Question 1

The Demand for Bungalow Bob's Bagels
  
-(Exhibit: The Demand for Bungalow Bob's Bagels) Total revenue increases if the price ________ from ________.

Accepted Answer

A)  decreases; $0.40 to $0.30 
B)  decreases; $0.50 to $0.40 
C)  decreases; $0.60 to $0.50 
D)  increases; $0.40 to $0.50 
A)  decreases; $0.40 to $0.30 
B)  decreases; $0.50 to $0.40 
C)  decreases; $0.60 to $0.50 
D)  increases; $0.40 to $0.50

Question 2

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

Accepted Answer

A)  price of related goods. 
B)  level of technology. 
C)  availability of substitutes. 
D)  quantity of the good supplied. 
A)  price of related goods. 
B)  level of technology. 
C)  availability of substitutes. 
D)  quantity of the good supplied.

Question 3

If a 20 percent increase in the price of one good leads to a 10 percent increase in the quantity demanded of another good at a specific price, the goods are:

Accepted Answer

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

Question 4

-(Exhibit: Demand for Shirts) The price elasticity of demand for the segment CD is:

Accepted Answer

A)  greater than 1 (absolute value). 
B)  -1. 
C)  -0.71. 
D)  -0.29. 
A)  greater than 1 (absolute value). 
B)  -1. 
C)  -0.71. 
D)  -0.29.

Question 5

If people purchase less of a good when their incomes go down, the good is an inferior good.

Accepted Answer

A) True 
 B)False

Question 6

Given a linear demand curve, we would expect that as we move down the curve from left to right that:

Accepted Answer

A)  total revenue will fall throughout. 
B)  total revenue will rise throughout. 
C)  total revenue will change depending on the price elasticity, which changes along the curve. 
D)  total revenue will equal zero at the midpoint of the curve. 
A)  total revenue will fall throughout. 
B)  total revenue will rise throughout. 
C)  total revenue will change depending on the price elasticity, which changes along the curve. 
D)  total revenue will equal zero at the midpoint of the curve.

Question 7

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded does not change, 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 8

To say that two goods are unrelated, their cross price elasticities of demand should be:

Accepted Answer

A)  less than zero. 
B)  significantly negative. 
C)  equal to zero. 
D)  greater than zero. 
A)  less than zero. 
B)  significantly negative. 
C)  equal to zero. 
D)  greater than zero.

Question 9

Income elasticity of demand measures the response of the change in quantity demanded at a specific price to a change in income.

Accepted Answer

A) True 
 B)False

Question 10

If total revenue goes down when price falls, the price elasticity of demand is said to be:

Accepted Answer

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

Question 11

Which factor is the most important in determining the price elasticity of supply?

Accepted Answer

A)  the number of close substitutes 
B)  the time period the producer has to adjust inputs and outputs 
C)  the intensity of the need on behalf of consumers 
D)  the number of alternative uses of the good 
A)  the number of close substitutes 
B)  the time period the producer has to adjust inputs and outputs 
C)  the intensity of the need on behalf of consumers 
D)  the number of alternative uses of the good

Question 12

The concept of price elasticity of supply can be applied to labor:

Accepted Answer

A)  to show the amount of income earned at different wage rates. 
B)  to show how the quantity of labor supplied responds to changes in wages and salaries. 
C)  to determine how responsive the demand for labor is to changes in wages and salaries. 
D)  to do all of the above. 
A)  to show the amount of income earned at different wage rates. 
B)  to show how the quantity of labor supplied responds to changes in wages and salaries. 
C)  to determine how responsive the demand for labor is to changes in wages and salaries. 
D)  to do all of the above.

Question 13

The price elasticity of demand for lettuce has been estimated to be -2.58. If an insect infestation destroys 10 percent of the nation's lettuce crop, how will that affect total expenditures on lettuce, 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 14

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

Accepted Answer

A)  infinite. 
B)  1. 
C)  0. 
D)  -1. 
A)  infinite. 
B)  1. 
C)  0. 
D)  -1.

Question 15

Price elasticity of demand measures the responsiveness of the change in:

Accepted Answer

A)  quantity demanded to a change in price. 
B)  price to a change in quantity demanded. 
C)  slope of the demand curve to a change in price. 
D)  slope of the demand curve to a change in quantity demanded. 
A)  quantity demanded to a change in price. 
B)  price to a change in quantity demanded. 
C)  slope of the demand curve to a change in price. 
D)  slope of the demand curve to a change in quantity demanded.

