Question 1

Oil and alternative sources of energy such as wind and solar are

Accepted Answer

A) Complementary goods. 
B) Substitute goods. 
C) Inferior goods. 
A) Complementary goods. 
B) Substitute goods. 
C) Inferior goods. B

Question 2

- In Figure 20.1,at what price is the elasticity of demand unitary?

Accepted Answer

A) $40. 
B) $100. 
C) $160. 
A) $40. 
B) $100. 
C) $160. B

Question 3

Assume the price elasticity of demand for JT Chip Co.chips is 4.0.If the company decreases the price of each bag of chips from $1.89 to $1.49,the number of bags sold will

Accepted Answer

A) Decrease by 78 percent. 
B) Increase by 95 percent. 
C) Increase by 48 percent. 
A) Decrease by 78 percent. 
B) Increase by 95 percent. 
C) Increase by 48 percent. B

Question 4

Price elasticity of demand shows how

Accepted Answer

A) To compute the slope of the demand curve. 
B) Responsive the quantity demanded is to a change in price. 
C) Responsive the quantity demanded is to a change in the price of related goods. 
A) To compute the slope of the demand curve. 
B) Responsive the quantity demanded is to a change in price. 
C) Responsive the quantity demanded is to a change in the price of related goods.

Question 5

Most goods are normal goods,and their demand shifts to the left when income rises.

Accepted Answer

A) True 
 B)False

Question 6

You own your business,and your research indicates that the price elasticity of demand for your product is 3.5.What pricing strategies should you follow,and why?

Accepted Answer

Price elasticity is the percentage chang

Question 7

The sign on the income elasticity formula will be positive for inferior goods and negative for normal goods.

Accepted Answer

A) True 
 B)False

Question 8

For inferior goods,when incomes rise the demand for these goods falls.

Accepted Answer

A) True 
 B)False

Question 9

Assume the price elasticity of demand for U.S.Frisbee Co.Frisbees is 0.5.If the company increases the price of each Frisbee from $12 to $16,the number of Frisbees demanded will

Accepted Answer

A) Decrease by 14.3 percent. 
B) Decrease by 33.3 percent. 
C) Increase by 20.0 percent. 
A) Decrease by 14.3 percent. 
B) Decrease by 33.3 percent. 
C) Increase by 20.0 percent.

Question 10

Nobel Prize-winning economist Gary Becker corrected President Clinton's elasticity estimate for cigarette smoking by

Accepted Answer

A) Showing that cigarettes were actually price-elastic. 
B) Showing that the long-run response to a price increase in cigarettes was likely to be more elastic than the president had estimated. 
C) Showing that the demand for cigarettes in the short run was more inelastic than the president calculated. 
A) Showing that cigarettes were actually price-elastic. 
B) Showing that the long-run response to a price increase in cigarettes was likely to be more elastic than the president had estimated. 
C) Showing that the demand for cigarettes in the short run was more inelastic than the president calculated.

Question 11

If two goods are complementary,it means that when the price of one good increases,the demand for the other rises.

Accepted Answer

A) True 
 B)False

Question 12

In the World View on gold prices and gold mining,

Accepted Answer

A) As the price of gold rises,the quantity supplied falls. 
B) As the price of gold increases,there is an increase in quantity supplied,indicating that supply is elastic. 
C) Miners around the world have had difficulty finding additional sources of gold,indicating that the elasticity of supply is inelastic. 
A) As the price of gold rises,the quantity supplied falls. 
B) As the price of gold increases,there is an increase in quantity supplied,indicating that supply is elastic. 
C) Miners around the world have had difficulty finding additional sources of gold,indicating that the elasticity of supply is inelastic.

Question 13

Income elasticity measures the

Accepted Answer

A) Responsiveness of quantity demanded for one good to a percentage change in price of another good. 
B) Responsiveness of quantity demanded to a percentage change in income. 
C) Way in which consumers switch from one product to another when price rises. 
A) Responsiveness of quantity demanded for one good to a percentage change in price of another good. 
B) Responsiveness of quantity demanded to a percentage change in income. 
C) Way in which consumers switch from one product to another when price rises.

Question 14

The demand is more price-elastic

Accepted Answer

A) In the long run. 
B) If the product is a necessity. 
C) If the product is a small part of the consumer's budget. 
A) In the long run. 
B) If the product is a necessity. 
C) If the product is a small part of the consumer's budget.

Question 15

A demand curve that is completely elastic is

Accepted Answer

A) Horizontal. 
B) Vertical. 
C) Upward-sloping. 
A) Horizontal. 
B) Vertical. 
C) Upward-sloping.

Question 16

Along a linear or straight-line demand curve,demand is more elastic at higher prices.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is most likely an inferior good?

Accepted Answer

A) Rolex watches. 
B) Nike running shoes. 
C) Generic canned food. 
A) Rolex watches. 
B) Nike running shoes. 
C) Generic canned food.

Question 18

The cross-price elasticity sign for substitute goods is negative.

Accepted Answer

A) True 
 B)False

Question 19

If the price elasticity of demand is equal to 2,the good has _____ demand.

Accepted Answer

A) elastic 
B) inelastic 
C) unitary elastic 
A) elastic 
B) inelastic 
C) unitary elastic

Question 20

A good is normal if the sign on the income elasticity formula is

Accepted Answer

A) Positive. 
B) Greater than 1. 
C) Less than 1. 
A) Positive. 
B) Greater than 1. 
C) Less than 1.

Exam 20: Elasticity

Oil and alternative sources of energy such as wind and solar are

- In Figure 20.1,at what price is the elasticity of demand unitary?

Assume the price elasticity of demand for JT Chip Co.chips is 4.0.If the company decreases the price of each bag of chips from $1.89 to $1.49,the number of bags sold will

Price elasticity of demand shows how

Most goods are normal goods,and their demand shifts to the left when income rises.

You own your business,and your research indicates that the price elasticity of demand for your product is 3.5.What pricing strategies should you follow,and why?

The sign on the income elasticity formula will be positive for inferior goods and negative for normal goods.

For inferior goods,when incomes rise the demand for these goods falls.

Assume the price elasticity of demand for U.S.Frisbee Co.Frisbees is 0.5.If the company increases the price of each Frisbee from $12 to $16,the number of Frisbees demanded will

Nobel Prize-winning economist Gary Becker corrected President Clinton's elasticity estimate for cigarette smoking by

If two goods are complementary,it means that when the price of one good increases,the demand for the other rises.

In the World View on gold prices and gold mining,

Income elasticity measures the

The demand is more price-elastic

A demand curve that is completely elastic is

Along a linear or straight-line demand curve,demand is more elastic at higher prices.

Which of the following is most likely an inferior good?

The cross-price elasticity sign for substitute goods is negative.

If the price elasticity of demand is equal to 2,the good has _____ demand.

A good is normal if the sign on the income elasticity formula is

Economics: the Core Issues Appendix: Using Graphs

The Us Economy: a Global View

Supply and Demand

The Role of Government

National Income Accounting

Unemployment

Inflation

The Business Cycle

Aggregate Demand Appendix: the Keynesian Cross

Self-Adjustment or Instability

Fiscal Policy

Deficits and Debt

Money and Banks

The Federal Reserve System

Monetary Policy

Supply-Side Policy: Short-Run Options

Growth and Productivity: Long-Run Possibilities

Theory Versus Reality

Consumer Choice Appendix: Indifference Curves

The Costs of Production

The Competitive Firm

Competitive Markets

Monopoly

Oligopoly

Monopolistic Competition

Natural Monopolies: Deregulation

Environmental Protection

The Farm Problem

The Labor Market

Labor Unions

Financial Markets

Taxes: Equity Versus Efficiency

Transfer Payments: Welfare and Social Security

International Trade

International Finance

Global Poverty Glossary Index Reference Tables

Filters