Question 1

If the price elasticity of demand for cigarettes is 0.4,

Accepted Answer

A) The demand is very elastic. 
B) A 10 percent increase in price will cause quantity demanded to fall by 40 percent. 
C) The demand is very inelastic. 
A) The demand is very elastic. 
B) A 10 percent increase in price will cause quantity demanded to fall by 40 percent. 
C) The demand is very inelastic.

Question 2

To find the average percentage change in price,

Accepted Answer

A) The change in price is divided by the average price. 
B) The change in quantity is divided by the average quantity. 
C) The change in quantity is divided by the change in price. 
A) The change in price is divided by the average price. 
B) The change in quantity is divided by the average quantity. 
C) The change in quantity is divided by the change in price.

Question 3

The price elasticity of supply will always be a negative number.

Accepted Answer

A) True 
 B)False

Question 4

If the price of gasoline rises by 10 percent and new car sales fall by 5 percent,this indicates that these two goods are complementary.

Accepted Answer

A) True 
 B)False

Question 5

-If the price is reduced from $100 to $80 in Figure 20.1,ceteris paribus,

Accepted Answer

A) Total revenue will decrease. 
B) Demand will increase. 
C) Quantity demanded will decrease. 
A) Total revenue will decrease. 
B) Demand will increase. 
C) Quantity demanded will decrease.

Question 6

Assume the price elasticity of demand for MC Pretzel Co.pretzels is 0.8.If the company increases the price of each bag of pretzels,total revenue will

Accepted Answer

A) Decrease because fewer bags will be sold. 
B) Increase because demand is elastic and revenue will rise. 
C) Increase because the percentage increase in price is greater than the percentage change in quantity demanded. 
A) Decrease because fewer bags will be sold. 
B) Increase because demand is elastic and revenue will rise. 
C) Increase because the percentage increase in price is greater than the percentage change in quantity demanded.

Question 7

- Over the price range from $180 to $120 in Figure 20.1,ceteris paribus,

Accepted Answer

A) Demand is elastic. 
B) Total revenue is maximized. 
C) Demand is increasing. 
A) Demand is elastic. 
B) Total revenue is maximized. 
C) Demand is increasing.

Question 8

Demand is more inelastic in the long run.

Accepted Answer

A) True 
 B)False

Question 9

Cross-price elasticity looks at the impact that income changes have on sales.

Accepted Answer

A) True 
 B)False

Question 10

If the price elasticity of demand is 1.0,and a firm raises its price by 10 percent,the total revenue will

Accepted Answer

A) Rise by 10 percent. 
B) Fall by 10 percent. 
C) Not change. 
A) Rise by 10 percent. 
B) Fall by 10 percent. 
C) Not change.

Question 11

On a demand curve,demand is more elastic

Accepted Answer

A) At higher prices. 
B) At lower prices. 
C) When demand is unitary. 
A) At higher prices. 
B) At lower prices. 
C) When demand is unitary.

Question 12

How does advertising influence the demand for goods and the shape of the demand curve?

Accepted Answer

Advertising can increase the demand for

Question 13

The World View article on the rise in gold prices indicates that

Accepted Answer

A) The quantity supplied falls when the price of gold rises. 
B) The law of supply is true: as the price of gold rises,miners around the world search for new deposits of gold. 
C) The law of supply is true because as the price of gold rises,the quantity supplied of gold actually falls. 
A) The quantity supplied falls when the price of gold rises. 
B) The law of supply is true: as the price of gold rises,miners around the world search for new deposits of gold. 
C) The law of supply is true because as the price of gold rises,the quantity supplied of gold actually falls.

Question 14

The demand for normal goods

Accepted Answer

A) Rises when incomes fall. 
B) Rises when incomes rise. 
C) Falls when incomes rise. 
A) Rises when incomes fall. 
B) Rises when incomes rise. 
C) Falls when incomes rise.

Question 15

When the percentage change in quantity demanded is less than the percentage change in price,ceteris paribus,

Accepted Answer

A) Demand is elastic. 
B) Demand is inelastic. 
C) Demand is unitary elastic. 
A) Demand is elastic. 
B) Demand is inelastic. 
C) Demand is unitary elastic.

Question 16

If the elasticity of demand is 3,and the price rises by 15 percent,then

Accepted Answer

A) The quantity demanded will increase by 5 percent. 
B) The quantity demanded will fall by 45 percent. 
C) The quantity demanded will rise by 4.5 percent. 
A) The quantity demanded will increase by 5 percent. 
B) The quantity demanded will fall by 45 percent. 
C) The quantity demanded will rise by 4.5 percent.

Question 17

Supply is very inelastic when

Accepted Answer

A) The quantity supplied changes little when the price increases. 
B) The quantity supplied changes a lot when price increases. 
C) The quantity supplied does not change at all when price increases. 
A) The quantity supplied changes little when the price increases. 
B) The quantity supplied changes a lot when price increases. 
C) The quantity supplied does not change at all when price increases.

Question 18

If DVD players and DVDs are complementary goods,an increase in the price of DVDs will,ceteris paribus,

Accepted Answer

A) Increase the quantity demanded of DVDs. 
B) Increase the quantity demanded of DVD players. 
C) Reduce the demand for DVD players. 
A) Increase the quantity demanded of DVDs. 
B) Increase the quantity demanded of DVD players. 
C) Reduce the demand for DVD players.

Question 19

If demand is perfectly elastic,

Accepted Answer

A) The demand curve is vertical. 
B) The demand curve is very steep. 
C) The demand curve is horizontal. 
A) The demand curve is vertical. 
B) The demand curve is very steep. 
C) The demand curve is horizontal.

Question 20

Elasticity of supply tells us

Accepted Answer

A) How much sellers will increase production in response to a change in price. 
B) How much sellers will change their price as their quantity supplied changes. 
C) How much producers will increase production with changes in consumers' income. 
A) How much sellers will increase production in response to a change in price. 
B) How much sellers will change their price as their quantity supplied changes. 
C) How much producers will increase production with changes in consumers' income.

Exam 20: Elasticity

If the price elasticity of demand for cigarettes is 0.4,

To find the average percentage change in price,

The price elasticity of supply will always be a negative number.

If the price of gasoline rises by 10 percent and new car sales fall by 5 percent,this indicates that these two goods are complementary.

-If the price is reduced from $100 to $80 in Figure 20.1,ceteris paribus,

Assume the price elasticity of demand for MC Pretzel Co.pretzels is 0.8.If the company increases the price of each bag of pretzels,total revenue will

- Over the price range from $180 to $120 in Figure 20.1,ceteris paribus,

Demand is more inelastic in the long run.

Cross-price elasticity looks at the impact that income changes have on sales.

If the price elasticity of demand is 1.0,and a firm raises its price by 10 percent,the total revenue will

On a demand curve,demand is more elastic

How does advertising influence the demand for goods and the shape of the demand curve?

The World View article on the rise in gold prices indicates that

The demand for normal goods

When the percentage change in quantity demanded is less than the percentage change in price,ceteris paribus,

If the elasticity of demand is 3,and the price rises by 15 percent,then

Supply is very inelastic when

If DVD players and DVDs are complementary goods,an increase in the price of DVDs will,ceteris paribus,

If demand is perfectly elastic,

Elasticity of supply tells us

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

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