Question 16

If demand is unit price elastic, then quantity changes by the same percentage as the percentage change in the price.

Accepted Answer

A) True 
 B)False

Question 17

The cross price elasticity of demand for Pepsi with respect to the price of Coke has been estimated to be 0.80. If the price of Coke increases by 10 percent in a period, how will that affect the demand for Pepsi in that period, all other things unchanged?

Accepted Answer

A)  The demand for Pepsi will increase 0.80 percent. 
B)  The demand for Pepsi will increase by 8 percent. 
C)  The demand for Pepsi will not change because many people prefer Coke over Pepsi. 
D)  The demand for Coke will fall and the demand for Pepsi will increase. 
A)  The demand for Pepsi will increase 0.80 percent. 
B)  The demand for Pepsi will increase by 8 percent. 
C)  The demand for Pepsi will not change because many people prefer Coke over Pepsi. 
D)  The demand for Coke will fall and the demand for Pepsi will increase.

Question 18

The Demand for Bungalow Bob's Bagels
  
-(Exhibit: The Demand for Bungalow Bob's Bagels) Total revenue increases if the price ________ from ________.

Accepted Answer

A)  decreases; $0.50 to $0.40 
B)  decreases; $0.70 to $0.60 
C)  increases; $0.50 to $0.60 
D)  increases; $0.70 to $0.80 
A)  decreases; $0.50 to $0.40 
B)  decreases; $0.70 to $0.60 
C)  increases; $0.50 to $0.60 
D)  increases; $0.70 to $0.80

Question 19

If the price of chocolate-covered peanuts increases and the demand for strawberry licorice twists increases, this indicates that these two goods are:

Accepted Answer

A)  unrelated goods. 
B)  superior goods. 
C)  inferior goods. 
D)  substitute goods. 
A)  unrelated goods. 
B)  superior goods. 
C)  inferior goods. 
D)  substitute goods.

Question 20

To say that two goods are complements, their cross price elasticities of demand should be:

Accepted Answer

A)  less than zero. 
B)  equal to zero. 
C)  positive, yet almost equal to zero. 
D)  greater than zero. 
A)  less than zero. 
B)  equal to zero. 
C)  positive, yet almost equal to zero. 
D)  greater than zero.

Exam 5: Elasticity

The Demand for Bungalow Bob's Bagels -(Exhibit: The Demand for Bungalow Bob's Bagels) Total revenue increases if the price ________ from ________.

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

If a 20 percent increase in the price of one good leads to a 10 percent increase in the quantity demanded of another good at a specific price, the goods are:

-(Exhibit: Demand for Shirts) The price elasticity of demand for the segment CD is:

If people purchase less of a good when their incomes go down, the good is an inferior good.

Given a linear demand curve, we would expect that as we move down the curve from left to right that:

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded does not change, this indicates that, if other things are unchanged, the price elasticity of demand is:

To say that two goods are unrelated, their cross price elasticities of demand should be:

Income elasticity of demand measures the response of the change in quantity demanded at a specific price to a change in income.

If total revenue goes down when price falls, the price elasticity of demand is said to be:

Which factor is the most important in determining the price elasticity of supply?

The concept of price elasticity of supply can be applied to labor:

The price elasticity of demand for lettuce has been estimated to be -2.58. If an insect infestation destroys 10 percent of the nation's lettuce crop, how will that affect total expenditures on lettuce, all other things unchanged?

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

Price elasticity of demand measures the responsiveness of the change in:

If demand is unit price elastic, then quantity changes by the same percentage as the percentage change in the price.

The cross price elasticity of demand for Pepsi with respect to the price of Coke has been estimated to be 0.80. If the price of Coke increases by 10 percent in a period, how will that affect the demand for Pepsi in that period, all other things unchanged?

The Demand for Bungalow Bob's Bagels -(Exhibit: The Demand for Bungalow Bob's Bagels) Total revenue increases if the price ________ from ________.

If the price of chocolate-covered peanuts increases and the demand for strawberry licorice twists increases, this indicates that these two goods are:

To say that two goods are complements, their cross price elasticities of demand should be:

Welcome to Economics

Demand and Supply

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Consumer Choices

Cost and Industry Structure

Perfect Competition

Monopolistic Competition and Oligopoly

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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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The Demand for Bungalow Bob's Bagels -(Exhibit: The Demand for Bungalow Bob's Bagels) Total revenue increases if the price from .

The Demand for Bungalow Bob's Bagels -(Exhibit: The Demand for Bungalow Bob's Bagels) Total revenue increases if the price from .