Question 1

If a friend says,"I am never going to buy another Avicii remix again!" his or her price elasticity of demand for Avicii remixes is

Accepted Answer

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

Question 2

Suppose that when the price of cereal rises 10 percent,the quantity demanded of cereal falls by 5 percent.Based on this information,what is the approximate price elasticity of demand for cereal?

Accepted Answer

A)  0.5 
B)  -0.5 
C)  2.0 
D)  -2.0 
E)  0 
A)  0.5 
B)  -0.5 
C)  2.0 
D)  -2.0 
E)  0

Question 3

Graph and explain the impact that time has on the price elasticity of demand for Barney's Baked Goods.

Accepted Answer

@#IMG-DLM& Over time,price elasticity of demand fo

Question 4

If the income elasticity of demand for noodles is -2 and the percentage change in the quantity consumed is 5 percent,what is the percentage change in income?

Accepted Answer

A)  2.5 percent 
B)  10 percent 
C)  -2.5 percent 
D)  -10 percent 
E)  -0.4 percent 
A)  2.5 percent 
B)  10 percent 
C)  -2.5 percent 
D)  -10 percent 
E)  -0.4 percent

Question 5

A firm knows that the price elasticity of demand for its service is 0 (zero).
a.Graph this demand curve.
b.What should the firm do to the price of its good to raise total revenue?

Accepted Answer

a. @#IMG-DLM& A price elasticity of demand equal t

Question 6

If the income elasticity of demand is-3,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 7

Nicolette raised her quantity demanded of hockey pucks from 100 to 150 when the price fell from $5 to $3 per puck.Using the midpoint method,her price elasticity of demand is

Accepted Answer

A)  0.80. 
B)  -1.25. 
C)  -1.00. 
D)  0.40. 
E)  -0.80. 
A)  0.80. 
B)  -1.25. 
C)  -1.00. 
D)  0.40. 
E)  -0.80.

Question 8

Toyota uses a just-in-time production method to respond to consumer demand for its vehicles.In essence,it relies on various cues to signal when new vehicles should be made rather than stocking inventory.This allows Toyota to respond very quickly to changes in consumer demand.Explain whether this system makes elasticity of supply relatively price elastic or price inelastic.

Accepted Answer

It is easy for Toyota to respond to chan

Question 9

Refer to the accompanying table.When the price drops from $5 to $3,price elasticity of demand for sushi (using the midpoint method)at an income of $30,000 is

Accepted Answer

A)  0.71. 
B)  0.67. 
C)  0.10. 
D)  0.33. 
E)  -0.67. 
A)  0.71. 
B)  0.67. 
C)  0.10. 
D)  0.33. 
E)  -0.67.

Question 10

Which of the following statements is FALSE?

Accepted Answer

A)  The flexibility of producers helps determine the supply elasticity. 
B)  The time frame helps determine the supply elasticity. 
C)  The perfectly inelastic supply curve is vertical. 
D)  The perfectly elastic supply curve is horizontal. 
E)  Price elasticity of supply can never equal one. 
A)  The flexibility of producers helps determine the supply elasticity. 
B)  The time frame helps determine the supply elasticity. 
C)  The perfectly inelastic supply curve is vertical. 
D)  The perfectly elastic supply curve is horizontal. 
E)  Price elasticity of supply can never equal one.

Question 11

The government is exploring ways to increase revenues through taxation.Lisette is an economic adviser to public policy makers,and they pose to her the following question: Should the government tax yachts or should it tax gasoline? Explain your answer using price elasticity of demand.

Accepted Answer

It is likely that yachts are a luxury go

Question 12

Lee says that he will always spend $20 a week on lattes.Lee's demand for lattes is price

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 13

The local National Hockey League (NHL)team decides to lower its ticket prices in order to attract more fans.It is hoping that the

Accepted Answer

A)  price elasticity of demand is perfectly inelastic. 
B)  price decrease matters more than the quantity increase to total revenue. 
C)  quantity increase matters more than the price decrease to total revenue. 
D)  price elasticity of demand is unitary elastic. 
E)  price elasticity of demand is perfectly elastic. 
A)  price elasticity of demand is perfectly inelastic. 
B)  price decrease matters more than the quantity increase to total revenue. 
C)  quantity increase matters more than the price decrease to total revenue. 
D)  price elasticity of demand is unitary elastic. 
E)  price elasticity of demand is perfectly elastic.

Question 14

At a price of $2,the quantity demanded for pens is 12.When the price increases to $3,the quantity demanded for pens is 10.The price elasticity of demand for pens is

Accepted Answer

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

Question 15

What good is most likely to have an income elasticity of demand equal to 0.3?

Accepted Answer

A)  medication 
B)  takeout dinner 
C)  used clothing 
D)  laptop 
E)  a download on iTunes 
A)  medication 
B)  takeout dinner 
C)  used clothing 
D)  laptop 
E)  a download on iTunes

Question 16

Zumba classes sell 20 participant spots at a price of $4.50 each.When the instructor raised the prices to $5.50,10 people attended the class.From the midpoint method,the price elasticity of demand for Zumba is

Accepted Answer

A) -0.50. 
B)  -3.33. 
C)  -2.50. 
D)  0.20. 
E)  -0.20. 
A) -0.50. 
B)  -3.33. 
C)  -2.50. 
D)  0.20. 
E)  -0.20.

Question 17

The price elasticity of supply is

Accepted Answer

A)  constant across the short run and long run. 
B)  the percentage change in the quantity supplied divided by the percentage change in price. 
C)  always negative. 
D)  the slope of the supply curve. 
E)  the percentage change in the price divided by the percentage change in quantity supplied. 
A)  constant across the short run and long run. 
B)  the percentage change in the quantity supplied divided by the percentage change in price. 
C)  always negative. 
D)  the slope of the supply curve. 
E)  the percentage change in the price divided by the percentage change in quantity supplied.

Question 18

When Noelle received a promotion at work,her income rose by 50 percent.The income elasticity of demand for steak was found to be 1.5.For her,steak is a(n)

Accepted Answer

A)  inferior good. 
B)  necessity. 
C)  complement to potatoes. 
D)  substitute for chicken. 
E)  luxury. 
A)  inferior good. 
B)  necessity. 
C)  complement to potatoes. 
D)  substitute for chicken. 
E)  luxury.

Question 19

The responsiveness of demand to changes in income while holding the good's relative price constant is

Accepted Answer

A)  slope of the demand curve. 
B)  price elasticity of supply. 
C)  cross-price elasticity. 
D)  price elasticity of demand. 
E)  income elasticity of demand. 
A)  slope of the demand curve. 
B)  price elasticity of supply. 
C)  cross-price elasticity. 
D)  price elasticity of demand. 
E)  income elasticity of demand.

Question 20

When you change your quantity demanded of one good because of a change in price of another good,you are acting according to the principle of

Accepted Answer

A)  price elasticity of demand. 
B)  cross-price elasticity of demand. 
C)  income elasticity of demand. 
D)  price elasticity of supply. 
E)  income elasticity of supply. 
A)  price elasticity of demand. 
B)  cross-price elasticity of demand. 
C)  income elasticity of demand. 
D)  price elasticity of supply. 
E)  income elasticity of supply.

Exam 4: Elasticity

If a friend says,"I am never going to buy another Avicii remix again!" his or her price elasticity of demand for Avicii remixes is

Suppose that when the price of cereal rises 10 percent,the quantity demanded of cereal falls by 5 percent.Based on this information,what is the approximate price elasticity of demand for cereal?

Graph and explain the impact that time has on the price elasticity of demand for Barney's Baked Goods.

If the income elasticity of demand for noodles is -2 and the percentage change in the quantity consumed is 5 percent,what is the percentage change in income?

A firm knows that the price elasticity of demand for its service is 0 (zero). a.Graph this demand curve. b.What should the firm do to the price of its good to raise total revenue?

If the income elasticity of demand is-3,the good will be a(n)________ good.

Nicolette raised her quantity demanded of hockey pucks from 100 to 150 when the price fell from $5 to $3 per puck.Using the midpoint method,her price elasticity of demand is

Refer to the accompanying table.When the price drops from $5 to $3,price elasticity of demand for sushi (using the midpoint method)at an income of $30,000 is

Which of the following statements is FALSE?

The government is exploring ways to increase revenues through taxation.Lisette is an economic adviser to public policy makers,and they pose to her the following question: Should the government tax yachts or should it tax gasoline? Explain your answer using price elasticity of demand.

Lee says that he will always spend $20 a week on lattes.Lee's demand for lattes is price

The local National Hockey League (NHL)team decides to lower its ticket prices in order to attract more fans.It is hoping that the

At a price of $2,the quantity demanded for pens is 12.When the price increases to $3,the quantity demanded for pens is 10.The price elasticity of demand for pens is

What good is most likely to have an income elasticity of demand equal to 0.3?

Zumba classes sell 20 participant spots at a price of $4.50 each.When the instructor raised the prices to $5.50,10 people attended the class.From the midpoint method,the price elasticity of demand for Zumba is

The price elasticity of supply is

When Noelle received a promotion at work,her income rose by 50 percent.The income elasticity of demand for steak was found to be 1.5.For her,steak is a(n)

The responsiveness of demand to changes in income while holding the good's relative price constant is

When you change your quantity demanded of one good because of a change in price of another good,you are acting according to the principle of

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

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