When price elasticity of demand for a good equals 0, it is said to be perfectly inelastic.

Accepted Answer

A) True 
 B)False

Question 10

The size of the price elasticity of demand is important to determine how much market price will change in response to a shift in the supply.

Accepted Answer

A) True 
 B)False

Question 11

The cross-price elasticity of demand between two goods measures the percentage change in the demand for one good for a given percentage change in the price of another good.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following statements about the minimum wage is false?

Accepted Answer

A)  The minimum wage causes a shortage of unskilled labor. 
B)  The minimum wage is an example of a price floor. 
C)  The minimum wage increases unemployment among unskilled workers. 
D)  More unskilled individuals are willing to offer their services in the labor market with a minimum wage than they would without it. 
E)  The minimum wage is set above the equilibrium wage. 
A)  The minimum wage causes a shortage of unskilled labor. 
B)  The minimum wage is an example of a price floor. 
C)  The minimum wage increases unemployment among unskilled workers. 
D)  More unskilled individuals are willing to offer their services in the labor market with a minimum wage than they would without it. 
E)  The minimum wage is set above the equilibrium wage.

Question 13

Consider two demand curves with different slopes. It is possible to predict ranges on each demand curve where the price elasticities of demand will be different.

Accepted Answer

A) True 
 B)False

Question 14

Assume that the price elasticity of demand equals .2 (ed = .2). Given a 10 percent increase in price, there will be a

Accepted Answer

A)  20 percent increase in the quantity demanded. 
B)  2 percent decrease in the quantity demanded. 
C)  20 percent decrease in the quantity demanded. 
D)  2 percent increase in the quantity demanded. 
E)  .2 percent decrease in the quantity demanded. 
A)  20 percent increase in the quantity demanded. 
B)  2 percent decrease in the quantity demanded. 
C)  20 percent decrease in the quantity demanded. 
D)  2 percent increase in the quantity demanded. 
E)  .2 percent decrease in the quantity demanded.

Question 15

If the price elasticity of demand for apples is higher than the price elasticity of demand for oranges, then a given percentage increase in the price of apples and oranges will result in more percentage decrease in the quantity demanded for apples than for oranges.

Accepted Answer

A) True 
 B)False

Question 16

All of the following are forms or examples of price control except

Accepted Answer

A)  a price ceiling. 
B)  free market interactions. 
C)  the minimum wage. 
D)  rent control. 
E)  a price floor. 
A)  a price ceiling. 
B)  free market interactions. 
C)  the minimum wage. 
D)  rent control. 
E)  a price floor.

Question 17

Suppose the price of a good rises from $2.25 to $3.15, and the quantity demanded changes from 2,360 units to 1,250 units. Calculate the price elasticity of demand using the midpoint formula, and indicate whether demand is elastic, inelastic, or unit elastic.

Accepted Answer

The answer of Suppose the price of a good rises...

Question 18

The price elasticity of demand measures the change in quantity demanded given a dollar change in price.

Accepted Answer

A) True 
 B)False

Question 19

A perfectly inelastic demand curve has a price elasticity

Accepted Answer

A)  equal to zero. 
B)  that varies. 
C)  equal to 1. 
D)  less than 1. 
E)  of infinity. 
A)  equal to zero. 
B)  that varies. 
C)  equal to 1. 
D)  less than 1. 
E)  of infinity.

Other things being equal, the demand for a product is less elastic if

If a 1 percent decrease in the price of steak results in a 2 percent increase in the quantity demanded for steak, then the price elasticity of the demand for steak is

A product has elastic demand if, when price rises, total revenue falls.

One of the results of a price ceiling is a decline in the quality of the good sold.

The demand for gasoline should be

If a price ceiling is imposed on a good, then a shortage for that good will occur.

Calculate the price elasticity of demand if a .8 percent change in the price of a product results in a .25 percent change in quantity demanded, and indicate whether demand is elastic, inelastic, or unit elastic.

The size of the price elasticity of demand is important to determine how much market price will change in response to a shift in the supply.

When price elasticity of demand for a good equals 0, it is said to be perfectly inelastic.

The size of the price elasticity of demand is important to determine how much market price will change in response to a shift in the supply.

The cross-price elasticity of demand between two goods measures the percentage change in the demand for one good for a given percentage change in the price of another good.

Which of the following statements about the minimum wage is false?

Consider two demand curves with different slopes. It is possible to predict ranges on each demand curve where the price elasticities of demand will be different.

Assume that the price elasticity of demand equals .2 (e_d = .2). Given a 10 percent increase in price, there will be a

If the price elasticity of demand for apples is higher than the price elasticity of demand for oranges, then a given percentage increase in the price of apples and oranges will result in more percentage decrease in the quantity demanded for apples than for oranges.

All of the following are forms or examples of price control except

Suppose the price of a good rises from $2.25 to $3.15, and the quantity demanded changes from 2,360 units to 1,250 units. Calculate the price elasticity of demand using the midpoint formula, and indicate whether demand is elastic, inelastic, or unit elastic.

The price elasticity of demand measures the change in quantity demanded given a dollar change in price.

A perfectly inelastic demand curve has a price elasticity

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Reading, Understanding, and Creating Graphs

Consumer Theory With Indifference Curves

Producer Theory With Isoquants

Filters

Exam 4: Subtleties of the Supply and Demand Model: Price Floors, Price Ceilings, and Elasticity

Other things being equal, the demand for a product is less elastic if

If a 1 percent decrease in the price of steak results in a 2 percent increase in the quantity demanded for steak, then the price elasticity of the demand for steak is

A product has elastic demand if, when price rises, total revenue falls.

One of the results of a price ceiling is a decline in the quality of the good sold.

The demand for gasoline should be

If a price ceiling is imposed on a good, then a shortage for that good will occur.

Calculate the price elasticity of demand if a .8 percent change in the price of a product results in a .25 percent change in quantity demanded, and indicate whether demand is elastic, inelastic, or unit elastic.

The size of the price elasticity of demand is important to determine how much market price will change in response to a shift in the supply.

When price elasticity of demand for a good equals 0, it is said to be perfectly inelastic.

The size of the price elasticity of demand is important to determine how much market price will change in response to a shift in the supply.

The cross-price elasticity of demand between two goods measures the percentage change in the demand for one good for a given percentage change in the price of another good.

Which of the following statements about the minimum wage is false?

Consider two demand curves with different slopes. It is possible to predict ranges on each demand curve where the price elasticities of demand will be different.

Assume that the price elasticity of demand equals .2 (ed = .2). Given a 10 percent increase in price, there will be a

If the price elasticity of demand for apples is higher than the price elasticity of demand for oranges, then a given percentage increase in the price of apples and oranges will result in more percentage decrease in the quantity demanded for apples than for oranges.

All of the following are forms or examples of price control except

Suppose the price of a good rises from $2.25 to $3.15, and the quantity demanded changes from 2,360 units to 1,250 units. Calculate the price elasticity of demand using the midpoint formula, and indicate whether demand is elastic, inelastic, or unit elastic.

The price elasticity of demand measures the change in quantity demanded given a dollar change in price.

A perfectly inelastic demand curve has a price elasticity

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Reading, Understanding, and Creating Graphs

Consumer Theory With Indifference Curves

Producer Theory With Isoquants

Filters

Assume that the price elasticity of demand equals .2 (e_d = .2). Given a 10 percent increase in price, there will be a