Question 1

All of the following are forms or examples of price control except

Accepted Answer

A) a price ceiling. 
B) free market interactions. 
C) the minimum wage. 
D) rent control. 
E) a price floor. 
A) a price ceiling. 
B) free market interactions. 
C) the minimum wage. 
D) rent control. 
E) a price floor.

Question 2

When a higher price cannot bring about any increase in the quantity supplied, the supply is

Accepted Answer

A) perfectly elastic. 
B) unit elastic. 
C) zero. 
D) perfectly inelastic. 
E) infinity. 
A) perfectly elastic. 
B) unit elastic. 
C) zero. 
D) perfectly inelastic. 
E) infinity.

Question 3

If the price of a product increases by 10 percent and the quantity demanded decreases by 15 percent, then the

Accepted Answer

A) product has an elastic demand. 
B) product has an inelastic demand. 
C) product has an elastic supply. 
D) product has a unit-elastic demand. 
E) producer should raise the price further to increase total revenue. 
A) product has an elastic demand. 
B) product has an inelastic demand. 
C) product has an elastic supply. 
D) product has a unit-elastic demand. 
E) producer should raise the price further to increase total revenue.

Question 4

A product with an elastic demand means that

Accepted Answer

A) consumers are relatively insensitive to a change in the quantity demanded. 
B) consumers are relatively insensitive to a change in the price of the product. 
C) consumers are relatively sensitive to a change in the price of the product. 
D) producers are relatively insensitive to a change in the price of the product. 
E) producers are relatively sensitive to a change in the quantity demanded. 
A) consumers are relatively insensitive to a change in the quantity demanded. 
B) consumers are relatively insensitive to a change in the price of the product. 
C) consumers are relatively sensitive to a change in the price of the product. 
D) producers are relatively insensitive to a change in the price of the product. 
E) producers are relatively sensitive to a change in the quantity demanded.

Question 5

The local public transportation system recently raised rates and was surprised to be faced with declining revenue. What can be accurately concluded?

Accepted Answer

A) The cross-price elasticity of demand for public transportation is less than 1. 
B) The demand for public transportation is inelastic. 
C) The income elasticity of demand for public transportation is greater than 1. 
D) The demand for public transportation is elastic. 
E) The demand curve for public transportation has a positive slope. 
A) The cross-price elasticity of demand for public transportation is less than 1. 
B) The demand for public transportation is inelastic. 
C) The income elasticity of demand for public transportation is greater than 1. 
D) The demand for public transportation is elastic. 
E) The demand curve for public transportation has a positive slope.

Question 6

The measurement of the price elasticity of demand is unit free.

Accepted Answer

A) True 
 B)False

Question 7

A price floor that is effective results in a surplus.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements about the price elasticity of demand is true?

Accepted Answer

A) Slope and elasticity measure the same things. 
B) Price elasticity of demand varies depending on how price and quantity are measured. 
C) It is important to know whether the price elasticity of demand is a positive or negative number. 
D) The slope of a demand curve does not tell us the price elasticity of demand. 
E) Price elasticity is the same everywhere along a demand curve of any shape. 
A) Slope and elasticity measure the same things. 
B) Price elasticity of demand varies depending on how price and quantity are measured. 
C) It is important to know whether the price elasticity of demand is a positive or negative number. 
D) The slope of a demand curve does not tell us the price elasticity of demand. 
E) Price elasticity is the same everywhere along a demand curve of any shape.

Question 9

Answer the following questions using the figure below.

Accepted Answer

The answer of Answer the following questions using the figure...

Question 10

Suppose the price elasticity of demand for apples is 2.1 and the price elasticity of demand for housing is 0.62. In comparing price elasticities of demand, it is proper to say that the demand for apples is

Accepted Answer

A) inelastic; for housing it is elastic. 
B) more elastic than the demand for housing. 
C) more inelastic than the demand for housing. 
D) more than three times as inelastic as the demand for housing. 
E) less elastic than the demand for housing. 
A) inelastic; for housing it is elastic. 
B) more elastic than the demand for housing. 
C) more inelastic than the demand for housing. 
D) more than three times as inelastic as the demand for housing. 
E) less elastic than the demand for housing.

