Question 1

Other things equal, the demand for a good tends to be more inelastic, the

Accepted Answer

A) fewer the available substitutes. 
B) longer the time period considered. 
C) more the good is considered a luxury good. 
D) more narrowly defined is the market for the good. 
A) fewer the available substitutes. 
B) longer the time period considered. 
C) more the good is considered a luxury good. 
D) more narrowly defined is the market for the good.

Question 2

Given the market for illegal drugs, when the government is successful in reducing the flow of drugs into the United States,

Accepted Answer

A) supply decreases, demand is unaffected, and price increases. 
B) demand decreases, supply is unaffected, and price decreases. 
C) demand and supply both decrease, leaving price essentially unchanged. 
D) supply decreases, demand increases, and price increases substantially. 
A) supply decreases, demand is unaffected, and price increases. 
B) demand decreases, supply is unaffected, and price decreases. 
C) demand and supply both decrease, leaving price essentially unchanged. 
D) supply decreases, demand increases, and price increases substantially.

Question 3

For a good that is a necessity, demand

Accepted Answer

A) tends to be inelastic. 
B) tends to be elastic. 
C) has unit elasticity. 
D) cannot be represented by a demand curve in the usual way. 
A) tends to be inelastic. 
B) tends to be elastic. 
C) has unit elasticity. 
D) cannot be represented by a demand curve in the usual way.

Question 4

Suppose the price elasticity of supply for soccer balls is 0.3 in the short run and 1.2 in the long run. If an increase in the demand for soccer balls causes the price of soccer balls to increase by 20%, then the quantity supplied of soccer balls will increase by about

Accepted Answer

A) 0.67% in the short run and 0.17% in the long run. 
B) 3% in the short run and 1.2% in the long run. 
C) 6% in the short run and 24% in the long run. 
D) 66.7% in the short run and 16.7% in the long run. 
A) 0.67% in the short run and 0.17% in the long run. 
B) 3% in the short run and 1.2% in the long run. 
C) 6% in the short run and 24% in the long run. 
D) 66.7% in the short run and 16.7% in the long run.

Question 5

If the price elasticity of demand for a good is 1.4, then a 14 percent increase in the quantity demanded must be the result of

Accepted Answer

A) a 0.1 percent decrease in the price. 
B) a 1 percent decrease in the price. 
C) a 10 percent decrease in the price. 
D) a 19.6 percent decrease in the price. 
A) a 0.1 percent decrease in the price. 
B) a 1 percent decrease in the price. 
C) a 10 percent decrease in the price. 
D) a 19.6 percent decrease in the price.

Question 6

If the price of milk rises, when is the price elasticity of demand likely to be the lowest?

Accepted Answer

A) immediately after the price increase 
B) one month after the price increase 
C) three months after the price increase 
D) one year after the price increase 
A) immediately after the price increase 
B) one month after the price increase 
C) three months after the price increase 
D) one year after the price increase

Question 7

The case of perfectly elastic demand is illustrated by a demand curve that is

Accepted Answer

A) vertical. 
B) horizontal. 
C) downward-sloping but relatively steep. 
D) downward-sloping but relatively flat. 
A) vertical. 
B) horizontal. 
C) downward-sloping but relatively steep. 
D) downward-sloping but relatively flat.

Question 8

If the price elasticity of demand for aluminum foil is 1.45, then a 2.4% decrease in the price of aluminum foil will increase the quantity demanded of aluminum foil by

Accepted Answer

A) 1.66%, and aluminum foil sellers' total revenue will increase as a result. 
B) 1.66%, and aluminum foil sellers' total revenue will decrease as a result. 
C) 3.48%, and aluminum foil sellers' total revenue will increase as a result. 
D) 3.48%, and aluminum foil sellers' total revenue will decrease as a result. 
A) 1.66%, and aluminum foil sellers' total revenue will increase as a result. 
B) 1.66%, and aluminum foil sellers' total revenue will decrease as a result. 
C) 3.48%, and aluminum foil sellers' total revenue will increase as a result. 
D) 3.48%, and aluminum foil sellers' total revenue will decrease as a result.

