Question 1

The price elasticity of demand is computed as the percentage change in the _____ divided by the percentage change in _____.

Accepted Answer

A)  quantity demanded; the quantity supplied. 
B)  price; the quantity demanded. 
C)  quantity demanded; income. 
D)  quantity demanded; the price. 
A)  quantity demanded; the quantity supplied. 
B)  price; the quantity demanded. 
C)  quantity demanded; income. 
D)  quantity demanded; the price.

Question 2

Use the following to answer questions:
Table: Price Elasticity  
-(Table: Price Elasticity) Look at the table Price Elasticity. What is the price elasticity of demand between $2.00 and $1.75?

Accepted Answer

A)  2.33 
B)  3.00 
C)  4.00 
D)  0.125 
A)  2.33 
B)  3.00 
C)  4.00 
D)  0.125

Question 3

If the income elasticity of demand for a good is _____, the good is said to be _____.

Accepted Answer

A)  negative; inferior 
B)  negative; negative 
C)  positive; positive 
D)  negative; normal 
A)  negative; inferior 
B)  negative; negative 
C)  positive; positive 
D)  negative; normal

Question 4

For an inferior good, the income elasticity of demand will be:

Accepted Answer

A)  negative. 
B)  positive. 
C)  zero. 
D)  determined by the direction of the change in income. 
A)  negative. 
B)  positive. 
C)  zero. 
D)  determined by the direction of the change in income.

Question 5

The price elasticity of supply is computed as the percentage change in _____ divided by the percentage change in _____.

Accepted Answer

A)  quantity supplied; quantity demanded 
B)  quantity supplied; price 
C)  price; quantity supplied 
D)  quantity supplied; consumer income 
A)  quantity supplied; quantity demanded 
B)  quantity supplied; price 
C)  price; quantity supplied 
D)  quantity supplied; consumer income

Question 6

A linear demand curve has:

Accepted Answer

A)  a constant price elasticity of demand. 
B)  a price elasticity of demand equal to one at all prices. 
C)  a calculated price elasticity of demand that is positive. 
D)  both elastic and inelastic price elasticities of demand. 
A)  a constant price elasticity of demand. 
B)  a price elasticity of demand equal to one at all prices. 
C)  a calculated price elasticity of demand that is positive. 
D)  both elastic and inelastic price elasticities of demand.

Question 7

The price elasticity of demand for gasoline is likely to be higher in the long run than in the short run.

Accepted Answer

A) True 
 B)False

Question 8

If the price elasticity of supply is:

Accepted Answer

A)  less than 1, then the supply is price-elastic. 
B)  less than 1, then the supply is price-inelastic. 
C)  zero, then price is unit-elastic. 
D)  less than 1, then the supply is very responsive to price changes. 
A)  less than 1, then the supply is price-elastic. 
B)  less than 1, then the supply is price-inelastic. 
C)  zero, then price is unit-elastic. 
D)  less than 1, then the supply is very responsive to price changes.

Question 9

Which of the following is most likely to have a vertical supply curve?

Accepted Answer

A)  salt 
B)  oil 
C)  insulin 
D)  paintings by Van Gogh 
A)  salt 
B)  oil 
C)  insulin 
D)  paintings by Van Gogh

Question 10

Which of the following statements is TRUE?

Accepted Answer

A)  When the income elasticity of demand is positive, the good is inferior. 
B)  When the income elasticity of demand is negative, the good is normal. 
C)  Income elasticity of demand measures how much the quantity demanded of a good is affected by changes in consumers' incomes. 
D)  Income elasticity of demand measures the effect of the change in one good's price on the quantity demanded of the other good. 
A)  When the income elasticity of demand is positive, the good is inferior. 
B)  When the income elasticity of demand is negative, the good is normal. 
C)  Income elasticity of demand measures how much the quantity demanded of a good is affected by changes in consumers' incomes. 
D)  Income elasticity of demand measures the effect of the change in one good's price on the quantity demanded of the other good.

Question 11

The income elasticity of demand for an inferior good, such as a macaroni and cheese dinner, is negative.

Accepted Answer

A) True 
 B)False

Question 12

If your purchases of shoes increase from 9 pairs per year to 11 pairs per year when your income increases from $19,000 to $21,000 a year, other things equal, for you, shoes are considered:

Accepted Answer

A)  a normal good. 
B)  an inferior good. 
C)  a complementary good. 
D)  a substitute good. 
A)  a normal good. 
B)  an inferior good. 
C)  a complementary good. 
D)  a substitute good.

Question 13

Use the following to answer questions:
Table: Price Elasticity  
-(Table: Price Elasticity) Look at the table Price Elasticity. What is the price elasticity of demand between $1.25 and $1.00?

Accepted Answer

A)  0.60 
B)  0.82 
C)  1.00 
D)  1.60 
A)  0.60 
B)  0.82 
C)  1.00 
D)  1.60

Question 14

If the price elasticity of demand between two points on a demand curve is 0.75, then the demand between those two points is:

Accepted Answer

A)  price unit-elastic. 
B)  price-inelastic. 
C)  price-elastic. 
D)  unknown. 
A)  price unit-elastic. 
B)  price-inelastic. 
C)  price-elastic. 
D)  unknown.

Question 15

If demand _____ and the University of Michigan increases the price of football tickets, revenues will increase.

Accepted Answer

A)  is price-inelastic 
B)  is price-elastic 
C)  has price elasticity equal to 1 
D)  is perfectly price-elastic 
A)  is price-inelastic 
B)  is price-elastic 
C)  has price elasticity equal to 1 
D)  is perfectly price-elastic

Question 16

Jessica's income increased by 10% this year. In the same year, Jessica's quantity demanded of milk increased by 10% and her quantity demanded for bread increased by 5%. This means that for Jessica:

Accepted Answer

A)  both milk and bread are inferior goods. 
B)  both milk and bread are normal goods. 
C)  milk is an inferior good, but bread is a normal good. 
D)  milk is a normal good, but bread is an inferior good. 
A)  both milk and bread are inferior goods. 
B)  both milk and bread are normal goods. 
C)  milk is an inferior good, but bread is a normal good. 
D)  milk is a normal good, but bread is an inferior good.

Question 17

Assume the supply curve shifts to the right by a given amount at each price. The price in the market will decline the most if demand is more _____ and supply is more _____.

Accepted Answer

A)  price-elastic; price-elastic 
B)  price-inelastic; price-elastic 
C)  price-elastic; price-inelastic 
D)  price-inelastic; price-inelastic 
A)  price-elastic; price-elastic 
B)  price-inelastic; price-elastic 
C)  price-elastic; price-inelastic 
D)  price-inelastic; price-inelastic

Question 18

Yovanka has diabetes, and she will pay any amount of money for insulin. What is likely the best characterization of Yovanka's demand for insulin?

Accepted Answer

A)  price-inelastic 
B)  price-elastic 
C)  perfectly price-inelastic 
D)  perfectly price-elastic 
A)  price-inelastic 
B)  price-elastic 
C)  perfectly price-inelastic 
D)  perfectly price-elastic

Question 19

If a good is a necessity with few substitutes, all others things equal, then demand will tend to:

Accepted Answer

A)  be more price-elastic. 
B)  be less price-elastic. 
C)  have price elasticity equal to 1. 
D)  be the same as that of a luxury good. 
A)  be more price-elastic. 
B)  be less price-elastic. 
C)  have price elasticity equal to 1. 
D)  be the same as that of a luxury good.

Question 20

The income elasticity of demand of a normal good is always:

Accepted Answer

A)  between 1 and 0. 
B)  less than 0. 
C)  equal to 0. 
D)  greater than 0. 
A)  between 1 and 0. 
B)  less than 0. 
C)  equal to 0. 
D)  greater than 0.

The price elasticity of demand is computed as the percentage change in the _ divided by the percentage change in _.

Use the following to answer questions: Table: Price Elasticity -(Table: Price Elasticity) Look at the table Price Elasticity. What is the price elasticity of demand between $2.00 and $1.75?

If the income elasticity of demand for a good is _, the good is said to be _.

For an inferior good, the income elasticity of demand will be:

The price elasticity of supply is computed as the percentage change in _ divided by the percentage change in _.

A linear demand curve has:

The price elasticity of demand for gasoline is likely to be higher in the long run than in the short run.

If the price elasticity of supply is:

Which of the following is most likely to have a vertical supply curve?

Which of the following statements is TRUE?

The income elasticity of demand for an inferior good, such as a macaroni and cheese dinner, is negative.

If your purchases of shoes increase from 9 pairs per year to 11 pairs per year when your income increases from $19,000 to $21,000 a year, other things equal, for you, shoes are considered:

Use the following to answer questions: Table: Price Elasticity -(Table: Price Elasticity) Look at the table Price Elasticity. What is the price elasticity of demand between $1.25 and $1.00?

If the price elasticity of demand between two points on a demand curve is 0.75, then the demand between those two points is:

If demand _____ and the University of Michigan increases the price of football tickets, revenues will increase.

Jessica's income increased by 10% this year. In the same year, Jessica's quantity demanded of milk increased by 10% and her quantity demanded for bread increased by 5%. This means that for Jessica:

Assume the supply curve shifts to the right by a given amount at each price. The price in the market will decline the most if demand is more _ and supply is more _.

Yovanka has diabetes, and she will pay any amount of money for insulin. What is likely the best characterization of Yovanka's demand for insulin?

If a good is a necessity with few substitutes, all others things equal, then demand will tend to:

The income elasticity of demand of a normal good is always:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

Exam 6: Elasticity

The price elasticity of demand is computed as the percentage change in the _____ divided by the percentage change in _____.

Use the following to answer questions: Table: Price Elasticity -(Table: Price Elasticity) Look at the table Price Elasticity. What is the price elasticity of demand between $2.00 and $1.75?

If the income elasticity of demand for a good is _____, the good is said to be _____.

For an inferior good, the income elasticity of demand will be:

The price elasticity of supply is computed as the percentage change in _____ divided by the percentage change in _____.

A linear demand curve has:

The price elasticity of demand for gasoline is likely to be higher in the long run than in the short run.

If the price elasticity of supply is:

Which of the following is most likely to have a vertical supply curve?

Which of the following statements is TRUE?

The income elasticity of demand for an inferior good, such as a macaroni and cheese dinner, is negative.

If your purchases of shoes increase from 9 pairs per year to 11 pairs per year when your income increases from $19,000 to $21,000 a year, other things equal, for you, shoes are considered:

Use the following to answer questions: Table: Price Elasticity -(Table: Price Elasticity) Look at the table Price Elasticity. What is the price elasticity of demand between $1.25 and $1.00?

If the price elasticity of demand between two points on a demand curve is 0.75, then the demand between those two points is:

If demand _____ and the University of Michigan increases the price of football tickets, revenues will increase.

Jessica's income increased by 10% this year. In the same year, Jessica's quantity demanded of milk increased by 10% and her quantity demanded for bread increased by 5%. This means that for Jessica:

Assume the supply curve shifts to the right by a given amount at each price. The price in the market will decline the most if demand is more _____ and supply is more _____.

Yovanka has diabetes, and she will pay any amount of money for insulin. What is likely the best characterization of Yovanka's demand for insulin?

If a good is a necessity with few substitutes, all others things equal, then demand will tend to:

The income elasticity of demand of a normal good is always:

First Principles

Economic Models: Trade-Offs and Trade 25

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas: Meddling With Markets

Taxes

International Trade

Decision Making by Individuals Firms

The Rational Consumer

Behind the Supply Curve: Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition and Product Differentiation

Externalities

Public Goods Common Resources

The Economics of the Welfare

Factor Markets and the Distribution of Income

Uncertainty, Risk, and Private Information

Filters

The price elasticity of demand is computed as the percentage change in the _ divided by the percentage change in _.

If the income elasticity of demand for a good is _, the good is said to be _.

The price elasticity of supply is computed as the percentage change in _ divided by the percentage change in _.

Assume the supply curve shifts to the right by a given amount at each price. The price in the market will decline the most if demand is more _ and supply is more _.