Question 1

A product that has good substitutes is likely to have a higher price elasticity of demand than one that does not.

Accepted Answer

A) True 
 B)False

Question 2

The pair of items that is most likely to have a negative cross price elasticity of demand is:

Accepted Answer

A)  aspirin and hamburgers. 
B)  hot dogs and mustard. 
C)  margarine and butter. 
D)  catsup and whiskey. 
A)  aspirin and hamburgers. 
B)  hot dogs and mustard. 
C)  margarine and butter. 
D)  catsup and whiskey.

Question 3

The price elasticity of a demand curve with a constant slope:

Accepted Answer

A)  is equal to the slope. 
B)  is greater than the slope. 
C)  is less than the slope. 
D)  increases in absolute value as the price rises. 
A)  is equal to the slope. 
B)  is greater than the slope. 
C)  is less than the slope. 
D)  increases in absolute value as the price rises.

Question 4

The Demand for Bungalow Bob's Bagels
  
-(Exhibit: The Demand for Bungalow Bob's Bagels) Demand is price inelastic between:

Accepted Answer

A)  $0.40 and $0.50. 
B)  $0.50 and $0.60. 
C)  $0.60 and $0.70. 
D)  $0.70 and $0.80. 
A)  $0.40 and $0.50. 
B)  $0.50 and $0.60. 
C)  $0.60 and $0.70. 
D)  $0.70 and $0.80.

Question 5

If the demand for golf is price elastic and your local public golf course increases the greens fees for using the course, you would expect:

Accepted Answer

A)  a decrease in total revenue received by the course. 
B)  an increase in total revenue received by the course. 
C)  no change in total revenue received by the course. 
D)  an increase in the amount of golf played on the course. 
A)  a decrease in total revenue received by the course. 
B)  an increase in total revenue received by the course. 
C)  no change in total revenue received by the course. 
D)  an increase in the amount of golf played on the course.

Question 6

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 the supply of milk is:

Accepted Answer

A)  less elastic in the short run than in the long run. 
B)  elastic in both the short run and the long run. 
C)  relatively more elastic (that is, less inelastic) in the long run than in the short run. 
D)  relatively less elastic (that is, more inelastic) in the long run than in the short run. 
A)  less elastic in the short run than in the long run. 
B)  elastic in both the short run and the long run. 
C)  relatively more elastic (that is, less inelastic) in the long run than in the short run. 
D)  relatively less elastic (that is, more inelastic) in the long run than in the short run.

Question 7

-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.75 and $1.50?

Accepted Answer

A)  -0.42 
B)  -1.5 
C)  -1.86 
D)  none of the above 
A)  -0.42 
B)  -1.5 
C)  -1.86 
D)  none of the above

Question 8

-(Exhibit: Estimating Price Elasticity) Between the two prices, P1 and P2, the absolute value of the price elasticity of demand is ________ for D2.

Accepted Answer

A)  0 
B)  greater than 1 
C)  equal to 1 
D)  greater than 0 but less than 1 
A)  0 
B)  greater than 1 
C)  equal to 1 
D)  greater than 0 but less than 1

Question 9

Determining whether the price elasticity of demand is price elastic, unit price elastic, or price inelastic is done by:

Accepted Answer

A)  comparing the percentage change in quantity demanded to the percentage change in price. 
B)  examining the ratio of the change in quantity to the change in price. 
C)  examining the slope of the demand curve. 
D)  examining the ratio of the change in price to the change in quantity 
A)  comparing the percentage change in quantity demanded to the percentage change in price. 
B)  examining the ratio of the change in quantity to the change in price. 
C)  examining the slope of the demand curve. 
D)  examining the ratio of the change in price to the change in quantity

Question 10

An important determinant of elasticity is the availability of substitutes.

Accepted Answer

A) True 
 B)False

Question 11

Although in most cases the price elasticity of labor supply is ________ , for some individuals it may be ________ .

Accepted Answer

A)  negative; zero 
B)  negative; positive 
C)  positive; negative 
D)  zero; negative 
A)  negative; zero 
B)  negative; positive 
C)  positive; negative 
D)  zero; negative

Question 12

Income elasticity of demand measures:

Accepted Answer

A)  how much quantity demanded changes in response to a price change. 
B)  how much a consumer can buy at given income levels. 
C)  how much consumer purchasing power is affected when prices change. 
D)  how demand for a good changes in response to changes in income. 
A)  how much quantity demanded changes in response to a price change. 
B)  how much a consumer can buy at given income levels. 
C)  how much consumer purchasing power is affected when prices change. 
D)  how demand for a good changes in response to changes in income.

