Question 1

The elasticity of supply equals ________ if the supply curve is horizontal.

Accepted Answer

A)  0 
B)  1 
C)  infinity 
D)  -1 
A)  0 
B)  1 
C)  infinity 
D)  -1

Question 2

Most corn produced in the United States is used for animal feed. The demand for corn is inelastic. These facts mean that

Accepted Answer

A)  there are many substitutes for corn in feeding animals. 
B)  there are few substitutes for corn in feeding animals. 
C)  there are no substitutes for corn in feeding animals. 
D)  animals are not buying the corn themselves, so we cannot learn anything from these facts. 
A)  there are many substitutes for corn in feeding animals. 
B)  there are few substitutes for corn in feeding animals. 
C)  there are no substitutes for corn in feeding animals. 
D)  animals are not buying the corn themselves, so we cannot learn anything from these facts.

Question 3

If a 4 percent rise in the price of peanut butter lowers the total revenue received by the producers of peanut butter by 4 percent, the demand for peanut butter

Accepted Answer

A)  is elastic. 
B)  is inelastic. 
C)  is unit elastic. 
D)  has an elasticity of 2.0. 
A)  is elastic. 
B)  is inelastic. 
C)  is unit elastic. 
D)  has an elasticity of 2.0.

Question 4

Which of the following goods has a perfectly inelastic supply?

Accepted Answer

A)  insulin 
B)  Diet Pepsi 
C)  the original portrait of "Whistler's Mother" 
D)  compact discs by Bush 
A)  insulin 
B)  Diet Pepsi 
C)  the original portrait of "Whistler's Mother" 
D)  compact discs by Bush

Question 5

During a recession when people's incomes drop, grocery chains experience much smaller declines in sales than do upscale department stores. Explain this phenomenon using the concept of elasticity.

Accepted Answer

During a recession, people's income decr

Question 6

The demand for ________ is more elastic than the demand for ________.

Accepted Answer

A)  chewing gum; cars 
B)  all personal computers; Dell computers 
C)  Pepsi; all soft beverages 
D)  food; exotic vacations 
A)  chewing gum; cars 
B)  all personal computers; Dell computers 
C)  Pepsi; all soft beverages 
D)  food; exotic vacations

Question 7

Suppose Target decided to lower the price on all shirts as part of its Back to School promotion. The cross elasticity of demand between pants and shirts is negative. Lowering the price on shirts will ________ the demand for pants because shirts and pants are ________.

Accepted Answer

A)  increase; substitutes 
B)  decrease; substitutes 
C)  increase; complements 
D)  decrease; complements 
A)  increase; substitutes 
B)  decrease; substitutes 
C)  increase; complements 
D)  decrease; complements

Question 8

If the demand for a good is elastic, the price elasticity of demand is

Accepted Answer

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

Question 9

A decrease in the supply of sugar increases the price of sugar from $1.00 a packet to $1.25 a packet. The quantity decreases from 100 packets a day to 80 packets a day. The price elasticity of demand of sugar is

Accepted Answer

A)  0.75. 
B)  0.5. 
C)  1.0. 
D)  1.25. 
A)  0.75. 
B)  0.5. 
C)  1.0. 
D)  1.25.

Question 10

The marketing people for AT&T believe that if they lower the price of long-distance phone calls by 5 percent, their quantity demanded will increase by 15 percent. If they are correct in their belief, then

Accepted Answer

A)  the demand for long-distance phone calls is price inelastic. 
B)  the total revenue from long-distance phone calls will increase if they lower the price. 
C)  the demand for long-distance phone calls is income elastic. 
D)  the total revenue from long-distance phone calls will decrease if they lower the price. 
A)  the demand for long-distance phone calls is price inelastic. 
B)  the total revenue from long-distance phone calls will increase if they lower the price. 
C)  the demand for long-distance phone calls is income elastic. 
D)  the total revenue from long-distance phone calls will decrease if they lower the price.

Question 11

If a 3 percent increase in the price of tennis shoes leads to a 7 percent increase in the number of tennis shoes supplied

Accepted Answer

A)  the elasticity of supply equals 0.43. 
B)  the elasticity of supply equals 2.33. 
C)  income elasticity equals 2.33. 
D)  supply is inelastic. 
A)  the elasticity of supply equals 0.43. 
B)  the elasticity of supply equals 2.33. 
C)  income elasticity equals 2.33. 
D)  supply is inelastic.

Question 12

The cross elasticity of demand measures the responsiveness of the quantity demanded of a particular good to changes in the prices of

Accepted Answer

A)  its substitutes and its complements. 
B)  its substitutes but not its complements. 
C)  its complements but not its substitutes. 
D)  neither its substitutes nor its complements. 
A)  its substitutes and its complements. 
B)  its substitutes but not its complements. 
C)  its complements but not its substitutes. 
D)  neither its substitutes nor its complements.

Question 13

Suppose a rise in the price of peaches from $5.50 to $6.50 per bushel decreases the quantity demanded from 12,500 to 11,500 bushels. The price elasticity of demand is

Accepted Answer

A)  0.5. 
B)  1.0. 
C)  2.0. 
D)  1000.0. 
A)  0.5. 
B)  1.0. 
C)  2.0. 
D)  1000.0.

Question 14

-The elasticity of demand along the demand curve shown in the above figure is constant and equal to 1. Thus

Accepted Answer

A)  area 0BCF equals area 0AGF. 
B)  area 0BCF equals area FGDE. 
C)  area 0BCF equals area 0ADE. 
D)  area ABCG equals area 0AGF. 
A)  area 0BCF equals area 0AGF. 
B)  area 0BCF equals area FGDE. 
C)  area 0BCF equals area 0ADE. 
D)  area ABCG equals area 0AGF.

Question 15

The elasticity of the momentary supply curve for any good always equals

Accepted Answer

A)  zero. 
B)  one. 
C)  positive infinity. 
D)  None of the above answers is correct. 
A)  zero. 
B)  one. 
C)  positive infinity. 
D)  None of the above answers is correct.

Question 16

-The above table gives the demand schedule for Billy Bob's BBQ ribs. The demand for Billy Bob's ribs is unit elastic at which of the following prices?

Accepted Answer

A)  $10 
B)  $7 
C)  $5 
D)  $1 
A)  $10 
B)  $7 
C)  $5 
D)  $1

Question 17

A determinant of the price elasticity of supply is the extent to which

Accepted Answer

A)  consumers like the quality of the good. 
B)  the demand for the good is relatively elastic. 
C)  the good has many consumer substitutes. 
D)  production of the good uses commonly available resources. 
A)  consumers like the quality of the good. 
B)  the demand for the good is relatively elastic. 
C)  the good has many consumer substitutes. 
D)  production of the good uses commonly available resources.

Question 18

If the demand curve for oranges is a downward sloping straight line, the price elasticity of demand will increase the

Accepted Answer

A)  higher the price of oranges. 
B)  higher the price of other fruits. 
C)  higher the income level of consumers. 
D)  lower the price of oranges. 
A)  higher the price of oranges. 
B)  higher the price of other fruits. 
C)  higher the income level of consumers. 
D)  lower the price of oranges.

Question 19

When the percentage change in quantity demanded is less than the percentage change in price, the demand for the good is

Accepted Answer

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

Question 20

If the cross elasticity of demand between goods X and Y is positive and between goods X and Z is negative, then X and Y are ________ and X and Z are ________.

Accepted Answer

A)  price inelastic; complements 
B)  complements; substitutes 
C)  substitutes; complements 
D)  price inelastic; income elastic 
A)  price inelastic; complements 
B)  complements; substitutes 
C)  substitutes; complements 
D)  price inelastic; income elastic

The elasticity of supply equals ________ if the supply curve is horizontal.

Most corn produced in the United States is used for animal feed. The demand for corn is inelastic. These facts mean that

If a 4 percent rise in the price of peanut butter lowers the total revenue received by the producers of peanut butter by 4 percent, the demand for peanut butter

Which of the following goods has a perfectly inelastic supply?

During a recession when people's incomes drop, grocery chains experience much smaller declines in sales than do upscale department stores. Explain this phenomenon using the concept of elasticity.

The demand for is more elastic than the demand for .

Suppose Target decided to lower the price on all shirts as part of its Back to School promotion. The cross elasticity of demand between pants and shirts is negative. Lowering the price on shirts will the demand for pants because shirts and pants are .

If the demand for a good is elastic, the price elasticity of demand is

A decrease in the supply of sugar increases the price of sugar from $1.00 a packet to $1.25 a packet. The quantity decreases from 100 packets a day to 80 packets a day. The price elasticity of demand of sugar is

The marketing people for AT&T believe that if they lower the price of long-distance phone calls by 5 percent, their quantity demanded will increase by 15 percent. If they are correct in their belief, then

If a 3 percent increase in the price of tennis shoes leads to a 7 percent increase in the number of tennis shoes supplied

The cross elasticity of demand measures the responsiveness of the quantity demanded of a particular good to changes in the prices of

Suppose a rise in the price of peaches from $5.50 to $6.50 per bushel decreases the quantity demanded from 12,500 to 11,500 bushels. The price elasticity of demand is

-The elasticity of demand along the demand curve shown in the above figure is constant and equal to 1. Thus

The elasticity of the momentary supply curve for any good always equals

-The above table gives the demand schedule for Billy Bob's BBQ ribs. The demand for Billy Bob's ribs is unit elastic at which of the following prices?

A determinant of the price elasticity of supply is the extent to which

If the demand curve for oranges is a downward sloping straight line, the price elasticity of demand will increase the

When the percentage change in quantity demanded is less than the percentage change in price, the demand for the good is

If the cross elasticity of demand between goods X and Y is positive and between goods X and Z is negative, then X and Y are and X and Z are .

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 elasticity of supply equals ________ if the supply curve is horizontal.

Most corn produced in the United States is used for animal feed. The demand for corn is inelastic. These facts mean that

If a 4 percent rise in the price of peanut butter lowers the total revenue received by the producers of peanut butter by 4 percent, the demand for peanut butter

Which of the following goods has a perfectly inelastic supply?

During a recession when people's incomes drop, grocery chains experience much smaller declines in sales than do upscale department stores. Explain this phenomenon using the concept of elasticity.

The demand for ________ is more elastic than the demand for ________.

Suppose Target decided to lower the price on all shirts as part of its Back to School promotion. The cross elasticity of demand between pants and shirts is negative. Lowering the price on shirts will ________ the demand for pants because shirts and pants are ________.

If the demand for a good is elastic, the price elasticity of demand is

A decrease in the supply of sugar increases the price of sugar from $1.00 a packet to $1.25 a packet. The quantity decreases from 100 packets a day to 80 packets a day. The price elasticity of demand of sugar is

The marketing people for AT&T believe that if they lower the price of long-distance phone calls by 5 percent, their quantity demanded will increase by 15 percent. If they are correct in their belief, then

If a 3 percent increase in the price of tennis shoes leads to a 7 percent increase in the number of tennis shoes supplied

The cross elasticity of demand measures the responsiveness of the quantity demanded of a particular good to changes in the prices of

Suppose a rise in the price of peaches from $5.50 to $6.50 per bushel decreases the quantity demanded from 12,500 to 11,500 bushels. The price elasticity of demand is

-The elasticity of demand along the demand curve shown in the above figure is constant and equal to 1. Thus

The elasticity of the momentary supply curve for any good always equals

-The above table gives the demand schedule for Billy Bob's BBQ ribs. The demand for Billy Bob's ribs is unit elastic at which of the following prices?

A determinant of the price elasticity of supply is the extent to which

If the demand curve for oranges is a downward sloping straight line, the price elasticity of demand will increase the

When the percentage change in quantity demanded is less than the percentage change in price, the demand for the good is

If the cross elasticity of demand between goods X and Y is positive and between goods X and Z is negative, then X and Y are ________ and X and Z are ________.

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 demand for is more elastic than the demand for .

Suppose Target decided to lower the price on all shirts as part of its Back to School promotion. The cross elasticity of demand between pants and shirts is negative. Lowering the price on shirts will the demand for pants because shirts and pants are .

If the cross elasticity of demand between goods X and Y is positive and between goods X and Z is negative, then X and Y are and X and Z are .