Question 11

The price elasticity of demand is expressed as the

Accepted Answer

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

Question 12

If the quantity supplied of a product stays the same no matter what its price, then the elasticity of supply of the product is

Accepted Answer

A) perfectly elastic. 
B) unit elastic. 
C) zero. 
D) perfectly inelastic. 
E) infinity. 
A) perfectly elastic. 
B) unit elastic. 
C) zero. 
D) perfectly inelastic. 
E) infinity.

Question 13

Which of the following statements about the minimum wage is false?

Accepted Answer

A) The minimum wage causes a shortage of unskilled labor. 
B) The minimum wage is an example of a price floor. 
C) The minimum wage increases unemployment among unskilled workers. 
D) More unskilled individuals are willing to offer their services in the labor market with a minimum wage than they would without it. 
E) The minimum wage is set above the equilibrium wage. 
A) The minimum wage causes a shortage of unskilled labor. 
B) The minimum wage is an example of a price floor. 
C) The minimum wage increases unemployment among unskilled workers. 
D) More unskilled individuals are willing to offer their services in the labor market with a minimum wage than they would without it. 
E) The minimum wage is set above the equilibrium wage.

Question 14

If the cross-price elasticity between two goods is positive, then it is most likely that the two goods are

Accepted Answer

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

Question 15

A perfectly elastic supply curve is vertical, and a perfectly elastic demand curve is horizontal.

Accepted Answer

A) True 
 B)False

Question 16

The measurement for the price elasticity of demand is

Accepted Answer

A) unit free. 
B) in percentage terms. 
C) in dollar terms. 
D) in terms of the quantity measurement of the good involved. 
E) in terms of the currency used to purchase the good. 
A) unit free. 
B) in percentage terms. 
C) in dollar terms. 
D) in terms of the quantity measurement of the good involved. 
E) in terms of the currency used to purchase the good.

Question 17

The cross-price elasticity of demand between two goods measures the percentage change in the demand for one good for a given percentage change in the price of another good.

Accepted Answer

A) True 
 B)False

Question 18

If a price ceiling is imposed on a good, then a shortage for that good will occur.

Accepted Answer

A) True 
 B)False

Question 19

When price rises by 3 percent and quantity demanded changes by 6 percent,

Accepted Answer

A) total revenue falls 3 percent. 
B) total revenue falls by half. 
C) total revenue doubles. 
D) total revenue does not change. 
E) total revenue increases 18 percent. 
A) total revenue falls 3 percent. 
B) total revenue falls by half. 
C) total revenue doubles. 
D) total revenue does not change. 
E) total revenue increases 18 percent.

Question 20

Use the following data for a demand curve.

Accepted Answer

The answer of Use the following data for a demand...

Exam 4: Subtleties of the Supply and Demand Model

All of the following are forms or examples of price control except

When a higher price cannot bring about any increase in the quantity supplied, the supply is

If the price of a product increases by 10 percent and the quantity demanded decreases by 15 percent, then the

A product with an elastic demand means that

The local public transportation system recently raised rates and was surprised to be faced with declining revenue. What can be accurately concluded?

The measurement of the price elasticity of demand is unit free.

A price floor that is effective results in a surplus.

Which of the following statements about the price elasticity of demand is true?

Answer the following questions using the figure below.

Suppose the price elasticity of demand for apples is 2.1 and the price elasticity of demand for housing is 0.62. In comparing price elasticities of demand, it is proper to say that the demand for apples is

The price elasticity of demand is expressed as the

If the quantity supplied of a product stays the same no matter what its price, then the elasticity of supply of the product is

Which of the following statements about the minimum wage is false?

If the cross-price elasticity between two goods is positive, then it is most likely that the two goods are

A perfectly elastic supply curve is vertical, and a perfectly elastic demand curve is horizontal.

The measurement for the price elasticity of demand is

The cross-price elasticity of demand between two goods measures the percentage change in the demand for one good for a given percentage change in the price of another good.

If a price ceiling is imposed on a good, then a shortage for that good will occur.

When price rises by 3 percent and quantity demanded changes by 6 percent,

Use the following data for a demand curve.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Efficiency of Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, Monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, Transfers, and Income Distribution

Public Goods, Externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, Income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth Around the World

International Trade

International Finance

Filters