Question 1

When quantity demanded and price increase by 10 percent,you know that price and quantity are ________ to the consumer.

Accepted Answer

A)  equally important 
B)  everything 
C)  nothing 
D)  relatively important 
E)  relatively unimportant 
A)  equally important 
B)  everything 
C)  nothing 
D)  relatively important 
E)  relatively unimportant

Question 2

When the price of scooters drops by 5 percent,the quantity demanded changes by 20 percent.We know that the price elasticity of demand for scooters is

Accepted Answer

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

Question 3

Suppose that the price elasticity of demand is -0.80 for aspirin.We could then say that the demand for aspirin is

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  unitary elastic. 
D)  infinitely elastic. 
E)  unable to be determined with the provided information. 
A)  elastic. 
B)  inelastic. 
C)  unitary elastic. 
D)  infinitely elastic. 
E)  unable to be determined with the provided information.

Question 4

When the price increases by 30 percent and the quantity demanded drops by 30 percent,the price elasticity of demand is

Accepted Answer

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

Question 5

When the total revenue is unchanged despite the change in price,demand is

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  unitary elastic. 
D)  horizontal. 
E)  vertical. 
A)  elastic. 
B)  inelastic. 
C)  unitary elastic. 
D)  horizontal. 
E)  vertical.

Question 6

What would you expect the cross-price elasticity of demand to be for chips and salsa? Explain your answer.

Accepted Answer

Chips and salsa are generally eaten toge

Question 7

At a price of $5/hour,Karina wants to hire three workers.When the price rises to $7/hour,she wants to hire only two workers.Karina's price elasticity of demand for workers is

Accepted Answer

A) -0.83. 
B) -1.20. 
C)  -0.33. 
D)  -0.40. 
E)  -0.10. 
A) -0.83. 
B) -1.20. 
C)  -0.33. 
D)  -0.40. 
E)  -0.10.

Question 8

Refer to the following graphs to answer the following questions.  
-Which of these graphs represents perfectly price inelastic demand for a good?

Accepted Answer

A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
E)  Graph E 
A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
E)  Graph E

Question 9

Refer to the following graphs to answer the following questions.  
-Which graph most likely shows the price elasticity of demand for the following situation: Lin's Boots can sell out its entire stock of shoe polish at $2.50 but can sell none if it raises the price to $2.55?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
E)  E 
A)  A 
B)  B 
C)  C 
D)  D 
E)  E

Question 10

If the price elasticity of supply is 2.5,we know that it is

Accepted Answer

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

Question 11

A local bakery gives information on consumer purchasing habits for muffins and cupcakes.It says that when the price of a muffin is $1,people buy 55 cupcakes.When the price of a muffin is raised to $2,cupcake purchases go up to 65 cupcakes.The cross-price elasticity of demand is

Accepted Answer

A)  0.50. 
B)  0.25. 
C)  0.67. 
D)  2.00. 
E)  4.00. 
A)  0.50. 
B)  0.25. 
C)  0.67. 
D)  2.00. 
E)  4.00.

Question 12

Barney owns a bagel business in New York City and he wants to increase his total revenue.He knows that when bagels are $1,he sells 250 an hour,and when he lowers the price to $0.75,he sells 275 an hour.
a.Calculate the price elasticity of demand for Barney's bagels.
b.Using the price elasticity of demand for Barney's bagels,explain whether he should raise or lower the price to generate more revenue.
c.A bakery moves in across the street from Barney's shop.Explain what is likely to happen to the price elasticity of demand for Barney's bagels.

Accepted Answer

a.Price elasticity of demand = percentag

Question 13

If we know that the price elasticity of demand is:
a.-5,graph the demand curve.
b.-1/2,graph the demand curve.
c.infinite,graph the demand curve.

Accepted Answer

a. @#IMG-DLM& A price elasticity of demand of -5 i

Question 14

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 ________ change in the quantity demanded for Good A.

Accepted Answer

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

Question 15

The income elasticity of demand for a good measures the responsiveness of ________ to a change in ________.

Accepted Answer

A)  quantity demanded; price of a related good 
B)  quantity demanded; income 
C)  demand; price of good 
D)  quantity demanded; price of a good 
E)  income; quantity demanded 
A)  quantity demanded; price of a related good 
B)  quantity demanded; income 
C)  demand; price of good 
D)  quantity demanded; price of a good 
E)  income; quantity demanded

Question 16

From the accompanying table,we can see that the demand curve for ice skates by hockey players will be ________ the demand curve for recreational skaters.

