Question 1

Suppose that when the price of good X changes, the quantity of good Y demanded remains the same. The cross price elasticity of demand is

Accepted Answer

A) zero. 
B) positive. 
C) negative. 
D) either positive or negative. 
A) zero. 
B) positive. 
C) negative. 
D) either positive or negative.

Question 2

When the price of a video rental was $2.00, ticket sales at the local movie theatre averaged 180 admissions per night. Then the video store reduced the price of a video rental to $1, and the theatre manager reported that ticket sales had fallen to 126 per night. What is the approximate value of the cross price elasticity of demand between video rentals and theatre tickets?

Accepted Answer

A) -0.53 
B) +0.30 
C) +0.53 
D) +1.67 
A) -0.53 
B) +0.30 
C) +0.53 
D) +1.67

Question 3

If a 1 percent increase in price causes a 2 percent increase in quantity supplied, then supply is

Accepted Answer

A) elastic. 
B) inelastic. 
C) unit elastic. 
D) infinite. 
A) elastic. 
B) inelastic. 
C) unit elastic. 
D) infinite.

Question 4

If goods are completely unrelated, their cross price elasticity will

Accepted Answer

A) be greater than one. 
B) be less than one. 
C) be equal to zero. 
D) be negative. 
A) be greater than one. 
B) be less than one. 
C) be equal to zero. 
D) be negative.

Question 5

The cross price elasticity of demand between two goods is 50. We may conclude that

Accepted Answer

A) the two goods are very complementary and probably are sold together. 
B) the two goods are poor substitutes for each other. 
C) the demand for one of the goods is likely to be fairly elastic and the demand for the other good is likely to be fairly inelastic. 
D) the demand for each of the goods is likely to be very elastic. 
A) the two goods are very complementary and probably are sold together. 
B) the two goods are poor substitutes for each other. 
C) the demand for one of the goods is likely to be fairly elastic and the demand for the other good is likely to be fairly inelastic. 
D) the demand for each of the goods is likely to be very elastic.

Question 6

All of the following are true regarding the relationship between price elasticity of demand and total revenues EXCEPT

Accepted Answer

A) when market demand is elastic, if the market price declines, then total revenues will rise. 
B) when market demand is unit elastic, if the market price rises, then total revenues will not change. 
C) when market demand is inelastic, if the market price falls, then total revenues will decrease. 
D) when market demand is inelastic, if the market price rises, then total revenues will decrease. 
A) when market demand is elastic, if the market price declines, then total revenues will rise. 
B) when market demand is unit elastic, if the market price rises, then total revenues will not change. 
C) when market demand is inelastic, if the market price falls, then total revenues will decrease. 
D) when market demand is inelastic, if the market price rises, then total revenues will decrease.

Question 7

Over the inelastic range of a demand curve, there is

Accepted Answer

A) a positive relationship between a given percentage change in price and a change in total revenues. 
B) a negative relationship between a given percentage change in price and a change in total revenues. 
C) an increase in total revenues regardless of an increase or decrease in price. 
D) no relationship between changes in price and changes in total revenues. 
A) a positive relationship between a given percentage change in price and a change in total revenues. 
B) a negative relationship between a given percentage change in price and a change in total revenues. 
C) an increase in total revenues regardless of an increase or decrease in price. 
D) no relationship between changes in price and changes in total revenues.

Question 8

The price elasticity of demand along a linear demand curve is

Accepted Answer

A) more elastic at higher prices than at low prices. 
B) infinite. 
C) one. 
D) constant. 
A) more elastic at higher prices than at low prices. 
B) infinite. 
C) one. 
D) constant.

Question 9

The difference between price elasticity of demand and income elasticity of demand is that

Accepted Answer

A) income elasticity of demand examines how an individual's income changes when prices change and the price elasticity of demand examines how quantity demand changes when price changes. 
B) income elasticity refers to the movement along the demand curve while price elasticity refers to a horizontal shift of the demand curve. 
C) income elasticity measures the responsiveness of income to changes in supply while price elasticity of demand measures the responsiveness of demand to a change in price. 
D) income elasticity refers to a horizontal shift of the demand curve while price elasticity of demand refers to a movement along the demand curve. 
A) income elasticity of demand examines how an individual's income changes when prices change and the price elasticity of demand examines how quantity demand changes when price changes. 
B) income elasticity refers to the movement along the demand curve while price elasticity refers to a horizontal shift of the demand curve. 
C) income elasticity measures the responsiveness of income to changes in supply while price elasticity of demand measures the responsiveness of demand to a change in price. 
D) income elasticity refers to a horizontal shift of the demand curve while price elasticity of demand refers to a movement along the demand curve.

Question 10

The greater is the absolute price elasticity of demand, the

Accepted Answer

A) larger is the responsiveness of quantity demanded to the price change. 
B) smaller is the responsiveness to a price change. 
C) larger is the income of the buyer. 
D) higher is the change in demand to an income change. 
A) larger is the responsiveness of quantity demanded to the price change. 
B) smaller is the responsiveness to a price change. 
C) larger is the income of the buyer. 
D) higher is the change in demand to an income change.

Question 11

-In the above figure, the range of unit elasticity occurs

Accepted Answer

A) on the vertical axis. 
B) on the horizontal axis. 
C) between point c and point d. 
D) below point e. 
A) on the vertical axis. 
B) on the horizontal axis. 
C) between point c and point d. 
D) below point e.

Question 12

If the absolute price elasticity of demand is equal to 1 in the short run, then in the long run, other things being equal, the absolute price elasticity of demand will be

Accepted Answer

A) less than one. 
B) less than zero. 
C) greater than one. 
D) equal to zero. 
A) less than one. 
B) less than zero. 
C) greater than one. 
D) equal to zero.

