Question 1

If a university decreases the price of tickets to football games in order to collect more revenue, it is assuming that the demand for tickets is:

Accepted Answer

A)  unstable. 
B)  price inelastic. 
C)  price elastic. 
D)  unit price elastic. 
A)  unstable. 
B)  price inelastic. 
C)  price elastic. 
D)  unit price elastic. C

Question 2

-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.25 and $1.00?

Accepted Answer

A)  -0.60 
B)  -0.82 
C)  -1.0 
D)  -1.6 
A)  -0.60 
B)  -0.82 
C)  -1.0 
D)  -1.6 B

Question 3

A linear demand curve will have absolute values of the coefficient of price elasticity that:

Accepted Answer

A)  exist only for a portion of the curve; on some portions elasticity cannot be measured. 
B)  are all less than 1. 
C)  are all equal to 1. 
D)  range from less than 1 to greater than 1. 
A)  exist only for a portion of the curve; on some portions elasticity cannot be measured. 
B)  are all less than 1. 
C)  are all equal to 1. 
D)  range from less than 1 to greater than 1. D

Question 4

Johnson's Income and Expenditures
Quantity Purchased per Month
  
-(Exhibit: Johnson's Income and Expenditures) Johnson's income elasticity of demand for steaks is:

Accepted Answer

A)  greater than 1. 
B)  1. 
C)  less than 1.0 but greater than 0. 
D)  0. 
A)  greater than 1. 
B)  1. 
C)  less than 1.0 but greater than 0. 
D)  0.

Question 5

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded increases from 180 bags to 220 bags, this indicates that, if other things are unchanged, the price elasticity of demand is:

Accepted Answer

A)  0. 
B)  -0.5. 
C)  -1. 
D)  -2. 
A)  0. 
B)  -0.5. 
C)  -1. 
D)  -2.

Question 6

The arc price elasticity of demand method is best used for:

Accepted Answer

A)  small changes in price. 
B)  large changes in quantity demanded. 
C)  large changes in both price and quantity demanded. 
D)  infinitely large changes in price. 
A)  small changes in price. 
B)  large changes in quantity demanded. 
C)  large changes in both price and quantity demanded. 
D)  infinitely large changes in price.

Question 7

There is no total revenue test for price elasticity of supply because:

Accepted Answer

A)  price and quantity are inversely related. 
B)  price and quantity are usually directly related. 
C)  total revenue will usually change in the direction of a supply price change. 
D)  both B and C are true. 
A)  price and quantity are inversely related. 
B)  price and quantity are usually directly related. 
C)  total revenue will usually change in the direction of a supply price change. 
D)  both B and C are true.

Question 8

-(Exhibit: Demand and Price Elasticity 2) From the graph it can be seen that, along a given segment of the demand curve, if price falls and total revenue _________, then demand is price elastic.

Accepted Answer

A)  increases 
B)  decreases 
C)  stays the same 
D)  decreases at first and then increases 
A)  increases 
B)  decreases 
C)  stays the same 
D)  decreases at first and then increases

Question 9

-(Exhibit: Demand and Price Elasticity 2) The price elasticity of demand between points D and E is:

Accepted Answer

A)  -.14 
B)  -.29 
C)  -.33 
D)  -.37 
A)  -.14 
B)  -.29 
C)  -.33 
D)  -.37

Question 10

A demand curve that is perfectly inelastic:

Accepted Answer

A)  will be vertical. 
B)  will be horizontal. 
C)  will be upward sloping. 
D)  has an elasticity equal to 1 everywhere on the curve. 
A)  will be vertical. 
B)  will be horizontal. 
C)  will be upward sloping. 
D)  has an elasticity equal to 1 everywhere on the curve.

Question 11

If the price of chocolate-covered peanuts decreases from $1.05 to $0.95 and the quantity demanded increases from 180 bags to 220 bags, this indicates that, if other things are unchanged, the price elasticity of demand is:

Accepted Answer

A)  -0.5. 
B)  -1. 
C)  -2. 
D)  greater than 2 (absolute value). 
A)  -0.5. 
B)  -1. 
C)  -2. 
D)  greater than 2 (absolute value).

Question 12

If the quantity supplied responds substantially to a relatively small change in price, supply would be:

Accepted Answer

A)  price elastic. 
B)  price inelastic. 
C)  negatively sloped. 
D)  insensitive to changes in price. 
A)  price elastic. 
B)  price inelastic. 
C)  negatively sloped. 
D)  insensitive to changes in price.

Question 13

If the price of a good is increased by 15 percent and the quantity demanded changes by 20 percent, then the price elasticity of demand is equal to:

Accepted Answer

A)  0.75. 
B)  approximately -0.33 
C)  approximately -1.33. 
D)  -1. 
A)  0.75. 
B)  approximately -0.33 
C)  approximately -1.33. 
D)  -1.

Question 14

The price elasticity of supply for milk in the short run has been estimated to be 0.36 while the price elasticity of supply for milk in the long run is estimated to be 0.51. That means that:

Accepted Answer

A)  the supply of milk reflects the fact that the longer the time period the more price elastic is the supply. 
B)  the supply of milk reflects the fact that the longer the time period the less price elastic is the supply. 
C)  the supply of milk reflects the fact that the shorter the time period the more price elastic is supply. 
D)  both B and C are true. 
A)  the supply of milk reflects the fact that the longer the time period the more price elastic is the supply. 
B)  the supply of milk reflects the fact that the longer the time period the less price elastic is the supply. 
C)  the supply of milk reflects the fact that the shorter the time period the more price elastic is supply. 
D)  both B and C are true.

