Question 1

-Refer to the above table. For which prices is demand inelastic?

Accepted Answer

A) In a range of prices below $6.00 
B) In a range of prices above $6.00 
C) In a range of prices between $5 and $1 
D) In a range of prices above $9.00 
A) In a range of prices below $6.00 
B) In a range of prices above $6.00 
C) In a range of prices between $5 and $1 
D) In a range of prices above $9.00

Question 2

Wheat is sold in world markets, usually priced in terms of bushels. In the market for wheat, the price elasticity of demand for wheat would be expressed as

Accepted Answer

A) the number of bushels of wheat sold. 
B) the number of whatever currency is used in purchasing the wheat. 
C) the number of dollars spent on wheat. 
D) a unitless number. 
A) the number of bushels of wheat sold. 
B) the number of whatever currency is used in purchasing the wheat. 
C) the number of dollars spent on wheat. 
D) a unitless number.

Question 3

When economists want to obtain a measure of the responsiveness of quantity demanded to changes in price, they use

Accepted Answer

A) the slope of the demand curve. 
B) the price elasticity of demand. 
C) only the percentage change in quantity demanded. 
D) the cross-price elasticity of demand. 
A) the slope of the demand curve. 
B) the price elasticity of demand. 
C) only the percentage change in quantity demanded. 
D) the cross-price elasticity of demand.

Question 4

If the cross price elasticity of demand between two goods is negative, then the two goods are

Accepted Answer

A) substitutes. 
B) complements. 
C) unrelated. 
D) independent. 
A) substitutes. 
B) complements. 
C) unrelated. 
D) independent.

Question 5

If the cross price elasticity of demand between Los Angeles Lakers professional basketball tickets and Los Angeles Dodgers professional baseball tickets is positive, then the two goods are

Accepted Answer

A) substitutes. 
B) unrelated. 
C) complements. 
D) not related. 
A) substitutes. 
B) unrelated. 
C) complements. 
D) not related.

Question 6

If demand is perfectly elastic everywhere along the demand curve, then

Accepted Answer

A) people must be irrational. 
B) the demand curve is vertical. 
C) the demand curve is a rectangular hyperbola. 
D) the demand curve is horizontal. 
A) people must be irrational. 
B) the demand curve is vertical. 
C) the demand curve is a rectangular hyperbola. 
D) the demand curve is horizontal.

Question 7

The cross elasticity of demand is

Accepted Answer

A) the percentage change in the demand divided by the percentage change in price of another good. 
B) the change in the price of one good divided by the change of quantity demanded of another good. 
C) the percentage change in the quantity demanded of one good divided by the percentage change in the quantity demanded of another good. 
D) the percentage change in the price of one good divided by the percentage change in the price of another good. 
A) the percentage change in the demand divided by the percentage change in price of another good. 
B) the change in the price of one good divided by the change of quantity demanded of another good. 
C) the percentage change in the quantity demanded of one good divided by the percentage change in the quantity demanded of another good. 
D) the percentage change in the price of one good divided by the percentage change in the price of another good.

Question 8

When two goods are substitutes,

Accepted Answer

A) the demands for both goods will be inelastic. 
B) cross price elasticity of demand will be 0. 
C) cross price elasticity of demand will be negative. 
D) cross price elasticity of demand will be positive. 
A) the demands for both goods will be inelastic. 
B) cross price elasticity of demand will be 0. 
C) cross price elasticity of demand will be negative. 
D) cross price elasticity of demand will be positive.

Question 9

Suppose that the value of the short-run absolute elasticity of demand for a good is 0.38. Then, we know the long-run absolute price elasticity of demand will be

Accepted Answer

A) 0. 
B) greater than 0.38. 
C) elastic. 
D) less than 0.38. 
A) 0. 
B) greater than 0.38. 
C) elastic. 
D) less than 0.38.

Question 10

A perfectly elastic demand curve

Accepted Answer

A) shows that a slight change in income will lead to a large reduction in price. 
B) is a horizontal line drawn across from the quantity axis. 
C) shows that a slight increase in price will reduce quantity demanded to zero. 
D) has a slope of -1. 
A) shows that a slight change in income will lead to a large reduction in price. 
B) is a horizontal line drawn across from the quantity axis. 
C) shows that a slight increase in price will reduce quantity demanded to zero. 
D) has a slope of -1.

Question 11

The price elasticity of demand can be computed as

Accepted Answer

A) change in total utility/change in quantity. 
B) change in price/change in quantity demanded. 
C) percentage change in quantity demanded/percentage change in price. 
D) change in quantity demanded/change in price. 
A) change in total utility/change in quantity. 
B) change in price/change in quantity demanded. 
C) percentage change in quantity demanded/percentage change in price. 
D) change in quantity demanded/change in price.

Question 12

The local baseball stadium's concession stands previously sold hot dogs for 80 cents apiece. At that price, when a baseball fan went to watch a baseball game, he bought 2 hotdogs. But now that the stadium has a "dime-a-dog night," he has purchased 6 hot dogs. What is the approximate value of this individual's absolute price elasticity of demand for hot dogs?

Accepted Answer

A) 0.64 
B) 0.80 
C) 1.00 
D) 1.56 
A) 0.64 
B) 0.80 
C) 1.00 
D) 1.56

Question 13

If total revenues decline when the market clearing price increases, then we know that

Accepted Answer

A) demand is inelastic. 
B) demand is elastic. 
C) demand is unit-elastic. 
D) demand has zero elasticity. 
A) demand is inelastic. 
B) demand is elastic. 
C) demand is unit-elastic. 
D) demand has zero elasticity.

Question 14

When demand is perfectly inelastic, the demand curve is

Accepted Answer

A) horizontal. 
B) vertical. 
C) upward sloping. 
D) downward sloping. 
A) horizontal. 
B) vertical. 
C) upward sloping. 
D) downward sloping.

Question 15

A demand relationship in which the quantity demanded changes exactly in proportion to the change in price is

Accepted Answer

A) elastic. 
B) unit-elastic. 
C) inelastic. 
D) consistent with zero elasticity. 
A) elastic. 
B) unit-elastic. 
C) inelastic. 
D) consistent with zero elasticity.

Question 16

A perfectly inelastic supply curve is

Accepted Answer

A) an upward sloping straight line that intersects the origin. 
B) horizontal. 
C) vertical. 
D) downward sloping. 
A) an upward sloping straight line that intersects the origin. 
B) horizontal. 
C) vertical. 
D) downward sloping.

Question 17

-Refer to the above table. What is the absolute price elasticity of demand when price changes from $6.00 to $6.50?

Accepted Answer

A) 1.60 
B) 1.00 
C) 0.65 
D) 0.60 
A) 1.60 
B) 1.00 
C) 0.65 
D) 0.60

Question 18

When demand is elastic,

Accepted Answer

A) a proportionately small change in price leads to a proportionately large change in quantity supplied. 
B) a proportionately small change in price leads to a proportionately small change in quantity supplied. 
C) a proportionately small change in price leads to a proportionately large change in quantity demanded. 
D) a proportionately small change in price leads to a proportionately small change in quantity demanded. 
A) a proportionately small change in price leads to a proportionately large change in quantity supplied. 
B) a proportionately small change in price leads to a proportionately small change in quantity supplied. 
C) a proportionately small change in price leads to a proportionately large change in quantity demanded. 
D) a proportionately small change in price leads to a proportionately small change in quantity demanded.

Question 19

Suppose that the demand for pizza is inelastic. If a pizzeria decided to lower the price of pizza, total revenue would

Accepted Answer

A) increase. 
B) decrease. 
C) stay the same. 
D) be maximized. 
A) increase. 
B) decrease. 
C) stay the same. 
D) be maximized.

Question 20

When quantity supplied is not very responsive to a change in price, supply is

Accepted Answer

A) elastic. 
B) unit-elastic. 
C) inelastic. 
D) income sensitive. 
A) elastic. 
B) unit-elastic. 
C) inelastic. 
D) income sensitive.

-Refer to the above table. For which prices is demand inelastic?

Wheat is sold in world markets, usually priced in terms of bushels. In the market for wheat, the price elasticity of demand for wheat would be expressed as

When economists want to obtain a measure of the responsiveness of quantity demanded to changes in price, they use

If the cross price elasticity of demand between two goods is negative, then the two goods are

If the cross price elasticity of demand between Los Angeles Lakers professional basketball tickets and Los Angeles Dodgers professional baseball tickets is positive, then the two goods are

If demand is perfectly elastic everywhere along the demand curve, then

The cross elasticity of demand is

When two goods are substitutes,

Suppose that the value of the short-run absolute elasticity of demand for a good is 0.38. Then, we know the long-run absolute price elasticity of demand will be

A perfectly elastic demand curve

The price elasticity of demand can be computed as

If total revenues decline when the market clearing price increases, then we know that

When demand is perfectly inelastic, the demand curve is

A demand relationship in which the quantity demanded changes exactly in proportion to the change in price is

A perfectly inelastic supply curve is

-Refer to the above table. What is the absolute price elasticity of demand when price changes from $6.00 to $6.50?

When demand is elastic,

Suppose that the demand for pizza is inelastic. If a pizzeria decided to lower the price of pizza, total revenue would

When quantity supplied is not very responsive to a change in price, supply is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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Exam 19: Demand and Supply Elasticity

-Refer to the above table. For which prices is demand inelastic?

Wheat is sold in world markets, usually priced in terms of bushels. In the market for wheat, the price elasticity of demand for wheat would be expressed as

When economists want to obtain a measure of the responsiveness of quantity demanded to changes in price, they use

If the cross price elasticity of demand between two goods is negative, then the two goods are

If the cross price elasticity of demand between Los Angeles Lakers professional basketball tickets and Los Angeles Dodgers professional baseball tickets is positive, then the two goods are

If demand is perfectly elastic everywhere along the demand curve, then

The cross elasticity of demand is

When two goods are substitutes,

Suppose that the value of the short-run absolute elasticity of demand for a good is 0.38. Then, we know the long-run absolute price elasticity of demand will be

A perfectly elastic demand curve

The price elasticity of demand can be computed as

If total revenues decline when the market clearing price increases, then we know that

When demand is perfectly inelastic, the demand curve is

A demand relationship in which the quantity demanded changes exactly in proportion to the change in price is

A perfectly inelastic supply curve is

-Refer to the above table. What is the absolute price elasticity of demand when price changes from $6.00 to $6.50?

When demand is elastic,

Suppose that the demand for pizza is inelastic. If a pizzeria decided to lower the price of pizza, total revenue would

When quantity supplied is not very responsive to a change in price, supply is

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters