Question 1

If your income increases and your consumption of a good increases, for you that good is considered:

Accepted Answer

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

Question 2

Suppose you are told that the short-run price elasticity of supply for a movie theater is zero. Does this make sense?

Accepted Answer

Yes. The number of seats in a movie thea

Question 3

Suppose the price elasticity of demand for electricity is equal to 0.15 in the short run but is equal to 0.5 in the long run. What explains this difference, and what does this imply about the demand curve for electricity in the short run versus the long run?

Accepted Answer

The demand for electricity in the long r

Question 4

If the price of burritos increases from $4 to $6 and customers decrease their consumption from 20 to 10 burritos, what is the price elasticity of demand (by the midpoint method)?

Accepted Answer

A)  1.67 
B)  0.67 
C)  3 
D)  2 
A)  1.67 
B)  0.67 
C)  3 
D)  2

Question 5

The pair of items that is likely to have the largest positive cross-price elasticity of demand is:

Accepted Answer

A)  coffee and tea. 
B)  skis and ski boots. 
C)  pizza and pepperoni. 
D)  milk and cookies. 
A)  coffee and tea. 
B)  skis and ski boots. 
C)  pizza and pepperoni. 
D)  milk and cookies.

Question 6

When the percentage change in quantity demanded is larger than the percentage change in price, demand is said to be:

Accepted Answer

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

Question 7

Suppose the price of real estate increases by 37.11% in Oakland next year. If the quantity of new homes supplied does not change, this means that the price elasticity of _____ will be perfectly _____ in Oakland next year.

Accepted Answer

A)  demand; elastic 
B)  supply; inelastic 
C)  demand; inelastic 
D)  supply; elastic 
A)  demand; elastic 
B)  supply; inelastic 
C)  demand; inelastic 
D)  supply; elastic

Question 8

If your purchases of shoes decrease from 11 pairs per year to 9 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 9

The price of pretzels increases and the demand for tortilla chips decreases, so we can assume that these two goods are:

Accepted Answer

A)  unrelated. 
B)  inferior. 
C)  complementary. 
D)  substitutes. 
A)  unrelated. 
B)  inferior. 
C)  complementary. 
D)  substitutes.

Question 10

A perfectly inelastic demand curve for insulin would mean that the quantity demanded does NOT respond at all to changes in the price of insulin.

Accepted Answer

A) True 
 B)False

Question 11

If the quantity demanded of agricultural output is very unresponsive to a fall in price, the demand for agricultural output is:

Accepted Answer

A)  price-elastic. 
B)  price-inelastic. 
C)  positively sloped. 
D)  horizontal. 
A)  price-elastic. 
B)  price-inelastic. 
C)  positively sloped. 
D)  horizontal.

Question 12

Use the following to answer questions:
Figure: The Demand for e-Books  
-(Figure: The Demand for e-Books) Look at the figure The Demand for e-Books. The demand schedule _____ when the price increases from $4 to $6 _____ when it increases from $6 to $8.

Accepted Answer

A)  is less elastic; than 
B)  is more elastic; than 
C)  has the same elasticity;; as 
D)  is unit-elastic; and 
A)  is less elastic; than 
B)  is more elastic; than 
C)  has the same elasticity;; as 
D)  is unit-elastic; and

Question 13

A men's tie store sold an average of 30 ties per day at $5 per tie. The same store sold 60 of the same ties per day at $3 per tie. In this case, the price elasticity of demand (by the midpoint method) is:

Accepted Answer

A)  greater than zero but less than 1. 
B)  equal to 1. 
C)  greater than 1 but less than 3. 
D)  greater than 3. 
A)  greater than zero but less than 1. 
B)  equal to 1. 
C)  greater than 1 but less than 3. 
D)  greater than 3.

Question 14

In general, we predict demand for Gala apples to be:

Accepted Answer

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

Question 15

If the price elasticity of demand for tobacco is 0.5 and the income elasticity of demand for tobacco is 0.4:

Accepted Answer

A)  an increase in the price of tobacco will decrease total revenue from sales of tobacco. 
B)  a 20% increase in the price of tobacco will decrease the quantity demanded of tobacco by 8%. 
C)  tobacco is an inferior good. 
D)  a 50% increase in income will increase the quantity demanded of tobacco by 20%. 
A)  an increase in the price of tobacco will decrease total revenue from sales of tobacco. 
B)  a 20% increase in the price of tobacco will decrease the quantity demanded of tobacco by 8%. 
C)  tobacco is an inferior good. 
D)  a 50% increase in income will increase the quantity demanded of tobacco by 20%.

Question 16

Eric's income increased from $40,000 to $50,000 per year. Eric's consumption of tickets to pro football games increased from two to four per year. By the midpoint formula, his income elasticity of demand for pro football game tickets is equal to _____, and football game tickets are _____ goods.

Accepted Answer

A)  -0.33; inferior 
B)  +0.67; normal 
C)  -3; inferior 
D)  +3; normal 
A)  -0.33; inferior 
B)  +0.67; normal 
C)  -3; inferior 
D)  +3; normal

Question 17

Paolo owns a pizza shop. The price of pizza recently increased from $3 to $5 a slice. Paolo responded by increasing the quantity of slices he supplied from 100 to 150 slices per day. By the midpoint method, Paolo's price elasticity of supply is:

Accepted Answer

A)  1.25. 
B)  0.8. 
C)  0.75. 
D)  2.5. 
A)  1.25. 
B)  0.8. 
C)  0.75. 
D)  2.5.

Question 18

There are several close substitutes for Quaker State oil but fewer substitutes for a complete checkup of your car's engine. We can expect the demand for:

Accepted Answer

A)  Quaker State oil to be more price-inelastic. 
B)  the two to be equally price-elastic. 
C)  car checkups to be more price-elastic. 
D)  Quaker State oil to be more price-elastic. 
A)  Quaker State oil to be more price-inelastic. 
B)  the two to be equally price-elastic. 
C)  car checkups to be more price-elastic. 
D)  Quaker State oil to be more price-elastic.

Question 19

Demand for Wendy's hamburgers is more inelastic than the demand for all fast food.

Accepted Answer

A) True 
 B)False

Question 20

The director of River City Public Transport recently stated, "The last seven times we increased bus fares, revenues dropped." This remark suggests the demand for bus service is elastic.

Accepted Answer

A) True 
 B)False

If your income increases and your consumption of a good increases, for you that good is considered:

Suppose you are told that the short-run price elasticity of supply for a movie theater is zero. Does this make sense?

Suppose the price elasticity of demand for electricity is equal to 0.15 in the short run but is equal to 0.5 in the long run. What explains this difference, and what does this imply about the demand curve for electricity in the short run versus the long run?

If the price of burritos increases from $4 to $6 and customers decrease their consumption from 20 to 10 burritos, what is the price elasticity of demand (by the midpoint method)?

The pair of items that is likely to have the largest positive cross-price elasticity of demand is:

When the percentage change in quantity demanded is larger than the percentage change in price, demand is said to be:

Suppose the price of real estate increases by 37.11% in Oakland next year. If the quantity of new homes supplied does not change, this means that the price elasticity of _ will be perfectly _ in Oakland next year.

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

The price of pretzels increases and the demand for tortilla chips decreases, so we can assume that these two goods are:

A perfectly inelastic demand curve for insulin would mean that the quantity demanded does NOT respond at all to changes in the price of insulin.

If the quantity demanded of agricultural output is very unresponsive to a fall in price, the demand for agricultural output is:

Use the following to answer questions: Figure: The Demand for e-Books -(Figure: The Demand for e-Books) Look at the figure The Demand for e-Books. The demand schedule _ when the price increases from $4 to $6 _ when it increases from $6 to $8.

A men's tie store sold an average of 30 ties per day at $5 per tie. The same store sold 60 of the same ties per day at $3 per tie. In this case, the price elasticity of demand (by the midpoint method) is:

In general, we predict demand for Gala apples to be:

If the price elasticity of demand for tobacco is 0.5 and the income elasticity of demand for tobacco is 0.4:

Eric's income increased from $40,000 to $50,000 per year. Eric's consumption of tickets to pro football games increased from two to four per year. By the midpoint formula, his income elasticity of demand for pro football game tickets is equal to _, and football game tickets are _ goods.