Question 15

If the quantity demanded of agricultural output is very unresponsive to a fall in price, the demand for agricultural output is:

Accepted Answer

A)  price elastic. 
B)  price inelastic. 
C)  positively sloped. 
D)  horizontal. 
A)  price elastic. 
B)  price inelastic. 
C)  positively sloped. 
D)  horizontal.

Question 16

A unit price elastic demand exists if a 10 percent change in the price of a good results in a percentage change (in absolute value terms) in quantity demanded that is:

Accepted Answer

A)  less than 0. 
B)  greater than 0 but less than 10. 
C)  equal to 10. 
D)  greater than 10. 
A)  less than 0. 
B)  greater than 0 but less than 10. 
C)  equal to 10. 
D)  greater than 10.

Question 17

-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $2.00 and $1.75?

Accepted Answer

A)  -2.33 
B)  -3.00 
C)  -4.00 
D)  none of the above 
A)  -2.33 
B)  -3.00 
C)  -4.00 
D)  none of the above

Question 18

-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.00 and $0.75?

Accepted Answer

A)  -0.54 
B)  -0.66 
C)  -0.75 
D)  -1.0 
A)  -0.54 
B)  -0.66 
C)  -0.75 
D)  -1.0

Question 19

The income elasticity of demand for ground beef has been estimated to be -0.197. If income falls by 10 percent in a period, how will that affect total expenditures on ground beef in that period, all other things unchanged?

Accepted Answer

A)  total expenditures will rise 
B)  total expenditures will remain unchanged 
C)  total expenditures will fall 
D)  not enough information is given to answer the question 
A)  total expenditures will rise 
B)  total expenditures will remain unchanged 
C)  total expenditures will fall 
D)  not enough information is given to answer the question

Question 20

Whenever supply increases, the resulting market price will always be lower except:

Accepted Answer

A)  when demand is perfectly price elastic (when the demand curve is horizontal). 
B)  when demand is completely price inelastic (when the demand curve is vertical). 
C)  when supply is perfectly price inelastic (when the supply curve is vertical). 
D)  in the case of demand having unit price elasticity throughout. 
A)  when demand is perfectly price elastic (when the demand curve is horizontal). 
B)  when demand is completely price inelastic (when the demand curve is vertical). 
C)  when supply is perfectly price inelastic (when the supply curve is vertical). 
D)  in the case of demand having unit price elasticity throughout.

Exam 5: Elasticity

If a university decreases the price of tickets to football games in order to collect more revenue, it is assuming that the demand for tickets is:

-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.25 and $1.00?

A linear demand curve will have absolute values of the coefficient of price elasticity that:

Johnson's Income and Expenditures Quantity Purchased per Month -(Exhibit: Johnson's Income and Expenditures) Johnson's income elasticity of demand for steaks is:

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded increases from 180 bags to 220 bags, this indicates that, if other things are unchanged, the price elasticity of demand is:

The arc price elasticity of demand method is best used for:

There is no total revenue test for price elasticity of supply because:

-(Exhibit: Demand and Price Elasticity 2) From the graph it can be seen that, along a given segment of the demand curve, if price falls and total revenue _________, then demand is price elastic.

-(Exhibit: Demand and Price Elasticity 2) The price elasticity of demand between points D and E is:

A demand curve that is perfectly inelastic:

If the price of chocolate-covered peanuts decreases from $1.05 to $0.95 and the quantity demanded increases from 180 bags to 220 bags, this indicates that, if other things are unchanged, the price elasticity of demand is:

If the quantity supplied responds substantially to a relatively small change in price, supply would be:

If the price of a good is increased by 15 percent and the quantity demanded changes by 20 percent, then the price elasticity of demand is equal to:

The price elasticity of supply for milk in the short run has been estimated to be 0.36 while the price elasticity of supply for milk in the long run is estimated to be 0.51. That means that:

If the quantity demanded of agricultural output is very unresponsive to a fall in price, the demand for agricultural output is:

A unit price elastic demand exists if a 10 percent change in the price of a good results in a percentage change (in absolute value terms) in quantity demanded that is:

-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $2.00 and $1.75?

-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.00 and $0.75?

The income elasticity of demand for ground beef has been estimated to be -0.197. If income falls by 10 percent in a period, how will that affect total expenditures on ground beef in that period, all other things unchanged?

Whenever supply increases, the resulting market price will always be lower except:

Welcome to Economics

Demand and Supply

Labor and Financial Markets

Consumer Choices

Cost and Industry Structure

Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly and Antitrust Policy

Environmental Protection and Negative Externalities

Positive Externalities and Public Goods

Poverty and Economic Inequality

Issues in Labor Markets: Unions, Discrimination, Immigration

Information, Risk, and Insurance

Financial Markets

Public Economy

The Macroeconomic Perspective

Economic Growth

Unemployment

Inflation

The International Trade and Capital Flows

The Aggregate Demandaggregate Supply Model

The Keynesian Perspective

The Neoclassical Perspective

Money and Banking

Monetary Policy and Bank Regulation

Exchange Rates and International Capital Flows

Government Budgets and Fiscal Policy

The Impacts of Government Borrowing

Macroeconomic Policy Around the World

International Trade

Globalization and Protectionism

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