Question 1

Demand is almost always more price elastic in the long run because

Accepted Answer

A)  people's preferences change. 
B)  newer versions of a good or service replace older ones. 
C)  production of the good or service stops. 
D)  more options become available and people can make different choices. 
E)  government regulations increase. 
A)  people's preferences change. 
B)  newer versions of a good or service replace older ones. 
C)  production of the good or service stops. 
D)  more options become available and people can make different choices. 
E)  government regulations increase.

Question 2

A professional hockey arena has a maximum seating capacity of 20,000 people.The price elasticity of supply is

Accepted Answer

A)  perfectly inelastic. 
B)  perfectly elastic. 
C)  inelastic. 
D)  relatively elastic. 
E)  elastic. 
A)  perfectly inelastic. 
B)  perfectly elastic. 
C)  inelastic. 
D)  relatively elastic. 
E)  elastic.

Question 3

Graph the following situations:
a.Brenda's cats love Kitty Kat Treats,and she will buy as much as the store has at the current price of $2.But when the price of Kitty Kat Treats increases by even 5 cents,she won't buy any!
b.Brenda will buy 20 bags of Kitty Kat Treats at any price.
c.If the price of Kitty Kat Treats rises by 5 percent,Brenda will decrease her quantity demanded by 10 percent.

Accepted Answer

a. @#IMG-DLM& This situation illustrates perfectly

Question 4

When the price of pencils increases from $1.50 to $2.50,there is an increase in quantity demanded of pens from 100 to 150.The cross-price elasticity of demand between pencils and pens is

Accepted Answer

A)  1.25. 
B)  0.50. 
C)  0.40. 
D)  0.80. 
E)  0.75. 
A)  1.25. 
B)  0.50. 
C)  0.40. 
D)  0.80. 
E)  0.75.

Question 5

The price elasticity of demand is always

Accepted Answer

A)  positive. 
B)  negative. 
C)  equal to -1. 
D)  equal to zero. 
E)  equal to infinity. 
A)  positive. 
B)  negative. 
C)  equal to -1. 
D)  equal to zero. 
E)  equal to infinity.

Question 6

When the demand curve is vertical

Accepted Answer

A)  the price elasticity of demand is negative. 
B)  the price elasticity of demand is positive. 
C)  the demand for the good is perfectly elastic. 
D)  the price elasticity of demand is equal to zero. 
E)  the price elasticity of demand is equal to -1. 
A)  the price elasticity of demand is negative. 
B)  the price elasticity of demand is positive. 
C)  the demand for the good is perfectly elastic. 
D)  the price elasticity of demand is equal to zero. 
E)  the price elasticity of demand is equal to -1.

Question 7

The government estimates that the demand curve for DVDs is represented by the equation Qd= -5P + 20.
a.Graph the demand curve.
b.Using prices of $2 and $3,determine the price elasticity of demand.

Accepted Answer

a. @#IMG-DLM& b.At price =$2,quantity de

Question 8

Super Economy Brand products have an income elasticity of -1.4.Thus,these are ________ goods.

Accepted Answer

A)  necessity 
B)  inferior 
C)  luxury 
D)  normal 
E)  complementary 
A)  necessity 
B)  inferior 
C)  luxury 
D)  normal 
E)  complementary

Question 9

When two goods are complements to each other,the cross-price elasticity will

Accepted Answer

A)  begin by being positive but becomes negative over time. 
B)  be unaffected by goods being complements. 
C)  be zero. 
D)  be positive. 
E)  be negative. 
A)  begin by being positive but becomes negative over time. 
B)  be unaffected by goods being complements. 
C)  be zero. 
D)  be positive. 
E)  be negative.

Question 10

When incomes fall by 20 percent,quantity demanded of specialty baked goods falls by 50 percent.Specialty baked goods are

Accepted Answer

A)  inferior goods. 
B)  necessities. 
C)  substitutes for mass-produced bread. 
D)  luxuries. 
E)  complements to butter. 
A)  inferior goods. 
B)  necessities. 
C)  substitutes for mass-produced bread. 
D)  luxuries. 
E)  complements to butter.

Question 11

Used car dealers find that their sales rise in a recession.We can be certain that consumers view used cars as

Accepted Answer

A)  necessities. 
B)  normal goods. 
C)  luxuries. 
D)  substitutes. 
E)  inferior. 
A)  necessities. 
B)  normal goods. 
C)  luxuries. 
D)  substitutes. 
E)  inferior.

Question 12

The price elasticity supply of doctors could be considered ________ because it takes a minimum of four to six years of training to be able to work as a physician.

Accepted Answer

A)  perfectly elastic 
B)  unitary elastic 
C)  relatively inelastic 
D)  relatively elastic 
E)  perfectly inelastic 
A)  perfectly elastic 
B)  unitary elastic 
C)  relatively inelastic 
D)  relatively elastic 
E)  perfectly inelastic

Question 13

When the price of a basketball is $15,the quantity supplied is 5,000.When the price increases to $20,the quantity supplied is 10,000.The price elasticity of supply is

Accepted Answer

A)  2.33. 
B)  0.67. 
C)  0.33. 
D)  0.43. 
E)  0.29. 
A)  2.33. 
B)  0.67. 
C)  0.33. 
D)  0.43. 
E)  0.29.

Question 14

A producer knows that the price elasticity for his product is -0.5.He wants to increase quantity demanded by 30 percent.By what percentage does he need to change the price?

Accepted Answer

A)  10 percent 
B)  6 percent 
C)  -9.5 percent 
D)  -60 percent 
E)  -6 percent 
A)  10 percent 
B)  6 percent 
C)  -9.5 percent 
D)  -60 percent 
E)  -6 percent

Question 15

We would expect to see a positive cross-price elasticity between

Accepted Answer

A)  peanut butter and jelly. 
B)  ice cream and frozen yogurt. 
C)  basketballs and steak. 
D)  sneakers and socks. 
E)  computers and iPods. 
A)  peanut butter and jelly. 
B)  ice cream and frozen yogurt. 
C)  basketballs and steak. 
D)  sneakers and socks. 
E)  computers and iPods.

Question 16

To keep the percentage change in quantity demanded equally proportional to the percentage change in price when the prices rise by 5 percent,a consumer would need to ________ quantity demanded by ________.

Accepted Answer

A)  increase; 5 percent 
B)  decrease; 5 percent 
C)  increase; 10 percent 
D)  decrease; 10 percent 
E)  increase; 2 percent 
A)  increase; 5 percent 
B)  decrease; 5 percent 
C)  increase; 10 percent 
D)  decrease; 10 percent 
E)  increase; 2 percent

Question 17

Masielle's Furniture produces high-quality wooden bedroom sets that take approximately four months to make,from start to finish.The price elasticity of supply for these bedroom sets in the short term is

Accepted Answer

A)  unitary elastic. 
B)  relatively inelastic. 
C)  perfectly inelastic. 
D)  relatively elastic. 
E)  perfectly elastic. 
A)  unitary elastic. 
B)  relatively inelastic. 
C)  perfectly inelastic. 
D)  relatively elastic. 
E)  perfectly elastic.

Question 18

If the cross-price elasticity of demand between Good A and Good B is 3,the price of Good B increases,and the price elasticity of demand for Good B is inelastic,we can expect to see a(n)________ change in the quantity demanded for Good A.

Accepted Answer

A)  zero 
B)  small 
C)  infinite 
D)  one-for-one 
E)  large 
A)  zero 
B)  small 
C)  infinite 
D)  one-for-one 
E)  large

Question 19

From the accompanying table,we would expect that,for recreational skaters,the price elasticity of demand for ice skates between $10 and $20 to be ________ than that of hockey players because ________.

