Question 1

Which of the following is not a factor in determining the price elasticity of demand?

Accepted Answer

A)  the number of available substitutes 
B)  the time period involved 
C)  the proportion of the budget spent on the item 
D)  the slope of the supply curve 
A)  the number of available substitutes 
B)  the time period involved 
C)  the proportion of the budget spent on the item 
D)  the slope of the supply curve

Question 2

Assuming the law of demand holds for a good, its price elasticity of demand is:

Accepted Answer

A)  positive. 
B)  greater than 1. 
C)  equal to 1. 
D)  negative. 
A)  positive. 
B)  greater than 1. 
C)  equal to 1. 
D)  negative.

Question 3

The income elasticity of demand for eggs has been estimated to be 0.57. If income grows by 15 percent in a period, how will that affect total expenditures on eggs in that period, all other things unchanged?

Accepted Answer

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

Question 4

If the price elasticity of demand is found to be -3/4, then demand is:

Accepted Answer

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

Question 5

If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year when your income increases from $19,000 to $21,000 a year, then your income elasticity of demand for shoes is.

Accepted Answer

A)  -2. 
B)  -0.67. 
C)  0.67. 
D)  2. 
A)  -2. 
B)  -0.67. 
C)  0.67. 
D)  2.

Question 6

The Case in Point on Child Labor in Pakistan indicated that the wage elasticity for girls was _____ indicating that the labor supply curve was _____.

Accepted Answer

A)  positive; upward sloping 
B)  negative; downward sloping 
C)  zero; horizontal 
D)  zero; vertical 
A)  positive; upward sloping 
B)  negative; downward sloping 
C)  zero; horizontal 
D)  zero; vertical

Question 7

The price elasticity of demand measures the ratio of the percentage change in demand to the percentage change in price.

Accepted Answer

A) True 
 B)False

Question 8

-(Exhibit: Demand for Macintosh Computers) The seller's total revenue at point V equals the:

Accepted Answer

A)  area 0TVN. 
B)  area 0PSVN. 
C)  distance 0T. 
D)  distance NV. 
A)  area 0TVN. 
B)  area 0PSVN. 
C)  distance 0T. 
D)  distance NV.

Question 9

The price elasticity of demand for peanuts has been estimated to be -0.38. If an insect infestation destroys 20 percent of the nation's peanut crop, how will that affect total expenditures on peanuts, all other things unchanged?

Accepted Answer

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

Question 10

Draw a demand curve that is perfectly elastic, one that is perfectly inelastic, and one that is unit price elastic throughout. Explain their differences. Draw a linear demand curve and explain why the price elasticity coefficient declines as price falls and quantity demanded increases as we move downward along the demand curve.

Accepted Answer

A perfectly elastic demand curve is hori

Question 11

The income elasticity of demand for ground beef has been estimated to be -0.197. If income falls by 20 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 remain 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 remain fall 
D)  not enough information is given to answer the question

Question 12

The ratio of the percentage change in a dependent variable to the percentage change in an independent variable , all other things unchanged, is:

Accepted Answer

A)  total revenue. 
B)  production possibilities. 
C)  elasticity. 
D)  slope. 
A)  total revenue. 
B)  production possibilities. 
C)  elasticity. 
D)  slope.

Question 13

If a change in price causes total revenue to change in the same direction, we can conclude that the demand is:

Accepted Answer

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

Question 14

According to the Case in Point on Conventional and Organic Milk:

Accepted Answer

A)  neither organic milk nor conventional milk is an inferior good. 
B)  organic milk is an inferior good. 
C)  conventional milk is an inferior good. 
D)  both organic milk and conventional milk are inferior goods. 
A)  neither organic milk nor conventional milk is an inferior good. 
B)  organic milk is an inferior good. 
C)  conventional milk is an inferior good. 
D)  both organic milk and conventional milk are inferior goods.

Question 15

A linear demand curve will have which of the following properties?

Accepted Answer

A)  a slope that is constant and price elasticity that varies 
B)  constant slope and constant price elasticity 
C)  constant price elasticity and varying slope 
D)  varying slope and varying elasticity 
A)  a slope that is constant and price elasticity that varies 
B)  constant slope and constant price elasticity 
C)  constant price elasticity and varying slope 
D)  varying slope and varying elasticity

Question 16

If demand is price elastic, a decrease in price will result in an increase in total revenue.

Accepted Answer

A) True 
 B)False

Question 17

If the percentage change in quantity demanded is greater than the percentage change in price, then demand is price elastic.

Accepted Answer

A) True 
 B)False

Question 18

The price elasticity of demand for fresh tomatoes has been estimated to be -2.22. If a new insecticide and fertilizer treatment yields a 20 percent increase in the nation's fresh tomato crop, how will that affect total expenditures on fresh tomatoes, all other things unchanged?

Accepted Answer

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

Question 19

If the price elasticity of supply is less than 1, then supply is:

Accepted Answer

A)  price elastic. 
B)  price inelastic. 
C)  unit price elastic. 
D)  very responsive to price changes. 
A)  price elastic. 
B)  price inelastic. 
C)  unit price elastic. 
D)  very responsive to price changes.

Question 20

There are several close substitutes for Bayer aspirin but fewer substitutes for a complete medical examination. Therefore, you would expect the demand for:

Accepted Answer

A)  medical exams to be more price elastic. 
B)  Bayer aspirin to be more price elastic. 
C)  Bayer aspirin to be more price inelastic. 
D)  both to be equally price elastic. 
A)  medical exams to be more price elastic. 
B)  Bayer aspirin to be more price elastic. 
C)  Bayer aspirin to be more price inelastic. 
D)  both to be equally price elastic.

Exam 5: Elasticity

Which of the following is not a factor in determining the price elasticity of demand?

Assuming the law of demand holds for a good, its price elasticity of demand is:

The income elasticity of demand for eggs has been estimated to be 0.57. If income grows by 15 percent in a period, how will that affect total expenditures on eggs in that period, all other things unchanged?

If the price elasticity of demand is found to be -3/4, then demand is:

If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year when your income increases from $19,000 to $21,000 a year, then your income elasticity of demand for shoes is.

The Case in Point on Child Labor in Pakistan indicated that the wage elasticity for girls was _____ indicating that the labor supply curve was _____.

The price elasticity of demand measures the ratio of the percentage change in demand to the percentage change in price.

-(Exhibit: Demand for Macintosh Computers) The seller's total revenue at point V equals the:

The price elasticity of demand for peanuts has been estimated to be -0.38. If an insect infestation destroys 20 percent of the nation's peanut crop, how will that affect total expenditures on peanuts, all other things unchanged?

The income elasticity of demand for ground beef has been estimated to be -0.197. If income falls by 20 percent in a period, how will that affect total expenditures on ground beef in that period, all other things unchanged?

The ratio of the percentage change in a dependent variable to the percentage change in an independent variable , all other things unchanged, is:

If a change in price causes total revenue to change in the same direction, we can conclude that the demand is:

According to the Case in Point on Conventional and Organic Milk:

A linear demand curve will have which of the following properties?

If demand is price elastic, a decrease in price will result in an increase in total revenue.

If the percentage change in quantity demanded is greater than the percentage change in price, then demand is price elastic.

The price elasticity of demand for fresh tomatoes has been estimated to be -2.22. If a new insecticide and fertilizer treatment yields a 20 percent increase in the nation's fresh tomato crop, how will that affect total expenditures on fresh tomatoes, all other things unchanged?

If the price elasticity of supply is less than 1, then supply is:

There are several close substitutes for Bayer aspirin but fewer substitutes for a complete medical examination. Therefore, you would expect the demand for:

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

The Case in Point on Child Labor in Pakistan indicated that the wage elasticity for girls was _ indicating that the labor supply curve was _.