Exam 6: Elasticity

Suppose the price elasticity of demand for cheeseburgers equals 0.37.This means the overall demand for cheeseburgers is: A.price elastic. B.price inelastic. C.price unit-elastic. D.perfectly price inelastic.

The price elasticity of demand is measured by: A.dividing the percentage change in the price by the percentage change in the quantity demanded. B.dividing the percentage change in the quantity demanded by the percentage change in the price. C.subtracting the percentage change in the price from the percentage change in the quantity demanded. D.adding the percentage change in the price to the percentage change in the quantity demanded.

Which of the following is likely to make supply more inelastic? A.The time period under consideration is very short. B.The inputs necessary for production cannot readily be increased. C.The good is necessary for survival (e.g., a life-saving drug). D.The time period under consideration is very short and the inputs necessary for production cannot readily be increased.

If an increase in income leads to an increase in the demand for a good, then the good is said to be: A.normal. B.a luxury. C.inferior. D.a staple or necessity.

The mayor advocates raising the entrance fee at the city's pools to increase revenue for the city.The mayor is right only if the price effect dominates the quantity effect.

The price elasticity of demand for ground beef has been estimated to be 1.0.If mad cow disease strikes the United States and a large percentage of the cattle are removed from the market, how will that affect total expenditures on hamburger, all other things equal? A.Total expenditures will remain unchanged. B.Total expenditures will fall by more than 1%. C.Demand will fall by 1%, but total expenditures will fall by less than 1%. D.Total expenditures will rise.

If the price elasticity of demand is found to be 6, then demand is: A.price-inelastic. B.price-elastic. C.price unit-elastic. D.horizontal.

Suppose the price of Vanilla Coke increases by 9% and quantity demanded falls by 13% overall but only by 4% for loyal Coca-Cola customers.This means that for the general public there are for Vanilla Coke, but for loyal Coca-Cola customers, Vanilla Coke is more of item.This means that Coca-Cola will enjoy an increase in total revenue only from ________. A.several substitutes; a necessity; loyal Coca-Cola customers B.few substitutes; a luxury; the general public C.no substitutes; a necessity; the general public D.several substitutes; a necessity; the general public

Local cable companies recently increased the price of basic services.A news expert reporting on the increase stated, "While prices have increased 40%, the cable company reports only a 20% increase in revenue." This remark suggests the demand for basic cable service is elastic.

(Table: Johnson's Income and Expenditures) Look again at the table Johnson's Income and Expenditures.Johnson's income elasticity of demand for magazines is: A.negative. B.0. C.greater than 0 but less than 1. D.1.

(Table: Johnson's Income and Expenditures) Look at the table Johnson's Income and Expenditures.Johnson's income elasticity of demand for steaks is: A.greater than 1. B.1. C.less than 1 but greater than 0. D.0.

The demand for agricultural output is price inelastic.This means that if farmers, taken collectively, have a bumper crop, they will experience: A.lower prices, greater quantities sold, and lower incomes. B.lower prices, greater quantities sold, and higher incomes. C.lower prices, lower quantities sold, and lower incomes. D.higher prices, higher quantities sold, and higher incomes.

There is no total revenue test for price elasticity of supply because:

Figure: The Demand Curve (Figure: The Demand Curve) Look at the figure The Demand Curve.Using the midpoint method, the price elasticity of demand between $8 and $9 is approximately:

Figure: The Demand for e-Books (Figure: The Demand for e-Books) Look at the figure The Demand for e-Books.What is the price elasticity of demand (using the midpoint method) when the price decreases from $6 to $4? A.5/9 B.1/2 C.1 D.2/3

Figure: The Demand Curve (Figure: The Demand Curve) Look again at the figure The Demand Curve.Using the midpoint method the price elasticity of demand between $3 and $4 is approximately:

All of the following are characteristics of elastic demand except: A.short periods of adjustment. B.a large number of substitutes. C.goods with elastic demand that are nonessential goods such as take-out food. D.goods with elastic demand that are specific brands of goods.

Consider the market for strawberries.Which of the following statements most likely applies to the strawberry market? A.The income elasticity of demand for strawberries is negative. B.The price elasticity of supply of strawberries is greater in the short run than it is in the long run. C.The price elasticity of demand for strawberries is lower in the long run than it is in the short run. D.The cross-price elasticity of demand for strawberries with respect to the price of raspberries is positive.

An important determinant of the price elasticity of demand is the: A.time period. B.price of related goods. C.level of technology. D.quantity of the good supplied.

Figure: The Linear Demand Curve II (Figure: The Linear Demand Curve II) Look at the figure Linear Demand Curve II.At prices greater than $8, demand is ________, while prices below $8 are , and demand at $8 is _. A.elastic; inelastic; unit-elastic B.inelastic; elastic; unit-elastic C.unit-elastic; inelastic; elastic D.equal to 0; elastic; inelastic