Question 1

As one moves down a straight-line, down-sloping demand curve, price elasticity will:

Accepted Answer

A)  change from elastic, to unit elastic, then to inelastic. 
B)  remain the same between any two points. 
C)  change from inelastic, to elastic, then to unit elastic. 
D)  change from unit elastic, to elastic, then to inelastic. 
E)  change from elastic, to inelastic, then to unit elastic. 
A)  change from elastic, to unit elastic, then to inelastic. 
B)  remain the same between any two points. 
C)  change from inelastic, to elastic, then to unit elastic. 
D)  change from unit elastic, to elastic, then to inelastic. 
E)  change from elastic, to inelastic, then to unit elastic. A

Question 2

Consider the market for bicycles. If a dealer cuts prices by 10 percent and sells 20 percent more bikes, then demand for bicycles is:

Accepted Answer

A)  inelastic, and total revenue will increase. 
B)  elastic, and total revenue will increase. 
C)  inelastic, and total revenue will decrease. 
D)  elastic, and total revenue will decrease. 
E)  unit elastic, and total revenue will remain the same. 
A)  inelastic, and total revenue will increase. 
B)  elastic, and total revenue will increase. 
C)  inelastic, and total revenue will decrease. 
D)  elastic, and total revenue will decrease. 
E)  unit elastic, and total revenue will remain the same. B

Question 3

Exhibit 5-7 Demand curve for concert tickets
​  
-According to Exhibit 5-7, the demand for concert tickets is:

Accepted Answer

A)  inelastic. 
B)  elastic. 
C)  unitary elastic 
D)  perfectly elastic. 
A)  inelastic. 
B)  elastic. 
C)  unitary elastic 
D)  perfectly elastic. A

Question 4

The cross elasticity of demand for complementary products must:

Accepted Answer

A)  be greater than one. 
B)  be less than one. 
C)  be zero. 
D)  exceed zero. 
E)  be negative. 
A)  be greater than one. 
B)  be less than one. 
C)  be zero. 
D)  exceed zero. 
E)  be negative.

Question 5

A good is classified as inferior if:

Accepted Answer

A)  consumers buy less when the price rises. 
B)  consumers buy less when income rises. 
C)  consumers buy less when the price falls. 
D)  consumers buy more when income rises. 
E)  better quality goods exist. 
A)  consumers buy less when the price rises. 
B)  consumers buy less when income rises. 
C)  consumers buy less when the price falls. 
D)  consumers buy more when income rises. 
E)  better quality goods exist.

Question 6

Looking at the relationship between elasticity and total revenue, we can see that ____.

Accepted Answer

A)  b and c 
B)  when demand is unit elastic, small price changes don't change total revenue 
C)  when a good is price inelastic, revenue increases when prices increase 
D)  when a good is price elastic, revenue increases when prices increase 
E)  total revenue is maximized when the elasticity has stopped changing 
A)  b and c 
B)  when demand is unit elastic, small price changes don't change total revenue 
C)  when a good is price inelastic, revenue increases when prices increase 
D)  when a good is price elastic, revenue increases when prices increase 
E)  total revenue is maximized when the elasticity has stopped changing

Question 7

The president of Tucker Motors says, "Lowering the price won't sell a single additional Tucker car." The president believes that the price elasticity of demand is:

Accepted Answer

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

Question 8

To determine whether two goods are substitutes or complements, an economist would estimate the:

Accepted Answer

A)  price elasticity of demand. 
B)  income elasticity of demand. 
C)  cross-elasticity of demand. 
D)  price elasticity of supply. 
A)  price elasticity of demand. 
B)  income elasticity of demand. 
C)  cross-elasticity of demand. 
D)  price elasticity of supply.

Question 9

Suppose there is no change in total revenue when the price changes. The demand curve for this good is:

Accepted Answer

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

Question 10

If a 10 percent decrease in the price of product A brings about a 3 percent increase in the sales of product B, then:

Accepted Answer

A)  products A and B are complementary. 
B)  the cross elasticity of demand between these two products is positive. 
C)  products A and B are substitutes. 
D)  the demand for these products is inelastic. 
E)  the total revenue earned from product A will decrease. 
A)  products A and B are complementary. 
B)  the cross elasticity of demand between these two products is positive. 
C)  products A and B are substitutes. 
D)  the demand for these products is inelastic. 
E)  the total revenue earned from product A will decrease.

Question 11

A perfectly elastic demand curve has a price elasticity of demand coefficient of:

Accepted Answer

A)  zero. 
B)  1. 
C)  greater than 1, but less than infinity. 
D)  less than 1, but greater than zero. 
E)  infinity. 
A)  zero. 
B)  1. 
C)  greater than 1, but less than infinity. 
D)  less than 1, but greater than zero. 
E)  infinity.

Question 12

As price decreases and we move down further along a linear demand curve, the price elasticity of demand will:

Accepted Answer

A)  decrease. 
B)  increase. 
C)  stay the same. 
D)  approach infinity. 
E)  increase or decrease. 
A)  decrease. 
B)  increase. 
C)  stay the same. 
D)  approach infinity. 
E)  increase or decrease.

Question 13

If a good has a price elasticity of demand coefficient greater than 1, total revenue can be increased by raising the price.
​

Accepted Answer

A) True 
 B)False

Question 14

Two goods are complementary if:

Accepted Answer

A)  they are part of the basic food group. 
B)  each performs the same basic task. 
C)  the cross elasticity of demand is positive. 
D)  they are used together. 
E)  the income elasticity of demand is negative. 
A)  they are part of the basic food group. 
B)  each performs the same basic task. 
C)  the cross elasticity of demand is positive. 
D)  they are used together. 
E)  the income elasticity of demand is negative.

Question 15

The longer the time period under study,

Accepted Answer

A)  the more elastic is the price elasticity of demand. 
B)  the less sensitive consumers will be to price changes. 
C)  the less adjustment consumers will make to price changes. 
D)  the more inelastic is the price elasticity of demand. 
E)  the more likely any given price cut will result in a smaller reaction by the consumer. 
A)  the more elastic is the price elasticity of demand. 
B)  the less sensitive consumers will be to price changes. 
C)  the less adjustment consumers will make to price changes. 
D)  the more inelastic is the price elasticity of demand. 
E)  the more likely any given price cut will result in a smaller reaction by the consumer.

Question 16

Exhibit 5-6 Demand curve for concert tickets
​  
-In Exhibit 5-6, if promoters lower their ticket price form $30 to $20, then:

Accepted Answer

A)  they will receive less money from their ticket sales. 
B)  people will continue to buy the same number of tickets. 
C)  customers will spend less total money on concert tickets. 
D)  both ticket sales and total revenue will rise. 
A)  they will receive less money from their ticket sales. 
B)  people will continue to buy the same number of tickets. 
C)  customers will spend less total money on concert tickets. 
D)  both ticket sales and total revenue will rise.

Question 17

On a part of the demand curve where the price elasticity of demand is less than 1, a decrease in price:

Accepted Answer

A)  is impossible. 
B)  will increase total revenue. 
C)  will decrease total revenue. 
D)  raises the price elasticity of demand. 
E)  decreases quantity demanded. 
A)  is impossible. 
B)  will increase total revenue. 
C)  will decrease total revenue. 
D)  raises the price elasticity of demand. 
E)  decreases quantity demanded.

Question 18

If a 10 percent price increase causes the quantity demanded for a good to decrease by 5 percent, demand is elastic.

Accepted Answer

A) True 
 B)False

Question 19

The cross elasticity of demand for substitute products must:

Accepted Answer

A)  be greater than one. 
B)  be less than one. 
C)  be zero. 
D)  exceed zero. 
E)  be negative. 
A)  be greater than one. 
B)  be less than one. 
C)  be zero. 
D)  exceed zero. 
E)  be negative.

Question 20

Dana is an art historian who needs to travel to Italy to do research. Art historians usually don't have a lot of money, and therefore are very sensitive to price changes. Dana's funding agency pays her a fixed amount to travel. At current exchange rates, Dana can stay in Italy for 35 days. If the exchange rate improves by 10 percent, she can stay for 40 days. What is Dana's price elasticity of demand for days spent in Italy?

Accepted Answer

A)  It is approximately equal to 2.3. 
B)  It is approximately equal to 1.6. 
C)  It is approximately equal to 1.4. 
D)  It is approximately equal to 0.4. 
E)  It is approximately equal to 0.1. 
A)  It is approximately equal to 2.3. 
B)  It is approximately equal to 1.6. 
C)  It is approximately equal to 1.4. 
D)  It is approximately equal to 0.4. 
E)  It is approximately equal to 0.1.

As one moves down a straight-line, down-sloping demand curve, price elasticity will:

Consider the market for bicycles. If a dealer cuts prices by 10 percent and sells 20 percent more bikes, then demand for bicycles is:

Exhibit 5-7 Demand curve for concert tickets -According to Exhibit 5-7, the demand for concert tickets is:

The cross elasticity of demand for complementary products must:

A good is classified as inferior if:

Looking at the relationship between elasticity and total revenue, we can see that ____.

The president of Tucker Motors says, "Lowering the price won't sell a single additional Tucker car." The president believes that the price elasticity of demand is:

To determine whether two goods are substitutes or complements, an economist would estimate the:

Suppose there is no change in total revenue when the price changes. The demand curve for this good is:

If a 10 percent decrease in the price of product A brings about a 3 percent increase in the sales of product B, then:

A perfectly elastic demand curve has a price elasticity of demand coefficient of:

As price decreases and we move down further along a linear demand curve, the price elasticity of demand will:

If a good has a price elasticity of demand coefficient greater than 1, total revenue can be increased by raising the price.

Two goods are complementary if:

The longer the time period under study,

Exhibit 5-6 Demand curve for concert tickets -In Exhibit 5-6, if promoters lower their ticket price form $30 to $20, then:

On a part of the demand curve where the price elasticity of demand is less than 1, a decrease in price:

If a 10 percent price increase causes the quantity demanded for a good to decrease by 5 percent, demand is elastic.

The cross elasticity of demand for substitute products must:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Exam 5: Price Elasticity of Demand and Supply

As one moves down a straight-line, down-sloping demand curve, price elasticity will:

Consider the market for bicycles. If a dealer cuts prices by 10 percent and sells 20 percent more bikes, then demand for bicycles is:

Exhibit 5-7 Demand curve for concert tickets ​ -According to Exhibit 5-7, the demand for concert tickets is:

The cross elasticity of demand for complementary products must:

A good is classified as inferior if:

Looking at the relationship between elasticity and total revenue, we can see that ____.

The president of Tucker Motors says, "Lowering the price won't sell a single additional Tucker car." The president believes that the price elasticity of demand is:

To determine whether two goods are substitutes or complements, an economist would estimate the:

Suppose there is no change in total revenue when the price changes. The demand curve for this good is:

If a 10 percent decrease in the price of product A brings about a 3 percent increase in the sales of product B, then:

A perfectly elastic demand curve has a price elasticity of demand coefficient of:

As price decreases and we move down further along a linear demand curve, the price elasticity of demand will:

If a good has a price elasticity of demand coefficient greater than 1, total revenue can be increased by raising the price. ​

Two goods are complementary if:

The longer the time period under study,

Exhibit 5-6 Demand curve for concert tickets ​ -In Exhibit 5-6, if promoters lower their ticket price form $30 to $20, then:

On a part of the demand curve where the price elasticity of demand is less than 1, a decrease in price:

If a 10 percent price increase causes the quantity demanded for a good to decrease by 5 percent, demand is elastic.

The cross elasticity of demand for substitute products must:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Consumer Choice Theory

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

Income Distribution, Poverty, and Discrimination

Antitrust and Regulation

Environmental Economics

International Trade and Finance

Economies in Transition

Growth and the

Filters

Exhibit 5-7 Demand curve for concert tickets -According to Exhibit 5-7, the demand for concert tickets is:

If a good has a price elasticity of demand coefficient greater than 1, total revenue can be increased by raising the price.

Exhibit 5-6 Demand curve for concert tickets -In Exhibit 5-6, if promoters lower their ticket price form $30 to $20, then: