Question 1

At the midpoint of a downward sloping straight-line demand curve, the demand

Accepted Answer

A)  is elastic. 
B)  is unit elastic. 
C)  is inelastic. 
D)  has an elasticity exactly equal to zero. 
A)  is elastic. 
B)  is unit elastic. 
C)  is inelastic. 
D)  has an elasticity exactly equal to zero.

Question 2

California is the sole producer of almonds in the United States. Suppose the price for a pound of almonds has increased during the past year. It is also predicted that almond prices will remain high. Over time, we predict that the

Accepted Answer

A)  elasticity of supply will increase. 
B)  elasticity of supply will decrease. 
C)  elasticity of supply will remain constant. 
D)  elasticity of supply will increase and then decrease. 
A)  elasticity of supply will increase. 
B)  elasticity of supply will decrease. 
C)  elasticity of supply will remain constant. 
D)  elasticity of supply will increase and then decrease.

Question 3

An inferior good is a good whose income elasticity of demand is less than 0.

Accepted Answer

A) True 
 B)False

Question 4

The demand for a good is elastic if

Accepted Answer

A)  an increase in its price results in an increase in total revenue. 
B)  a decrease in its price results in a decrease in total revenue. 
C)  an increase in its price results in a decrease in total revenue. 
D)  the good is a necessity. 
A)  an increase in its price results in an increase in total revenue. 
B)  a decrease in its price results in a decrease in total revenue. 
C)  an increase in its price results in a decrease in total revenue. 
D)  the good is a necessity.

Question 5

A supply curve that is horizontal reflects a supply that

Accepted Answer

A)  is elastic. 
B)  is inelastic. 
C)  is unit elastic. 
D)  has a zero elasticity. 
A)  is elastic. 
B)  is inelastic. 
C)  is unit elastic. 
D)  has a zero elasticity.

Question 6

-The figure above illustrates a linear demand curve. If the price falls from $8 to $6

Accepted Answer

A)  total revenue increases. 
B)  total revenue decreases. 
C)  total revenue remains unchanged. 
D)  the quantity demanded increases by less than 20 percent. 
A)  total revenue increases. 
B)  total revenue decreases. 
C)  total revenue remains unchanged. 
D)  the quantity demanded increases by less than 20 percent.

Question 7

-The figure above illustrates a linear demand curve. If the price falls from $6 to $4

Accepted Answer

A)  total revenue increases. 
B)  total revenue decreases. 
C)  total revenue remains unchanged. 
D)  quantity demanded increases by more than 100 percent. 
A)  total revenue increases. 
B)  total revenue decreases. 
C)  total revenue remains unchanged. 
D)  quantity demanded increases by more than 100 percent.

Question 8

The demand for computer chips is a downward sloping straight line. If there is an increase in the supply of computer chips, this change will

Accepted Answer

A)  increase the price elasticity of demand for computer chips. 
B)  decrease the price elasticity of demand for computer chips. 
C)  have no effect on the price elasticity of demand for computer chips. 
D)  have an unpredictable effect on the price elasticity of demand for computer chips. 
A)  increase the price elasticity of demand for computer chips. 
B)  decrease the price elasticity of demand for computer chips. 
C)  have no effect on the price elasticity of demand for computer chips. 
D)  have an unpredictable effect on the price elasticity of demand for computer chips.

Question 9

What are the three cases for the price elasticity of demand? Briefly define each.

Accepted Answer

Demand can be elastic, inelastic, or uni

Question 10

If the quantity demanded changes by a relatively small amount for a given change in price, then demand is

Accepted Answer

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

Question 11

The price of a good rises by 12 percent and the price elasticity of demand for the good is 0.85. Which of the following is a CORRECT interpretation of these facts?

Accepted Answer

A)  When the price rises by 12 percent, the quantity demanded decreased by 0.85 percent. 
B)  For each 1 percent that the price rose, the quantity demanded decreased by 10.2 percent. 
C)  For each 0.85 percent that the price rose, the quantity demanded decreased by 1 percent. 
D)  For each 1 percent that the price rose, the quantity demanded decreased by 0.85 percent. 
A)  When the price rises by 12 percent, the quantity demanded decreased by 0.85 percent. 
B)  For each 1 percent that the price rose, the quantity demanded decreased by 10.2 percent. 
C)  For each 0.85 percent that the price rose, the quantity demanded decreased by 1 percent. 
D)  For each 1 percent that the price rose, the quantity demanded decreased by 0.85 percent.

Question 12

If a good is produced using inputs for which there are no substitutes, the good's

Accepted Answer

A)  elasticity of supply is likely to be small. 
B)  elasticity of supply is likely to be large. 
C)  elasticity of demand will be small. 
D)  elasticity of demand will be large. 
A)  elasticity of supply is likely to be small. 
B)  elasticity of supply is likely to be large. 
C)  elasticity of demand will be small. 
D)  elasticity of demand will be large.

Question 13

Which of the following leads a good to have a high elasticity of supply? I. The good must be produced using unique resources.
II) The good is produced using commonly available resources.

Accepted Answer

A)  I only 
B)  II only 
C)  I and II 
D)  neither I nor II 
A)  I only 
B)  II only 
C)  I and II 
D)  neither I nor II

Question 14

The price elasticity of demand for purses is measured in what units?

Accepted Answer

A)  dollars 
B)  purses 
C)  dollars per purse 
D)  The price elasticity of demand is a unitless measure. 
A)  dollars 
B)  purses 
C)  dollars per purse 
D)  The price elasticity of demand is a unitless measure.

Question 15

The income elasticity of demand for store brands of soda (that is, non-name brands) is negative. What does this fact indicate about consumers' perceptions about the store brands?

Accepted Answer

The negative income elasticity indicates

Question 16

One year, the government boosted regulated taxi fares in New York City by 15 percent with the expectation that the total revenue from taxi rides would also increase by 15 percent. The taxi commission that authorized this fare increase must have believed that the demand for taxi service was

Accepted Answer

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

Question 17

If a price hike of 5 percent increases the quantity demanded of another good by 2 percent, the goods must be ________ and the cross elasticity of demand equals ________.

Accepted Answer

A)  substitutes; 0.40 
B)  substitutes; 2.5 
C)  complements; 0.40 
D)  complements; 2.5 
A)  substitutes; 0.40 
B)  substitutes; 2.5 
C)  complements; 0.40 
D)  complements; 2.5

Question 18

-In the above figure, the price elasticity of supply at any given quantity is

Accepted Answer

A)  highest along S1, next highest along S2, and lowest along S3. 
B)  highest along S3, next highest along S2, and lowest along S1. 
C)  equal to zero on each of the three supply curves. 
D)  equal to one on each of the three supply curves. 
A)  highest along S1, next highest along S2, and lowest along S3. 
B)  highest along S3, next highest along S2, and lowest along S1. 
C)  equal to zero on each of the three supply curves. 
D)  equal to one on each of the three supply curves.

Question 19

Freezing temperatures in California have sharply reduced the supply of oranges in the U.S. You predict that the price of oranges will ________, and the more elastic the demand for oranges, the ________ will be the effect on the price.

Accepted Answer

A)  fall; smaller 
B)  fall; greater 
C)  rise; smaller 
D)  rise; greater 
A)  fall; smaller 
B)  fall; greater 
C)  rise; smaller 
D)  rise; greater

Question 20

Suppose a 10 percent increase in the price of textbooks decreases the quantity demanded by 20 percent. The elasticity of demand for textbooks is

Accepted Answer

A)  0.2. 
B)  2.0. 
C)  5.0. 
D)  10.0. 
A)  0.2. 
B)  2.0. 
C)  5.0. 
D)  10.0.

At the midpoint of a downward sloping straight-line demand curve, the demand

California is the sole producer of almonds in the United States. Suppose the price for a pound of almonds has increased during the past year. It is also predicted that almond prices will remain high. Over time, we predict that the

An inferior good is a good whose income elasticity of demand is less than 0.

The demand for a good is elastic if

A supply curve that is horizontal reflects a supply that

-The figure above illustrates a linear demand curve. If the price falls from $8 to $6

-The figure above illustrates a linear demand curve. If the price falls from $6 to $4

The demand for computer chips is a downward sloping straight line. If there is an increase in the supply of computer chips, this change will

What are the three cases for the price elasticity of demand? Briefly define each.

If the quantity demanded changes by a relatively small amount for a given change in price, then demand is

The price of a good rises by 12 percent and the price elasticity of demand for the good is 0.85. Which of the following is a CORRECT interpretation of these facts?

If a good is produced using inputs for which there are no substitutes, the good's

Which of the following leads a good to have a high elasticity of supply? I. The good must be produced using unique resources. II) The good is produced using commonly available resources.

The price elasticity of demand for purses is measured in what units?

The income elasticity of demand for store brands of soda (that is, non-name brands) is negative. What does this fact indicate about consumers' perceptions about the store brands?

One year, the government boosted regulated taxi fares in New York City by 15 percent with the expectation that the total revenue from taxi rides would also increase by 15 percent. The taxi commission that authorized this fare increase must have believed that the demand for taxi service was

If a price hike of 5 percent increases the quantity demanded of another good by 2 percent, the goods must be and the cross elasticity of demand equals .

-In the above figure, the price elasticity of supply at any given quantity is

Freezing temperatures in California have sharply reduced the supply of oranges in the U.S. You predict that the price of oranges will , and the more elastic the demand for oranges, the will be the effect on the price.

Suppose a 10 percent increase in the price of textbooks decreases the quantity demanded by 20 percent. The elasticity of demand for textbooks is

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

At the midpoint of a downward sloping straight-line demand curve, the demand

California is the sole producer of almonds in the United States. Suppose the price for a pound of almonds has increased during the past year. It is also predicted that almond prices will remain high. Over time, we predict that the

An inferior good is a good whose income elasticity of demand is less than 0.

The demand for a good is elastic if

A supply curve that is horizontal reflects a supply that

-The figure above illustrates a linear demand curve. If the price falls from $8 to $6

-The figure above illustrates a linear demand curve. If the price falls from $6 to $4

The demand for computer chips is a downward sloping straight line. If there is an increase in the supply of computer chips, this change will

What are the three cases for the price elasticity of demand? Briefly define each.

If the quantity demanded changes by a relatively small amount for a given change in price, then demand is

The price of a good rises by 12 percent and the price elasticity of demand for the good is 0.85. Which of the following is a CORRECT interpretation of these facts?

If a good is produced using inputs for which there are no substitutes, the good's

Which of the following leads a good to have a high elasticity of supply? I. The good must be produced using unique resources. II) The good is produced using commonly available resources.

The price elasticity of demand for purses is measured in what units?

The income elasticity of demand for store brands of soda (that is, non-name brands) is negative. What does this fact indicate about consumers' perceptions about the store brands?

One year, the government boosted regulated taxi fares in New York City by 15 percent with the expectation that the total revenue from taxi rides would also increase by 15 percent. The taxi commission that authorized this fare increase must have believed that the demand for taxi service was

If a price hike of 5 percent increases the quantity demanded of another good by 2 percent, the goods must be ________ and the cross elasticity of demand equals ________.

-In the above figure, the price elasticity of supply at any given quantity is

Freezing temperatures in California have sharply reduced the supply of oranges in the U.S. You predict that the price of oranges will ________, and the more elastic the demand for oranges, the ________ will be the effect on the price.

Suppose a 10 percent increase in the price of textbooks decreases the quantity demanded by 20 percent. The elasticity of demand for textbooks is

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

If a price hike of 5 percent increases the quantity demanded of another good by 2 percent, the goods must be and the cross elasticity of demand equals .

Freezing temperatures in California have sharply reduced the supply of oranges in the U.S. You predict that the price of oranges will , and the more elastic the demand for oranges, the will be the effect on the price.