Question 1

If the price elasticity of demand for a good is zero,then demand is

Accepted Answer

A)  perfectly elastic. 
B)  perfectly inelastic. 
C)  unit elastic. 
D)  inelastic. 
E)  none of the above 
A)  perfectly elastic. 
B)  perfectly inelastic. 
C)  unit elastic. 
D)  inelastic. 
E)  none of the above

Question 2

The price elasticity of demand is the percentage change in

Accepted Answer

A)  price divided by the percentage change in quantity demanded. 
B)  price divided by the percentage change in demand. 
C)  quantity demanded divided by the percentage change in price. 
D)  demand divided by the percentage change in price. 
E)  c and d 
A)  price divided by the percentage change in quantity demanded. 
B)  price divided by the percentage change in demand. 
C)  quantity demanded divided by the percentage change in price. 
D)  demand divided by the percentage change in price. 
E)  c and d

Question 3

If the price of good X falls and the demand for good X is inelastic,then the percentage __________ in quantity demanded is __________ the percentage fall in price,and total revenue __________.

Accepted Answer

A)  fall; greater than; rises 
B)  rise; less than; rises 
C)  fall; equal to; remains constant 
D)  rise; less than; falls 
E)  fall; greater than; falls 
A)  fall; greater than; rises 
B)  rise; less than; rises 
C)  fall; equal to; remains constant 
D)  rise; less than; falls 
E)  fall; greater than; falls

Question 4

If the percentage change in quantity demanded of a good is less than the percentage change in income,then the good is said to be

Accepted Answer

A)  income elastic. 
B)  income inelastic. 
C)  income unit elastic. 
D)  price elastic. 
E)  price inelastic. 
A)  income elastic. 
B)  income inelastic. 
C)  income unit elastic. 
D)  price elastic. 
E)  price inelastic.

Question 5

The price elasticity of demand indicates

Accepted Answer

A)  a buyer's responsiveness to price changes. 
B)  the slope of the demand curve. 
C)  how far demand stretches over time. 
D)  the extent to which a demand curve shifts as incomes change. 
E)  none of the above 
A)  a buyer's responsiveness to price changes. 
B)  the slope of the demand curve. 
C)  how far demand stretches over time. 
D)  the extent to which a demand curve shifts as incomes change. 
E)  none of the above

Question 6

If a 5 percent reduction in the price of a commodity results in a 3 percent increase in the quantity demanded,demand is said to be

Accepted Answer

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

Question 7

As price rises from $22 to $26,quantity supplied rises from 100 to 110 units and quantity demanded falls from 90 units to 65 units.It follows that supply is __________ and demand is __________.

Accepted Answer

A)  inelastic; elastic 
B)  elastic; inelastic 
C)  inelastic; unit elastic 
D)  elastic; elastic 
E)  unit elastic; inelastic 
A)  inelastic; elastic 
B)  elastic; inelastic 
C)  inelastic; unit elastic 
D)  elastic; elastic 
E)  unit elastic; inelastic

Question 8

If the percentage change in quantity demanded is equal to the percentage change 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 9

For a normal good,__________ falls as income __________; for an inferior good,__________ rises as income __________.

Accepted Answer

A)  demand; falls; demand; falls 
B)  demand; rises; demand; rises 
C)  supply; falls; demand; falls 
D)  supply; rises; supply; falls 
A)  demand; falls; demand; falls 
B)  demand; rises; demand; rises 
C)  supply; falls; demand; falls 
D)  supply; rises; supply; falls

Question 10

For a certain good,when price rises from $50 to $55,quantity demanded falls from 8,400 to 7,500.The price elasticity of demand here is _____________,making the demand for this good ____________ in the price range between $50 and $55.

Accepted Answer

A)  1.19; inelastic 
B)  1.19; elastic 
C)  1.45; elastic 
D)  0.84; elastic 
E)  0.84; inelastic 
A)  1.19; inelastic 
B)  1.19; elastic 
C)  1.45; elastic 
D)  0.84; elastic 
E)  0.84; inelastic

Question 11

If a small increase in the price of a good reduces quantity demanded to zero,demand is ________________ and the price elasticity of demand is equal to _______________.

Accepted Answer

A)  perfectly inelastic; zero 
B)  perfectly elastic; infinity 
C)  unit elastic; one 
D)  perfectly elastic; zero 
A)  perfectly inelastic; zero 
B)  perfectly elastic; infinity 
C)  unit elastic; one 
D)  perfectly elastic; zero

Question 12

Exhibit 20-4
  
-Refer to Exhibit 20-4.As a consequence of the depicted change in supply of X,the demand curve for Y shifted from D1 to D2.What is true of the cross elasticity of demand for Y?

Accepted Answer

A) Ec > 0 B) Ec < 0 C) Ec = 0 D) It cannot be determined from the information provided. A) Ec > 0 B) Ec < 0 C) Ec = 0 D) It cannot be determined from the information provided.

Question 13

Income elasticity of demand for a normal good is always

Accepted Answer

A)  less than zero. 
B)  greater than zero. 
C)  equal to zero. 
D)  less than one. 
A)  less than zero. 
B)  greater than zero. 
C)  equal to zero. 
D)  less than one.

Question 14

If a 7 percent increase in the price of a commodity results in a 12 percent increase in the quantity supplied,supply is said to be

Accepted Answer

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

Question 15

When the price of a good rises,total revenue will fall if the good is elastic in demand.

Accepted Answer

A) True 
 B)False

Question 16

If price rises and total revenue falls,then

Accepted Answer

A)  cross elasticity of demand is negative. 
B)  price elasticity of demand is less than 1. 
C)  income elasticity of demand is positive. 
D)  b and c 
E)  none of the above 
A)  cross elasticity of demand is negative. 
B)  price elasticity of demand is less than 1. 
C)  income elasticity of demand is positive. 
D)  b and c 
E)  none of the above

Question 17

The longer the period of time consumers have to adjust to price changes,the __________ the __________ elasticity of demand.

Accepted Answer

A)  lower, price 
B)  lower, income 
C)  higher, price 
D)  higher, income 
A)  lower, price 
B)  lower, income 
C)  higher, price 
D)  higher, income

Question 18

Provide an economic explanation for why many companies hire celebrities to advertise their products. Be sure to include a discussion of the possible impact of celebrity endorsements upon the price elasticity of demand and total revenue for the product being advertised.

Accepted Answer

Companies use celebrities to gain attent

Question 19

Cross elasticity of demand measures consumer responsiveness to a change in the price of one good,in terms of the quantity demanded of some other good.

Accepted Answer

A) True 
 B)False

Question 20

If Jack bought 21 CDs last year when his income was $30,000 and he buys 23 CDs this year when his income is $35,000,then his income elasticity of demand is ______________ which means that CDs are a(n)______________ good for Jack.

Accepted Answer

A)  +1.69; normal 
B)  -1.69; inferior 
C)  +0.59; normal 
D)  +0.59; inferior 
E)  -0.44; inferior 
A)  +1.69; normal 
B)  -1.69; inferior 
C)  +0.59; normal 
D)  +0.59; inferior 
E)  -0.44; inferior

Exam 20: Elasticity

If the price elasticity of demand for a good is zero,then demand is

The price elasticity of demand is the percentage change in

If the price of good X falls and the demand for good X is inelastic,then the percentage __________ in quantity demanded is __________ the percentage fall in price,and total revenue __________.

If the percentage change in quantity demanded of a good is less than the percentage change in income,then the good is said to be

The price elasticity of demand indicates

If a 5 percent reduction in the price of a commodity results in a 3 percent increase in the quantity demanded,demand is said to be

As price rises from $22 to $26,quantity supplied rises from 100 to 110 units and quantity demanded falls from 90 units to 65 units.It follows that supply is __________ and demand is __________.

If the percentage change in quantity demanded is equal to the percentage change in price,demand is

For a normal good,__________ falls as income __________; for an inferior good,__________ rises as income __________.

For a certain good,when price rises from $50 to $55,quantity demanded falls from 8,400 to 7,500.The price elasticity of demand here is _____________,making the demand for this good ____________ in the price range between $50 and $55.

If a small increase in the price of a good reduces quantity demanded to zero,demand is ________________ and the price elasticity of demand is equal to _______________.

Exhibit 20-4 -Refer to Exhibit 20-4.As a consequence of the depicted change in supply of X,the demand curve for Y shifted from D1 to D2.What is true of the cross elasticity of demand for Y?

Income elasticity of demand for a normal good is always

If a 7 percent increase in the price of a commodity results in a 12 percent increase in the quantity supplied,supply is said to be

When the price of a good rises,total revenue will fall if the good is elastic in demand.

If price rises and total revenue falls,then

The longer the period of time consumers have to adjust to price changes,the __________ the __________ elasticity of demand.

Provide an economic explanation for why many companies hire celebrities to advertise their products. Be sure to include a discussion of the possible impact of celebrity endorsements upon the price elasticity of demand and total revenue for the product being advertised.

Cross elasticity of demand measures consumer responsiveness to a change in the price of one good,in terms of the quantity demanded of some other good.

If Jack bought 21 CDs last year when his income was $30,000 and he buys 23 CDs this year when his income is $35,000,then his income elasticity of demand is ______________ which means that CDs are a(n)______________ good for Jack.

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

If the price of good X falls and the demand for good X is inelastic,then the percentage in quantity demanded is the percentage fall in price,and total revenue __.

As price rises from $22 to $26,quantity supplied rises from 100 to 110 units and quantity demanded falls from 90 units to 65 units.It follows that supply is and demand is .

For a normal good, falls as income ; for an inferior good, rises as income .

For a certain good,when price rises from $50 to $55,quantity demanded falls from 8,400 to 7,500.The price elasticity of demand here is _,making the demand for this good in the price range between $50 and $55.

If a small increase in the price of a good reduces quantity demanded to zero,demand is __ and the price elasticity of demand is equal to _.

Exhibit 20-4 -Refer to Exhibit 20-4.As a consequence of the depicted change in supply of X,the demand curve for Y shifted from D₁to D₂.What is true of the cross elasticity of demand for Y?

The longer the period of time consumers have to adjust to price changes,the the elasticity of demand.

If Jack bought 21 CDs last year when his income was $30,000 and he buys 23 CDs this year when his income is $35,000,then his income elasticity of demand is which means that CDs are a(n) good for Jack.