Question 1

If the cross-price elasticity of demand is 6,Good A and Good B are

Accepted Answer

A)  inferior goods. 
B)  complements. 
C)  substitutes. 
D)  normal goods. 
E)  luxury goods. 
A)  inferior goods. 
B)  complements. 
C)  substitutes. 
D)  normal goods. 
E)  luxury goods.

Question 2

Which of the following statements are true about demand and the price elasticity of demand?

Accepted Answer

A)  When the demand curve has a negative slope,the price elasticity of demand is infinite. 
B)  When the demand curve has a negative slope,the price elasticity of demand is zero. 
C)  When the demand curve has a negative slope,the price elasticity of demand is positive. 
D)  When the demand curve has a negative slope,the price elasticity of demand is negative. 
A)  When the demand curve has a negative slope,the price elasticity of demand is infinite. 
B)  When the demand curve has a negative slope,the price elasticity of demand is zero. 
C)  When the demand curve has a negative slope,the price elasticity of demand is positive. 
D)  When the demand curve has a negative slope,the price elasticity of demand is negative.

Question 3

Sellers of bottled water find that whether the price falls or rises,the quantity bought by consumers remains unchanged every week.The price elasticity of demand for bottled water 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 4

Refer to the following graphs to answer the following questions.  
-Which of these graphs most likely depicts a price elasticity of demand of -0.2?

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 5

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

Accepted Answer

A)  pancakes and waffles 
B)  fruit and bacon 
C)  butter and toast 
D)  potatoes and sausage 
E)  milk and coffee 
A)  pancakes and waffles 
B)  fruit and bacon 
C)  butter and toast 
D)  potatoes and sausage 
E)  milk and coffee

Question 6

At higher prices,the price elasticity of demand is likely to be ________,whereas it is likely to be ________ at lower prices.

Accepted Answer

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

Question 7

If the elasticity of demand for Good A is -3,a 33 percent decrease in quantity demanded of Good A results from a(n)________ in the price of Good A.

Accepted Answer

A)  99 percent decrease 
B)  99 percent increase 
C)  11 percent decrease 
D)  11 percent increase 
E)  33 percent decrease 
A)  99 percent decrease 
B)  99 percent increase 
C)  11 percent decrease 
D)  11 percent increase 
E)  33 percent decrease

Question 8

Consider two labor markets.In the first,the elasticity of supply is relatively elastic,while it is relatively inelastic in the latter.Imposing a minimum wage in each market would result in ________ unemployment in the first market and ________ unemployment in the second.

Accepted Answer

A)  lower; lower 
B)  higher; higher 
C)  unchanged; unchanged 
D)  lower; higher 
E)  higher; lower 
A)  lower; lower 
B)  higher; higher 
C)  unchanged; unchanged 
D)  lower; higher 
E)  higher; lower

Question 9

When can a firm lower prices and still increase revenue?

Accepted Answer

A)  when the elasticity of demand is equal to unity 
B)  when the demand curve is horizontal 
C)  when the demand curve is vertical 
D)  when the demand is inelastic 
E)  when the demand is elastic 
A)  when the elasticity of demand is equal to unity 
B)  when the demand curve is horizontal 
C)  when the demand curve is vertical 
D)  when the demand is inelastic 
E)  when the demand is elastic

Question 10

The supply curve for Mio's Munchies is shown in the accompanying figure.
   
a.What is the price elasticity of supply between $9 and $10?
b.Is this price elasticity relatively elastic or inelastic? Explain.
c.What happens to this supply curve if Mio has difficulty finding workers to make his product?

Accepted Answer

a.At $9,quantity supplied is 15 bags.At

Question 11

In a typical demand curve,the price elastic portion of demand is found in the ________ region and the price inelastic portion of demand is found in the ________ region of the graph.

Accepted Answer

A)  middle; lower 
B)  lower; upper 
C)  upper; lower 
D)  middle; middle 
E)  None of these choices are correct. 
A)  middle; lower 
B)  lower; upper 
C)  upper; lower 
D)  middle; middle 
E)  None of these choices are correct.

Question 12

As we move left along the 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 13

Celine runs a sporting goods store and knows that the price elasticity of demand for her sports clothing line is -1.5.She is planning to lower prices by 10 percent.The percentage change in quantity demanded will be

Accepted Answer

A)  15 percent. 
B)  0.15 percent. 
C)  6.66 percent. 
D)  0.06 percent. 
E)  8.50 percent. 
A)  15 percent. 
B)  0.15 percent. 
C)  6.66 percent. 
D)  0.06 percent. 
E)  8.50 percent.

Question 14

Firms are indifferent to changing prices when the price elasticity of demand is

Accepted Answer

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

Question 15

Refer to the accompanying table.
   
a.Calculate the price elasticity of demand when the price rises from $450 to $550 for an individual income of $20,000.
b.Is demand elastic or inelastic? Explain your answer to the elasticity of demand you calculated in part (a)and include the mathematical equation used to find it.

Accepted Answer

a.Price elasticity of demand= percentage

Question 16

The initial price of picture frames is $6 and suppliers offer 20 frames.When the price falls to $4,suppliers offer only 10.The price elasticity of supply is

Accepted Answer

A)  0.33. 
B)  0.67. 
C)  1.67. 
D)  0.60. 
E)  0.40. 
A)  0.33. 
B)  0.67. 
C)  1.67. 
D)  0.60. 
E)  0.40.

Question 17

Price elasticity of demand is measured as the

Accepted Answer

A)  change in quantity demanded divided by the change in price. 
B)  change in price divided by the change in quantity demanded. 
C)  percentage change in price divided by the percentage change in quantity demanded. 
D)  percentage change in demand divided by the percentage change in income. 
E)  percentage change in quantity demanded divided by the percentage change in price. 
A)  change in quantity demanded divided by the change in price. 
B)  change in price divided by the change in quantity demanded. 
C)  percentage change in price divided by the percentage change in quantity demanded. 
D)  percentage change in demand divided by the percentage change in income. 
E)  percentage change in quantity demanded divided by the percentage change in price.

Question 18

Refer to the accompanying table to answer the following questions.  
-The price of erasers increases from $0.50 to $1.00 per eraser.By what percentage does the quantity demanded of pencils change? (Use the midpoint method.)

Accepted Answer

A)  8.70 percent 
B)  22.22 percent 
C)  -22.22 percent 
D)  -08.70 percent 
E)  6.67 percent 
A)  8.70 percent 
B)  22.22 percent 
C)  -22.22 percent 
D)  -08.70 percent 
E)  6.67 percent

Question 19

Demand for which of the following goods or services is likely to be the LEAST elastic in cold weather?

Accepted Answer

A)  a blue hooded sweatshirt with fur-lined pockets 
B)  a blue hooded sweatshirt 
C)  a hooded sweatshirt 
D)  a blue sweatshirt 
E)  a sweatshirt 
A)  a blue hooded sweatshirt with fur-lined pockets 
B)  a blue hooded sweatshirt 
C)  a hooded sweatshirt 
D)  a blue sweatshirt 
E)  a sweatshirt

Question 20

Refer to the information in the accompanying table.Without any calculations,we know that sushi is a(n)

Accepted Answer

A)  necessity. 
B)  substitute for fish sticks. 
C)  normal good. 
D)  inferior good. 
E)  complement to sake. 
A)  necessity. 
B)  substitute for fish sticks. 
C)  normal good. 
D)  inferior good. 
E)  complement to sake.

Exam 4: Elasticity

If the cross-price elasticity of demand is 6,Good A and Good B are

Which of the following statements are true about demand and the price elasticity of demand?

Sellers of bottled water find that whether the price falls or rises,the quantity bought by consumers remains unchanged every week.The price elasticity of demand for bottled water is

Refer to the following graphs to answer the following questions. -Which of these graphs most likely depicts a price elasticity of demand of -0.2?

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

At higher prices,the price elasticity of demand is likely to be ________,whereas it is likely to be ________ at lower prices.

If the elasticity of demand for Good A is -3,a 33 percent decrease in quantity demanded of Good A results from a(n)________ in the price of Good A.

Consider two labor markets.In the first,the elasticity of supply is relatively elastic,while it is relatively inelastic in the latter.Imposing a minimum wage in each market would result in ________ unemployment in the first market and ________ unemployment in the second.

When can a firm lower prices and still increase revenue?

The supply curve for Mio's Munchies is shown in the accompanying figure. a.What is the price elasticity of supply between $9 and $10? b.Is this price elasticity relatively elastic or inelastic? Explain. c.What happens to this supply curve if Mio has difficulty finding workers to make his product?

In a typical demand curve,the price elastic portion of demand is found in the ________ region and the price inelastic portion of demand is found in the ________ region of the graph.

As we move left along the demand curve,the price elasticity of demand

Celine runs a sporting goods store and knows that the price elasticity of demand for her sports clothing line is -1.5.She is planning to lower prices by 10 percent.The percentage change in quantity demanded will be

Firms are indifferent to changing prices when the price elasticity of demand is

The initial price of picture frames is $6 and suppliers offer 20 frames.When the price falls to $4,suppliers offer only 10.The price elasticity of supply is

Price elasticity of demand is measured as the

Refer to the accompanying table to answer the following questions. -The price of erasers increases from $0.50 to $1.00 per eraser.By what percentage does the quantity demanded of pencils change? (Use the midpoint method.)

Demand for which of the following goods or services is likely to be the LEAST elastic in cold weather?

Refer to the information in the accompanying table.Without any calculations,we know that sushi is a(n)

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

At higher prices,the price elasticity of demand is likely to be ,whereas it is likely to be at lower prices.

Consider two labor markets.In the first,the elasticity of supply is relatively elastic,while it is relatively inelastic in the latter.Imposing a minimum wage in each market would result in unemployment in the first market and unemployment in the second.

In a typical demand curve,the price elastic portion of demand is found in the region and the price inelastic portion of demand is found in the region of the graph.