Question 13

When the percentage change in quantity demanded is less than the percentage change in price:

Accepted Answer

A)  demand is price elastic. 
B)  demand is price inelastic. 
C)  an increase in price will result in lower total revenue. 
D)  total revenue will be zero at the midpoint of a linear demand curve. 
A)  demand is price elastic. 
B)  demand is price inelastic. 
C)  an increase in price will result in lower total revenue. 
D)  total revenue will be zero at the midpoint of a linear demand curve.

Question 14

If a 20 percent increase in the price of one good leads to a decrease of 10 percent in the demand for another good, the goods are:

Accepted Answer

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

Question 15

If demand is price elastic, a change in price in either direction (up or down) causes:

Accepted Answer

A)  a change in total revenue in the opposite direction. 
B)  a change in total revenue in the same direction. 
C)  no change in total revenue. 
D)  an increase in total revenue. 
A)  a change in total revenue in the opposite direction. 
B)  a change in total revenue in the same direction. 
C)  no change in total revenue. 
D)  an increase in total revenue.

Question 16

-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $0.75 and $0.50?

Accepted Answer

A)  -0.25 
B)  -0.33 
C)  -0.43 
D)  -0.52 
A)  -0.25 
B)  -0.33 
C)  -0.43 
D)  -0.52

Question 17

-(Exhibit: Nonlinear Demand Curve) The values for quantity demanded along this nonlinear demand curve are given by the formula Q = 24/P. For this curve:

Accepted Answer

A)  total revenue is constant at all prices. 
B)  price elasticity falls as price rises. 
C)  price elasticity rises as price rises. 
D)  demand is price inelastic throughout. 
A)  total revenue is constant at all prices. 
B)  price elasticity falls as price rises. 
C)  price elasticity rises as price rises. 
D)  demand is price inelastic throughout.

Question 18

An important determinant of the price elasticity of demand is the:

Accepted Answer

A)  importance in household budgets. 
B)  level of technology. 
C)  quantity of the good supplied. 
D)  extent of government regulation. 
A)  importance in household budgets. 
B)  level of technology. 
C)  quantity of the good supplied. 
D)  extent of government regulation.

Question 19

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

Accepted Answer

A)  -7. 
B)  -0.143 
C)  cannot be calculated since quantity is zero at the price of $8. 
D)  1, since total revenue is zero at the price of $8 and $12 at the price of $6. 
A)  -7. 
B)  -0.143 
C)  cannot be calculated since quantity is zero at the price of $8. 
D)  1, since total revenue is zero at the price of $8 and $12 at the price of $6.

Question 20

The percentage change in quantity demanded of one good or service divided by the percentage change in the price of a related good or service is:

Accepted Answer

A)  price elasticity of demand. 
B)  quantity elasticity of demand. 
C)  income elasticity of demand. 
D)  cross price elasticity of demand. 
A)  price elasticity of demand. 
B)  quantity elasticity of demand. 
C)  income elasticity of demand. 
D)  cross price elasticity of demand.

Exam 5: Elasticity

A product that has good substitutes is likely to have a higher price elasticity of demand than one that does not.

The pair of items that is most likely to have a negative cross price elasticity of demand is:

The price elasticity of a demand curve with a constant slope:

The Demand for Bungalow Bob's Bagels -(Exhibit: The Demand for Bungalow Bob's Bagels) Demand is price inelastic between:

If the demand for golf is price elastic and your local public golf course increases the greens fees for using the course, you would expect:

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 the supply of milk is:

-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.75 and $1.50?

-(Exhibit: Estimating Price Elasticity) Between the two prices, P1 and P2, the absolute value of the price elasticity of demand is ________ for D2.

Determining whether the price elasticity of demand is price elastic, unit price elastic, or price inelastic is done by:

An important determinant of elasticity is the availability of substitutes.

Although in most cases the price elasticity of labor supply is ________ , for some individuals it may be ________ .

Income elasticity of demand measures:

When the percentage change in quantity demanded is less than the percentage change in price:

If a 20 percent increase in the price of one good leads to a decrease of 10 percent in the demand for another good, the goods are:

If demand is price elastic, a change in price in either direction (up or down) causes:

-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $0.75 and $0.50?

-(Exhibit: Nonlinear Demand Curve) The values for quantity demanded along this nonlinear demand curve are given by the formula Q = 24/P. For this curve:

An important determinant of the price elasticity of demand is the:

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

The percentage change in quantity demanded of one good or service divided by the percentage change in the price of a related good or service is:

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

Filters

-(Exhibit: Estimating Price Elasticity) Between the two prices, P₁ and P₂, the absolute value of the price elasticity of demand is ________ for D₂.

Although in most cases the price elasticity of labor supply is , for some individuals it may be .