Paolo owns a pizza shop. The price of pizza recently increased from $3 to $5 a slice. Paolo responded by increasing the quantity of slices he supplied from 100 to 150 slices per day. By the midpoint method, Paolo's price elasticity of supply is:

There are several close substitutes for Quaker State oil but fewer substitutes for a complete checkup of your car's engine. We can expect the demand for:

Demand for Wendy's hamburgers is more inelastic than the demand for all fast food.

The director of River City Public Transport recently stated, "The last seven times we increased bus fares, revenues dropped." This remark suggests the demand for bus service is elastic.

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

If your income increases and your consumption of a good increases, for you that good is considered:

Suppose you are told that the short-run price elasticity of supply for a movie theater is zero. Does this make sense?

Suppose the price elasticity of demand for electricity is equal to 0.15 in the short run but is equal to 0.5 in the long run. What explains this difference, and what does this imply about the demand curve for electricity in the short run versus the long run?

If the price of burritos increases from $4 to $6 and customers decrease their consumption from 20 to 10 burritos, what is the price elasticity of demand (by the midpoint method)?

The pair of items that is likely to have the largest positive cross-price elasticity of demand is:

When the percentage change in quantity demanded is larger than the percentage change in price, demand is said to be:

Suppose the price of real estate increases by 37.11% in Oakland next year. If the quantity of new homes supplied does not change, this means that the price elasticity of _____ will be perfectly _____ in Oakland next year.

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

The price of pretzels increases and the demand for tortilla chips decreases, so we can assume that these two goods are:

A perfectly inelastic demand curve for insulin would mean that the quantity demanded does NOT respond at all to changes in the price of insulin.

If the quantity demanded of agricultural output is very unresponsive to a fall in price, the demand for agricultural output is:

Use the following to answer questions: Figure: The Demand for e-Books -(Figure: The Demand for e-Books) Look at the figure The Demand for e-Books. The demand schedule _____ when the price increases from $4 to $6 _____ when it increases from $6 to $8.

A men's tie store sold an average of 30 ties per day at $5 per tie. The same store sold 60 of the same ties per day at $3 per tie. In this case, the price elasticity of demand (by the midpoint method) is:

In general, we predict demand for Gala apples to be:

If the price elasticity of demand for tobacco is 0.5 and the income elasticity of demand for tobacco is 0.4:

Eric's income increased from $40,000 to $50,000 per year. Eric's consumption of tickets to pro football games increased from two to four per year. By the midpoint formula, his income elasticity of demand for pro football game tickets is equal to _____, and football game tickets are _____ goods.

Paolo owns a pizza shop. The price of pizza recently increased from $3 to $5 a slice. Paolo responded by increasing the quantity of slices he supplied from 100 to 150 slices per day. By the midpoint method, Paolo's price elasticity of supply is:

There are several close substitutes for Quaker State oil but fewer substitutes for a complete checkup of your car's engine. We can expect the demand for:

Demand for Wendy's hamburgers is more inelastic than the demand for all fast food.

The director of River City Public Transport recently stated, "The last seven times we increased bus fares, revenues dropped." This remark suggests the demand for bus service is elastic.

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

Suppose the price of real estate increases by 37.11% in Oakland next year. If the quantity of new homes supplied does not change, this means that the price elasticity of _ will be perfectly _ in Oakland next year.

Use the following to answer questions: Figure: The Demand for e-Books -(Figure: The Demand for e-Books) Look at the figure The Demand for e-Books. The demand schedule _ when the price increases from $4 to $6 _ when it increases from $6 to $8.

Eric's income increased from $40,000 to $50,000 per year. Eric's consumption of tickets to pro football games increased from two to four per year. By the midpoint formula, his income elasticity of demand for pro football game tickets is equal to _, and football game tickets are _ goods.