Question 1

A 10 percent rise in the price of housing reduces the quantity demanded of housing by 3 percent. We can conclude that the demand for housing is:

Accepted Answer

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

Question 2

Exhibit 5-5 Demand curve for computers
​  
-In Exhibit 5-5, the total revenue at point B on the demand curve equals:

Accepted Answer

A)  OA. 
B)  CB. 
C)  AB. 
D)  OABC. 
E)  None of these. 
A)  OA. 
B)  CB. 
C)  AB. 
D)  OABC. 
E)  None of these.

Question 3

An increase in the price of good X causes the demand for good Y to shift inward. One can conclude that X and Y are:

Accepted Answer

A)  complements. 
B)  substitutes. 
C)  unrelated goods. 
D)  normal goods. 
E)  exceptions to the law of demand. 
A)  complements. 
B)  substitutes. 
C)  unrelated goods. 
D)  normal goods. 
E)  exceptions to the law of demand.

Question 4

Exhibit 5-7 Demand curve for concert tickets
​  
-In Exhibit 5-7, if promoters raise their prices from $10 to $40 per ticket, then their total revenue will:

Accepted Answer

A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  react unpredictably. 
A)  increase. 
B)  decrease. 
C)  remain unchanged. 
D)  react unpredictably.

Question 5

Exhibit 5-5 Demand curve for computers
​  
-In Exhibit 5-5, the change in total revenue resulting from a change in price from A to D indicates that the demand curve is:

Accepted Answer

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

Question 6

Suppose you are the manager of a local water company, and you are instructed to get consumers to reduce their water consumption by 10 percent. If the price elasticity of demand for water is 0.25, by how much would you have to raise the price of water?

Accepted Answer

A)  10 percent 
B)  25 percent 
C)  40 percent 
D)  100 percent 
A)  10 percent 
B)  25 percent 
C)  40 percent 
D)  100 percent

Question 7

You are on a campus committee which sets the ticket prices for basketball games. The committee wants to increase the total money generated from ticket sales. When should the committee choose to lower its ticket prices?

Accepted Answer

A)  Always. 
B)  Never. 
C)  When demand for basketball tickets is elastic. 
D)  When demand for basketball tickets is inelastic. 
A)  Always. 
B)  Never. 
C)  When demand for basketball tickets is elastic. 
D)  When demand for basketball tickets is inelastic.

Question 8

The percentage change in the quantity demanded of film divided by the percentage change in the price of cameras indicates:

Accepted Answer

A)  the price elasticity of demand for film. 
B)  the price elasticity of demand for cameras. 
C)  the price elasticity of supply for film. 
D)  the price elasticity of supply for cameras. 
E)  nothing, because the two goods fall into the broadly defined category of photographic equipment. 
A)  the price elasticity of demand for film. 
B)  the price elasticity of demand for cameras. 
C)  the price elasticity of supply for film. 
D)  the price elasticity of supply for cameras. 
E)  nothing, because the two goods fall into the broadly defined category of photographic equipment.

Question 9

If demand is price elastic, a decrease in price causes:

Accepted Answer

A)  an increase in total revenue. 
B)  a decrease in total revenue. 
C)  no change in total revenue. 
D)  an increase in quantity, but anything can happen to revenue. 
A)  an increase in total revenue. 
B)  a decrease in total revenue. 
C)  no change in total revenue. 
D)  an increase in quantity, but anything can happen to revenue.

Question 10

Which of the following factors is associated with products with a highly price elastic demand?

Accepted Answer

A)  Few close substitutes. 
B)  A very short time period for consumers to respond to price changes. 
C)  Many very close substitutes. 
D)  A per unit price that is only a very small portion of most peoples' budgets. 
A)  Few close substitutes. 
B)  A very short time period for consumers to respond to price changes. 
C)  Many very close substitutes. 
D)  A per unit price that is only a very small portion of most peoples' budgets.

Question 11

If the demand curve over a certain range is "price elastic," this implies that the:

Accepted Answer

A)  percentage change in the quantity demanded exceeds one. 
B)  percentage change in the quantity demanded exceeds the percentage change in product price. 
C)  percentage change in price exceeds the percentage change in quantity demanded. 
D)  product is non-reactive. 
E)  product has no good substitute. 
A)  percentage change in the quantity demanded exceeds one. 
B)  percentage change in the quantity demanded exceeds the percentage change in product price. 
C)  percentage change in price exceeds the percentage change in quantity demanded. 
D)  product is non-reactive. 
E)  product has no good substitute.

Question 12

A law requiring sellers to pay the government a tax per pack on cigarettes has the effect of:

Accepted Answer

A)  shifting the supply curve to the right. 
B)  shifting the demand curve to the right. 
C)  shifting the supply curve to the left. 
D)  shifting the demand curve to the left. 
A)  shifting the supply curve to the right. 
B)  shifting the demand curve to the right. 
C)  shifting the supply curve to the left. 
D)  shifting the demand curve to the left.

Question 13

Tara buys four music cassettes when the price is $10 and two cassettes when the price is $14. Her price elasticity of demand is:

Accepted Answer

A)  0. 
B)  1. 
C)  2. 
D)  3. 
E)  4. 
A)  0. 
B)  1. 
C)  2. 
D)  3. 
E)  4.

Question 14

If a 1 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 15

For an inferior good, the income elasticity of demand is negative.
​

Accepted Answer

A) True 
 B)False

Question 16

If a decrease in the price of football tickets increases the total revenue of the athletic department, this is evidence that demand is:

Accepted Answer

A)  price elastic. 
B)  price inelastic. 
C)  unit elastic with respect to price. 
D)  perfectly inelastic. 
A)  price elastic. 
B)  price inelastic. 
C)  unit elastic with respect to price. 
D)  perfectly inelastic.

Question 17

Leo's Bakery reduces the price of wheat bread from $3 to $1 and finds that quantity demanded increases from 100 to 122 loaves. Leo calculates that his price elasticity of demand for wheat bread is:

Accepted Answer

A)  0. 
B)  0.2. 
C)  1.0. 
D)  1.5. 
E)  2.0 
A)  0. 
B)  0.2. 
C)  1.0. 
D)  1.5. 
E)  2.0

Question 18

Price elasticity of demand refers to the:

Accepted Answer

A)  percentage increase in price in response to a percentage increase in quantity demanded. 
B)  percentage decrease in price in response to a percentage increase in income. 
C)  minimum amount that consumers will pay for a percentage change in quantity demanded or supplied. 
D)  responsiveness of quantity demanded to a change in the price of a good. 
A)  percentage increase in price in response to a percentage increase in quantity demanded. 
B)  percentage decrease in price in response to a percentage increase in income. 
C)  minimum amount that consumers will pay for a percentage change in quantity demanded or supplied. 
D)  responsiveness of quantity demanded to a change in the price of a good.

Question 19

As cities prospered and per-capita incomes increased, the demand for bus travel diminished. This suggests that:

Accepted Answer

A)  cities could raise revenue by increasing bus fares. 
B)  the demand for bus travel is price elastic. 
C)  bus travel and automobile travel are complements. 
D)  bus travel is an inferior good. 
A)  cities could raise revenue by increasing bus fares. 
B)  the demand for bus travel is price elastic. 
C)  bus travel and automobile travel are complements. 
D)  bus travel is an inferior good.

Question 20

If demand is inelastic, an increase in the price of a good will cause total revenue to:

Accepted Answer

A)  fall. 
B)  remain constant since the decrease in quantity sold is exactly offset by the price increase. 
C)  rise. 
D)  rise if it is a normal good and fall if it is an inferior good. 
A)  fall. 
B)  remain constant since the decrease in quantity sold is exactly offset by the price increase. 
C)  rise. 
D)  rise if it is a normal good and fall if it is an inferior good.

A 10 percent rise in the price of housing reduces the quantity demanded of housing by 3 percent. We can conclude that the demand for housing is:

Exhibit 5-5 Demand curve for computers -In Exhibit 5-5, the total revenue at point B on the demand curve equals:

An increase in the price of good X causes the demand for good Y to shift inward. One can conclude that X and Y are:

Exhibit 5-7 Demand curve for concert tickets -In Exhibit 5-7, if promoters raise their prices from $10 to $40 per ticket, then their total revenue will:

Exhibit 5-5 Demand curve for computers -In Exhibit 5-5, the change in total revenue resulting from a change in price from A to D indicates that the demand curve is:

Suppose you are the manager of a local water company, and you are instructed to get consumers to reduce their water consumption by 10 percent. If the price elasticity of demand for water is 0.25, by how much would you have to raise the price of water?

You are on a campus committee which sets the ticket prices for basketball games. The committee wants to increase the total money generated from ticket sales. When should the committee choose to lower its ticket prices?

The percentage change in the quantity demanded of film divided by the percentage change in the price of cameras indicates:

If demand is price elastic, a decrease in price causes:

Which of the following factors is associated with products with a highly price elastic demand?

If the demand curve over a certain range is "price elastic," this implies that the:

A law requiring sellers to pay the government a tax per pack on cigarettes has the effect of:

Tara buys four music cassettes when the price is $10 and two cassettes when the price is $14. Her price elasticity of demand is:

If a 1 percent decrease in the price of product A brings about a 3 percent increase in the sales of product B, then:

For an inferior good, the income elasticity of demand is negative.

If a decrease in the price of football tickets increases the total revenue of the athletic department, this is evidence that demand is:

Leo's Bakery reduces the price of wheat bread from $3 to $1 and finds that quantity demanded increases from 100 to 122 loaves. Leo calculates that his price elasticity of demand for wheat bread is:

Price elasticity of demand refers to the:

As cities prospered and per-capita incomes increased, the demand for bus travel diminished. This suggests that:

If demand is inelastic, an increase in the price of a good will cause total revenue to:

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

A 10 percent rise in the price of housing reduces the quantity demanded of housing by 3 percent. We can conclude that the demand for housing is:

Exhibit 5-5 Demand curve for computers ​ -In Exhibit 5-5, the total revenue at point B on the demand curve equals:

An increase in the price of good X causes the demand for good Y to shift inward. One can conclude that X and Y are:

Exhibit 5-7 Demand curve for concert tickets ​ -In Exhibit 5-7, if promoters raise their prices from $10 to $40 per ticket, then their total revenue will:

Exhibit 5-5 Demand curve for computers ​ -In Exhibit 5-5, the change in total revenue resulting from a change in price from A to D indicates that the demand curve is:

Suppose you are the manager of a local water company, and you are instructed to get consumers to reduce their water consumption by 10 percent. If the price elasticity of demand for water is 0.25, by how much would you have to raise the price of water?

You are on a campus committee which sets the ticket prices for basketball games. The committee wants to increase the total money generated from ticket sales. When should the committee choose to lower its ticket prices?

The percentage change in the quantity demanded of film divided by the percentage change in the price of cameras indicates:

If demand is price elastic, a decrease in price causes:

Which of the following factors is associated with products with a highly price elastic demand?

If the demand curve over a certain range is "price elastic," this implies that the:

A law requiring sellers to pay the government a tax per pack on cigarettes has the effect of:

Tara buys four music cassettes when the price is $10 and two cassettes when the price is $14. Her price elasticity of demand is:

If a 1 percent decrease in the price of product A brings about a 3 percent increase in the sales of product B, then:

For an inferior good, the income elasticity of demand is negative. ​

If a decrease in the price of football tickets increases the total revenue of the athletic department, this is evidence that demand is:

Leo's Bakery reduces the price of wheat bread from $3 to $1 and finds that quantity demanded increases from 100 to 122 loaves. Leo calculates that his price elasticity of demand for wheat bread is:

Price elasticity of demand refers to the:

As cities prospered and per-capita incomes increased, the demand for bus travel diminished. This suggests that:

If demand is inelastic, an increase in the price of a good will cause total revenue to:

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 5-5 Demand curve for computers -In Exhibit 5-5, the total revenue at point B on the demand curve equals:

Exhibit 5-7 Demand curve for concert tickets -In Exhibit 5-7, if promoters raise their prices from $10 to $40 per ticket, then their total revenue will:

Exhibit 5-5 Demand curve for computers -In Exhibit 5-5, the change in total revenue resulting from a change in price from A to D indicates that the demand curve is:

For an inferior good, the income elasticity of demand is negative.