Question 1

The demand for oil is inelastic. So, does an increase in the price of oil mean an increase in total revenue or a decrease in total revenue for oil producers?

Accepted Answer

Because the demand is inelasti

Question 2

According to one study, the price elasticity of demand for cigarettes is 0.25. To decrease the consumption of cigarettes by 8 percent, a tax on cigarettes must raise the price of cigarettes by

Accepted Answer

A)  32 percent. 
B)  25 percent. 
C)  2 percent. 
D)  3.1 percent. 
A)  32 percent. 
B)  25 percent. 
C)  2 percent. 
D)  3.1 percent.

Question 3

If the income elasticity of demand for spaghetti is -1.3, then spaghetti

Accepted Answer

A)  is a normal good. 
B)  is an inferior good. 
C)  has an elastic demand. 
D)  is income elastic. 
A)  is a normal good. 
B)  is an inferior good. 
C)  has an elastic demand. 
D)  is income elastic.

Question 4

Suppose the price of burgers increases from $2 to $3 each. The degree to which quantity demanded responds to this price increase depends on the

Accepted Answer

A)  price elasticity of demand. 
B)  the price elasticity of supply. 
C)  income elasticity of demand. 
D)  cross elasticity of demand. 
A)  price elasticity of demand. 
B)  the price elasticity of supply. 
C)  income elasticity of demand. 
D)  cross elasticity of demand.

Question 5

Suppose bad weather decreases the wheat harvest by 12 percent. If the price elasticity of demand for wheat is 0.6, how would the crop failure affect the price of wheat? Would the crop failure benefit or harm wheat farmers?

Accepted Answer

When the price elasticity of demand is 0

Question 6

If a shift in the demand curve that raises the price of oranges from $7 to $9 a bushel increases the quantity of oranges supplied from 4,000 bushels to 6,000 bushels, the

Accepted Answer

A)  supply of oranges is elastic. 
B)  supply of oranges is inelastic. 
C)  demand for oranges is elastic. 
D)  demand for oranges is inelastic. 
A)  supply of oranges is elastic. 
B)  supply of oranges is inelastic. 
C)  demand for oranges is elastic. 
D)  demand for oranges is inelastic.

Question 7

The price elasticity of demand depends on the

Accepted Answer

A)  proportion of consumers' budgets spent on the good. 
B)  number of available substitutes. 
C)  extent to which the commodity is a luxury. 
D)  all of the above. 
A)  proportion of consumers' budgets spent on the good. 
B)  number of available substitutes. 
C)  extent to which the commodity is a luxury. 
D)  all of the above.

Question 8

When the price of oil is $80 per barrel, the quantity of oil supplied is 74 million barrels per day. When the price of oil is $60 per barrel, the quantity of oil supplied is 71 million barrels per day. What is the elasticity of supply of oil? (Use the midpoint method.)

Accepted Answer

The price elasticity of supply = (percen

Question 9

A fall in the price of cabbage from $10.50 to $9.50 per bushel increases the quantity demanded from 18,800 to 21,200 bushels. The price elasticity of demand is

Accepted Answer

A)  0.80. 
B)  1.20. 
C)  1.25. 
D)  8.00. 
A)  0.80. 
B)  1.20. 
C)  1.25. 
D)  8.00.

Question 10

A local transit authority charges $1 for a bus ride. An economics study suggests that in the price range from $0.50 to $1.50, the elasticity of demand for bus trips is 1.1. To increase its revenue, the transit authority should

Accepted Answer

A)  raise the fare. 
B)  lower the fare. 
C)  leave the fare as it is. 
A)  raise the fare. 
B)  lower the fare. 
C)  leave the fare as it is.

Question 11

What does a horizontal demand curve indicate about the price elasticity of demand?

Accepted Answer

If the demand curve for a good

Question 12

The price elasticity of demand for wheat is 0.42. A drought cuts the supply of wheat. What will happen to the farmers' total revenue?

Accepted Answer

A)  The total revenue will increase. 
B)  The total revenue will decrease. 
C)  The total revenue will not change. 
D)  There is not enough information to determine what happens to the total revenue. 
A)  The total revenue will increase. 
B)  The total revenue will decrease. 
C)  The total revenue will not change. 
D)  There is not enough information to determine what happens to the total revenue.

Question 13

The income elasticity of demand is

Accepted Answer

A)  always positive. 
B)  always negative. 
C)  negative for a normal good and positive for an inferior good. 
D)  positive for a normal good and negative for an inferior good. 
A)  always positive. 
B)  always negative. 
C)  negative for a normal good and positive for an inferior good. 
D)  positive for a normal good and negative for an inferior good.

Question 14

Pizza Hut pizza has more close substitutes than does food in general. The price elasticity of demand for Pizza Hut pizza is ________ the price elasticity of demand for food in general.

Accepted Answer

A)  not comparable to 
B)  greater than 
C)  less than 
D)  the same as 
A)  not comparable to 
B)  greater than 
C)  less than 
D)  the same as

Question 15

If a 1 percent decrease in the price of a pound of oranges results in a smaller percentage decrease in the quantity supplied

Accepted Answer

A)  demand is elastic. 
B)  demand is inelastic. 
C)  supply is elastic. 
D)  supply is inelastic. 
A)  demand is elastic. 
B)  demand is inelastic. 
C)  supply is elastic. 
D)  supply is inelastic.

Question 16

If a decrease in price increases total revenue, what can you determine about the elasticity of demand for the good?

Accepted Answer

If a decrease in price increas

Question 17

Suppose the price elasticity of teenagers' demand for cigarettes is 2.0. If the government imposes a tax on cigarettes that raises the price by 10 percent, by how much will it reduce teenaged smoking?

Accepted Answer

A)  by 5 percent 
B)  by 10 percent 
C)  by 15 percent 
D)  by 20 percent 
A)  by 5 percent 
B)  by 10 percent 
C)  by 15 percent 
D)  by 20 percent

Question 18

Suppose Sandy's Candies wants to increase its total revenues. If Sandy increases the price of her candy, she must be assuming that the demand for candy is

Accepted Answer

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

Question 19

If a small percentage decrease in the price of chocolate causes a larger percentage decrease in the quantity supplied, the

Accepted Answer

A)  demand for chocolate is elastic. 
B)  demand for chocolate is inelastic. 
C)  supply of chocolate is elastic. 
D)  supply of chocolate is inelastic. 
A)  demand for chocolate is elastic. 
B)  demand for chocolate is inelastic. 
C)  supply of chocolate is elastic. 
D)  supply of chocolate is inelastic.

Question 20

Which of the following statements is FALSE?

Accepted Answer

A)  Goods or services that have few close substitutes generally have a less elastic demand. 
B)  Goods or services for which a greater proportion of income is spent on the item generally have a more elastic demand. 
C)  A narrowly defined good or service generally has a less elastic demand. 
D)  The longer the time that has elapsed since a price change, the more elastic the demand. 
A)  Goods or services that have few close substitutes generally have a less elastic demand. 
B)  Goods or services for which a greater proportion of income is spent on the item generally have a more elastic demand. 
C)  A narrowly defined good or service generally has a less elastic demand. 
D)  The longer the time that has elapsed since a price change, the more elastic the demand.

The demand for oil is inelastic. So, does an increase in the price of oil mean an increase in total revenue or a decrease in total revenue for oil producers?

According to one study, the price elasticity of demand for cigarettes is 0.25. To decrease the consumption of cigarettes by 8 percent, a tax on cigarettes must raise the price of cigarettes by

If the income elasticity of demand for spaghetti is -1.3, then spaghetti

Suppose the price of burgers increases from $2 to $3 each. The degree to which quantity demanded responds to this price increase depends on the

Suppose bad weather decreases the wheat harvest by 12 percent. If the price elasticity of demand for wheat is 0.6, how would the crop failure affect the price of wheat? Would the crop failure benefit or harm wheat farmers?

If a shift in the demand curve that raises the price of oranges from $7 to $9 a bushel increases the quantity of oranges supplied from 4,000 bushels to 6,000 bushels, the

The price elasticity of demand depends on the

When the price of oil is $80 per barrel, the quantity of oil supplied is 74 million barrels per day. When the price of oil is $60 per barrel, the quantity of oil supplied is 71 million barrels per day. What is the elasticity of supply of oil? (Use the midpoint method.)

A fall in the price of cabbage from $10.50 to $9.50 per bushel increases the quantity demanded from 18,800 to 21,200 bushels. The price elasticity of demand is

A local transit authority charges $1 for a bus ride. An economics study suggests that in the price range from $0.50 to $1.50, the elasticity of demand for bus trips is 1.1. To increase its revenue, the transit authority should

What does a horizontal demand curve indicate about the price elasticity of demand?

The price elasticity of demand for wheat is 0.42. A drought cuts the supply of wheat. What will happen to the farmers' total revenue?

The income elasticity of demand is

Pizza Hut pizza has more close substitutes than does food in general. The price elasticity of demand for Pizza Hut pizza is ________ the price elasticity of demand for food in general.

If a 1 percent decrease in the price of a pound of oranges results in a smaller percentage decrease in the quantity supplied

If a decrease in price increases total revenue, what can you determine about the elasticity of demand for the good?

Suppose the price elasticity of teenagers' demand for cigarettes is 2.0. If the government imposes a tax on cigarettes that raises the price by 10 percent, by how much will it reduce teenaged smoking?

Suppose Sandy's Candies wants to increase its total revenues. If Sandy increases the price of her candy, she must be assuming that the demand for candy is

If a small percentage decrease in the price of chocolate causes a larger percentage decrease in the quantity supplied, the

Which of the following statements is FALSE?

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 demand for oil is inelastic. So, does an increase in the price of oil mean an increase in total revenue or a decrease in total revenue for oil producers?

According to one study, the price elasticity of demand for cigarettes is 0.25. To decrease the consumption of cigarettes by 8 percent, a tax on cigarettes must raise the price of cigarettes by

If the income elasticity of demand for spaghetti is -1.3, then spaghetti

Suppose the price of burgers increases from $2 to $3 each. The degree to which quantity demanded responds to this price increase depends on the

Suppose bad weather decreases the wheat harvest by 12 percent. If the price elasticity of demand for wheat is 0.6, how would the crop failure affect the price of wheat? Would the crop failure benefit or harm wheat farmers?

If a shift in the demand curve that raises the price of oranges from $7 to $9 a bushel increases the quantity of oranges supplied from 4,000 bushels to 6,000 bushels, the

The price elasticity of demand depends on the

When the price of oil is $80 per barrel, the quantity of oil supplied is 74 million barrels per day. When the price of oil is $60 per barrel, the quantity of oil supplied is 71 million barrels per day. What is the elasticity of supply of oil? (Use the midpoint method.)

A fall in the price of cabbage from $10.50 to $9.50 per bushel increases the quantity demanded from 18,800 to 21,200 bushels. The price elasticity of demand is

A local transit authority charges $1 for a bus ride. An economics study suggests that in the price range from $0.50 to $1.50, the elasticity of demand for bus trips is 1.1. To increase its revenue, the transit authority should

What does a horizontal demand curve indicate about the price elasticity of demand?

The price elasticity of demand for wheat is 0.42. A drought cuts the supply of wheat. What will happen to the farmers' total revenue?

The income elasticity of demand is

Pizza Hut pizza has more close substitutes than does food in general. The price elasticity of demand for Pizza Hut pizza is ________ the price elasticity of demand for food in general.

If a 1 percent decrease in the price of a pound of oranges results in a smaller percentage decrease in the quantity supplied

If a decrease in price increases total revenue, what can you determine about the elasticity of demand for the good?

Suppose the price elasticity of teenagers' demand for cigarettes is 2.0. If the government imposes a tax on cigarettes that raises the price by 10 percent, by how much will it reduce teenaged smoking?

Suppose Sandy's Candies wants to increase its total revenues. If Sandy increases the price of her candy, she must be assuming that the demand for candy is

If a small percentage decrease in the price of chocolate causes a larger percentage decrease in the quantity supplied, the

Which of the following statements is FALSE?

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