Question 1

Johnson's Income and Expenditures
Quantity Purchased per Month
  
-(Exhibit: Johnson's Income and Expenditures) For Johnson, magazines are a(n):

Accepted Answer

A)  negative good. 
B)  inferior good. 
C)  normal good. 
D)  neutral good. 
A)  negative good. 
B)  inferior good. 
C)  normal good. 
D)  neutral good.

Question 2

If people purchase less of a good when they have an increase in income, the good in question is an inferior good.

Accepted Answer

A) True 
 B)False

Question 3

Along the upper half of a linear demand curve, the price elasticity of demand will be:

Accepted Answer

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

Question 4

The cross price elasticity of demand of substitute goods is:

Accepted Answer

A)  between -1 and 0. 
B)  less than 0. 
C)  equal to 0. 
D)  greater than 0. 
A)  between -1 and 0. 
B)  less than 0. 
C)  equal to 0. 
D)  greater than 0.

Question 5

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

Accepted Answer

A)  -13. 
B)  -11. 
C)  -0.91. 
D)  -0.1. 
A)  -13. 
B)  -11. 
C)  -0.91. 
D)  -0.1.

Question 6

If the total revenue received by a firm does not change when it raises its price, this indicates that the demand for the firm's product 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.

Question 7

Suppose the price elasticity of demand for oranges is -1.8. If a fall frost destroys one-third of the nation's orange crop, how will that affect total expenditures on oranges, all other things unchanged?

Accepted Answer

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

Question 8

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

Accepted Answer

A)  greater than 1 (absolute value). 
B)  -1. 
C)  -0.7. 
D)  -0.3. 
A)  greater than 1 (absolute value). 
B)  -1. 
C)  -0.7. 
D)  -0.3.

Question 9

If a demand curve is unit price elastic throughout, then a decrease in supply will result in:

Accepted Answer

A)  an increase in total revenue. 
B)  a decrease in total revenue. 
C)  no change in total revenue. 
D)  a decrease in demand. 
A)  an increase in total revenue. 
B)  a decrease in total revenue. 
C)  no change in total revenue. 
D)  a decrease in demand.

Question 10

If changes in price and total revenue move in opposite directions, then demand is price inelastic in that portion of the demand curve.

Accepted Answer

A) True 
 B)False

Question 11

Explain, using the concept of elasticity of demand, why increased output could be a problem for farmers.

Accepted Answer

The concept of elasticity of demand refe

Question 12

Suppose that the cross price elasticity of demand for beer with respect to the price of wine is 1.2. This tells us that beer and wine are:

Accepted Answer

A)  substitutes. 
B)  complements. 
C)  elastic. 
D)  inelastic. 
A)  substitutes. 
B)  complements. 
C)  elastic. 
D)  inelastic.

Question 13

Johnson's Income and Expenditures
Quantity Purchased per Month
  
-(Exhibit: Johnson's Income and Expenditures) For Johnson, pizzas are a(n):

Accepted Answer

A)  inferior good. 
B)  positive good. 
C)  neutral good. 
D)  normal good. 
A)  inferior good. 
B)  positive good. 
C)  neutral good. 
D)  normal good.

Question 14

The price elasticity of demand for cabbage has been estimated to be -0.25. If an insect infestation destroys 20 percent of the nation's cabbage crop, how will that affect total expenditures on cabbage, all other things unchanged?

Accepted Answer

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

Question 15

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

Accepted Answer

A)  0. 
B)  0.09. 
C)  -0.5. 
D)  greater than 1 (absolute value). 
A)  0. 
B)  0.09. 
C)  -0.5. 
D)  greater than 1 (absolute value).

Question 16

The concept of price elasticity of demand is most closely related to:

Accepted Answer

A)  the equilibrium price. 
B)  the equilibrium quantity. 
C)  a movement along the demand curve. 
D)  a shift in the demand curve. 
A)  the equilibrium price. 
B)  the equilibrium quantity. 
C)  a movement along the demand curve. 
D)  a shift in the demand curve.

Question 17

Price elasticity of demand is computed as the arc elasticity by:

Accepted Answer

A)  dividing the slope of the demand curve by the average value of each variable between two points. 
B)  dividing the slope of the demand curve by the average value of each variable at one point. 
C)  calculating percentage changes relative to the value of one variable at one point. 
D)  calculating percentage changes relative to the average value of each variable between two points. 
A)  dividing the slope of the demand curve by the average value of each variable between two points. 
B)  dividing the slope of the demand curve by the average value of each variable at one point. 
C)  calculating percentage changes relative to the value of one variable at one point. 
D)  calculating percentage changes relative to the average value of each variable between two points.

Question 18

If the demand for golf is unit 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)  a decrease in the amount of golf played on the course. 
D)  no change 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)  a decrease in the amount of golf played on the course. 
D)  no change in the amount of golf played on the course.

Question 19

If your purchases of shoes remain constant at 9 pairs per year when the price of shirts increases from $8 to $12, then, for you, shoes and shirts are considered:

Accepted Answer

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

Question 20

The income elasticity of demand of a normal good is:

Accepted Answer

A)  between -1 and 0. 
B)  less than 0. 
C)  equal to 0. 
D)  greater than 0. 
A)  between -1 and 0. 
B)  less than 0. 
C)  equal to 0. 
D)  greater than 0.

Exam 5: Elasticity

Johnson's Income and Expenditures Quantity Purchased per Month -(Exhibit: Johnson's Income and Expenditures) For Johnson, magazines are a(n):

If people purchase less of a good when they have an increase in income, the good in question is an inferior good.

Along the upper half of a linear demand curve, the price elasticity of demand will be:

The cross price elasticity of demand of substitute goods is:

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

If the total revenue received by a firm does not change when it raises its price, this indicates that the demand for the firm's product is:

Suppose the price elasticity of demand for oranges is -1.8. If a fall frost destroys one-third of the nation's orange crop, how will that affect total expenditures on oranges, all other things unchanged?

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

If a demand curve is unit price elastic throughout, then a decrease in supply will result in:

If changes in price and total revenue move in opposite directions, then demand is price inelastic in that portion of the demand curve.

Explain, using the concept of elasticity of demand, why increased output could be a problem for farmers.

Suppose that the cross price elasticity of demand for beer with respect to the price of wine is 1.2. This tells us that beer and wine are:

Johnson's Income and Expenditures Quantity Purchased per Month -(Exhibit: Johnson's Income and Expenditures) For Johnson, pizzas are a(n):

The price elasticity of demand for cabbage has been estimated to be -0.25. If an insect infestation destroys 20 percent of the nation's cabbage crop, how will that affect total expenditures on cabbage, all other things unchanged?

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

The concept of price elasticity of demand is most closely related to:

Price elasticity of demand is computed as the arc elasticity by:

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

If your purchases of shoes remain constant at 9 pairs per year when the price of shirts increases from $8 to $12, then, for you, shoes and shirts are considered:

The income elasticity of demand of a normal good 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