Question 1

The demand for all carbonated beverages as a whole is likely to be ________ the demand for Dr. Pepper.

Accepted Answer

A)  more elastic than 
B)  perfectly elastic compared to 
C)  less elastic than 
D)  perfectly inelastic compared to 
A)  more elastic than 
B)  perfectly elastic compared to 
C)  less elastic than 
D)  perfectly inelastic compared to

Question 2

Suppose the California Nurses Union successfully secured a 12 percent increase in the wages of registered nurses. If a hospital responds by reducing the quantity of registered nurses hired and increasing the quantity of physician's assistants hired, what conclusion can you draw?

Accepted Answer

A)  Physician's assistants are more valuable in terms of their productivity. 
B)  The price elasticity of demand for registered nurses is negative while the price elasticity of demand for physician's assistants is positive. 
C)  The cross-price elasticity of demand between registered nurses and physician's assistants is positive. 
D)  The cross-price elasticity of demand between registered nurses and physician's assistants is negative. 
A)  Physician's assistants are more valuable in terms of their productivity. 
B)  The price elasticity of demand for registered nurses is negative while the price elasticity of demand for physician's assistants is positive. 
C)  The cross-price elasticity of demand between registered nurses and physician's assistants is positive. 
D)  The cross-price elasticity of demand between registered nurses and physician's assistants is negative.

Question 3

Studies show that the income elasticity of demand for wine is 5.03 and the income elasticity of demand for spirits is 1.21. This indicates that

Accepted Answer

A)  wine and spirits are luxury goods. 
B)  wine is a luxury good and spirits are inferior goods. 
C)  wine and spirits are highly price elastic. 
D)  wine is a luxury good and spirits are necessities. 
A)  wine and spirits are luxury goods. 
B)  wine is a luxury good and spirits are inferior goods. 
C)  wine and spirits are highly price elastic. 
D)  wine is a luxury good and spirits are necessities.

Question 4

Consider the following types of demand curves: 
a. a vertical demand curve
b. a horizontal demand curve
c. a linear downward-sloping demand curve
Which of the demand curves listed exhibits a price elasticity of demand coefficient that remains constant along the demand curve?

Accepted Answer

A)  a only 
B)  b only 
C)  a and b only 
D)  a, b, and c 
A)  a only 
B)  b only 
C)  a and b only 
D)  a, b, and c

Question 5

If the slope of a demand curve is equal to -0.1 then

Accepted Answer

A)  demand is inelastic. 
B)  we don't know whether the demand is elastic or inelastic. 
C)  the demand is elastic at low prices and inelastic at high prices. 
D)  as price increases by 10 percent quantity demanded decreases by 1 percent. 
A)  demand is inelastic. 
B)  we don't know whether the demand is elastic or inelastic. 
C)  the demand is elastic at low prices and inelastic at high prices. 
D)  as price increases by 10 percent quantity demanded decreases by 1 percent.

Question 6

If, when price changes by 35 percent, the quantity demanded changes by 7 percent, then the absolute value of the price elasticity of demand is 5.

Accepted Answer

A) True 
 B)False

Question 7

If demand is inelastic, the absolute value of the price elasticity of demand is

Accepted Answer

A)  one. 
B)  less than one. 
C)  greater than one. 
D)  greater than the absolute value of the slope of the demand curve. 
A)  one. 
B)  less than one. 
C)  greater than one. 
D)  greater than the absolute value of the slope of the demand curve.

Question 8

The absolute value of the price elasticity of demand for telescopes is 1.5. Therefore, telescopes can be classified as a luxury.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following could explain why the demand for table salt is inelastic?

Accepted Answer

A)  Salt is a luxury good. 
B)  Salt is a rare commodity. 
C)  Households devote a very small portion of their income to salt purchases. 
D)  Salt is a luxury for high-income consumers but a necessity for low-income consumers. 
A)  Salt is a luxury good. 
B)  Salt is a rare commodity. 
C)  Households devote a very small portion of their income to salt purchases. 
D)  Salt is a luxury for high-income consumers but a necessity for low-income consumers.

Question 10

The price elasticity of demand for Stork ice cream is -4. Suppose you're told that following a price increase, quantity demanded fell by 10 percent. What was the percentage change in price that brought about this change in quantity demanded?

Accepted Answer

A)  40 percent 
B)  25 percent 
C)  2.5 percent 
D)  0.4 percent 
A)  40 percent 
B)  25 percent 
C)  2.5 percent 
D)  0.4 percent

Question 11

Table 6-6
  
-Refer to Table 6-6. Based on the data in the table and using the midpoint formula, between a price of $9.99 and $14.99, the price elasticity of demand for books is

Accepted Answer

A)  -0.74. 
B)  -1.16. 
C)  -1.35. 
D)  -14.8. 
A)  -0.74. 
B)  -1.16. 
C)  -1.35. 
D)  -14.8.

Question 12

A recent study indicated that "Stricter college alcohol policies such as raising the price of alcohol, or banning alcohol on campus, decreases the number of students who use marijuana." This indicates that the cross-price elasticity between alcohol and marijuana is positive.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following statements about the price elasticity of demand is correct?

Accepted Answer

A)  The elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good. 
B)  The absolute value of the elasticity of demand ranges from zero to one. 
C)  Demand is more elastic in the long run than it is in the short run. 
D)  Demand is more elastic the smaller the percentage of the consumer's budget the item takes up. 
A)  The elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good. 
B)  The absolute value of the elasticity of demand ranges from zero to one. 
C)  Demand is more elastic in the long run than it is in the short run. 
D)  Demand is more elastic the smaller the percentage of the consumer's budget the item takes up.