Accepted Answer

A)  steeper than 
B)  flatter than 
C)  unrelated to 
D)  the same as 
E)  the inverse of 
A)  steeper than 
B)  flatter than 
C)  unrelated to 
D)  the same as 
E)  the inverse of

Question 17

Lewis has a fixed budget and buys all of the items listed below.When will a 20 percent reduction in price cause him to change the amount he buys the most?

Accepted Answer

A)  scented candles,regular price is $25 
B)  jasmine rice,regular price is $4/lb 
C)  GAP jeans,regular price is $75 
D)  flat-screen LCD TV,regular price is $400 
E)  living room couch,regular price is $300 
A)  scented candles,regular price is $25 
B)  jasmine rice,regular price is $4/lb 
C)  GAP jeans,regular price is $75 
D)  flat-screen LCD TV,regular price is $400 
E)  living room couch,regular price is $300

Question 18

Which one of the following pairs of goods is likely to have a positive cross-price elasticity of demand?

Accepted Answer

A)  chocolate ice cream and sprinkles 
B)  ice cream shakes and hamburgers 
C)  fries and ketchup 
D)  Pepsi and Coke 
E)  onion rings and chicken strips 
A)  chocolate ice cream and sprinkles 
B)  ice cream shakes and hamburgers 
C)  fries and ketchup 
D)  Pepsi and Coke 
E)  onion rings and chicken strips

Question 19

Price elasticity of demand measures the change in

Accepted Answer

A)  quantity demanded due to the change in price. 
B)  demand due to the change in price. 
C)  quantity demanded due to the change in price of another good or service. 
D)  price due to a change in quantity demanded. 
E)  price due to the change in demand. 
A)  quantity demanded due to the change in price. 
B)  demand due to the change in price. 
C)  quantity demanded due to the change in price of another good or service. 
D)  price due to a change in quantity demanded. 
E)  price due to the change in demand.

Question 20

Refer to the accompanying table.The price elasticity of demand of erasers is ________ when the price is lowered from $1.50 to $1.00.Sellers of erasers will ________ their total revenue from this price change.

Accepted Answer

A)  perfectly elastic; not change 
B)  elastic; raise 
C)  elastic; lower 
D)  inelastic; lower 
E)  inelastic; raise 
A)  perfectly elastic; not change 
B)  elastic; raise 
C)  elastic; lower 
D)  inelastic; lower 
E)  inelastic; raise

Exam 4: Elasticity

When quantity demanded and price increase by 10 percent,you know that price and quantity are ________ to the consumer.

When the price of scooters drops by 5 percent,the quantity demanded changes by 20 percent.We know that the price elasticity of demand for scooters is

Suppose that the price elasticity of demand is -0.80 for aspirin.We could then say that the demand for aspirin is

When the price increases by 30 percent and the quantity demanded drops by 30 percent,the price elasticity of demand is

When the total revenue is unchanged despite the change in price,demand is

What would you expect the cross-price elasticity of demand to be for chips and salsa? Explain your answer.

At a price of $5/hour,Karina wants to hire three workers.When the price rises to $7/hour,she wants to hire only two workers.Karina's price elasticity of demand for workers is

Refer to the following graphs to answer the following questions. -Which of these graphs represents perfectly price inelastic demand for a good?

Refer to the following graphs to answer the following questions. -Which graph most likely shows the price elasticity of demand for the following situation: Lin's Boots can sell out its entire stock of shoe polish at $2.50 but can sell none if it raises the price to $2.55?

If the price elasticity of supply is 2.5,we know that it is

A local bakery gives information on consumer purchasing habits for muffins and cupcakes.It says that when the price of a muffin is $1,people buy 55 cupcakes.When the price of a muffin is raised to $2,cupcake purchases go up to 65 cupcakes.The cross-price elasticity of demand is

If we know that the price elasticity of demand is: a.-5,graph the demand curve. b.-1/2,graph the demand curve. c.infinite,graph the demand curve.

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 ________ change in the quantity demanded for Good A.

The income elasticity of demand for a good measures the responsiveness of ________ to a change in ________.

From the accompanying table,we can see that the demand curve for ice skates by hockey players will be ________ the demand curve for recreational skaters.

Lewis has a fixed budget and buys all of the items listed below.When will a 20 percent reduction in price cause him to change the amount he buys the most?

Which one of the following pairs of goods is likely to have a positive cross-price elasticity of demand?

Price elasticity of demand measures the change in

Refer to the accompanying table.The price elasticity of demand of erasers is ________ when the price is lowered from $1.50 to $1.00.Sellers of erasers will ________ their total revenue from this price change.

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 income elasticity of demand for a good measures the responsiveness of to a change in .

Refer to the accompanying table.The price elasticity of demand of erasers is when the price is lowered from $1.50 to $1.00.Sellers of erasers will their total revenue from this price change.