Question 9

Scenario 5-3
Suppose that the supply of aged cheddar cheese is inelastic, and the supply of bread is elastic. Both goods are considered to be normal goods by a majority of consumers. Suppose that a large income tax increase decreases the demand for both goods by 10%.
-Refer to Scenario 5-3. The price elasticity of supply for aged cheddar cheese could be

Accepted Answer

A) -1. 
B) 0. 
C) 0.5. 
D) 1.5. 
A) -1. 
B) 0. 
C) 0.5. 
D) 1.5.

Question 10

A key determinant of the price elasticity of supply is the

Accepted Answer

A) time horizon. 
B) income of consumers. 
C) price elasticity of demand. 
D) importance of the good in a consumer's budget. 
A) time horizon. 
B) income of consumers. 
C) price elasticity of demand. 
D) importance of the good in a consumer's budget.

Question 11

Figure 5-9  
-Refer to Figure 5-9. Using the midpoint method, the price elasticity of demand between point C and point D is about

Accepted Answer

A) 0.29. 
B) 0.54. 
C) 1.86. 
D) 2.0. 
A) 0.29. 
B) 0.54. 
C) 1.86. 
D) 2.0.

Question 12

If the price elasticity of supply is 2 and the quantity supplied decreases by 6%, then the price must have decreased by 3%.

Accepted Answer

A) True 
 B)False

Question 13

The demand for desserts tends to be more inelastic than the demand for red velvet cake.

Accepted Answer

A) True 
 B)False

Question 14

For which of the following goods is the price elasticity of demand most inelastic?

Accepted Answer

A) pizza 
B) large pizza 
C) large pepperoni pizza 
D) Domino's large pepperoni pizza 
A) pizza 
B) large pizza 
C) large pepperoni pizza 
D) Domino's large pepperoni pizza

Question 15

Suppose a market has the demand function Qd=20-0.5P. At what price will total revenue be maximized?

Accepted Answer

Question 16

Which of the following is likely to have the most price inelastic demand?

Accepted Answer

A) white chocolate chip with macadamia nut cookies 
B) hardback novels 
C) salt 
D) box seats at a major league baseball game 
A) white chocolate chip with macadamia nut cookies 
B) hardback novels 
C) salt 
D) box seats at a major league baseball game

Question 17

In January the price of dark chocolate candy bars was $2.00, and Willy's Chocolate Factory produced 80 pounds. In February the price of dark chocolate candy bars was $2.50, and Willy's produced 110 pounds. In March the price of dark chocolate candy bars was $3.00, and Willy's produced 140 pounds. The price elasticity of supply of Willy's dark chocolate candy bars was about

Accepted Answer

A) 0.70 when the price increased from $2.00 to $2.50 and 0.76 when the price increased from $2.50 to $3.00. 
B) 0.88 when the price increased from $2.00 to $2.50 and 1.08 when the price increased from $2.50 to $3.00. 
C) 1.42 when the price increased from $2.00 to $2.50 and 1.32 when the price increased from $2.50 to $3.00. 
D) 1.50 when the price increased from $2.00 to $2.50 and 1.18 when the price increased from $2.50 to $3.00. 
A) 0.70 when the price increased from $2.00 to $2.50 and 0.76 when the price increased from $2.50 to $3.00. 
B) 0.88 when the price increased from $2.00 to $2.50 and 1.08 when the price increased from $2.50 to $3.00. 
C) 1.42 when the price increased from $2.00 to $2.50 and 1.32 when the price increased from $2.50 to $3.00. 
D) 1.50 when the price increased from $2.00 to $2.50 and 1.18 when the price increased from $2.50 to $3.00.

Question 18

Which of the following could be the price elasticity of demand for a good for which a decrease in price would decrease revenue?

Accepted Answer

A) 0.8 
B) 1 
C) 1.8 
D) 2.4 
A) 0.8 
B) 1 
C) 1.8 
D) 2.4

Question 19

The flatter the demand curve that passes through a given point, the more elastic the demand.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following could be the cross-price elasticity of demand for two goods that are complements?

Accepted Answer

A) -1.3 
B) 0 
C) 0.2 
D) 1.4 
A) -1.3 
B) 0 
C) 0.2 
D) 1.4

Other things equal, the demand for a good tends to be more inelastic, the

Given the market for illegal drugs, when the government is successful in reducing the flow of drugs into the United States,

For a good that is a necessity, demand

Suppose the price elasticity of supply for soccer balls is 0.3 in the short run and 1.2 in the long run. If an increase in the demand for soccer balls causes the price of soccer balls to increase by 20%, then the quantity supplied of soccer balls will increase by about

If the price elasticity of demand for a good is 1.4, then a 14 percent increase in the quantity demanded must be the result of

If the price of milk rises, when is the price elasticity of demand likely to be the lowest?

The case of perfectly elastic demand is illustrated by a demand curve that is

If the price elasticity of demand for aluminum foil is 1.45, then a 2.4% decrease in the price of aluminum foil will increase the quantity demanded of aluminum foil by

A key determinant of the price elasticity of supply is the

Figure 5-9 -Refer to Figure 5-9. Using the midpoint method, the price elasticity of demand between point C and point D is about

If the price elasticity of supply is 2 and the quantity supplied decreases by 6%, then the price must have decreased by 3%.

The demand for desserts tends to be more inelastic than the demand for red velvet cake.

For which of the following goods is the price elasticity of demand most inelastic?

Suppose a market has the demand function Q^d=20-0.5P. At what price will total revenue be maximized?

Which of the following is likely to have the most price inelastic demand?

Which of the following could be the price elasticity of demand for a good for which a decrease in price would decrease revenue?

The flatter the demand curve that passes through a given point, the more elastic the demand.

Which of the following could be the cross-price elasticity of demand for two goods that are complements?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters

Exam 5: Elasticity and Its Application

Other things equal, the demand for a good tends to be more inelastic, the

Given the market for illegal drugs, when the government is successful in reducing the flow of drugs into the United States,

For a good that is a necessity, demand

Suppose the price elasticity of supply for soccer balls is 0.3 in the short run and 1.2 in the long run. If an increase in the demand for soccer balls causes the price of soccer balls to increase by 20%, then the quantity supplied of soccer balls will increase by about

If the price elasticity of demand for a good is 1.4, then a 14 percent increase in the quantity demanded must be the result of

If the price of milk rises, when is the price elasticity of demand likely to be the lowest?

The case of perfectly elastic demand is illustrated by a demand curve that is

If the price elasticity of demand for aluminum foil is 1.45, then a 2.4% decrease in the price of aluminum foil will increase the quantity demanded of aluminum foil by

A key determinant of the price elasticity of supply is the

Figure 5-9 -Refer to Figure 5-9. Using the midpoint method, the price elasticity of demand between point C and point D is about

If the price elasticity of supply is 2 and the quantity supplied decreases by 6%, then the price must have decreased by 3%.

The demand for desserts tends to be more inelastic than the demand for red velvet cake.

For which of the following goods is the price elasticity of demand most inelastic?

Suppose a market has the demand function Qd=20-0.5P. At what price will total revenue be maximized?

Which of the following is likely to have the most price inelastic demand?

Which of the following could be the price elasticity of demand for a good for which a decrease in price would decrease revenue?

The flatter the demand curve that passes through a given point, the more elastic the demand.

Which of the following could be the cross-price elasticity of demand for two goods that are complements?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: The Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Filters

Suppose a market has the demand function Q^d=20-0.5P. At what price will total revenue be maximized?