Question 1

A product would be more demand price inelastic:

Accepted Answer

A)  the shorter the time the consumer has to adjust to price changes. 
B)  the higher the price of the good. 
C)  the more the number of good substitutes. 
D)  the less the essential nature of the good. 
E)  if the supply is more price elastic. 
A)  the shorter the time the consumer has to adjust to price changes. 
B)  the higher the price of the good. 
C)  the more the number of good substitutes. 
D)  the less the essential nature of the good. 
E)  if the supply is more price elastic.

Question 2

Computers and software programs are:

Accepted Answer

A)  inferior goods. 
B)  complementary goods. 
C)  goods with a cross-price elasticity of demand of 0. 
D)  substitute goods. 
E)  perfectly elastic goods. 
A)  inferior goods. 
B)  complementary goods. 
C)  goods with a cross-price elasticity of demand of 0. 
D)  substitute goods. 
E)  perfectly elastic goods.

Question 3

What does the "price elasticity of demand" measure? What does a price elasticity of demand coefficient of 1.2 mean? Does the product have an elastic, unitary elastic or inelastic demand?

Accepted Answer

The price elasticity of demand measures

Question 4

The price elasticity of demand measures consumer responsiveness to a price change.
​

Accepted Answer

A) True 
 B)False

Question 5

If a 1 percent change in income generates a greater than 1 percent change in quantity demanded of boating expenditures, then boating is an:

Accepted Answer

A)  example of Engel's law. 
B)  inferior good. 
C)  income inelastic good. 
D)  income elastic good. 
E)  example of a substitute good. 
A)  example of Engel's law. 
B)  inferior good. 
C)  income inelastic good. 
D)  income elastic good. 
E)  example of a substitute good.

Question 6

In the short run, consumers typically ____ to price changes (when compared to the long run).

Accepted Answer

A)  are very responsive 
B)  are more demand sensitive 
C)  are less demand sensitive 
D)  do not respond at all 
E)  overreact 
A)  are very responsive 
B)  are more demand sensitive 
C)  are less demand sensitive 
D)  do not respond at all 
E)  overreact

Question 7

Avital and Joshua each have their own business selling lemonade in front of their houses. When they each charge 25 cents per glass, their total revenues are equal. However, when they each charge 40 cents per glass, Avital's revenues are bigger than Joshua's revenues. This is because:

Accepted Answer

A)  Joshua faces a more inelastic demand curve. 
B)  Avital faces a more elastic demand curve. 
C)  Joshua faces a more elastic demand curve. 
D)  Avital faces a less inelastic demand curve. 
E)  there is a market failure. 
A)  Joshua faces a more inelastic demand curve. 
B)  Avital faces a more elastic demand curve. 
C)  Joshua faces a more elastic demand curve. 
D)  Avital faces a less inelastic demand curve. 
E)  there is a market failure.

Question 8

Suppose Good Food's supermarket raises the price of its steak and finds its total revenue from steak sales does not change. This is evidence that price elasticity of demand for steak is:

Accepted Answer

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

Question 9

Suppose an oil company wants to make its total revenue as large as possible. It should charge a price at which the demand for oil is:

Accepted Answer

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

Question 10

Exhibit 5-3 Demand curves for gallons of orange juice $$\begin{array} { | c | c | c | c | c | c | } 
\hline \text { Price } & \text { Albert } & \text { Betty } & \text { Carl } & \text { Dana } & \text { Edward } \
\hline 10 & 0 & 1 & 2 & 0 & 0 \
9 & 0 & 1.5 & 2 & 0.5 & 0 \
8 & 0 & 2 & 2 & 2 & 4 \
7 & 0 & 2.5 & 2 & 3.5 & 8 \
6 & 1 & 3 & 3 & 5 & 12 \
5 & 3 & 3.5 & 3 & 6.5 & 16 \
4 & 5 & 4 & 3 & 8 & 20 \
3 & 7 & 4.5 & 3 & 9.5 & 24 \
2 & 9 & 5 & 3 & 11 & 28 \
1 & 11 & 5.5 & 3 & 12.5 & 32 \
\hline
\end{array}$$
-Using Exhibit 5-3, whose "quantity demanded" experiences the largest percentage increase when the price falls from $2 to $1?

Accepted Answer

A)  Albert 
B)  Betty 
C)  Carl 
D)  Dana 
E)  Edward 
A)  Albert 
B)  Betty 
C)  Carl 
D)  Dana 
E)  Edward

Question 11

Suppose that Starbucks reduces the price of its premium coffee from $2.20 to $1.80 per cup, and as a result, the quantity sold per day increased from 350 to 450. Over this price range, the price elasticity of demand for Starbucks coffee is:

Accepted Answer

A)  0.40. 
B)  0.80. 
C)  1.25. 
D)  2.50. 
A)  0.40. 
B)  0.80. 
C)  1.25. 
D)  2.50.

Question 12

If a good is inferior in an economic sense:

Accepted Answer

A)  it is demand price elastic. 
B)  it is demand price inelastic. 
C)  the income elasticity of demand is negative. 
D)  it is a low-quality good. 
E)  it is not the highest quality good in its class. 
A)  it is demand price elastic. 
B)  it is demand price inelastic. 
C)  the income elasticity of demand is negative. 
D)  it is a low-quality good. 
E)  it is not the highest quality good in its class.

Question 13

The price elasticity of demand for a vertical demand curve 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 14

There is no change in total revenue when the demand curve for a good is:

Accepted Answer

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

Question 15

If the cross-elasticity of demand for two goods is positive, this means that the goods are:

Accepted Answer

A)  normal goods. 
B)  inferior goods. 
C)  substitutes. 
D)  complements. 
A)  normal goods. 
B)  inferior goods. 
C)  substitutes. 
D)  complements.

Question 16

Demand price elasticity measures:

Accepted Answer

A)  how much supply will change as price changes. 
B)  how consumers change their purchases in response to a change in income. 
C)  how consumers change their purchases in response to a change in the price of a substitute good. 
D)  how consumers change their purchases in response to a change in the price of a product. 
E)  the change in price brought about by a change in consumer demand. 
A)  how much supply will change as price changes. 
B)  how consumers change their purchases in response to a change in income. 
C)  how consumers change their purchases in response to a change in the price of a substitute good. 
D)  how consumers change their purchases in response to a change in the price of a product. 
E)  the change in price brought about by a change in consumer demand.

Question 17

Exhibit 5-9 Supply and demand curves for good X
​  
-As shown in Exhibit 5-9, assuming goods X and Y are substitutes, an increase in the price of Y, 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 18

\Suppose the quantity demanded of steak is 200 million pounds per year when the price is $6 per pound and 400 million pounds per year when the price is $2 per pound. The price elasticity of demand for steak over this range is:

Accepted Answer

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

Question 19

A lower price elasticity of demand coefficient occurs when:

Accepted Answer

A)  many substitutes exist. 
B)  the quantity demanded is more responsive. 
C)  few substitutes exist. 
D)  the market is broadly defined. 
A)  many substitutes exist. 
B)  the quantity demanded is more responsive. 
C)  few substitutes exist. 
D)  the market is broadly defined.

Question 20

Suppose the Good Food supermarket increases the price of a pound of bananas from $.75 to $1.25 and finds that the quantity of bananas it sells per month drops from 1,500 to 1,000. The price elasticity of demand coefficient for bananas in this price range is:

Accepted Answer

A)  0.80. 
B)  3.00. 
C)  2.00. 
D)  0.50. 
A)  0.80. 
B)  3.00. 
C)  2.00. 
D)  0.50.

A product would be more demand price inelastic:

Computers and software programs are:

What does the "price elasticity of demand" measure? What does a price elasticity of demand coefficient of 1.2 mean? Does the product have an elastic, unitary elastic or inelastic demand?

The price elasticity of demand measures consumer responsiveness to a price change.

If a 1 percent change in income generates a greater than 1 percent change in quantity demanded of boating expenditures, then boating is an:

In the short run, consumers typically ____ to price changes (when compared to the long run).

Avital and Joshua each have their own business selling lemonade in front of their houses. When they each charge 25 cents per glass, their total revenues are equal. However, when they each charge 40 cents per glass, Avital's revenues are bigger than Joshua's revenues. This is because:

Suppose Good Food's supermarket raises the price of its steak and finds its total revenue from steak sales does not change. This is evidence that price elasticity of demand for steak is:

Suppose an oil company wants to make its total revenue as large as possible. It should charge a price at which the demand for oil is:

Suppose that Starbucks reduces the price of its premium coffee from $2.20 to $1.80 per cup, and as a result, the quantity sold per day increased from 350 to 450. Over this price range, the price elasticity of demand for Starbucks coffee is:

If a good is inferior in an economic sense:

The price elasticity of demand for a vertical demand curve is:

There is no change in total revenue when the demand curve for a good is:

If the cross-elasticity of demand for two goods is positive, this means that the goods are:

Demand price elasticity measures:

Exhibit 5-9 Supply and demand curves for good X -As shown in Exhibit 5-9, assuming goods X and Y are substitutes, an increase in the price of Y, other factors held constant, could move the equilibrium from point E to point:

\Suppose the quantity demanded of steak is 200 million pounds per year when the price is $6 per pound and 400 million pounds per year when the price is $2 per pound. The price elasticity of demand for steak over this range is:

A lower price elasticity of demand coefficient occurs when:

Suppose the Good Food supermarket increases the price of a pound of bananas from $.75 to $1.25 and finds that the quantity of bananas it sells per month drops from 1,500 to 1,000. The price elasticity of demand coefficient for bananas in this price range 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

A product would be more demand price inelastic:

Computers and software programs are:

What does the "price elasticity of demand" measure? What does a price elasticity of demand coefficient of 1.2 mean? Does the product have an elastic, unitary elastic or inelastic demand?

The price elasticity of demand measures consumer responsiveness to a price change. ​

If a 1 percent change in income generates a greater than 1 percent change in quantity demanded of boating expenditures, then boating is an:

In the short run, consumers typically ____ to price changes (when compared to the long run).

Avital and Joshua each have their own business selling lemonade in front of their houses. When they each charge 25 cents per glass, their total revenues are equal. However, when they each charge 40 cents per glass, Avital's revenues are bigger than Joshua's revenues. This is because:

Suppose Good Food's supermarket raises the price of its steak and finds its total revenue from steak sales does not change. This is evidence that price elasticity of demand for steak is:

Suppose an oil company wants to make its total revenue as large as possible. It should charge a price at which the demand for oil is:

Suppose that Starbucks reduces the price of its premium coffee from $2.20 to $1.80 per cup, and as a result, the quantity sold per day increased from 350 to 450. Over this price range, the price elasticity of demand for Starbucks coffee is:

If a good is inferior in an economic sense:

The price elasticity of demand for a vertical demand curve is:

There is no change in total revenue when the demand curve for a good is:

If the cross-elasticity of demand for two goods is positive, this means that the goods are:

Demand price elasticity measures:

Exhibit 5-9 Supply and demand curves for good X ​ -As shown in Exhibit 5-9, assuming goods X and Y are substitutes, an increase in the price of Y, other factors held constant, could move the equilibrium from point E to point: ​

\Suppose the quantity demanded of steak is 200 million pounds per year when the price is $6 per pound and 400 million pounds per year when the price is $2 per pound. The price elasticity of demand for steak over this range is:

A lower price elasticity of demand coefficient occurs when:

Suppose the Good Food supermarket increases the price of a pound of bananas from $.75 to $1.25 and finds that the quantity of bananas it sells per month drops from 1,500 to 1,000. The price elasticity of demand coefficient for bananas in this price range 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

The price elasticity of demand measures consumer responsiveness to a price change.

Exhibit 5-9 Supply and demand curves for good X -As shown in Exhibit 5-9, assuming goods X and Y are substitutes, an increase in the price of Y, other factors held constant, could move the equilibrium from point E to point: