Question 1

The income elasticity of demand for low-quality beef is -2. Thus, an 8% decrease in the quantity of low-quality beef demanded

Accepted Answer

A)  is the result of a decrease in income of 4%. 
B)  is the result of an increase in income of 0.25%. 
C)  is the result of an increase in income of 4%. 
D)  is unrelated to any change in income. 
A)  is the result of a decrease in income of 4%. 
B)  is the result of an increase in income of 0.25%. 
C)  is the result of an increase in income of 4%. 
D)  is unrelated to any change in income.

Question 2

A perfectly price elastic supply curve will be a(n) ________ line.

Accepted Answer

A)  horizontal 
B)  vertical 
C)  upward-sloping 
D)  downward-sloping 
A)  horizontal 
B)  vertical 
C)  upward-sloping 
D)  downward-sloping

Question 3

If a firm wants to increase revenue, it should decrease the selling price of its product if it is currently producing in the ________ portion of its demand curve.

Accepted Answer

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

Question 4

If an increase in income results in an increase in the quantity demanded for a product, the product is ________, and the value of the income elasticity of demand is ________.

Accepted Answer

A)  a normal good; positive 
B)  a normal good, negative 
C)  an inferior good; positive 
D)  an inferior good; negative 
A)  a normal good; positive 
B)  a normal good, negative 
C)  an inferior good; positive 
D)  an inferior good; negative

Question 5

Refer to the information provided in Figure 5.7 below to answer the question(s) that follow.   Figure 5.7
The above figure represents the market for pumpkins both before and after the imposition of an excise tax, which is represented by the shift of the supply curve.
-Refer to Figure 5.7. The amount customers will pay per pumpkin after the imposition of the tax is

Accepted Answer

A)  $1.75. 
B)  $3.00. 
C)  $4.25. 
D)  $7.25. 
A)  $1.75. 
B)  $3.00. 
C)  $4.25. 
D)  $7.25.

Question 6

A tax on a good whose demand is perfectly price inelastic will be effective in discouraging consumption of that good.

Accepted Answer

A) True 
 B)False

Question 7

Normal goods will experience decreasing demand when incomes decrease.

Accepted Answer

A) True 
 B)False

Question 8

If the supply of oranges is unit elastic, the price elasticity of supply of oranges is

Accepted Answer

A)  1.0. 
B)  0.0. 
C)  -1.0. 
D)  -100.0. 
A)  1.0. 
B)  0.0. 
C)  -1.0. 
D)  -100.0.

Question 9

Perfectly elastic demand is represented as a horizontal line.

Accepted Answer

A) True 
 B)False

Question 10

Refer to the information provided in Figure 5.7 below to answer the question(s) that follow.   Figure 5.7
The above figure represents the market for pumpkins both before and after the imposition of an excise tax, which is represented by the shift of the supply curve.
-Refer to Figure 5.7. Had the demand for pumpkins been perfectly inelastic at Point A, the total revenue the government would have received from the imposition of this tax would have been

Accepted Answer

A)  $875. 
B)  $1,225. 
C)  $2,100. 
D)  $3,600. 
A)  $875. 
B)  $1,225. 
C)  $2,100. 
D)  $3,600.

Question 11

At a price of $4, quantity supplied is 120, and at a price of $10, quantity supplied is 300. Using the midpoint formula, the price elasticity of supply is ________ and supply is ________.

Accepted Answer

A)  0.1; inelastic 
B)  0.40; inelastic 
C)  2.5; elastic 
D)  1; unit elastic 
A)  0.1; inelastic 
B)  0.40; inelastic 
C)  2.5; elastic 
D)  1; unit elastic

Question 12

The determinants of elasticity include

Accepted Answer

A)  availability of substitutes. 
B)  price relative to income. 
C)  time. 
D)  all of the above 
A)  availability of substitutes. 
B)  price relative to income. 
C)  time. 
D)  all of the above

Question 13

Point elasticity is a measure of elasticity that uses slope measurement.

Accepted Answer

A) True 
 B)False

Question 14

On a downward-sloping linear demand curve, demand becomes more inelastic as price decreases.

Accepted Answer

A) True 
 B)False

Question 15

When the price of coffee increases 5%, quantity demanded decreases 10%. The price elasticity of demand for coffee is ________ and total revenue from coffee sales will ________.

Accepted Answer

A)  inelastic; increase 
B)  inelastic; decrease 
C)  elastic; increase 
D)  elastic; decrease 
A)  inelastic; increase 
B)  inelastic; decrease 
C)  elastic; increase 
D)  elastic; decrease

Question 16

In output markets, the elasticity of supply tends to be

Accepted Answer

A)  negative. 
B)  zero. 
C)  positive. 
D)  decreasing at an increasing rate. 
A)  negative. 
B)  zero. 
C)  positive. 
D)  decreasing at an increasing rate.

Question 17

A perfectly price elastic demand curve will be a ________ line.

Accepted Answer

A)  horizontal 
B)  vertical 
C)  positively sloped 
D)  negatively sloped 
A)  horizontal 
B)  vertical 
C)  positively sloped 
D)  negatively sloped

Question 18

The income elasticity of demand for education is 3.5. Thus, a 6% decrease in income will

Accepted Answer

A)  decrease the quantity of education demanded by 3.5%. 
B)  decrease the quantity of education demanded by 21%. 
C)  increase the quantity of education demanded by 6%. 
D)  increase the quantity of education demanded by 21%. 
A)  decrease the quantity of education demanded by 3.5%. 
B)  decrease the quantity of education demanded by 21%. 
C)  increase the quantity of education demanded by 6%. 
D)  increase the quantity of education demanded by 21%.

Question 19

Refer to the information provided in Figure 5.2 below to answer the question(s) that follow.   Figure 5.2
-Refer to Figure 5.2. If the price of a hamburger decreases from $6 to $4, the price elasticity of demand equals ________. Use the midpoint formula.

Accepted Answer

A)  -0.35 
B)  -0.71 
C)  -1.4 
D)  -2.4 
A)  -0.35 
B)  -0.71 
C)  -1.4 
D)  -2.4

Question 20

If income increases by 10% and, in response, the quantity of housing demanded increases by 7%, then the income elasticity of demand for housing is

Accepted Answer

A)  -1. 
B)  -0.7. 
C)  0.7. 
D)  1.43. 
A)  -1. 
B)  -0.7. 
C)  0.7. 
D)  1.43.

The income elasticity of demand for low-quality beef is -2. Thus, an 8% decrease in the quantity of low-quality beef demanded

A perfectly price elastic supply curve will be a(n) ________ line.

If a firm wants to increase revenue, it should decrease the selling price of its product if it is currently producing in the ________ portion of its demand curve.

If an increase in income results in an increase in the quantity demanded for a product, the product is , and the value of the income elasticity of demand is .

A tax on a good whose demand is perfectly price inelastic will be effective in discouraging consumption of that good.

Normal goods will experience decreasing demand when incomes decrease.

If the supply of oranges is unit elastic, the price elasticity of supply of oranges is

Perfectly elastic demand is represented as a horizontal line.

At a price of $4, quantity supplied is 120, and at a price of $10, quantity supplied is 300. Using the midpoint formula, the price elasticity of supply is and supply is .

The determinants of elasticity include

Point elasticity is a measure of elasticity that uses slope measurement.

On a downward-sloping linear demand curve, demand becomes more inelastic as price decreases.

When the price of coffee increases 5%, quantity demanded decreases 10%. The price elasticity of demand for coffee is and total revenue from coffee sales will .

In output markets, the elasticity of supply tends to be

A perfectly price elastic demand curve will be a ________ line.

The income elasticity of demand for education is 3.5. Thus, a 6% decrease in income will

Refer to the information provided in Figure 5.2 below to answer the question(s) that follow. Figure 5.2 -Refer to Figure 5.2. If the price of a hamburger decreases from $6 to $4, the price elasticity of demand equals ________. Use the midpoint formula.

If income increases by 10% and, in response, the quantity of housing demanded increases by 7%, then the income elasticity of demand for housing is

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

Exam 5: Elasticity

The income elasticity of demand for low-quality beef is -2. Thus, an 8% decrease in the quantity of low-quality beef demanded

A perfectly price elastic supply curve will be a(n) ________ line.

If a firm wants to increase revenue, it should decrease the selling price of its product if it is currently producing in the ________ portion of its demand curve.

If an increase in income results in an increase in the quantity demanded for a product, the product is ________, and the value of the income elasticity of demand is ________.

A tax on a good whose demand is perfectly price inelastic will be effective in discouraging consumption of that good.

Normal goods will experience decreasing demand when incomes decrease.

If the supply of oranges is unit elastic, the price elasticity of supply of oranges is

Perfectly elastic demand is represented as a horizontal line.

At a price of $4, quantity supplied is 120, and at a price of $10, quantity supplied is 300. Using the midpoint formula, the price elasticity of supply is ________ and supply is ________.

The determinants of elasticity include

Point elasticity is a measure of elasticity that uses slope measurement.

On a downward-sloping linear demand curve, demand becomes more inelastic as price decreases.

When the price of coffee increases 5%, quantity demanded decreases 10%. The price elasticity of demand for coffee is ________ and total revenue from coffee sales will ________.

In output markets, the elasticity of supply tends to be

A perfectly price elastic demand curve will be a ________ line.

The income elasticity of demand for education is 3.5. Thus, a 6% decrease in income will

Refer to the information provided in Figure 5.2 below to answer the question(s) that follow. Figure 5.2 -Refer to Figure 5.2. If the price of a hamburger decreases from $6 to $4, the price elasticity of demand equals ________. Use the midpoint formula.

If income increases by 10% and, in response, the quantity of housing demanded increases by 7%, then the income elasticity of demand for housing is

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Household Behavior and Consumer Choice

The Production Process: the Behavior of Profit-Maximizing Firms

Short-Run Costs and Output Decisions

Long-Run Costs and Output Decisions

Input Demand: the Labor and Land Markets

Input Demand: the Capital Market and the Investment Decision

General Equilibrium and the Efficiency of Perfect Competition

Monopoly and Antitrust Policy

Oligopoly

Monopolistic Competition

Externalities, Public Goods, and Common Resources

Uncertainty and Asymmetric Information

Income Distribution and Poverty

Public Finance: the Economics of Taxation

International Trade, Comparative Advantage, and Protectionism

Economic Growth in Developing Economies

Critical Thinking About Research

Filters

If an increase in income results in an increase in the quantity demanded for a product, the product is , and the value of the income elasticity of demand is .

At a price of $4, quantity supplied is 120, and at a price of $10, quantity supplied is 300. Using the midpoint formula, the price elasticity of supply is and supply is .

When the price of coffee increases 5%, quantity demanded decreases 10%. The price elasticity of demand for coffee is and total revenue from coffee sales will .