Question 1

What good is most likely to have an income elasticity of demand equal to 8?

Accepted Answer

A)  a doctor's visit 
B)  toilet paper 
C)  used clothing 
D)  a five-star hotel 
E)  college coursework 
A)  a doctor's visit 
B)  toilet paper 
C)  used clothing 
D)  a five-star hotel 
E)  college coursework

Question 2

A vertical supply curve can be described as

Accepted Answer

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

Question 3

Kenji tells the manager at Moo's Ice Cream that he won't buy any ice cream cones costing more than $2,but he will buy a limitless number at any price less than $2.His price elasticity of demand for ice cream cones 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 4

As we move right along a demand curve,the price elasticity of demand

Accepted Answer

A)  becomes more inelastic. 
B)  becomes more elastic. 
C)  does not change. 
D)  becomes infinite. 
E)  moves closer to zero. 
A)  becomes more inelastic. 
B)  becomes more elastic. 
C)  does not change. 
D)  becomes infinite. 
E)  moves closer to zero.

Question 5

The reason that someone buys a lot more paintings when the price of art falls is that

Accepted Answer

A)  there are many substitutes for paintings. 
B)  paintings are a necessity. 
C)  they complement his or her home décor. 
D)  his or her income has risen. 
E)  art is a luxury. 
A)  there are many substitutes for paintings. 
B)  paintings are a necessity. 
C)  they complement his or her home décor. 
D)  his or her income has risen. 
E)  art is a luxury.

Question 6

A local sandwich shop can quickly place an order for food with its local vendors if it uses up its existing resources quickly.This indicates that the price elasticity of supply is

Accepted Answer

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

Question 7

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

Accepted Answer

A)  tea and coffee 
B)  soda and water 
C)  spaghetti and ravioli 
D)  tennis shoes and flip-flops 
E)  coffee and cream 
A)  tea and coffee 
B)  soda and water 
C)  spaghetti and ravioli 
D)  tennis shoes and flip-flops 
E)  coffee and cream

Question 8

When the demand curve is perfectly horizontal the demand curve has

Accepted Answer

A)  zero elasticity. 
B)  a large,but not infinite,elasticity. 
C)  perfect elasticity. 
D)  a small,but nonzero,elasticity. 
E)  negative elasticity. 
A)  zero elasticity. 
B)  a large,but not infinite,elasticity. 
C)  perfect elasticity. 
D)  a small,but nonzero,elasticity. 
E)  negative elasticity.

Question 9

If the income elasticity of demand for laptops is 3.5,you know that laptops are a(n)________ good.

Accepted Answer

A)  substitute 
B)  inferior 
C)  luxury 
D)  necessity 
E)  complement 
A)  substitute 
B)  inferior 
C)  luxury 
D)  necessity 
E)  complement

Question 10

For which of the following products should sellers raise the price in order to increase total revenue from college students?

Accepted Answer

A)  blue hooded sweatshirts 
B)  Gatorade 
C)  concert tickets 
D)  textbooks 
E)  spaghetti sauce 
A)  blue hooded sweatshirts 
B)  Gatorade 
C)  concert tickets 
D)  textbooks 
E)  spaghetti sauce

Question 11

Refer to the accompanying graph.
   
a.Calculate the income elasticity of demand for televisions at a price of $550.
b.Are televisions a luxury good,necessity good,or inferior good? Explain.
c.Name a good for which consumption would likely fall when there is an increase in income from $20,000 to $30,000.Explain your reasoning.

Accepted Answer

a.Income elasticity of demand = percenta

Question 12

A firm knows that Seneca's income elasticity of demand for hair ties is 5; for Janelle,it is 0.2.A firm can reason that a hair tie is a(n)________ good for Seneca while it is a(n)________ good for Janelle.

Accepted Answer

A)  normal; inferior 
B)  complement; substitute 
C)  necessity; luxury 
D)  inferior; normal 
E)  luxury; necessity 
A)  normal; inferior 
B)  complement; substitute 
C)  necessity; luxury 
D)  inferior; normal 
E)  luxury; necessity

Question 13

If the income elasticity of demand is 0.5,the good will be a(n)________ good.

Accepted Answer

A)  complement 
B)  substitute 
C)  necessity 
D)  inferior 
E)  luxury 
A)  complement 
B)  substitute 
C)  necessity 
D)  inferior 
E)  luxury

Question 14

The supply curve for Fancy Flowers is represented by the equation Qs = 5 +10P.
a.Graph the supply curve.
b.Using prices of $5 and $2,determine whether the price elasticity of supply is elastic or inelastic.

Accepted Answer

a. @#IMG-DLM& b.At a price of $5,quantit

Question 15

If the owner of Kuji's Treats finds that,in the long run,he can trade one type of input for another,the price elasticity of supply is

Accepted Answer

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

Question 16

There was a more than proportional decrease in quantity demanded for cupcakes when the local baker raised the price by 20 percent.The price elasticity of demand for cupcakes is

Accepted Answer

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

Question 17

Refer to the following graphs to answer the following questions.  
-Which of these graphs most likely depicts a price elasticity of demand of -5?

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 18

How can a firm increase total revenue?

Accepted Answer

A)  when demand is elastic and price decreases 
B)  when demand is elastic and price increases 
C)  when demand is unitary elastic and price increases 
D)  when demand is unitary elastic and price decreases 
E)  when demand is inelastic and price decreases 
A)  when demand is elastic and price decreases 
B)  when demand is elastic and price increases 
C)  when demand is unitary elastic and price increases 
D)  when demand is unitary elastic and price decreases 
E)  when demand is inelastic and price decreases

Question 19

When the price elasticity of demand is elastic,a consumer is

Accepted Answer

A)  completely unresponsive to a change in price. 
B)  relatively unresponsive to a change in price. 
C)  unaffected by a change in price. 
D)  relatively responsive to a change in price. 
E)  completely responsive to a change in price. 
A)  completely unresponsive to a change in price. 
B)  relatively unresponsive to a change in price. 
C)  unaffected by a change in price. 
D)  relatively responsive to a change in price. 
E)  completely responsive to a change in price.

Question 20

When Kelsey decreases her price of lipstick from $7 to $5,she finds that her sales increase from 6 to 7.She faces ________ demand for her product,and this price change will ________ her total revenue.

Accepted Answer

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

Exam 4: Elasticity

What good is most likely to have an income elasticity of demand equal to 8?

A vertical supply curve can be described as

Kenji tells the manager at Moo's Ice Cream that he won't buy any ice cream cones costing more than $2,but he will buy a limitless number at any price less than $2.His price elasticity of demand for ice cream cones is

As we move right along a demand curve,the price elasticity of demand

The reason that someone buys a lot more paintings when the price of art falls is that

A local sandwich shop can quickly place an order for food with its local vendors if it uses up its existing resources quickly.This indicates that the price elasticity of supply is

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

When the demand curve is perfectly horizontal the demand curve has

If the income elasticity of demand for laptops is 3.5,you know that laptops are a(n)________ good.

For which of the following products should sellers raise the price in order to increase total revenue from college students?

A firm knows that Seneca's income elasticity of demand for hair ties is 5; for Janelle,it is 0.2.A firm can reason that a hair tie is a(n)________ good for Seneca while it is a(n)________ good for Janelle.

If the income elasticity of demand is 0.5,the good will be a(n)________ good.

The supply curve for Fancy Flowers is represented by the equation Qs = 5 +10P. a.Graph the supply curve. b.Using prices of $5 and $2,determine whether the price elasticity of supply is elastic or inelastic.

If the owner of Kuji's Treats finds that,in the long run,he can trade one type of input for another,the price elasticity of supply is

There was a more than proportional decrease in quantity demanded for cupcakes when the local baker raised the price by 20 percent.The price elasticity of demand for cupcakes is

Refer to the following graphs to answer the following questions. -Which of these graphs most likely depicts a price elasticity of demand of -5?

How can a firm increase total revenue?

When the price elasticity of demand is elastic,a consumer is

When Kelsey decreases her price of lipstick from $7 to $5,she finds that her sales increase from 6 to 7.She faces ________ demand for her product,and this price change will ________ her total revenue.

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

A firm knows that Seneca's income elasticity of demand for hair ties is 5; for Janelle,it is 0.2.A firm can reason that a hair tie is a(n) good for Seneca while it is a(n) good for Janelle.

The supply curve for Fancy Flowers is represented by the equation Q_s = 5 +10P. a.Graph the supply curve. b.Using prices of $5 and $2,determine whether the price elasticity of supply is elastic or inelastic.

When Kelsey decreases her price of lipstick from $7 to $5,she finds that her sales increase from 6 to 7.She faces demand for her product,and this price change will her total revenue.