Question 14

Jonah lives in a small town where there is only one Mexican restaurant. Which of the following is likely to be true about the price elasticity of demand for meals at the Mexican restaurant?

Accepted Answer

A)  Demand is likely to be perfectly inelastic. 
B)  Demand is likely to be perfectly elastic. 
C)  Demand is likely to be relatively elastic. 
D)  Demand is likely to be relatively inelastic. 
A)  Demand is likely to be perfectly inelastic. 
B)  Demand is likely to be perfectly elastic. 
C)  Demand is likely to be relatively elastic. 
D)  Demand is likely to be relatively inelastic.

Question 15

If demand is perfectly inelastic, the absolute value of the price elasticity of demand is

Accepted Answer

A)  zero. 
B)  less than one. 
C)  more than one. 
D)  equal to the absolute value of the slope of the demand curve. 
A)  zero. 
B)  less than one. 
C)  more than one. 
D)  equal to the absolute value of the slope of the demand curve.

Question 16

If, for a given percentage increase in price, quantity demanded falls by a proportionately smaller percentage, then demand is

Accepted Answer

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

Question 17

If the demand for a life-saving drug was perfectly inelastic and the price doubled, the quantity demanded would

Accepted Answer

A)  also double. 
B)  decrease by 50%. 
C)  be cut in half. 
D)  remain constant. 
A)  also double. 
B)  decrease by 50%. 
C)  be cut in half. 
D)  remain constant.

Question 18

When the price of pistachio nuts is $7.50 per lb. the quantity demanded is 48 lbs. When the price of pistachio nuts is $9.00 per lb. the quantity demanded is 40 lbs. When the midpoint formula is used to measure the price elasticity of demand we can say that the demand for pistachio nuts is

Accepted Answer

A)  relatively, but not perfectly, elastic. 
B)  unit elastic. 
C)  completely inelastic. 
D)  relatively, but not perfectly, inelastic. 
A)  relatively, but not perfectly, elastic. 
B)  unit elastic. 
C)  completely inelastic. 
D)  relatively, but not perfectly, inelastic.

Question 19

Figure 6-3  
-Refer to Figure 6-3. Using the midpoint formula, calculate the absolute value of the price elasticity of demand between e and f.

Accepted Answer

A)  0.32 
B)  0.4 
C)  2.5 
D)  3.125 
A)  0.32 
B)  0.4 
C)  2.5 
D)  3.125

Question 20

If at a price of $10, a vendor sells 5 units of a product and at a price of $8, 6 units are sold. Using the midpoint formula, the demand for this good is inelastic.

Accepted Answer

A) True 
 B)False

Exam 6: Elasticity: the Responsiveness of Demand and Supply

The demand for all carbonated beverages as a whole is likely to be ________ the demand for Dr. Pepper.

Suppose the California Nurses Union successfully secured a 12 percent increase in the wages of registered nurses. If a hospital responds by reducing the quantity of registered nurses hired and increasing the quantity of physician's assistants hired, what conclusion can you draw?

Studies show that the income elasticity of demand for wine is 5.03 and the income elasticity of demand for spirits is 1.21. This indicates that

Consider the following types of demand curves: a. a vertical demand curve b. a horizontal demand curve c. a linear downward-sloping demand curve Which of the demand curves listed exhibits a price elasticity of demand coefficient that remains constant along the demand curve?

If the slope of a demand curve is equal to -0.1 then

If, when price changes by 35 percent, the quantity demanded changes by 7 percent, then the absolute value of the price elasticity of demand is 5.

If demand is inelastic, the absolute value of the price elasticity of demand is

The absolute value of the price elasticity of demand for telescopes is 1.5. Therefore, telescopes can be classified as a luxury.

Which of the following could explain why the demand for table salt is inelastic?

The price elasticity of demand for Stork ice cream is -4. Suppose you're told that following a price increase, quantity demanded fell by 10 percent. What was the percentage change in price that brought about this change in quantity demanded?

Table 6-6 -Refer to Table 6-6. Based on the data in the table and using the midpoint formula, between a price of $9.99 and $14.99, the price elasticity of demand for books is

A recent study indicated that "Stricter college alcohol policies such as raising the price of alcohol, or banning alcohol on campus, decreases the number of students who use marijuana." This indicates that the cross-price elasticity between alcohol and marijuana is positive.

Which of the following statements about the price elasticity of demand is correct?

Jonah lives in a small town where there is only one Mexican restaurant. Which of the following is likely to be true about the price elasticity of demand for meals at the Mexican restaurant?

If demand is perfectly inelastic, the absolute value of the price elasticity of demand is

If, for a given percentage increase in price, quantity demanded falls by a proportionately smaller percentage, then demand is

If the demand for a life-saving drug was perfectly inelastic and the price doubled, the quantity demanded would

When the price of pistachio nuts is $7.50 per lb. the quantity demanded is 48 lbs. When the price of pistachio nuts is $9.00 per lb. the quantity demanded is 40 lbs. When the midpoint formula is used to measure the price elasticity of demand we can say that the demand for pistachio nuts is

Figure 6-3 -Refer to Figure 6-3. Using the midpoint formula, calculate the absolute value of the price elasticity of demand between e and f.

If at a price of $10, a vendor sells 5 units of a product and at a price of $8, 6 units are sold. Using the midpoint formula, the demand for this good is inelastic.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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