Question 1

If a 5 percent increase in price results in a 3 percent increase in the quantity supplied, the elasticity of supply is

Accepted Answer

A)  0.30. 
B)  0.60. 
C)  1.20. 
D)  1.66. 
A)  0.30. 
B)  0.60. 
C)  1.20. 
D)  1.66.

Question 2

If the quantity demanded of hamburgers increases by 20 percent when the price decreases by 5 percent, then the price elasticity of demand is

Accepted Answer

A)  0.25. 
B)  4.0. 
C)  20.0. 
D)  5.0. 
A)  0.25. 
B)  4.0. 
C)  20.0. 
D)  5.0.

Question 3

All normal goods have

Accepted Answer

A)  income elasticities of demand greater than 1.0. 
B)  price elasticities of demand greater than 1.0. 
C)  negative price elasticities of demand. 
D)  positive income elasticities of demand. 
A)  income elasticities of demand greater than 1.0. 
B)  price elasticities of demand greater than 1.0. 
C)  negative price elasticities of demand. 
D)  positive income elasticities of demand.

Question 4

If the price of a burger decreases by 5 percent and as a result the quantity of burgers demanded increases by 8 percent, the price elasticity of demand equals

Accepted Answer

A)  0.60. 
B)  0.40. 
C)  1.60. 
D)  0.625. 
A)  0.60. 
B)  0.40. 
C)  1.60. 
D)  0.625.

Question 5

As the price of cell phones fell during the last decade, consumers' total expenditures on cell phones increased. If the demand curve for cell phones did not shift, this fact means that the demand for cell phones

Accepted Answer

A)  must have shifted leftward. 
B)  must be upward sloping. 
C)  is elastic. 
D)  is inelastic. 
A)  must have shifted leftward. 
B)  must be upward sloping. 
C)  is elastic. 
D)  is inelastic.

Question 6

If the price of gasoline fell from $2.95 to $2.85 per gallon, your expenditure on gasoline would increase if your price elasticity of demand for gasoline equals

Accepted Answer

A)  1.1. 
B)  1.0. 
C)  0.9. 
D)  Total revenue would increase at all of the above elasticities. 
A)  1.1. 
B)  1.0. 
C)  0.9. 
D)  Total revenue would increase at all of the above elasticities.

Question 7

Suppose tennis shoes cost $50 per pair and firms supply 50,000 pairs of shoes. If the price decreases to $45 and firms decide to supply 48,000, the elasticity of supply equals

Accepted Answer

A)  0.0025. 
B)  0.04. 
C)  2.63. 
D)  0.39. 
A)  0.0025. 
B)  0.04. 
C)  2.63. 
D)  0.39.

Question 8

If the supply for a good is elastic, that means that when price increases, the

Accepted Answer

A)  supply will increase. 
B)  quantity supplied will decrease. 
C)  quantity supplied will increase by a smaller percentage than the price increased. 
D)  quantity supplied will increase by a greater percentage than the price increased. 
A)  supply will increase. 
B)  quantity supplied will decrease. 
C)  quantity supplied will increase by a smaller percentage than the price increased. 
D)  quantity supplied will increase by a greater percentage than the price increased.

Question 9

The demand for a good is more price elastic

Accepted Answer

A)  if closer substitutes are available. 
B)  if the good is a necessity rather than a luxury. 
C)  if the share of the good in the average consumer's budget is smaller. 
D)  in the short run than in the long run. 
A)  if closer substitutes are available. 
B)  if the good is a necessity rather than a luxury. 
C)  if the share of the good in the average consumer's budget is smaller. 
D)  in the short run than in the long run.

Question 10

The income elasticity of demand is the percentage change in ________ divided by the percentage change in ________.

Accepted Answer

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

Question 11

If a rise in the price of good B increases the quantity demanded of good A

Accepted Answer

A)  A and B are substitutes. 
B)  A and B are complements. 
C)  A is a substitute for B, but B is a complement to A. 
D)  B is a substitute for A, but A is a complement to B. 
A)  A and B are substitutes. 
B)  A and B are complements. 
C)  A is a substitute for B, but B is a complement to A. 
D)  B is a substitute for A, but A is a complement to B.

Question 12

If OPEC, a group of oil producing nations, cuts oil production to increase the total revenue, OPEC presumes that the demand for oil is

Accepted Answer

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

Question 13

-The table above gives the demand schedule for peas. Which of the following statements CORRECTLY describes the price elasticity of demand?

Accepted Answer

A)  The price elasticity of demand is larger at point A than at point B. 
B)  The price elasticity of demand is larger at point D than at point A. 
C)  The price elasticity of demand is constant because the slope is constant. 
D)  The price elasticity of demand increases moving from point A to point B to point C to point D to point E. 
A)  The price elasticity of demand is larger at point A than at point B. 
B)  The price elasticity of demand is larger at point D than at point A. 
C)  The price elasticity of demand is constant because the slope is constant. 
D)  The price elasticity of demand increases moving from point A to point B to point C to point D to point E.

Question 14

The demand for a good is less price elastic

Accepted Answer

A)  if closer substitutes are available. 
B)  if the good is a luxury rather than a necessity. 
C)  if the share of the good in the average consumer's budget is smaller. 
D)  in the long run than in the short run. 
A)  if closer substitutes are available. 
B)  if the good is a luxury rather than a necessity. 
C)  if the share of the good in the average consumer's budget is smaller. 
D)  in the long run than in the short run.

Question 15

The price elasticity of demand is calculated as the absolute value of the

Accepted Answer

A)  percentage change in quantity demanded divided by the percentage change in price. 
B)  percentage change in price divided by the percentage change in quantity demanded. 
C)  change in quantity demanded divided by the change in price. 
D)  change in price divided by the change in quantity demanded. 
A)  percentage change in quantity demanded divided by the percentage change in price. 
B)  percentage change in price divided by the percentage change in quantity demanded. 
C)  change in quantity demanded divided by the change in price. 
D)  change in price divided by the change in quantity demanded.

Question 16

Duke increased his spending on steak from $7 to $11 per week because of a 12 percent salary increase, so his

Accepted Answer

A)  income elasticity of demand for steak is 1.37. 
B)  price elasticity of demand for steak is 1.37. 
C)  income elasticity of demand for steak is 3.7. 
D)  price elasticity of demand for steak is 3.7. 
A)  income elasticity of demand for steak is 1.37. 
B)  price elasticity of demand for steak is 1.37. 
C)  income elasticity of demand for steak is 3.7. 
D)  price elasticity of demand for steak is 3.7.

Question 17

The greater the magnitude of the absolute value of the income elasticity of demand for a good, the more the

Accepted Answer

A)  demand for that good changes when income changes. 
B)  total revenue for firms producing that good changes when income changes. 
C)  price of the good changes when income changes. 
D)  All of the above answers are correct. 
A)  demand for that good changes when income changes. 
B)  total revenue for firms producing that good changes when income changes. 
C)  price of the good changes when income changes. 
D)  All of the above answers are correct.

Question 18

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

Accepted Answer

A)  equal to zero at all prices. 
B)  equal to infinite at all prices. 
C)  equal to one at all prices. 
D)  that is different at all prices. 
A)  equal to zero at all prices. 
B)  equal to infinite at all prices. 
C)  equal to one at all prices. 
D)  that is different at all prices.

Question 19

Aglets are the metal or plastic tips on shoelaces that make it easier to lace your shoes. The demand for aglets is probably

Accepted Answer

A)  inelastic. 
B)  unit elastic. 
C)  elastic but not perfectly elastic. 
D)  perfectly elastic. 
A)  inelastic. 
B)  unit elastic. 
C)  elastic but not perfectly elastic. 
D)  perfectly elastic.

Question 20

If the demand for KFC chicken is price elastic, a fall in the price of KFC chicken will raise the total revenue.

Accepted Answer

A) True 
 B)False

If a 5 percent increase in price results in a 3 percent increase in the quantity supplied, the elasticity of supply is

If the quantity demanded of hamburgers increases by 20 percent when the price decreases by 5 percent, then the price elasticity of demand is

All normal goods have

If the price of a burger decreases by 5 percent and as a result the quantity of burgers demanded increases by 8 percent, the price elasticity of demand equals

As the price of cell phones fell during the last decade, consumers' total expenditures on cell phones increased. If the demand curve for cell phones did not shift, this fact means that the demand for cell phones

If the price of gasoline fell from $2.95 to $2.85 per gallon, your expenditure on gasoline would increase if your price elasticity of demand for gasoline equals

Suppose tennis shoes cost $50 per pair and firms supply 50,000 pairs of shoes. If the price decreases to $45 and firms decide to supply 48,000, the elasticity of supply equals

If the supply for a good is elastic, that means that when price increases, the

The demand for a good is more price elastic

The income elasticity of demand is the percentage change in divided by the percentage change in .

If a rise in the price of good B increases the quantity demanded of good A

If OPEC, a group of oil producing nations, cuts oil production to increase the total revenue, OPEC presumes that the demand for oil is

-The table above gives the demand schedule for peas. Which of the following statements CORRECTLY describes the price elasticity of demand?

The demand for a good is less price elastic

The price elasticity of demand is calculated as the absolute value of the

Duke increased his spending on steak from $7 to $11 per week because of a 12 percent salary increase, so his

The greater the magnitude of the absolute value of the income elasticity of demand for a good, the more the

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

Aglets are the metal or plastic tips on shoelaces that make it easier to lace your shoes. The demand for aglets is probably

If the demand for KFC chicken is price elastic, a fall in the price of KFC chicken will raise the total revenue.

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

If a 5 percent increase in price results in a 3 percent increase in the quantity supplied, the elasticity of supply is

If the quantity demanded of hamburgers increases by 20 percent when the price decreases by 5 percent, then the price elasticity of demand is

All normal goods have

If the price of a burger decreases by 5 percent and as a result the quantity of burgers demanded increases by 8 percent, the price elasticity of demand equals

As the price of cell phones fell during the last decade, consumers' total expenditures on cell phones increased. If the demand curve for cell phones did not shift, this fact means that the demand for cell phones

If the price of gasoline fell from $2.95 to $2.85 per gallon, your expenditure on gasoline would increase if your price elasticity of demand for gasoline equals

Suppose tennis shoes cost $50 per pair and firms supply 50,000 pairs of shoes. If the price decreases to $45 and firms decide to supply 48,000, the elasticity of supply equals

If the supply for a good is elastic, that means that when price increases, the

The demand for a good is more price elastic

The income elasticity of demand is the percentage change in ________ divided by the percentage change in ________.

If a rise in the price of good B increases the quantity demanded of good A

If OPEC, a group of oil producing nations, cuts oil production to increase the total revenue, OPEC presumes that the demand for oil is

-The table above gives the demand schedule for peas. Which of the following statements CORRECTLY describes the price elasticity of demand?

The demand for a good is less price elastic

The price elasticity of demand is calculated as the absolute value of the

Duke increased his spending on steak from $7 to $11 per week because of a 12 percent salary increase, so his

The greater the magnitude of the absolute value of the income elasticity of demand for a good, the more the

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

Aglets are the metal or plastic tips on shoelaces that make it easier to lace your shoes. The demand for aglets is probably

If the demand for KFC chicken is price elastic, a fall in the price of KFC chicken will raise the total revenue.

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 income elasticity of demand is the percentage change in divided by the percentage change in .