Question 1

All things equal, the price elasticity of supply:

Accepted Answer

A)  will be greater in the short run than in the long run. 
B)  will be greater in the long run than in the short run. 
C)  is the same for the short run and the long run. 
D)  approaches zero in the long run. 
A)  will be greater in the short run than in the long run. 
B)  will be greater in the long run than in the short run. 
C)  is the same for the short run and the long run. 
D)  approaches zero in the long run.

Question 2

A perfectly elastic supply curve is expressed graphically as a(n):

Accepted Answer

A)  downward sloping line or curve. 
B)  upward sloping line or curve. 
C)  vertical line. 
D)  horizontal line. 
A)  downward sloping line or curve. 
B)  upward sloping line or curve. 
C)  vertical line. 
D)  horizontal line.

Question 3

If the price elasticity of demand for a good is elastic, then consumers are relatively unresponsive with respect to the quantity purchased when the price changes.
​

Accepted Answer

A) True 
 B)False

Question 4

Exhibit 5-1 Demand curve
​  
-In Exhibit 5-1, the demand curve between points a and b is:

Accepted Answer

A)  price elastic. 
B)  price inelastic. 
C)  unit elastic. 
D)  perfectly elastic. 
E)  perfectly inelastic. 
A)  price elastic. 
B)  price inelastic. 
C)  unit elastic. 
D)  perfectly elastic. 
E)  perfectly inelastic.

Question 5

If a consumer's purchases of a product increases as income increases, this good is classified as a(n):

Accepted Answer

A)  superior good. 
B)  inferior good. 
C)  substitute good. 
D)  complementary good. 
E)  normal good. 
A)  superior good. 
B)  inferior good. 
C)  substitute good. 
D)  complementary good. 
E)  normal good.

Question 6

Suppose the quantity demanded is 1,000 million bushels of peaches per year when the price is $3 per bushel and 1,500 million bushels when the price is $1 per bushel. The price elasticity of demand in this range of the demand curve is:

Accepted Answer

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

Question 7

Exhibit 5-9 Supply and demand curves for good X
​  
-As shown in Exhibit 5-9, assuming good X is an inferior good, an increase in consumer income, other factors held constant, could move the equilibrium from point E to point: ​

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  D. 
A)  A. 
B)  B. 
C)  C. 
D)  D.

Question 8

Elasticity measures how "sensitive" consumers are by measuring their change in ____ as the price of the product changes.

Accepted Answer

A)  attitude 
B)  income 
C)  quantity demanded 
D)  supply 
E)  taxes 
A)  attitude 
B)  income 
C)  quantity demanded 
D)  supply 
E)  taxes

Question 9

Exhibit 5-6 Demand curve for concert tickets
​  
-In Exhibit 5-6, suppose promoters charge a price of $30 per ticket. How much total revenue will their sales generate?

Accepted Answer

A)  $300,000. 
B)  $400,000. 
C)  $500,000. 
D)  $600,000. 
A)  $300,000. 
B)  $400,000. 
C)  $500,000. 
D)  $600,000.

Question 10

Sally recently got a 15 percent raise. She now purchases 7.5 percent more steak dinners. Sally's income elasticity for steak dinners is:

Accepted Answer

A)  0.5. 
B)  0.75. 
C)  1.5. 
D)  2.0. 
A)  0.5. 
B)  0.75. 
C)  1.5. 
D)  2.0.

Question 11

If the price elasticity of demand coefficient equals 2 then:

Accepted Answer

A)  a 7 percent decrease in the price will result in a 14 percent decrease in the quantity demanded. 
B)  a price decrease will increase total revenue. 
C)  the good has an inelastic demand. 
D)  there is likely few substitutes, a short time period under consideration, or this good accounts for a relatively small percentage of consumers' budgets. 
A)  a 7 percent decrease in the price will result in a 14 percent decrease in the quantity demanded. 
B)  a price decrease will increase total revenue. 
C)  the good has an inelastic demand. 
D)  there is likely few substitutes, a short time period under consideration, or this good accounts for a relatively small percentage of consumers' budgets.

Question 12

The short-run price elasticity of demand for airline travel is .05, while the long-run elasticity is 2.36. This means that a significant increase in airline ticket prices will cause airline companies to:

Accepted Answer

A)  collect less revenue from short-notice travelers. 
B)  collect more revenue from travelers who book well in advance. 
C)  lose money on short-notice travelers. 
D)  collect less revenue from travelers who book well in advance. 
E)  lose many of its short-notice travelers. 
A)  collect less revenue from short-notice travelers. 
B)  collect more revenue from travelers who book well in advance. 
C)  lose money on short-notice travelers. 
D)  collect less revenue from travelers who book well in advance. 
E)  lose many of its short-notice travelers.

Question 13

If a supply curve has a constant slope throughout its length, it must have a constant price elasticity throughout its length. ​
​

Accepted Answer

A) True 
 B)False

Question 14

Within different price ranges along a linear demand curve, elasticities are:

Accepted Answer

A)  constant. 
B)  different. 
C)  equal. 
D)  the same as slope. 
E)  negative 1. 
A)  constant. 
B)  different. 
C)  equal. 
D)  the same as slope. 
E)  negative 1.

Question 15

The price elasticity of demand coefficient for a good will be greater:

Accepted Answer

A)  if close substitutes exist. 
B)  if minor complements exist. 
C)  in the short-run. 
D)  if a small portion of the budget will be spent on it. 
A)  if close substitutes exist. 
B)  if minor complements exist. 
C)  in the short-run. 
D)  if a small portion of the budget will be spent on it.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

The Smith family buys much more macaroni when someone in the family is laid off. This means that the Smiths' ____ is negative.

Accepted Answer

A)  demand curve for macaroni 
B)  income elasticity for macaroni 
C)  Engel's law 
D)  income 
E)  price elasticity of demand for macaroni 
A)  demand curve for macaroni 
B)  income elasticity for macaroni 
C)  Engel's law 
D)  income 
E)  price elasticity of demand for macaroni

Question 18

A horizontal demand curve is perfectly elastic. ​
​
​

Accepted Answer

A) True 
 B)False

Question 19

Exhibit 5-8 Supply and demand curves for good X
​  
-As shown in Exhibit 5-8, assuming goods X and Y are substitutes, a decrease in the price of Y, other factors held constant, will move the equilibrium from point E to point:

Accepted Answer

A)  W. 
B)  X. 
C)  Y. 
D)  Z. 
A)  W. 
B)  X. 
C)  Y. 
D)  Z.

Question 20

Exhibit 5-8 Supply and demand curves for good X
​  
-In Exhibit 5-8, the price elasticity of supply for good X between points Y and E is:

Accepted Answer

A)  1/5 = 0.20. 
B)  5/3 = 1.66. 
C)  3/5 = 0.60. 
D)  1. 
A)  1/5 = 0.20. 
B)  5/3 = 1.66. 
C)  3/5 = 0.60. 
D)  1.

All things equal, the price elasticity of supply:

A perfectly elastic supply curve is expressed graphically as a(n):

If the price elasticity of demand for a good is elastic, then consumers are relatively unresponsive with respect to the quantity purchased when the price changes.

Exhibit 5-1 Demand curve -In Exhibit 5-1, the demand curve between points a and b is:

If a consumer's purchases of a product increases as income increases, this good is classified as a(n):

Suppose the quantity demanded is 1,000 million bushels of peaches per year when the price is $3 per bushel and 1,500 million bushels when the price is $1 per bushel. The price elasticity of demand in this range of the demand curve is:

Exhibit 5-9 Supply and demand curves for good X -As shown in Exhibit 5-9, assuming good X is an inferior good, an increase in consumer income, other factors held constant, could move the equilibrium from point E to point:

Elasticity measures how "sensitive" consumers are by measuring their change in ____ as the price of the product changes.

Exhibit 5-6 Demand curve for concert tickets -In Exhibit 5-6, suppose promoters charge a price of $30 per ticket. How much total revenue will their sales generate?

Sally recently got a 15 percent raise. She now purchases 7.5 percent more steak dinners. Sally's income elasticity for steak dinners is:

If the price elasticity of demand coefficient equals 2 then:

The short-run price elasticity of demand for airline travel is .05, while the long-run elasticity is 2.36. This means that a significant increase in airline ticket prices will cause airline companies to:

If a supply curve has a constant slope throughout its length, it must have a constant price elasticity throughout its length.

Within different price ranges along a linear demand curve, elasticities are:

The price elasticity of demand coefficient for a good will be greater:

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

The Smith family buys much more macaroni when someone in the family is laid off. This means that the Smiths' ____ is negative.

A horizontal demand curve is perfectly elastic.

Exhibit 5-8 Supply and demand curves for good X -As shown in Exhibit 5-8, assuming goods X and Y are substitutes, a decrease in the price of Y, other factors held constant, will move the equilibrium from point E to point:

Exhibit 5-8 Supply and demand curves for good X -In Exhibit 5-8, the price elasticity of supply for good X between points Y and E is:

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

All things equal, the price elasticity of supply:

A perfectly elastic supply curve is expressed graphically as a(n):

If the price elasticity of demand for a good is elastic, then consumers are relatively unresponsive with respect to the quantity purchased when the price changes. ​

Exhibit 5-1 Demand curve ​ -In Exhibit 5-1, the demand curve between points a and b is:

If a consumer's purchases of a product increases as income increases, this good is classified as a(n):

Suppose the quantity demanded is 1,000 million bushels of peaches per year when the price is $3 per bushel and 1,500 million bushels when the price is $1 per bushel. The price elasticity of demand in this range of the demand curve is:

Exhibit 5-9 Supply and demand curves for good X ​ -As shown in Exhibit 5-9, assuming good X is an inferior good, an increase in consumer income, other factors held constant, could move the equilibrium from point E to point: ​

Elasticity measures how "sensitive" consumers are by measuring their change in ____ as the price of the product changes.

Exhibit 5-6 Demand curve for concert tickets ​ -In Exhibit 5-6, suppose promoters charge a price of $30 per ticket. How much total revenue will their sales generate?

Sally recently got a 15 percent raise. She now purchases 7.5 percent more steak dinners. Sally's income elasticity for steak dinners is:

If the price elasticity of demand coefficient equals 2 then:

The short-run price elasticity of demand for airline travel is .05, while the long-run elasticity is 2.36. This means that a significant increase in airline ticket prices will cause airline companies to:

If a supply curve has a constant slope throughout its length, it must have a constant price elasticity throughout its length. ​ ​

Within different price ranges along a linear demand curve, elasticities are:

The price elasticity of demand coefficient for a good will be greater:

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

The Smith family buys much more macaroni when someone in the family is laid off. This means that the Smiths' ____ is negative.

A horizontal demand curve is perfectly elastic. ​ ​ ​

Exhibit 5-8 Supply and demand curves for good X ​ -As shown in Exhibit 5-8, assuming goods X and Y are substitutes, a decrease in the price of Y, other factors held constant, will move the equilibrium from point E to point:

Exhibit 5-8 Supply and demand curves for good X ​ -In Exhibit 5-8, the price elasticity of supply for good X between points Y and E is:

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

If the price elasticity of demand for a good is elastic, then consumers are relatively unresponsive with respect to the quantity purchased when the price changes.

Exhibit 5-1 Demand curve -In Exhibit 5-1, the demand curve between points a and b is:

Exhibit 5-9 Supply and demand curves for good X -As shown in Exhibit 5-9, assuming good X is an inferior good, an increase in consumer income, other factors held constant, could move the equilibrium from point E to point:

Exhibit 5-6 Demand curve for concert tickets -In Exhibit 5-6, suppose promoters charge a price of $30 per ticket. How much total revenue will their sales generate?

If a supply curve has a constant slope throughout its length, it must have a constant price elasticity throughout its length.

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

A horizontal demand curve is perfectly elastic.

Exhibit 5-8 Supply and demand curves for good X -As shown in Exhibit 5-8, assuming goods X and Y are substitutes, a decrease in the price of Y, other factors held constant, will move the equilibrium from point E to point:

Exhibit 5-8 Supply and demand curves for good X -In Exhibit 5-8, the price elasticity of supply for good X between points Y and E is: