Question 1

The cross elasticity of demand for substitutes is always positive.

Accepted Answer

A) True 
 B)False

Question 2

A shift of the supply curve of DVDs raises the price of a DVD from $9.50 to $10.50 a DVD and reduces the quantity demanded from 41 million to 39 million DVDs a month. The price elasticity of demand for DVDs is

Accepted Answer

A)  2 million DVDs a month per dollar. 
B)  $1 per 2 million barrels a day. 
C)  0.5. 
D)  2.0. 
A)  2 million DVDs a month per dollar. 
B)  $1 per 2 million barrels a day. 
C)  0.5. 
D)  2.0.

Question 3

The income elasticity of demand is largest for

Accepted Answer

A)  food. 
B)  clothing. 
C)  shelter. 
D)  luxuries. 
A)  food. 
B)  clothing. 
C)  shelter. 
D)  luxuries.

Question 4

When the price of milk rose 50 percent, the quantity of milk sold fell 25 percent and the sale of breakfast cereals also fell 25 percent. This set of facts indicates that the

Accepted Answer

A)  demand for milk is price elastic. 
B)  demand for breakfast cereals is price elastic. 
C)  cross elasticity between milk and cereal is negative so the two are complements. 
D)  cross elasticity between milk and cereal is positive so the two are complements. 
A)  demand for milk is price elastic. 
B)  demand for breakfast cereals is price elastic. 
C)  cross elasticity between milk and cereal is negative so the two are complements. 
D)  cross elasticity between milk and cereal is positive so the two are complements.

Question 5

-The above figure shows the demand curve for movie rentals from Redbox. Which of the following is TRUE?

Accepted Answer

A)  Consumer expenditure on movie rentals will always increase whenever Redbox lowers its price. 
B)  Redbox will receive more total revenue if it charges $4.00 per movie rental rather than $3.00. 
C)  The price elasticity of demand for movie rentals falls as Redbox raises its price. 
D)  The demand for movie rentals is more price inelastic at $1.00 than it is at $1.50. 
A)  Consumer expenditure on movie rentals will always increase whenever Redbox lowers its price. 
B)  Redbox will receive more total revenue if it charges $4.00 per movie rental rather than $3.00. 
C)  The price elasticity of demand for movie rentals falls as Redbox raises its price. 
D)  The demand for movie rentals is more price inelastic at $1.00 than it is at $1.50.

Question 6

What is the price elasticity of demand and how is it measured?

Accepted Answer

The price elasticity of demand is a unit

Question 7

-The above figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $1.50 to $1.00, then total revenue would ________ because demand is ________.

Accepted Answer

A)  decrease; elastic 
B)  increase; elastic 
C)  decrease; inelastic 
D)  increase; inelastic 
A)  decrease; elastic 
B)  increase; elastic 
C)  decrease; inelastic 
D)  increase; inelastic

Question 8

Netflix is the largest online streaming service. Currently, there are approximately 110 million subscribers. Suppose Netflix decreases its price by 10 percent and an additional 1 million people subscribe. This information means that Netflix's demand is

Accepted Answer

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

Question 9

Which of the following represents a price elastic supply?

Accepted Answer

A)  The quantity demanded increases 18 percent as a result of a decrease in the price of 8 percent. 
B)  The price rises by 8 percent causing the quantity demanded to fall by 10 percent. 
C)  The quantity supplied increases by 21 percent as a result of an increase in the price of 12 percent. 
D)  The price rises by 22 percent causing the quantity supplied to increase by 3 percent. 
A)  The quantity demanded increases 18 percent as a result of a decrease in the price of 8 percent. 
B)  The price rises by 8 percent causing the quantity demanded to fall by 10 percent. 
C)  The quantity supplied increases by 21 percent as a result of an increase in the price of 12 percent. 
D)  The price rises by 22 percent causing the quantity supplied to increase by 3 percent.

Question 10

-The above table gives the demand schedule for Billy Bob's BBQ ribs. If the price of a pound of ribs falls from $3 per pound to $1 per pound, what is the change in Billy Bob's total revenue?

Accepted Answer

A)  $42 
B)  $24 
C)  -$2 
D)  -$24 
A)  $42 
B)  $24 
C)  -$2 
D)  -$24

Question 11

Last year when John graduated and received a 20 percent pay increase, the average number of restaurant meals he consumed rose from one a week to three a week. Hence his income elasticity for restaurant meals is

Accepted Answer

A)  0.50. 
B)  -0.50. 
C)  5.00. 
D)  -5.00. 
A)  0.50. 
B)  -0.50. 
C)  5.00. 
D)  -5.00.

Question 12

-The table above gives the demand schedule for a good. What is the total revenue at point A? At point B? At point C? At point D? At point E?

Accepted Answer

The total revenue is the price times the

Question 13

An increase in subway fares in New York City will boost your expenditures on subway rides if

Accepted Answer

A)  the supply of subway rides is elastic. 
B)  the supply of subway rides is inelastic. 
C)  your demand for subway rides is elastic. 
D)  your demand for subway rides is inelastic. 
A)  the supply of subway rides is elastic. 
B)  the supply of subway rides is inelastic. 
C)  your demand for subway rides is elastic. 
D)  your demand for subway rides is inelastic.

Question 14

Demand is price inelastic if a relatively ________ price increase leads to a relatively ________ in the quantity demanded.

Accepted Answer

A)  large; small increase 
B)  small; large decrease 
C)  large; small decrease 
D)  small; large increase 
A)  large; small increase 
B)  small; large decrease 
C)  large; small decrease 
D)  small; large increase

Question 15

Suppose Clyde always eats ice cream and chocolate syrup together. If the price of syrup increases by 10 percent, and the cross elasticity of demand is -2, the demand for ice cream

Accepted Answer

A)  increases by 5 percent. 
B)  increases by 20 percent. 
C)  decreases by 5 percent. 
D)  decreases by 20 percent. 
A)  increases by 5 percent. 
B)  increases by 20 percent. 
C)  decreases by 5 percent. 
D)  decreases by 20 percent.

Question 16

If a price decrease results in your expenditure on a good decreasing, your demand must be

Accepted Answer

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

Question 17

Which of the following makes demand less elastic?

Accepted Answer

A)  the existence of many close substitutes for the good 
B)  spending a large proportion of income on the good 
C)  a short time elapsing since the product's price changed 
D)  All of the above answers are correct. 
A)  the existence of many close substitutes for the good 
B)  spending a large proportion of income on the good 
C)  a short time elapsing since the product's price changed 
D)  All of the above answers are correct.

Question 18

-The demand curve in the figure above illustrates the demand for a product with

Accepted Answer

A)  zero price elasticity of demand at all prices. 
B)  infinite price elasticity of demand. 
C)  unit price elasticity of demand at all prices. 
D)  a price elasticity of demand that is different at all prices. 
A)  zero price elasticity of demand at all prices. 
B)  infinite price elasticity of demand. 
C)  unit price elasticity of demand at all prices. 
D)  a price elasticity of demand that is different at all prices.

Question 19

The income elasticity of demand is a measure of the responsiveness of the

Accepted Answer

A)  quantity of a good demanded to changes in income. 
B)  consumer's income to a change in the price of the goods he or she consumes. 
C)  quantity of a good demanded to changes in its price. 
D)  quantity of a good demanded to changes in another good's price. 
A)  quantity of a good demanded to changes in income. 
B)  consumer's income to a change in the price of the goods he or she consumes. 
C)  quantity of a good demanded to changes in its price. 
D)  quantity of a good demanded to changes in another good's price.

Question 20

"Last October, due to an early frost, the price of a pumpkin increased by 10 percent compared to the price in the previous Halloween seasons. As a result, the quantity demanded county-wide decreased from 2 million to 1.5 million." Based on this statement, the

Accepted Answer

A)  demand for pumpkins is elastic. 
B)  demand for pumpkins is inelastic. 
C)  demand for pumpkins is unit elastic. 
D)  demand curve for pumpkins shifted rightward. 
A)  demand for pumpkins is elastic. 
B)  demand for pumpkins is inelastic. 
C)  demand for pumpkins is unit elastic. 
D)  demand curve for pumpkins shifted rightward.

The cross elasticity of demand for substitutes is always positive.

A shift of the supply curve of DVDs raises the price of a DVD from $9.50 to $10.50 a DVD and reduces the quantity demanded from 41 million to 39 million DVDs a month. The price elasticity of demand for DVDs is

The income elasticity of demand is largest for

When the price of milk rose 50 percent, the quantity of milk sold fell 25 percent and the sale of breakfast cereals also fell 25 percent. This set of facts indicates that the

-The above figure shows the demand curve for movie rentals from Redbox. Which of the following is TRUE?

What is the price elasticity of demand and how is it measured?

-The above figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $1.50 to $1.00, then total revenue would because demand is .

Netflix is the largest online streaming service. Currently, there are approximately 110 million subscribers. Suppose Netflix decreases its price by 10 percent and an additional 1 million people subscribe. This information means that Netflix's demand is

Which of the following represents a price elastic supply?

-The above table gives the demand schedule for Billy Bob's BBQ ribs. If the price of a pound of ribs falls from $3 per pound to $1 per pound, what is the change in Billy Bob's total revenue?

Last year when John graduated and received a 20 percent pay increase, the average number of restaurant meals he consumed rose from one a week to three a week. Hence his income elasticity for restaurant meals is

-The table above gives the demand schedule for a good. What is the total revenue at point A? At point B? At point C? At point D? At point E?

An increase in subway fares in New York City will boost your expenditures on subway rides if

Demand is price inelastic if a relatively price increase leads to a relatively in the quantity demanded.

Suppose Clyde always eats ice cream and chocolate syrup together. If the price of syrup increases by 10 percent, and the cross elasticity of demand is -2, the demand for ice cream

If a price decrease results in your expenditure on a good decreasing, your demand must be

Which of the following makes demand less elastic?

-The demand curve in the figure above illustrates the demand for a product with

The income elasticity of demand is a measure of the responsiveness of the

"Last October, due to an early frost, the price of a pumpkin increased by 10 percent compared to the price in the previous Halloween seasons. As a result, the quantity demanded county-wide decreased from 2 million to 1.5 million." Based on this statement, the

What Is Economics

The Economic Problem

Demand and Supply

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 4: Elasticity

The cross elasticity of demand for substitutes is always positive.

A shift of the supply curve of DVDs raises the price of a DVD from $9.50 to $10.50 a DVD and reduces the quantity demanded from 41 million to 39 million DVDs a month. The price elasticity of demand for DVDs is

The income elasticity of demand is largest for

When the price of milk rose 50 percent, the quantity of milk sold fell 25 percent and the sale of breakfast cereals also fell 25 percent. This set of facts indicates that the

-The above figure shows the demand curve for movie rentals from Redbox. Which of the following is TRUE?

What is the price elasticity of demand and how is it measured?

-The above figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $1.50 to $1.00, then total revenue would ________ because demand is ________.

Netflix is the largest online streaming service. Currently, there are approximately 110 million subscribers. Suppose Netflix decreases its price by 10 percent and an additional 1 million people subscribe. This information means that Netflix's demand is

Which of the following represents a price elastic supply?

-The above table gives the demand schedule for Billy Bob's BBQ ribs. If the price of a pound of ribs falls from $3 per pound to $1 per pound, what is the change in Billy Bob's total revenue?

Last year when John graduated and received a 20 percent pay increase, the average number of restaurant meals he consumed rose from one a week to three a week. Hence his income elasticity for restaurant meals is

-The table above gives the demand schedule for a good. What is the total revenue at point A? At point B? At point C? At point D? At point E?

An increase in subway fares in New York City will boost your expenditures on subway rides if

Demand is price inelastic if a relatively ________ price increase leads to a relatively ________ in the quantity demanded.

Suppose Clyde always eats ice cream and chocolate syrup together. If the price of syrup increases by 10 percent, and the cross elasticity of demand is -2, the demand for ice cream

If a price decrease results in your expenditure on a good decreasing, your demand must be

Which of the following makes demand less elastic?

-The demand curve in the figure above illustrates the demand for a product with

The income elasticity of demand is a measure of the responsiveness of the

"Last October, due to an early frost, the price of a pumpkin increased by 10 percent compared to the price in the previous Halloween seasons. As a result, the quantity demanded county-wide decreased from 2 million to 1.5 million." Based on this statement, the

What Is Economics

The Economic Problem

Demand and Supply

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

-The above figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $1.50 to $1.00, then total revenue would because demand is .

Demand is price inelastic if a relatively price increase leads to a relatively in the quantity demanded.