Accepted Answer

A)  more elastic; ice skates are a normal good 
B)  less elastic; ice skates are an inferior good 
C)  the same; they both skate 
D)  more elastic; recreational skaters can substitute other activities 
E)  less elastic; hockey players need skates 
A)  more elastic; ice skates are a normal good 
B)  less elastic; ice skates are an inferior good 
C)  the same; they both skate 
D)  more elastic; recreational skaters can substitute other activities 
E)  less elastic; hockey players need skates

Question 20

When two goods are unrelated then

Accepted Answer

A)  cross-price elasticity of demand will be zero. 
B)  cross-price elasticity of demand will be positive. 
C)  cross-price elasticity of demand will be negative. 
D)  the demand for both goods will be elastic. 
E)  cross-price elasticity of demand will be infinite. 
A)  cross-price elasticity of demand will be zero. 
B)  cross-price elasticity of demand will be positive. 
C)  cross-price elasticity of demand will be negative. 
D)  the demand for both goods will be elastic. 
E)  cross-price elasticity of demand will be infinite.

Exam 4: Elasticity

Demand is almost always more price elastic in the long run because

A professional hockey arena has a maximum seating capacity of 20,000 people.The price elasticity of supply is

When the price of pencils increases from $1.50 to $2.50,there is an increase in quantity demanded of pens from 100 to 150.The cross-price elasticity of demand between pencils and pens is

The price elasticity of demand is always

When the demand curve is vertical

The government estimates that the demand curve for DVDs is represented by the equation Qd= -5P + 20. a.Graph the demand curve. b.Using prices of $2 and $3,determine the price elasticity of demand.

Super Economy Brand products have an income elasticity of -1.4.Thus,these are ________ goods.

When two goods are complements to each other,the cross-price elasticity will

When incomes fall by 20 percent,quantity demanded of specialty baked goods falls by 50 percent.Specialty baked goods are

Used car dealers find that their sales rise in a recession.We can be certain that consumers view used cars as

The price elasticity supply of doctors could be considered ________ because it takes a minimum of four to six years of training to be able to work as a physician.

When the price of a basketball is $15,the quantity supplied is 5,000.When the price increases to $20,the quantity supplied is 10,000.The price elasticity of supply is

A producer knows that the price elasticity for his product is -0.5.He wants to increase quantity demanded by 30 percent.By what percentage does he need to change the price?

We would expect to see a positive cross-price elasticity between

To keep the percentage change in quantity demanded equally proportional to the percentage change in price when the prices rise by 5 percent,a consumer would need to ________ quantity demanded by ________.

Masielle's Furniture produces high-quality wooden bedroom sets that take approximately four months to make,from start to finish.The price elasticity of supply for these bedroom sets in the short term is

If the cross-price elasticity of demand between Good A and Good B is 3,the price of Good B increases,and the price elasticity of demand for Good B is inelastic,we can expect to see a(n)________ change in the quantity demanded for Good A.

From the accompanying table,we would expect that,for recreational skaters,the price elasticity of demand for ice skates between $10 and $20 to be ________ than that of hockey players because ________.

When two goods are unrelated then

Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Market Outcomes and Tax Incidence

Price Controls

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Understanding Monopoly

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

The Demand and Supply of Resources

Income,inequality,and Poverty

Consumer Choice

Behavioral Economics and Risk Taking

Health Insurance and Health Care

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

The Price Level and Inflation

Savings,interest Rates,and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Aggregate Demandaggregate Supply Model

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters

The government estimates that the demand curve for DVDs is represented by the equation Q_d= -5P + 20. a.Graph the demand curve. b.Using prices of $2 and $3,determine the price elasticity of demand.

To keep the percentage change in quantity demanded equally proportional to the percentage change in price when the prices rise by 5 percent,a consumer would need to quantity demanded by .

From the accompanying table,we would expect that,for recreational skaters,the price elasticity of demand for ice skates between $10 and $20 to be than that of hockey players because .