Question 13

-In the above figure, along which range would total revenue rise by lowering prices?

Accepted Answer

A) Between point a and point b 
B) Between point c and point d 
C) Between point d and point e 
D) Below point e 
A) Between point a and point b 
B) Between point c and point d 
C) Between point d and point e 
D) Below point e

Question 14

If the price of hamburger meat increases by 20 percent and the quantity supplied by meat packing companies increases by 30 percent, what is the price elasticity of supply?

Accepted Answer

A) 1.65 
B) 1.20 
C) 0.67 
D) 1.50 
A) 1.65 
B) 1.20 
C) 0.67 
D) 1.50

Question 15

A movie theatre raises ticket prices from $8 to $10 in order to raise revenues. The theatre's management is assuming the absolute value of the price elasticity of demand for tickets is

Accepted Answer

A) less than 1. 
B) greater than 1. 
C) equal to 1. 
D) infinity. 
A) less than 1. 
B) greater than 1. 
C) equal to 1. 
D) infinity.

Question 16

For which of the following purchases would the absolute price elasticity of demand be greatest?

Accepted Answer

A) A sports car 
B) Utilities 
C) Chewing gum 
D) A cell phone 
A) A sports car 
B) Utilities 
C) Chewing gum 
D) A cell phone

Question 17

Absolute price elasticities are calculated for four commodities, and the values are: 0.009; 1.0; 3.3; and 4.1. Which indicates the most price-responsive situation?

Accepted Answer

A) 0.009 
B) 1.0 
C) 3.3 
D) 4.1 
A) 0.009 
B) 1.0 
C) 3.3 
D) 4.1

Question 18

If the quantity demanded of a product is the same for each possible price, demand is

Accepted Answer

A) unit-elastic. 
B) elastic. 
C) perfectly elastic. 
D) perfectly inelastic. 
A) unit-elastic. 
B) elastic. 
C) perfectly elastic. 
D) perfectly inelastic.

Question 19

If the prices of computer tablets rise, we would expect the number of tablet covers purchased to

Accepted Answer

A) increase. 
B) decrease. 
C) be equal to ten. 
D) be equal to one. 
A) increase. 
B) decrease. 
C) be equal to ten. 
D) be equal to one.

Question 20

When very few substitutes for a good exist, demand will be

Accepted Answer

A) elastic. 
B) unit-elastic. 
C) inelastic. 
D) perfectly elastic. 
A) elastic. 
B) unit-elastic. 
C) inelastic. 
D) perfectly elastic.

Suppose that when the price of good X changes, the quantity of good Y demanded remains the same. The cross price elasticity of demand is

If a 1 percent increase in price causes a 2 percent increase in quantity supplied, then supply is

If goods are completely unrelated, their cross price elasticity will

The cross price elasticity of demand between two goods is 50. We may conclude that

All of the following are true regarding the relationship between price elasticity of demand and total revenues EXCEPT

Over the inelastic range of a demand curve, there is

The price elasticity of demand along a linear demand curve is

The difference between price elasticity of demand and income elasticity of demand is that

The greater is the absolute price elasticity of demand, the

-In the above figure, the range of unit elasticity occurs

If the absolute price elasticity of demand is equal to 1 in the short run, then in the long run, other things being equal, the absolute price elasticity of demand will be

-In the above figure, along which range would total revenue rise by lowering prices?

If the price of hamburger meat increases by 20 percent and the quantity supplied by meat packing companies increases by 30 percent, what is the price elasticity of supply?

A movie theatre raises ticket prices from $8 to $10 in order to raise revenues. The theatre's management is assuming the absolute value of the price elasticity of demand for tickets is

For which of the following purchases would the absolute price elasticity of demand be greatest?

Absolute price elasticities are calculated for four commodities, and the values are: 0.009; 1.0; 3.3; and 4.1. Which indicates the most price-responsive situation?

If the quantity demanded of a product is the same for each possible price, demand is

If the prices of computer tablets rise, we would expect the number of tablet covers purchased to

When very few substitutes for a good exist, demand will be

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

Suppose that when the price of good X changes, the quantity of good Y demanded remains the same. The cross price elasticity of demand is

If a 1 percent increase in price causes a 2 percent increase in quantity supplied, then supply is

If goods are completely unrelated, their cross price elasticity will

The cross price elasticity of demand between two goods is 50. We may conclude that

All of the following are true regarding the relationship between price elasticity of demand and total revenues EXCEPT

Over the inelastic range of a demand curve, there is

The price elasticity of demand along a linear demand curve is

The difference between price elasticity of demand and income elasticity of demand is that

The greater is the absolute price elasticity of demand, the

-In the above figure, the range of unit elasticity occurs

If the absolute price elasticity of demand is equal to 1 in the short run, then in the long run, other things being equal, the absolute price elasticity of demand will be

-In the above figure, along which range would total revenue rise by lowering prices?

If the price of hamburger meat increases by 20 percent and the quantity supplied by meat packing companies increases by 30 percent, what is the price elasticity of supply?

A movie theatre raises ticket prices from $8 to $10 in order to raise revenues. The theatre's management is assuming the absolute value of the price elasticity of demand for tickets is

For which of the following purchases would the absolute price elasticity of demand be greatest?

Absolute price elasticities are calculated for four commodities, and the values are: 0.009; 1.0; 3.3; and 4.1. Which indicates the most price-responsive situation?

If the quantity demanded of a product is the same for each possible price, demand is

If the prices of computer tablets rise, we would expect the number of tablet covers purchased to

When very few substitutes for a good exist, demand will be

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