Question 1

The result of the calculation of the price elasticity of demand is

Accepted Answer

A) always positive. 
B) always negative. 
C) sometimes positive, sometimes negative. 
D) always greater than one. 
A) always positive. 
B) always negative. 
C) sometimes positive, sometimes negative. 
D) always greater than one.

Question 2

For most goods and services the income elasticity of demand is

Accepted Answer

A) negative. 
B) positive. 
C) invisible. 
D) inverse. 
A) negative. 
B) positive. 
C) invisible. 
D) inverse.

Question 3

If a price decrease of a product significantly raises its revenues, then the absolute price elasticity of demand for that product must be

Accepted Answer

A) less than one. 
B) equal to one. 
C) greater than one. 
D) an example of unit elasticity. 
A) less than one. 
B) equal to one. 
C) greater than one. 
D) an example of unit elasticity.

Question 4

Tickets for the Super Bowl are an example of supply that is

Accepted Answer

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

Question 5

To say that demand is inelastic means that

Accepted Answer

A) people do not like the good very much. 
B) quantity demanded not very responsive to price changes. 
C) relatively small changes in price lead to relatively large changes in quantity demanded. 
D) relatively small changes in quantity demanded lead to relatively small changes in price. 
A) people do not like the good very much. 
B) quantity demanded not very responsive to price changes. 
C) relatively small changes in price lead to relatively large changes in quantity demanded. 
D) relatively small changes in quantity demanded lead to relatively small changes in price.

Question 6

-Supply will become more elastic when

Accepted Answer

A) a time period lengthens. 
B) the time period shortens. 
C) the good is important to consumers. 
D) there are good substitutes for the goods. 
A) a time period lengthens. 
B) the time period shortens. 
C) the good is important to consumers. 
D) there are good substitutes for the goods.

Question 7

-According to the above table, what is the absolute price elasticity of demand if price falls from $8.00 to $7.50?

Accepted Answer

A) 4.00 
B) 2.82 
C) 1.80 
D) 1.21 
A) 4.00 
B) 2.82 
C) 1.80 
D) 1.21

Question 8

The income elasticity of demand

Accepted Answer

A) is positive only. 
B) is negative only. 
C) must lie between -1 and +1. 
D) can be positive, negative, or zero. 
A) is positive only. 
B) is negative only. 
C) must lie between -1 and +1. 
D) can be positive, negative, or zero.

Question 9

-Use the above table. Based on the information in the table, artisan bread is a(n)

Accepted Answer

A) normal good. 
B) necessary good. 
C) inferior good. 
D) negative good. 
A) normal good. 
B) necessary good. 
C) inferior good. 
D) negative good.

Question 10

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

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 11

If a good has an absolute price elasticity of 0, the demand for the good is

Accepted Answer

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

Question 12

The price elasticity of demand is measured by the

Accepted Answer

A) percentage change in quantity demanded divided by the percentage change in price. 
B) percentage change in price divided by the percentage change in quantity demanded. 
C) change in quantity demanded divided by the change in price. 
D) change in price divided by the change in quantity demanded. 
A) percentage change in quantity demanded divided by the percentage change in price. 
B) percentage change in price divided by the percentage change in quantity demanded. 
C) change in quantity demanded divided by the change in price. 
D) change in price divided by the change in quantity demanded.

Question 13

Explain the three possible ranges for price elasticity of demand.

Accepted Answer

If the percentage change in quantity dem

Question 14

"Income elasticity of demand is always positive." Do you agree or disagree? Explain.

Accepted Answer

Disagree. Income elasticity of demand ca

Question 15

Color television prices rise by 10 percent, and in response the quantity of those TVs supplied increases by 6 percent. The supply elasticity for color television sets in that price range is

Accepted Answer

A) 0.6. 
B) 1.66. 
C) 6.0. 
D) -1.66. 
A) 0.6. 
B) 1.66. 
C) 6.0. 
D) -1.66.

Question 16

If the price elasticity of supply of television sets is constant and equal to 3, a 10 percent increase in price will result in a change in quantity supplied equal to

Accepted Answer

A) 3 1/3 percent. 
B) 30 percent. 
C) 1/3 percent. 
D) -30 percent. 
A) 3 1/3 percent. 
B) 30 percent. 
C) 1/3 percent. 
D) -30 percent.

Question 17

-In the above figure, over the price range P5P6, demand is

Accepted Answer

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

Question 18

Janice earns an income of $2,000 a week and goes out to lunch 3 times a week. If her income increased to $2,100 she would go out to lunch 4 times a week. Compute Janice's income elasticity of demand.

Accepted Answer

A) 0.17 
B) 5.86 
C) 7 
D) 100 
A) 0.17 
B) 5.86 
C) 7 
D) 100

Question 19

When the price of cable modems decreased from $100 to $85, the number of cable modems produced fell from 1,000 per week to 850 per week. Using this information, we know the supply of cable modems is

Accepted Answer

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

Question 20

-Refer to the above table. What is the absolute price elasticity of demand when a price rises from $9 to $9.50?

Accepted Answer

A) 0.35 
B) 0.55 
C) 2.57 
D) 2.85 
A) 0.35 
B) 0.55 
C) 2.57 
D) 2.85

Exam 19: Demand and Supply Elasticity

The result of the calculation of the price elasticity of demand is

For most goods and services the income elasticity of demand is

If a price decrease of a product significantly raises its revenues, then the absolute price elasticity of demand for that product must be

Tickets for the Super Bowl are an example of supply that is

To say that demand is inelastic means that

-Supply will become more elastic when

-According to the above table, what is the absolute price elasticity of demand if price falls from $8.00 to $7.50?

The income elasticity of demand

-Use the above table. Based on the information in the table, artisan bread is a(n)

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

If a good has an absolute price elasticity of 0, the demand for the good is

The price elasticity of demand is measured by the

Explain the three possible ranges for price elasticity of demand.

"Income elasticity of demand is always positive." Do you agree or disagree? Explain.

Color television prices rise by 10 percent, and in response the quantity of those TVs supplied increases by 6 percent. The supply elasticity for color television sets in that price range is

If the price elasticity of supply of television sets is constant and equal to 3, a 10 percent increase in price will result in a change in quantity supplied equal to

-In the above figure, over the price range P5P6, demand is

Janice earns an income of $2,000 a week and goes out to lunch 3 times a week. If her income increased to $2,100 she would go out to lunch 4 times a week. Compute Janice's income elasticity of demand.

When the price of cable modems decreased from $100 to $85, the number of cable modems produced fell from 1,000 per week to 850 per week. Using this information, we know the supply of cable modems is

-Refer to the above table. What is the absolute price elasticity of demand when a price rises from $9 to $9.50?

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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