Question 1

For which of the following goods is the income elasticity of demand likely lowest?

Accepted Answer

A) water 
B) sapphire pendant necklaces 
C) filet mignon steaks 
D) fresh fruit 
A) water 
B) sapphire pendant necklaces 
C) filet mignon steaks 
D) fresh fruit

Question 2

In the case of perfectly inelastic demand,

Accepted Answer

A) the change in quantity demanded equals the change in price. 
B) the percentage change in quantity demanded equals the percentage change in price. 
C) infinitely-large changes in quantity demanded result from very small changes in the price. 
D) quantity demanded stays the same whenever price changes. 
A) the change in quantity demanded equals the change in price. 
B) the percentage change in quantity demanded equals the percentage change in price. 
C) infinitely-large changes in quantity demanded result from very small changes in the price. 
D) quantity demanded stays the same whenever price changes.

Question 3

Which of the following should be held constant when calculating an income elasticity of demand?

Accepted Answer

A) the price of the good 
B) prices of related goods 
C) tastes 
D) All of the above should be held constant. 
A) the price of the good 
B) prices of related goods 
C) tastes 
D) All of the above should be held constant.

Question 4

Studies indicate that the price elasticity of demand for beer is about 0.9. A government policy aimed at reducing beer consumption changed the price of a case of beer from $10 to $20. According to the midpoint method, the government policy should have reduced beer consumption by

Accepted Answer

A) 30%. 
B) 40%. 
C) 60%. 
D) 74%. 
A) 30%. 
B) 40%. 
C) 60%. 
D) 74%.

Question 5

Figure 5-11  
-Refer to Figure 5-11. A decrease in price from $20 to $10 leads to a

Accepted Answer

A) decrease in total revenue of $200, so the price elasticity of demand is greater than 1 in this price range. 
B) decrease in total revenue of $200, so the price elasticity of demand is less than 1 in this price range. 
C) decrease in total revenue of $120, so the price elasticity of demand is less than 1 in this price range. 
D) decrease in total revenue of $120, so demand is elastic in this price range. 
A) decrease in total revenue of $200, so the price elasticity of demand is greater than 1 in this price range. 
B) decrease in total revenue of $200, so the price elasticity of demand is less than 1 in this price range. 
C) decrease in total revenue of $120, so the price elasticity of demand is less than 1 in this price range. 
D) decrease in total revenue of $120, so demand is elastic in this price range.

For which of the following goods is the income elasticity of demand likely lowest?

In the case of perfectly inelastic demand,

Which of the following should be held constant when calculating an income elasticity of demand?

Studies indicate that the price elasticity of demand for beer is about 0.9. A government policy aimed at reducing beer consumption changed the price of a case of beer from $10 to $20. According to the midpoint method, the government policy should have reduced beer consumption by

Figure 5-11 -Refer to Figure 5-11. A decrease in price from $20 to $10 leads to a

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

For which of the following goods is the income elasticity of demand likely lowest?

In the case of perfectly inelastic demand,

Which of the following should be held constant when calculating an income elasticity of demand?

Studies indicate that the price elasticity of demand for beer is about 0.9. A government policy aimed at reducing beer consumption changed the price of a case of beer from $10 to $20. According to the midpoint method, the government policy should have reduced beer consumption by

Figure 5-11 -Refer to Figure 5-11. A decrease in price from $20 to $10 leads to a

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