Question 1

If the demand for a product is elastic,then

Accepted Answer

A) The percentage change in quantity demanded is greater than the percentage in price. 
B) The percentage change in price is greater than the percentage change in quantity demanded. 
C) The change in the quantity demanded is greater than the change in income. 
A) The percentage change in quantity demanded is greater than the percentage in price. 
B) The percentage change in price is greater than the percentage change in quantity demanded. 
C) The change in the quantity demanded is greater than the change in income.

Question 2

Ceteris paribus,as the number of substitutes for a good increases,the

Accepted Answer

A) Price elasticity of demand should become smaller. 
B) Price elasticity of demand should become larger. 
C) Cross-price elasticity of demand should become negative. 
A) Price elasticity of demand should become smaller. 
B) Price elasticity of demand should become larger. 
C) Cross-price elasticity of demand should become negative.

Question 3

A price decrease will cause total revenue to fall if

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 4

Cross-price elasticity refers to

Accepted Answer

A) How responsive consumers are to a change in price. 
B) How responsive consumers are to a change in income. 
C) How responsive consumers of one good are to a change in the price of another good. 
A) How responsive consumers are to a change in price. 
B) How responsive consumers are to a change in income. 
C) How responsive consumers of one good are to a change in the price of another good.

Question 5

If the demand for cigarettes is inelastic,

Accepted Answer

A) Total revenue will rise if the price of cigarettes rises. 
B) No matter how high the price goes,the quantity demanded will not fall. 
C) Total revenue will fall if the price of cigarettes rises. 
A) Total revenue will rise if the price of cigarettes rises. 
B) No matter how high the price goes,the quantity demanded will not fall. 
C) Total revenue will fall if the price of cigarettes rises.

Question 6

If two goods are substitute goods,

Accepted Answer

A) The percentage change in quantity demanded for good X will fall if there is a reduction in price of good Y. 
B) The percentage change in quantity demanded for good X will stay the same if there is an increase in the price of good Y. 
C) If the price of good X increases,the demand for good Y falls. 
A) The percentage change in quantity demanded for good X will fall if there is a reduction in price of good Y. 
B) The percentage change in quantity demanded for good X will stay the same if there is an increase in the price of good Y. 
C) If the price of good X increases,the demand for good Y falls.

Question 7

The In The News article "Recession Eats into Gator Market" states that

Accepted Answer

A) The demand for alligator skins was inelastic. 
B) The quantity demanded for alligator skins fell when income dropped,indicating that the skins were an inferior good. 
C) The demand for alligator skins fell when income dropped,indicating that the skins were a normal good. 
A) The demand for alligator skins was inelastic. 
B) The quantity demanded for alligator skins fell when income dropped,indicating that the skins were an inferior good. 
C) The demand for alligator skins fell when income dropped,indicating that the skins were a normal good.

Question 8

Which of the following is likely to have the most inelastic price elasticity of demand?

Accepted Answer

A) Automobiles. 
B) Pickup trucks. 
C) Hondas. 
A) Automobiles. 
B) Pickup trucks. 
C) Hondas.

Question 9

Suppose the price of soccer shoes decreases by 7 percent and as a result,there is a 12 percent rise in the quantity of shin guards demanded.The value of the cross-price elasticity of demand is

Accepted Answer

A) -1.71. 
B) -0.58. 
C) 1.71 
A) -1.71. 
B) -0.58. 
C) 1.71

Question 10

Ceteris paribus,if income increases and as a result,the demand for good X increases and the demand for good Y falls,

Accepted Answer

A) Good X is an inferior good and good Y is a normal good. 
B) Good X is a normal good and good Y is an inferior good. 
C) Goods X and Y are substitute goods. 
A) Good X is an inferior good and good Y is a normal good. 
B) Good X is a normal good and good Y is an inferior good. 
C) Goods X and Y are substitute goods.

Question 11

Supply is very elastic when

Accepted Answer

A) The quantity supplied does not change much when price rises. 
B) The quantity supplied has a large increase in response to an increase in price. 
C) The quantity supply does not respond to an increase in price. 
A) The quantity supplied does not change much when price rises. 
B) The quantity supplied has a large increase in response to an increase in price. 
C) The quantity supply does not respond to an increase in price.

Question 12

Which of the following would most likely have a price elasticity coefficient less than 1?

Accepted Answer

A) Coffee. 
B) Televisions. 
C) Fresh fish. 
A) Coffee. 
B) Televisions. 
C) Fresh fish.

Question 13

The formula for the elasticity of supply is

Accepted Answer

A) The percentage change in quantity supplied divided by the percentage change in price. 
B) The percentage change in price divided by the percentage change in quantity supplied. 
C) The percentage change in quantity supplied divided by the percentage change in income. 
A) The percentage change in quantity supplied divided by the percentage change in price. 
B) The percentage change in price divided by the percentage change in quantity supplied. 
C) The percentage change in quantity supplied divided by the percentage change in income.

Question 14

Demand is elastic if the consumer has only a few substitutes to choose from.

Accepted Answer

A) True 
 B)False

Question 15

If the elasticity of demand for cigarettes is 0.4,a seller should

Accepted Answer

A) Increase price to increase total revenue. 
B) Decrease price to increase total revenue. 
C) Reduce price to maximize profits. 
A) Increase price to increase total revenue. 
B) Decrease price to increase total revenue. 
C) Reduce price to maximize profits.

Question 16

If the price elasticity of demand is 0.4,a 5 percent increase in price will quantity demanded to fall by 2 percent.

Accepted Answer

A) True 
 B)False

Question 17

- Refer to Figure 20.2.If the area 0P1AB is less than the area 0P2CD,we can conclude that the price elasticity of demand between point A and point C is

Accepted Answer

A) Elastic. 
B) Inelastic. 
C) Unitary elastic. 
A) Elastic. 
B) Inelastic. 
C) Unitary elastic.

Question 18

During a recession the sales of autos fall,and the best measure of this is to use cross-price elasticity.

Accepted Answer

A) True 
 B)False

Question 19

Suppose income falls 5 percent in a year,and as a result,housing construction falls from 10 million to 5 million units annually.Based on this information,housing starts are

Accepted Answer

A) An inferior good. 
B) A normal good. 
C) Price-elastic. 
A) An inferior good. 
B) A normal good. 
C) Price-elastic.

Question 20

Which of the following does not influence the price elasticity of demand?

Accepted Answer

A) The availability of substitutes. 
B) The price of the item relative to the consumer's budget. 
C) Costs of production. 
A) The availability of substitutes. 
B) The price of the item relative to the consumer's budget. 
C) Costs of production.

Exam 20: Elasticity

If the demand for a product is elastic,then

Ceteris paribus,as the number of substitutes for a good increases,the

A price decrease will cause total revenue to fall if

Cross-price elasticity refers to

If the demand for cigarettes is inelastic,

If two goods are substitute goods,

The In The News article "Recession Eats into Gator Market" states that

Which of the following is likely to have the most inelastic price elasticity of demand?

Suppose the price of soccer shoes decreases by 7 percent and as a result,there is a 12 percent rise in the quantity of shin guards demanded.The value of the cross-price elasticity of demand is

Ceteris paribus,if income increases and as a result,the demand for good X increases and the demand for good Y falls,

Supply is very elastic when

Which of the following would most likely have a price elasticity coefficient less than 1?

The formula for the elasticity of supply is

Demand is elastic if the consumer has only a few substitutes to choose from.

If the elasticity of demand for cigarettes is 0.4,a seller should

If the price elasticity of demand is 0.4,a 5 percent increase in price will quantity demanded to fall by 2 percent.

- Refer to Figure 20.2.If the area 0P1AB is less than the area 0P2CD,we can conclude that the price elasticity of demand between point A and point C is

During a recession the sales of autos fall,and the best measure of this is to use cross-price elasticity.

Suppose income falls 5 percent in a year,and as a result,housing construction falls from 10 million to 5 million units annually.Based on this information,housing starts are

Which of the following does not influence the price elasticity of demand?

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

- Refer to Figure 20.2.If the area 0P₁AB is less than the area 0P₂CD,we can conclude that the price elasticity of demand between point A and point C is