Question 1

If a product has a short-run elasticity of supply equal to zero, then an increase in the demand for the product will

Accepted Answer

A) have no effect on price or quantity sold. 
B) increase price and leave quantity sold unchanged. 
C) increase price and reduce the quantity sold to zero. 
D) leave the price unchanged and reduce the quantity sold. 
A) have no effect on price or quantity sold. 
B) increase price and leave quantity sold unchanged. 
C) increase price and reduce the quantity sold to zero. 
D) leave the price unchanged and reduce the quantity sold.

Question 2

A leftward shift in the supply curve of product X will increase equilibrium price to a greater extent the

Accepted Answer

A) more elastic the supply curve. 
B) larger the elasticity of demand coefficient. 
C) more elastic the demand for the product. 
D) more inelastic the demand for the product. 
A) more elastic the supply curve. 
B) larger the elasticity of demand coefficient. 
C) more elastic the demand for the product. 
D) more inelastic the demand for the product.

Question 3

The smaller the number of good substitutes for a product, the greater will be the price elasticity of demand for it.

Accepted Answer

A) True 
 B)False

Question 4

If demand for farm crops is inelastic, a good harvest will cause farm revenues to

Accepted Answer

A) increase because of the increase in the quantity that farmers can sell. 
B) increase because of a downward movement along the supply curve, encouraging an increase in demand. 
C) decrease because of a percentage fall in price that is greater than the percentage increase in quantity sold. 
D) remain unchanged, because the increase in quantity that can be sold will be matched by an equal decrease in price. 
A) increase because of the increase in the quantity that farmers can sell. 
B) increase because of a downward movement along the supply curve, encouraging an increase in demand. 
C) decrease because of a percentage fall in price that is greater than the percentage increase in quantity sold. 
D) remain unchanged, because the increase in quantity that can be sold will be matched by an equal decrease in price.

Question 5

In interpreting the Ed value as either elastic or inelastic, we look at the

Accepted Answer

A) Ed coefficient with its negative sign. 
B) absolute value of the Ed coefficient. 
C) percentage change in price. 
D) percentage change in quantity. 
A) Ed coefficient with its negative sign. 
B) absolute value of the Ed coefficient. 
C) percentage change in price. 
D) percentage change in quantity.

Question 6

Most demand curves are relatively elastic in the upper-left portion because the original price

Accepted Answer

A) and quantity from which the percentage changes in price and quantity are calculated are both large. 
B) and quantity from which the percentage changes in price and quantity are calculated are both small. 
C) from which the percentage price change is calculated is small and the original quantity from which the percentage change in quantity is calculated is large. 
D) from which the percentage price change is calculated is large and the original quantity from which the percentage change in quantity is calculated is small. 
A) and quantity from which the percentage changes in price and quantity are calculated are both large. 
B) and quantity from which the percentage changes in price and quantity are calculated are both small. 
C) from which the percentage price change is calculated is small and the original quantity from which the percentage change in quantity is calculated is large. 
D) from which the percentage price change is calculated is large and the original quantity from which the percentage change in quantity is calculated is small.

Question 7

(Last Word) Microsoft charges a substantially lower price for a software upgrade than for the initial purchase of the software.This implies that Microsoft views the demand curve for the software upgrade to be

Accepted Answer

A) more elastic than the demand for the original software. 
B) upsloping rather than downsloping. 
C) less elastic than the demand for the original software. 
D) of less value than the original software. 
A) more elastic than the demand for the original software. 
B) upsloping rather than downsloping. 
C) less elastic than the demand for the original software. 
D) of less value than the original software.

Question 8

Chuck has a price elasticity of demand for beer of 1.2.Suppose that the price of beer is increased by 10 percent.What will happen to the total amount Chuck spends on beer?

Accepted Answer

A) It will not change. 
B) It will decrease. 
C) It will increase. 
D) It is impossible to tell. 
A) It will not change. 
B) It will decrease. 
C) It will increase. 
D) It is impossible to tell.

Question 9

The supply of product X is inelastic (but not perfectly inelastic) if the price of X rises by

Accepted Answer

A) 5 percent and quantity supplied rises by 7 percent. 
B) 8 percent and quantity supplied rises by 8 percent. 
C) 10 percent and quantity supplied remains the same. 
D) 7 percent and quantity supplied rises by 5 percent. 
A) 5 percent and quantity supplied rises by 7 percent. 
B) 8 percent and quantity supplied rises by 8 percent. 
C) 10 percent and quantity supplied remains the same. 
D) 7 percent and quantity supplied rises by 5 percent.

Question 10

(Last Word) Based on the concept of price elasticity of demand, which of the following cases is most likely to occur?

Accepted Answer

A) golf courses charging higher prices for golf during the week than on weekends 
B) movie theaters charging higher prices for senior citizens 
C) colleges charging lower tuition for low-income students 
D) airlines charging lower fares for business travelers 
A) golf courses charging higher prices for golf during the week than on weekends 
B) movie theaters charging higher prices for senior citizens 
C) colleges charging lower tuition for low-income students 
D) airlines charging lower fares for business travelers

Question 11

Suppose the price of a product rises and the total revenue of sellers increases.

Accepted Answer

A) It can be concluded that the demand for the product is elastic. 
B) It can be concluded that the supply of the product is elastic. 
C) It can be concluded that the supply of the product is inelastic. 
D) No conclusion can be reached with respect to the elasticity of supply. 
A) It can be concluded that the demand for the product is elastic. 
B) It can be concluded that the supply of the product is elastic. 
C) It can be concluded that the supply of the product is inelastic. 
D) No conclusion can be reached with respect to the elasticity of supply.

Question 12

The price-elasticity of demand is always negative because of

Accepted Answer

A) the law of demand. 
B) percentage changes being used in the formula. 
C) the midpoint formula. 
D) scarcity. 
A) the law of demand. 
B) percentage changes being used in the formula. 
C) the midpoint formula. 
D) scarcity.

Question 13

If a firm can sell 3,000 units of product A at $10 per unit and 5,000 at $8, then

Accepted Answer

A) the price elasticity of demand is 0.44. 
B) A is a complementary good. 
C) the price elasticity of demand is 2.25. 
D) A is an inferior good. 
A) the price elasticity of demand is 0.44. 
B) A is a complementary good. 
C) the price elasticity of demand is 2.25. 
D) A is an inferior good.

Question 14

If a college admits only a fixed number of applicants every year, then the school's supply curve for admissions is

Accepted Answer

A) perfectly elastic. 
B) perfectly inelastic. 
C) quite flat. 
D) downward-sloping. 
A) perfectly elastic. 
B) perfectly inelastic. 
C) quite flat. 
D) downward-sloping.

Question 15

The price of gold is often volatile because

Accepted Answer

A) demand is relatively inelastic, so changes in supply have a large effect on price. 
B) supply is relatively elastic, so changes in demand have a large effect on price. 
C) demand is relatively elastic, so changes in supply have a large effect on price. 
D) supply is relatively inelastic, so changes in demand have a large effect on price. 
A) demand is relatively inelastic, so changes in supply have a large effect on price. 
B) supply is relatively elastic, so changes in demand have a large effect on price. 
C) demand is relatively elastic, so changes in supply have a large effect on price. 
D) supply is relatively inelastic, so changes in demand have a large effect on price.

Question 16

A glass company making windows for houses also makes windows for other things (cars, boats, stores, etc.).We would expect its supply curve for house windows to be

Accepted Answer

A) dependent on the demand for boat and plane windows. 
B) no different from that of firms which make only house windows. 
C) relatively more elastic than those of firms that make only house windows 
D) relatively more inelastic than those of firms that make only house windows 
A) dependent on the demand for boat and plane windows. 
B) no different from that of firms which make only house windows. 
C) relatively more elastic than those of firms that make only house windows 
D) relatively more inelastic than those of firms that make only house windows

Question 17

(Last Word) Suppose that a firm has "pricing power" and can segregate its market into two distinct groups based on differences in elasticities of demand.The firm might charge

Accepted Answer

A) a lower price to the group that has the less elastic demand. 
B) a higher price to the group that has the less elastic demand. 
C) the same price to both groups but include a "free" related product for the group that has an inelastic demand. 
D) the same price to both groups but make it difficult for the group with the more elastic demand to gain access to the product. 
A) a lower price to the group that has the less elastic demand. 
B) a higher price to the group that has the less elastic demand. 
C) the same price to both groups but include a "free" related product for the group that has an inelastic demand. 
D) the same price to both groups but make it difficult for the group with the more elastic demand to gain access to the product.

Question 18

Which of the following factors will make the demand for a product relatively elastic?

Accepted Answer

A) There are few substitutes. 
B) The time interval considered is long. 
C) The good is considered a necessity. 
D) Purchases of the good require a small portion of consumers' budgets. 
A) There are few substitutes. 
B) The time interval considered is long. 
C) The good is considered a necessity. 
D) Purchases of the good require a small portion of consumers' budgets.

Question 19

Which of the following generalizations is not correct? Blooms: Remember

Accepted Answer

A) The larger an item is in one's budget, the greater the price elasticity of demand. 
B) The price elasticity of demand is greater for necessities than it is for luxuries. 
C) The larger the number of close substitutes available, the greater will be the price elasticity of demand for a particular product. 
D) The price elasticity of demand is greater the longer the time period under consideration. 
A) The larger an item is in one's budget, the greater the price elasticity of demand. 
B) The price elasticity of demand is greater for necessities than it is for luxuries. 
C) The larger the number of close substitutes available, the greater will be the price elasticity of demand for a particular product. 
D) The price elasticity of demand is greater the longer the time period under consideration.

Question 20

Refer to the table.Over the $6-$4 price range, supply is

Accepted Answer

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

Exam 6: Elasticity

If a product has a short-run elasticity of supply equal to zero, then an increase in the demand for the product will

A leftward shift in the supply curve of product X will increase equilibrium price to a greater extent the

The smaller the number of good substitutes for a product, the greater will be the price elasticity of demand for it.

If demand for farm crops is inelastic, a good harvest will cause farm revenues to

In interpreting the Ed value as either elastic or inelastic, we look at the

Most demand curves are relatively elastic in the upper-left portion because the original price

(Last Word) Microsoft charges a substantially lower price for a software upgrade than for the initial purchase of the software.This implies that Microsoft views the demand curve for the software upgrade to be

Chuck has a price elasticity of demand for beer of 1.2.Suppose that the price of beer is increased by 10 percent.What will happen to the total amount Chuck spends on beer?

The supply of product X is inelastic (but not perfectly inelastic) if the price of X rises by

(Last Word) Based on the concept of price elasticity of demand, which of the following cases is most likely to occur?

Suppose the price of a product rises and the total revenue of sellers increases.

The price-elasticity of demand is always negative because of

If a firm can sell 3,000 units of product A at $10 per unit and 5,000 at $8, then

If a college admits only a fixed number of applicants every year, then the school's supply curve for admissions is

The price of gold is often volatile because

A glass company making windows for houses also makes windows for other things (cars, boats, stores, etc.).We would expect its supply curve for house windows to be

(Last Word) Suppose that a firm has "pricing power" and can segregate its market into two distinct groups based on differences in elasticities of demand.The firm might charge

Which of the following factors will make the demand for a product relatively elastic?

Which of the following generalizations is not correct? Blooms: Remember

Refer to the table.Over the $6-$4 price range, supply is

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Utility Maximization

Behavioral Economics

Businesses and the Costs of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Technology, Rd, and Efficiency

The Demand for Resources

Wage Determination

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Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

Income Inequality, Poverty, and Discrimination

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Immigration

An Introduction to Macroeconomics

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Business Cycles, Unemployment, and Inflation

Basic Macroeconomic Relationships

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Money, Banking, and Financial Institutions

Money Creation

Interest Rates and Monetary Policy

Financial Economics

Extending the Analysis of Aggregate Supply

Current Issues in Macro Theory and Policy

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The Balance of Payments, Exchange Rates, and Trade Deficits

The Economics of Developing Countries

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