Question 1

$\begin{array}{c}
\begin{array}{c}
 \text {Price}\
14\
16\
18\
20\
22 
\end{array}
\begin{array}{c}
\text {Quantity Demanded}\
220 \
200 \
180 \
160 \
140 
\end{array}
\end{array}$

-Refer to the information above to answer this question. Over what price range is demand inelastic?

Accepted Answer

A)  $14 to $16. 
B)  $14 to $18. 
C)  $16 to $18. 
D)  $18 to $20. 
E)  $18 to $22. 
A)  $14 to $16. 
B)  $14 to $18. 
C)  $16 to $18. 
D)  $18 to $20. 
E)  $18 to $22.

Question 2

Why is the price elasticity of demand for toothpicks so different from that of houses?

Accepted Answer

The elasticity of demand for toothpicks

Question 3

What do products such as movies, tomatoes and restaurant meals have in common?

Accepted Answer

A)  They are all inferior goods. 
B)  They all are likely to have incomes elasticities less than one. 
C)  The demand for all three goods is price elastic. 
D)  The demand for all three goods is price inelastic. 
E)  They all have a small number of substitute goods. 
A)  They are all inferior goods. 
B)  They all are likely to have incomes elasticities less than one. 
C)  The demand for all three goods is price elastic. 
D)  The demand for all three goods is price inelastic. 
E)  They all have a small number of substitute goods.

Question 4

What is unitary elasticity?

Accepted Answer

A)  An elasticity coefficient which is negative. 
B)  An elasticity coefficient which is equal to zero. 
C)  An elasticity coefficient which is equal to one. 
D)  A percentage change in quantity which is exactly equal to the percentage change in demand. 
E)  Where elasticity and inelasticity are balanced. 
A)  An elasticity coefficient which is negative. 
B)  An elasticity coefficient which is equal to zero. 
C)  An elasticity coefficient which is equal to one. 
D)  A percentage change in quantity which is exactly equal to the percentage change in demand. 
E)  Where elasticity and inelasticity are balanced.

Question 5

Define the term income elasticity. What does it mean if the calculation of income elasticity turns out to be positive and greater than one?

Accepted Answer

Income elasticity refers to the responsi

Question 6

What is the effect of a rise in income on the quantity demanded of a product?

Accepted Answer

A)  It will rise if it is an inferior good. 
B)  It will rise if it is a normal good. 
C)  It will fall if it has many substitute goods. 
D)  It will fall if price elasticity of demand is zero. 
A)  It will rise if it is an inferior good. 
B)  It will rise if it is a normal good. 
C)  It will fall if it has many substitute goods. 
D)  It will fall if price elasticity of demand is zero.

Question 7

On what type of products do governments impose "sin" taxes?

Accepted Answer

A)  On products with elastic demand such as candy. 
B)  On products with inelastic demand such as alcohol. 
C)  On illegal products. 
D)  On consumer goods but not capital goods. 
A)  On products with elastic demand such as candy. 
B)  On products with inelastic demand such as alcohol. 
C)  On illegal products. 
D)  On consumer goods but not capital goods.

Question 8

Suppose the demand curve is perfectly inelastic. How much of a $1 per unit tax is paid by the consumer?

Accepted Answer

The demand curve is vertical. Thus the s

Question 9

$$\begin{array} { c c } 
\text { Price } & \text { Quantity Demanded } \
1 & 20 \
2 & 18 \
3 & 16 \
4 & 14 \
5 & 12 \
6 & 10 \
7 & 8 \
8 & 6 \
9 & 4 \
10 & 2
\end{array}$$
-Refer to the information above to answer this question. Which of the following statements is correct?

Accepted Answer

A)  Demand is inelastic between the prices of $1 and $5. 
B)  Demand is inelastic between the prices of $4 and $7. 
C)  Demand is inelastic between the prices of $6 and $10. 
D)  No comment on elasticity can be made from the above information. 
A)  Demand is inelastic between the prices of $1 and $5. 
B)  Demand is inelastic between the prices of $4 and $7. 
C)  Demand is inelastic between the prices of $6 and $10. 
D)  No comment on elasticity can be made from the above information.

Question 10

Alfred Marshall recognized time in the determination of supply elasticity. His 'momentary market period' is shown through a short-run supply curve which is:

Accepted Answer

A)  perfectly elastic. 
B)  elastic. 
C)  inelastic. 
D)  perfectly inelastic. 
E)  It could either be elastic or have unitary elasticity. 
A)  perfectly elastic. 
B)  elastic. 
C)  inelastic. 
D)  perfectly inelastic. 
E)  It could either be elastic or have unitary elasticity.

Question 11

Suppose that the price of Product A increased from $9 to $11 and the quantity demanded of Product B increased from 192 to 208. What can be said about the products?

Accepted Answer

A)  They both have elastic demands. 
B)  They both have inelastic demands. 
C)  They are inferior products. 
D)  They are complementary products. 
E)  They are substitute products. 
A)  They both have elastic demands. 
B)  They both have inelastic demands. 
C)  They are inferior products. 
D)  They are complementary products. 
E)  They are substitute products.

Question 12

Historical data from the college bookstore shows that when the price of textbooks is increased by 5%, the number of textbooks sold falls by 10%. Should the bookstore lower its prices?

Accepted Answer

The elasticity of demand is 2

Question 13

If a product has few substitutes, which of the following statements is correct?

Accepted Answer

A)  It is likely that its income elasticity is high. 
B)  It is likely that it is an inferior product. 
C)  It is likely that its supply elasticity is high. 
D)  It is likely that its price elasticity of demand is low. 
A)  It is likely that its income elasticity is high. 
B)  It is likely that it is an inferior product. 
C)  It is likely that its supply elasticity is high. 
D)  It is likely that its price elasticity of demand is low.

Question 14

The list below refers to the price elasticity of demand.
1) perfectly inelastic
2) perfectly elastic
3) unitary elasticity
4) elastic
5) inelastic
-Refer to the information above to answer this question. What is a demand when an increase in price raises total revenue?

Accepted Answer

A)  1. 
B)  2. 
C)  3. 
D)  4. 
E)  5. 
A)  1. 
B)  2. 
C)  3. 
D)  4. 
E)  5.

Question 15

Given the demand curve in the following graph:   a) What can you say about the slope of the demand curve?
b) What is the elasticity of demand between points a and b and between c and d?
c) At what price is the elasticity of demand equal to 1?
d) At what price will consumers spend the most on this product?

Accepted Answer

a) It is constant; graphically

Question 16

Demonstrate graphically and explain verbally the impact on price and quantity when supply decreases and demand is highly elastic.

Accepted Answer

The diagram: @#IMG-DLM& We can see that demand is

Question 17

If a sales tax is imposed on a product, which of the following statements is correct?

Accepted Answer

A)  If the demand for the product is inelastic, the seller will pay a larger percentage of the tax than will the consumer. 
B)  If the demand for the product is elastic, the seller will pay a smaller percentage of the product than will the consumer. 
C)  The consumer will pay 100% of the tax. 
D)  If the demand for the product is inelastic, the consumer will pay a larger percentage of the tax than will the seller. 
A)  If the demand for the product is inelastic, the seller will pay a larger percentage of the tax than will the consumer. 
B)  If the demand for the product is elastic, the seller will pay a smaller percentage of the product than will the consumer. 
C)  The consumer will pay 100% of the tax. 
D)  If the demand for the product is inelastic, the consumer will pay a larger percentage of the tax than will the seller.

Question 18

Below is a graphical representation of the wheat market in the distant land of Nod.
  
-Refer to the graph above to answer this question. At equilibrium, what is the total expenditure by consumers on wheat?

Accepted Answer

A)  $5. 
B)  $40 million. 
C)  $200 million. 
D)  Cannot be determined. 
A)  $5. 
B)  $40 million. 
C)  $200 million. 
D)  Cannot be determined.

Question 19

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

Accepted Answer

A)  It is higher in the short run than in the long run because people's habits change slowly. 
B)  It is higher in the long run than the short run because people have more time to find substitute products. 
C)  It is the same in the short run and the long run. 
D)  It is higher in the short run because markets adjust slowly to changes. 
A)  It is higher in the short run than in the long run because people's habits change slowly. 
B)  It is higher in the long run than the short run because people have more time to find substitute products. 
C)  It is the same in the short run and the long run. 
D)  It is higher in the short run because markets adjust slowly to changes.

Question 20

If demand is inelastic and price falls, then total revenue will rise.

Accepted Answer

A) True 
 B)False

Price 14 16 18 20 22 Quantity Demanded 220 200 180 160 140 -Refer to the information above to answer this question. Over what price range is demand inelastic?

Why is the price elasticity of demand for toothpicks so different from that of houses?

What do products such as movies, tomatoes and restaurant meals have in common?

What is unitary elasticity?

Define the term income elasticity. What does it mean if the calculation of income elasticity turns out to be positive and greater than one?

What is the effect of a rise in income on the quantity demanded of a product?

On what type of products do governments impose "sin" taxes?

Suppose the demand curve is perfectly inelastic. How much of a $1 per unit tax is paid by the consumer?

Price Quantity Demanded 1 20 2 18 3 16 4 14 5 12 6 10 7 8 8 6 9 4 10 2 -Refer to the information above to answer this question. Which of the following statements is correct?

Alfred Marshall recognized time in the determination of supply elasticity. His 'momentary market period' is shown through a short-run supply curve which is:

Suppose that the price of Product A increased from $9 to $11 and the quantity demanded of Product B increased from 192 to 208. What can be said about the products?

Historical data from the college bookstore shows that when the price of textbooks is increased by 5%, the number of textbooks sold falls by 10%. Should the bookstore lower its prices?

If a product has few substitutes, which of the following statements is correct?

The list below refers to the price elasticity of demand. 1) perfectly inelastic 2) perfectly elastic 3) unitary elasticity 4) elastic 5) inelastic -Refer to the information above to answer this question. What is a demand when an increase in price raises total revenue?

Demonstrate graphically and explain verbally the impact on price and quantity when supply decreases and demand is highly elastic.

If a sales tax is imposed on a product, which of the following statements is correct?

Below is a graphical representation of the wheat market in the distant land of Nod. -Refer to the graph above to answer this question. At equilibrium, what is the total expenditure by consumers on wheat?

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

If demand is inelastic and price falls, then total revenue will rise.

The Economic Problem

Demand and Supply: an Introduction

Demand and Supply: an Elaboration

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters

Exam 4: Elasticity

Price 14 16 18 20 22 Quantity Demanded 220 200 180 160 140 -Refer to the information above to answer this question. Over what price range is demand inelastic?

Why is the price elasticity of demand for toothpicks so different from that of houses?

What do products such as movies, tomatoes and restaurant meals have in common?

What is unitary elasticity?

Define the term income elasticity. What does it mean if the calculation of income elasticity turns out to be positive and greater than one?

What is the effect of a rise in income on the quantity demanded of a product?

On what type of products do governments impose "sin" taxes?

Suppose the demand curve is perfectly inelastic. How much of a $1 per unit tax is paid by the consumer?

Price Quantity Demanded 1 20 2 18 3 16 4 14 5 12 6 10 7 8 8 6 9 4 10 2 -Refer to the information above to answer this question. Which of the following statements is correct?

Alfred Marshall recognized time in the determination of supply elasticity. His 'momentary market period' is shown through a short-run supply curve which is:

Suppose that the price of Product A increased from $9 to $11 and the quantity demanded of Product B increased from 192 to 208. What can be said about the products?

Historical data from the college bookstore shows that when the price of textbooks is increased by 5%, the number of textbooks sold falls by 10%. Should the bookstore lower its prices?

If a product has few substitutes, which of the following statements is correct?

The list below refers to the price elasticity of demand. 1) perfectly inelastic 2) perfectly elastic 3) unitary elasticity 4) elastic 5) inelastic -Refer to the information above to answer this question. What is a demand when an increase in price raises total revenue?

Demonstrate graphically and explain verbally the impact on price and quantity when supply decreases and demand is highly elastic.

If a sales tax is imposed on a product, which of the following statements is correct?

Below is a graphical representation of the wheat market in the distant land of Nod. -Refer to the graph above to answer this question. At equilibrium, what is the total expenditure by consumers on wheat?

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

If demand is inelastic and price falls, then total revenue will rise.

The Economic Problem

Demand and Supply: an Introduction

Demand and Supply: an Elaboration

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters