Question 1

If Cassandra bought 12 blouses last year when her income was $55,000 and she buys 10 blouses this year when her income is $49,000,then her income elasticity of demand is

Accepted Answer

A)  -1.58. 
B)  +1.58. 
C)  -0.63. 
D)  +0.63. 
E)  -2.33. 
A)  -1.58. 
B)  +1.58. 
C)  -0.63. 
D)  +0.63. 
E)  -2.33.

Question 2

Exhibit 20-5
  
-Refer to Exhibit 20-5.Which of the graphs represents a greater percentage change in quantity demanded than the percentage change in price?

Accepted Answer

A)  (1) 
B)  (2) 
C)  (3) 
D)  (2) and (3) 
A)  (1) 
B)  (2) 
C)  (3) 
D)  (2) and (3)

Question 3

Demand is inelastic,so it follows that if price rises,__________ will rise,too.

Accepted Answer

A)  quantity demanded 
B)  total revenue 
C)  total cost 
D)  income 
E)  supply 
A)  quantity demanded 
B)  total revenue 
C)  total cost 
D)  income 
E)  supply

Question 4

Exhibit 20-5
  
-Refer to Exhibit 20-5.For graph (3),what is the price elasticity of demand going between $2.00 and $1.50?

Accepted Answer

A)  1.0 
B)  0 
C)  50.0 
D)  0.02 
A)  1.0 
B)  0 
C)  50.0 
D)  0.02

Question 5

Exhibit 20-3
  
-Refer to Exhibit 20-3.When price decreases from $1.50 to $0.50,the price elasticity of supply is

Accepted Answer

A)  0. 
B)  1.0. 
C)  5.0. 
D)  0.1. 
E)  0.5. 
A)  0. 
B)  1.0. 
C)  5.0. 
D)  0.1. 
E)  0.5.

Question 6

If income elasticity of demand for a good is negative,the good is a(n)__________ good.

Accepted Answer

A)  normal 
B)  positive 
C)  complementary 
D)  substitute 
E)  inferior 
A)  normal 
B)  positive 
C)  complementary 
D)  substitute 
E)  inferior

Question 7

Price rises from $10.19 to $10.29 and quantity demanded does not change for good X.It follows that the entire demand curve for good X is

Accepted Answer

A)  perfectly inelastic. 
B)  inelastic. 
C)  elastic. 
D)  unit elastic. 
E)  There is not enough information to answer the question. 
A)  perfectly inelastic. 
B)  inelastic. 
C)  elastic. 
D)  unit elastic. 
E)  There is not enough information to answer the question.

Question 8

Price rises from $10 to $12,and the quantity demanded falls from 200 units to 100 units.What is the price elasticity of demand between these two prices?

Accepted Answer

A)  0.18 
B)  3.67 
C)  1.86 
D)  0.27 
A)  0.18 
B)  3.67 
C)  1.86 
D)  0.27

Question 9

Exhibit 20-8
  
-Refer to Exhibit 20-8.The market for good X is initially at point A.A tax is then placed on the production of good X.At the new equilibrium,point __________,buyers end up paying __________ of the tax and sellers end up paying __________ of the tax.

Accepted Answer

A)  B; one-half; one-half 
B)  D; one-half; one-half 
C)  C; one-half; one-half 
D)  B; one-quarter; three-quarters 
E)  none of the above 
A)  B; one-half; one-half 
B)  D; one-half; one-half 
C)  C; one-half; one-half 
D)  B; one-quarter; three-quarters 
E)  none of the above

Question 10

Exhibit 20-3
  
-Refer to Exhibit 20-3.If price decreases from $1.50 to $0.50,total revenue along the demand curve

Accepted Answer

A)  increases to $67.50. 
B)  increases to $87.50. 
C)  remains at $87.50. 
D)  decreases to $67.50. 
E)  decreases to $27.50. 
A)  increases to $67.50. 
B)  increases to $87.50. 
C)  remains at $87.50. 
D)  decreases to $67.50. 
E)  decreases to $27.50.

Question 11

If the demand for a good is perfectly inelastic,then

Accepted Answer

A)  the percentage change in quantity demanded is greater than the percentage change in price. 
B)  the percentage change in quantity demanded is less than the percentage change in price. 
C)  the percentage change in quantity demanded is equal to the percentage change in price. 
D)  quantity demanded is extremely responsive to changes in price. 
E)  quantity demanded is not responsive to changes in price. 
A)  the percentage change in quantity demanded is greater than the percentage change in price. 
B)  the percentage change in quantity demanded is less than the percentage change in price. 
C)  the percentage change in quantity demanded is equal to the percentage change in price. 
D)  quantity demanded is extremely responsive to changes in price. 
E)  quantity demanded is not responsive to changes in price.

Question 12

An inferior good is

Accepted Answer

A)  any good that consumers think is of low quality. 
B)  a good for which the quantity demanded increases as its price decreases. 
C)  a good for which the demand rises as income falls. 
D)  a good for which the demand rises as income rises. 
E)  any good that a producer cannot sell a large quantity of, even at a low price. 
A)  any good that consumers think is of low quality. 
B)  a good for which the quantity demanded increases as its price decreases. 
C)  a good for which the demand rises as income falls. 
D)  a good for which the demand rises as income rises. 
E)  any good that a producer cannot sell a large quantity of, even at a low price.

Question 13

Price elasticity of supply is perfectly inelastic if the coefficient of price elasticity of supply is

Accepted Answer

A)  infinity. 
B)  1. 
C)  0. 
D)  -1. 
A)  infinity. 
B)  1. 
C)  0. 
D)  -1.

Question 14

If quantity demanded is completely unresponsive to changes in price,demand is

Accepted Answer

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

Question 15

Exhibit 20-6
  
-Refer to Exhibit 20-6.Let S1 be the supply curve of a producer.If S2 is the supply curve of the same producer after the government imposes a per-unit tax,the tax revenue generated will be

Accepted Answer

A)  greater if D1 is the demand curve facing the firm. 
B)  greater if D2 is the demand curve facing the firm. 
C)  the same regardless of which demand curve the firm faces. 
D)  Any of the above, depending on the type of good the tax is imposed on. 
A)  greater if D1 is the demand curve facing the firm. 
B)  greater if D2 is the demand curve facing the firm. 
C)  the same regardless of which demand curve the firm faces. 
D)  Any of the above, depending on the type of good the tax is imposed on.

Question 16

Which of the following statements is false?

Accepted Answer

A)  If the income elasticity of demand for a good is less than 1, the demand for the good is income inelastic. 
B)  If the income elasticity of demand for a good is greater than 1, the demand for the good is income elastic. 
C)  If the income elasticity of demand for a good is equal to 1, the demand for the good is income unit elastic. 
D)  If the income elasticity of demand for a good is less than zero, the good is a normal good. 
E)  A good can be both a normal good and income inelastic. 
A)  If the income elasticity of demand for a good is less than 1, the demand for the good is income inelastic. 
B)  If the income elasticity of demand for a good is greater than 1, the demand for the good is income elastic. 
C)  If the income elasticity of demand for a good is equal to 1, the demand for the good is income unit elastic. 
D)  If the income elasticity of demand for a good is less than zero, the good is a normal good. 
E)  A good can be both a normal good and income inelastic.

Question 17

Exhibit 20-3
  
-Refer to Exhibit 20-3.When price decreases from $5.50 to $4.50,the price elasticity of demand is

Accepted Answer

A)  0.2. 
B)  0.5. 
C)  1.0. 
D)  2.0. 
E)  5.0. 
A)  0.2. 
B)  0.5. 
C)  1.0. 
D)  2.0. 
E)  5.0.

Question 18

Price elasticity of demand is the ratio of the percentage change in price of a good to the percentage change in quantity demanded of that good.

Accepted Answer

A) True 
 B)False

Exam 20: Elasticity

If Cassandra bought 12 blouses last year when her income was $55,000 and she buys 10 blouses this year when her income is $49,000,then her income elasticity of demand is

Exhibit 20-5 -Refer to Exhibit 20-5.Which of the graphs represents a greater percentage change in quantity demanded than the percentage change in price?

Demand is inelastic,so it follows that if price rises,__________ will rise,too.

Exhibit 20-5 -Refer to Exhibit 20-5.For graph (3),what is the price elasticity of demand going between $2.00 and $1.50?

Exhibit 20-3 -Refer to Exhibit 20-3.When price decreases from $1.50 to $0.50,the price elasticity of supply is

If income elasticity of demand for a good is negative,the good is a(n)__________ good.

Price rises from $10.19 to $10.29 and quantity demanded does not change for good X.It follows that the entire demand curve for good X is

Price rises from $10 to $12,and the quantity demanded falls from 200 units to 100 units.What is the price elasticity of demand between these two prices?

Exhibit 20-8 -Refer to Exhibit 20-8.The market for good X is initially at point A.A tax is then placed on the production of good X.At the new equilibrium,point __________,buyers end up paying __________ of the tax and sellers end up paying __________ of the tax.

Exhibit 20-3 -Refer to Exhibit 20-3.If price decreases from $1.50 to $0.50,total revenue along the demand curve

If the demand for a good is perfectly inelastic,then

An inferior good is

Price elasticity of supply is perfectly inelastic if the coefficient of price elasticity of supply is

If quantity demanded is completely unresponsive to changes in price,demand is

Exhibit 20-6 -Refer to Exhibit 20-6.Let S1 be the supply curve of a producer.If S2 is the supply curve of the same producer after the government imposes a per-unit tax,the tax revenue generated will be

Which of the following statements is false?

Exhibit 20-3 -Refer to Exhibit 20-3.When price decreases from $5.50 to $4.50,the price elasticity of demand is

Price elasticity of demand is the ratio of the percentage change in price of a good to the percentage change in quantity demanded of that good.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Macroeconomic Measurements: Prices and Unemployment

Macroeconomic Measurements: GDP and Real GDP

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability: A Critique of the Self-Regulating Economy

Fiscal Policy and the Federal Budget

Money, Banking,and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth: Resources, Technology, Ideas, and Institutions

The Financial Crisis of 2007-2009

Debates in Macroeconomics Over the Role and Effects of Government

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages,Unions,and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

International Finance

Globalization and International Impacts on the Economy

The Economic Case For and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Agriculture: Problems, Policies, and Unintended Effects

Filters

Exhibit 20-8 -Refer to Exhibit 20-8.The market for good X is initially at point A.A tax is then placed on the production of good X.At the new equilibrium,point ,buyers end up paying of the tax and sellers end up paying __ of the tax.

Exhibit 20-6 -Refer to Exhibit 20-6.Let S₁ be the supply curve of a producer.If S₂ is the supply curve of the same producer after the government imposes a per-unit tax,the tax revenue generated will be