Question 1

Starting at the top of a straight-line downward sloping demand curve, as the price falls, total expenditures will

Accepted Answer

A)  initially increase and then decrease. 
B)  initially decrease and then increase. 
C)  increase along the entire demand curve. 
D)  decrease along the entire demand curve. 
A)  initially increase and then decrease. 
B)  initially decrease and then increase. 
C)  increase along the entire demand curve. 
D)  decrease along the entire demand curve.

Question 2

If the demand curve for tacos is a downward sloping straight line, at which of the following prices is the demand the most elastic?

Accepted Answer

A)  a price of $0.50 per taco 
B)  a price of $1.00 per taco 
C)  a price of $1.50 per taco 
D)  There is not enough information given to determine at which price the demand is most elastic. 
A)  a price of $0.50 per taco 
B)  a price of $1.00 per taco 
C)  a price of $1.50 per taco 
D)  There is not enough information given to determine at which price the demand is most elastic.

Question 3

-The table above gives the demand schedule for peas. Between point A and point B, the price elasticity of demand equals

Accepted Answer

A)  0.11. 
B)  0.50. 
C)  0.22. 
D)  9.09. 
A)  0.11. 
B)  0.50. 
C)  0.22. 
D)  9.09.

Question 4

If the income elasticity of demand for corn is 0.5, then as income increases

Accepted Answer

A)  the demand for corn will increase. 
B)  the demand for corn will decrease. 
C)  corn will prove to be an inferior good. 
D)  the supply curve of corn will shift leftward. 
A)  the demand for corn will increase. 
B)  the demand for corn will decrease. 
C)  corn will prove to be an inferior good. 
D)  the supply curve of corn will shift leftward.

Question 5

If the price of one good increases by 3 percent and the quantity demanded of another good increases by 2 percent, the cross elasticity is ________ and the two goods are ________.

Accepted Answer

A)  2/3, substitutes 
B)  2/3, complements 
C)  3/2, complements 
D)  3/2, substitutes 
A)  2/3, substitutes 
B)  2/3, complements 
C)  3/2, complements 
D)  3/2, substitutes

Question 6

Last year, after Shirley received a 14 percent pay increase, she increased the quantity of pork chops she purchased by 6 percent. Hence, her income elasticity of demand for pork chops equals

Accepted Answer

A)  0.43. 
B)  -0.43. 
C)  2.33. 
D)  -2.33 
A)  0.43. 
B)  -0.43. 
C)  2.33. 
D)  -2.33

Question 7

Deb's income has just risen from $950 per week to $1,050 per week. As a result, she decides to increase the number of movies she attends each month by 5 percent. Her demand for movies is

Accepted Answer

A)  represented by a vertical line. 
B)  represented by a horizontal line. 
C)  income elastic. 
D)  income inelastic. 
A)  represented by a vertical line. 
B)  represented by a horizontal line. 
C)  income elastic. 
D)  income inelastic.

Question 8

If the price elasticity of demand for gasoline is 0.8 and the price elasticity of demand for plane tickets is 2.2 then the demand for gasoline is ________ and the demand for plane tickets is ________.

Accepted Answer

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

Question 9

-The figure illustrates the demand for peanuts. If the price falls from $12 to $9 a bag, total revenue will ________, and if the price rises from $3 to $6 a bag, total revenue will ________.

Accepted Answer

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

Question 10

Dell lowers the price of their PCs by 10 percent. As a result, the quantity of Gateway computers demanded at the current price decreases by 12 percent. What is the cross elasticity of demand for Gateway computers with respect to the price of Dell computers?

Accepted Answer

A)  -1.20 
B)  -0.83 
C)  1.20 
D)  0.83 
A)  -1.20 
B)  -0.83 
C)  1.20 
D)  0.83

Question 11

The income elasticity of demand for bicycles is +10, which implies that bicycles are

Accepted Answer

A)  an inferior good. 
B)  a normal good. 
C)  a substitute good for motorbikes. 
D)  a complement good for motorbikes. 
A)  an inferior good. 
B)  a normal good. 
C)  a substitute good for motorbikes. 
D)  a complement good for motorbikes.

Question 12

A 10 percent increase in income brings about a 15 percent decrease in the demand for a good. What is the income elasticity of demand and is the good a normal good or an inferior good?

Accepted Answer

The income elasticit

Question 13

For Product X, the income elasticity of demand is -2.56. Which of the following is therefore TRUE?

Accepted Answer

A)  Product X is a necessity. 
B)  Product X is a luxury. 
C)  Product X is an inferior good. 
D)  Product X is a normal good. 
A)  Product X is a necessity. 
B)  Product X is a luxury. 
C)  Product X is an inferior good. 
D)  Product X is a normal good.

Question 14

Moving up (to the left) along a linear demand curve, the price elasticity of demand

Accepted Answer

A)  decreases. 
B)  does not change. 
C)  increases. 
D)  at first increases and then decreases. 
A)  decreases. 
B)  does not change. 
C)  increases. 
D)  at first increases and then decreases.

Question 15

The demand curve for microwave popcorn is linear. Which of the following definitely makes the demand for microwave popcorn more inelastic?

Accepted Answer

A)  a decrease in the price of microwave popcorn 
B)  an increase in the price of microwave popcorn 
C)  an increase in income 
D)  a decrease in income 
A)  a decrease in the price of microwave popcorn 
B)  an increase in the price of microwave popcorn 
C)  an increase in income 
D)  a decrease in income

Question 16

Which demand is more price elastic: The demand for all personal computers or the demand for Dell computers? Explain your answer.

Accepted Answer

The demand for Dell computers is more el

Question 17

You are the brand manager of Crest toothpaste and you observe that when you increase the price of Crest, your total revenue increases. How is that possible?

Accepted Answer

The demand for Crest toothpaste must be

Question 18

Using average price and average quantity, calculate the price elasticity of demand if a price rise from $8 to $10 and decreases the quantity demanded from 20 units to 15 units. The price elasticity of demand equals

Accepted Answer

A)  2.5. 
B)  1.29. 
C)  0.78. 
D)  0.06 
A)  2.5. 
B)  1.29. 
C)  0.78. 
D)  0.06

Question 19

For many goods, the price elasticity of demand increases over time because

Accepted Answer

A)  people's incomes tend to increase over time. 
B)  inflation increases all prices and incomes over time. 
C)  the ability to find substitutes for a good whose price has risen increases over time. 
D)  None of the above answers is correct. 
A)  people's incomes tend to increase over time. 
B)  inflation increases all prices and incomes over time. 
C)  the ability to find substitutes for a good whose price has risen increases over time. 
D)  None of the above answers is correct.

Question 20

If University of Nebraska increased its season football ticket sales from 43,000 to 47,000 when it lowered price from $350.00 to $300.00, then its demand for season tickets must be ________ because total revenue ________ when the price was lowered.

Accepted Answer

A)  elastic; decreased 
B)  elastic; increased 
C)  inelastic; decreased 
D)  inelastic; increased 
A)  elastic; decreased 
B)  elastic; increased 
C)  inelastic; decreased 
D)  inelastic; increased

Starting at the top of a straight-line downward sloping demand curve, as the price falls, total expenditures will

If the demand curve for tacos is a downward sloping straight line, at which of the following prices is the demand the most elastic?

-The table above gives the demand schedule for peas. Between point A and point B, the price elasticity of demand equals

If the income elasticity of demand for corn is 0.5, then as income increases

If the price of one good increases by 3 percent and the quantity demanded of another good increases by 2 percent, the cross elasticity is and the two goods are .

Last year, after Shirley received a 14 percent pay increase, she increased the quantity of pork chops she purchased by 6 percent. Hence, her income elasticity of demand for pork chops equals

Deb's income has just risen from $950 per week to $1,050 per week. As a result, she decides to increase the number of movies she attends each month by 5 percent. Her demand for movies is

If the price elasticity of demand for gasoline is 0.8 and the price elasticity of demand for plane tickets is 2.2 then the demand for gasoline is and the demand for plane tickets is .

-The figure illustrates the demand for peanuts. If the price falls from $12 to $9 a bag, total revenue will , and if the price rises from $3 to $6 a bag, total revenue will .

Dell lowers the price of their PCs by 10 percent. As a result, the quantity of Gateway computers demanded at the current price decreases by 12 percent. What is the cross elasticity of demand for Gateway computers with respect to the price of Dell computers?

The income elasticity of demand for bicycles is +10, which implies that bicycles are

A 10 percent increase in income brings about a 15 percent decrease in the demand for a good. What is the income elasticity of demand and is the good a normal good or an inferior good?

For Product X, the income elasticity of demand is -2.56. Which of the following is therefore TRUE?

Moving up (to the left) along a linear demand curve, the price elasticity of demand

The demand curve for microwave popcorn is linear. Which of the following definitely makes the demand for microwave popcorn more inelastic?

Which demand is more price elastic: The demand for all personal computers or the demand for Dell computers? Explain your answer.

You are the brand manager of Crest toothpaste and you observe that when you increase the price of Crest, your total revenue increases. How is that possible?

Using average price and average quantity, calculate the price elasticity of demand if a price rise from $8 to $10 and decreases the quantity demanded from 20 units to 15 units. The price elasticity of demand equals

For many goods, the price elasticity of demand increases over time because

If University of Nebraska increased its season football ticket sales from 43,000 to 47,000 when it lowered price from $350.00 to $300.00, then its demand for season tickets must be because total revenue when the price was lowered.

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

Starting at the top of a straight-line downward sloping demand curve, as the price falls, total expenditures will

If the demand curve for tacos is a downward sloping straight line, at which of the following prices is the demand the most elastic?

-The table above gives the demand schedule for peas. Between point A and point B, the price elasticity of demand equals

If the income elasticity of demand for corn is 0.5, then as income increases

If the price of one good increases by 3 percent and the quantity demanded of another good increases by 2 percent, the cross elasticity is ________ and the two goods are ________.

Last year, after Shirley received a 14 percent pay increase, she increased the quantity of pork chops she purchased by 6 percent. Hence, her income elasticity of demand for pork chops equals

Deb's income has just risen from $950 per week to $1,050 per week. As a result, she decides to increase the number of movies she attends each month by 5 percent. Her demand for movies is

If the price elasticity of demand for gasoline is 0.8 and the price elasticity of demand for plane tickets is 2.2 then the demand for gasoline is ________ and the demand for plane tickets is ________.

-The figure illustrates the demand for peanuts. If the price falls from $12 to $9 a bag, total revenue will ________, and if the price rises from $3 to $6 a bag, total revenue will ________.

Dell lowers the price of their PCs by 10 percent. As a result, the quantity of Gateway computers demanded at the current price decreases by 12 percent. What is the cross elasticity of demand for Gateway computers with respect to the price of Dell computers?

The income elasticity of demand for bicycles is +10, which implies that bicycles are

A 10 percent increase in income brings about a 15 percent decrease in the demand for a good. What is the income elasticity of demand and is the good a normal good or an inferior good?

For Product X, the income elasticity of demand is -2.56. Which of the following is therefore TRUE?

Moving up (to the left) along a linear demand curve, the price elasticity of demand

The demand curve for microwave popcorn is linear. Which of the following definitely makes the demand for microwave popcorn more inelastic?

Which demand is more price elastic: The demand for all personal computers or the demand for Dell computers? Explain your answer.

You are the brand manager of Crest toothpaste and you observe that when you increase the price of Crest, your total revenue increases. How is that possible?

Using average price and average quantity, calculate the price elasticity of demand if a price rise from $8 to $10 and decreases the quantity demanded from 20 units to 15 units. The price elasticity of demand equals

For many goods, the price elasticity of demand increases over time because

If University of Nebraska increased its season football ticket sales from 43,000 to 47,000 when it lowered price from $350.00 to $300.00, then its demand for season tickets must be ________ because total revenue ________ when the price was lowered.

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 the price of one good increases by 3 percent and the quantity demanded of another good increases by 2 percent, the cross elasticity is and the two goods are .

If the price elasticity of demand for gasoline is 0.8 and the price elasticity of demand for plane tickets is 2.2 then the demand for gasoline is and the demand for plane tickets is .

-The figure illustrates the demand for peanuts. If the price falls from $12 to $9 a bag, total revenue will , and if the price rises from $3 to $6 a bag, total revenue will .

If University of Nebraska increased its season football ticket sales from 43,000 to 47,000 when it lowered price from $350.00 to $300.00, then its demand for season tickets must be because total revenue when the price was lowered.