Question 1

The quantity demanded of good A changes from 100 to 111 when the price of good A changes from $9 to $8.The cross elasticity of demand is

Accepted Answer

A)  1.20. 
B)  -1.13. 
C)  2.20. 
D)  -0.89. 
E)  There is not enough information to answer the question. 
A)  1.20. 
B)  -1.13. 
C)  2.20. 
D)  -0.89. 
E)  There is not enough information to answer the question.

Question 2

Price elasticity of demand is a measure of the responsiveness of quantity demanded to changes in

Accepted Answer

A)  interest rates. 
B)  price. 
C)  supply. 
D)  demand. 
A)  interest rates. 
B)  price. 
C)  supply. 
D)  demand.

Question 3

If a demand curve is downward sloping,demand is

Accepted Answer

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

Question 4

What does price elasticity of supply measure? Explain the relationship that exists between price elasticity of supply and the length of time allowed to adjust to the price change.

Accepted Answer

Price elasticity of supply measures the

Question 5

As the price of a product rises the product will become more elastic in demand,assuming that the demand curve for the product is a downward-sloping straight line.

Accepted Answer

A) True 
 B)False

Question 6

Price elasticity of supply measures the responsiveness of __________ to changes in __________.

Accepted Answer

A)  quantity supplied; income 
B)  quantity supplied; price 
C)  quantity supplied; quantity demanded 
D)  income; quantity demanded 
E)  none of the above 
A)  quantity supplied; income 
B)  quantity supplied; price 
C)  quantity supplied; quantity demanded 
D)  income; quantity demanded 
E)  none of the above

Question 7

If the demand for a good is elastic,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 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 not responsive to changes in price.

Question 8

Which of the following statements is true?

Accepted Answer

A)  Lower prices always lower total revenue. 
B)  Higher prices always raise total revenue. 
C)  Higher prices always lower total revenue. 
D)  Lower prices always raise total revenue. 
E)  none of the above 
A)  Lower prices always lower total revenue. 
B)  Higher prices always raise total revenue. 
C)  Higher prices always lower total revenue. 
D)  Lower prices always raise total revenue. 
E)  none of the above

Question 9

As the price of good X rises from $1.50 to $1.75 the result is a decrease in the quantity demanded of good X from 650 units to 590 units.The price elasticity of demand for good X is _____________ and total revenue __________ as the price of good X rises from $1.50 to $1.75.

Accepted Answer

A)  0.63; falls 
B)  1.59; rises 
C)  1.59; falls 
D)  0.63; rises 
A)  0.63; falls 
B)  1.59; rises 
C)  1.59; falls 
D)  0.63; rises

Question 10

If demand is perfectly elastic,it follows that

Accepted Answer

A)  as price changes, quantity demanded does not change. 
B)  as price changes, quantity demanded changes by a larger percentage. 
C)  as price changes only a small percentage, quantity demanded falls to zero. 
D)  as income changes only a small percentage, quantity demanded changes by a very large percentage. 
E)  none of the above 
A)  as price changes, quantity demanded does not change. 
B)  as price changes, quantity demanded changes by a larger percentage. 
C)  as price changes only a small percentage, quantity demanded falls to zero. 
D)  as income changes only a small percentage, quantity demanded changes by a very large percentage. 
E)  none of the above

Question 11

When the price of cigarettes decreases by 20 percent,the quantity demanded increases by 12 percent.The price elasticity of demand for cigarettes is __________,making cigarettes an ____________ product (in this example).

Accepted Answer

A)  0.6; elastic 
B)  1.7; inelastic 
C)  0.6; inelastic 
D)  1.7; elastic 
E)  2.6; elastic 
A)  0.6; elastic 
B)  1.7; inelastic 
C)  0.6; inelastic 
D)  1.7; elastic 
E)  2.6; elastic

Question 12

When the price of diamond rings rises by 30 percent,the quantity demanded falls by 10 percent.The price elasticity of demand for diamond rings is ____________,making diamond rings an _______________ good (in this example).

Accepted Answer

A)  0.33; inelastic 
B)  3.0; elastic 
C)  1.0; unit elastic 
D)  0.33; elastic 
A)  0.33; inelastic 
B)  3.0; elastic 
C)  1.0; unit elastic 
D)  0.33; elastic

Question 13

The price elasticity of demand for a given good is 2.3.This implies that if price

Accepted Answer

A)  rises by 10 percent, quantity demanded falls 2.3 percent. 
B)  rises by 2.3 percent, quantity demanded falls 2.3 percent. 
C)  rises by 20 percent, quantity demanded falls 46 percent. 
D)  falls by 10 percent, quantity demanded falls 2.3 percent. 
E)  none of the above 
A)  rises by 10 percent, quantity demanded falls 2.3 percent. 
B)  rises by 2.3 percent, quantity demanded falls 2.3 percent. 
C)  rises by 20 percent, quantity demanded falls 46 percent. 
D)  falls by 10 percent, quantity demanded falls 2.3 percent. 
E)  none of the above

Question 14

Which of the following statements is false?

Accepted Answer

A)  Ham has a higher price elasticity of demand than meat. 
B)  Peaches have a higher price elasticity of demand than fruit. 
C)  Soap has a higher price elasticity of demand than Ivory Soap. 
D)  Carrots have a higher price elasticity of demand than vegetables. 
A)  Ham has a higher price elasticity of demand than meat. 
B)  Peaches have a higher price elasticity of demand than fruit. 
C)  Soap has a higher price elasticity of demand than Ivory Soap. 
D)  Carrots have a higher price elasticity of demand than vegetables.

Question 15

If,as the price of good Y rises from $5.00 to $5.75,the quantity demanded of good Y falls from 54 units to 48 units,price elasticity of demand for good Y in this price range is

Accepted Answer

A)  1.05. 
B)  1.19. 
C)  0.37. 
D)  4.77. 
E)  0.84. 
A)  1.05. 
B)  1.19. 
C)  0.37. 
D)  4.77. 
E)  0.84.

Question 16

If a good is perfectly inelastic in a given price range,it will be perfectly inelastic at all prices.

Accepted Answer

A) True 
 B)False

Question 17

A Broadway play company can only charge one price for tickets to a given performance of its play. The company manager notices that they earn greater total revenue when they charge a higher ticket price and its theater is three-quarters full than when they charge a lower ticket price and the theater is completely full.It follows that demand for this play is

Accepted Answer

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

Question 18

If demand for a product is perfectly inelastic,a tax of $1 per unit imposed on sellers will

Accepted Answer

A)  not affect the market price of the product. 
B)  cause the market price to rise by $1 per unit. 
C)  cause the market price to decline by $1 per unit. 
D)  cause the market price to rise by less than $1 per unit. 
E)  none of the above 
A)  not affect the market price of the product. 
B)  cause the market price to rise by $1 per unit. 
C)  cause the market price to decline by $1 per unit. 
D)  cause the market price to rise by less than $1 per unit. 
E)  none of the above

Question 19

Price elasticity of supply and price elasticity of demand are likely to be __________ in the __________ than in the __________.

Accepted Answer

A)  higher; short run; long run 
B)  lower; long run; short run 
C)  higher; long run; short run 
D)  lower; past; future 
E)  higher; past; future 
A)  higher; short run; long run 
B)  lower; long run; short run 
C)  higher; long run; short run 
D)  lower; past; future 
E)  higher; past; future

Question 20

Total revenue is defined as

Accepted Answer

A)  price minus quantity sold. 
B)  price multiplied by quantity sold. 
C)  price divided by quantity sold. 
D)  quantity divided by price sold. 
E)  price plus quantity sold. 
A)  price minus quantity sold. 
B)  price multiplied by quantity sold. 
C)  price divided by quantity sold. 
D)  quantity divided by price sold. 
E)  price plus quantity sold.

Exam 20: Elasticity

The quantity demanded of good A changes from 100 to 111 when the price of good A changes from $9 to $8.The cross elasticity of demand is

Price elasticity of demand is a measure of the responsiveness of quantity demanded to changes in

If a demand curve is downward sloping,demand is

What does price elasticity of supply measure? Explain the relationship that exists between price elasticity of supply and the length of time allowed to adjust to the price change.

As the price of a product rises the product will become more elastic in demand,assuming that the demand curve for the product is a downward-sloping straight line.

Price elasticity of supply measures the responsiveness of __________ to changes in __________.

If the demand for a good is elastic,then

Which of the following statements is true?

As the price of good X rises from $1.50 to $1.75 the result is a decrease in the quantity demanded of good X from 650 units to 590 units.The price elasticity of demand for good X is _____________ and total revenue __________ as the price of good X rises from $1.50 to $1.75.

If demand is perfectly elastic,it follows that

When the price of cigarettes decreases by 20 percent,the quantity demanded increases by 12 percent.The price elasticity of demand for cigarettes is __________,making cigarettes an ____________ product (in this example).

When the price of diamond rings rises by 30 percent,the quantity demanded falls by 10 percent.The price elasticity of demand for diamond rings is ____________,making diamond rings an _______________ good (in this example).

The price elasticity of demand for a given good is 2.3.This implies that if price

Which of the following statements is false?

If,as the price of good Y rises from $5.00 to $5.75,the quantity demanded of good Y falls from 54 units to 48 units,price elasticity of demand for good Y in this price range is

If a good is perfectly inelastic in a given price range,it will be perfectly inelastic at all prices.

If demand for a product is perfectly inelastic,a tax of $1 per unit imposed on sellers will

Price elasticity of supply and price elasticity of demand are likely to be __________ in the __________ than in the __________.

Total revenue is defined as

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

Price elasticity of supply measures the responsiveness of to changes in .

As the price of good X rises from $1.50 to $1.75 the result is a decrease in the quantity demanded of good X from 650 units to 590 units.The price elasticity of demand for good X is ___ and total revenue as the price of good X rises from $1.50 to $1.75.

When the price of cigarettes decreases by 20 percent,the quantity demanded increases by 12 percent.The price elasticity of demand for cigarettes is ,making cigarettes an __ product (in this example).

When the price of diamond rings rises by 30 percent,the quantity demanded falls by 10 percent.The price elasticity of demand for diamond rings is ,making diamond rings an ___ good (in this example).

Price elasticity of supply and price elasticity of demand are likely to be in the than in the __.