Question 1

If the cross elasticity of demand between Jeep Cherokees and Chevy Lumina Vans is 1.55, then the two vehicles are not substitutes in the eyes of car buyers.

Accepted Answer

A) True 
 B)False

Question 2

How are the cross elasticity of demand and income elasticity of demand similar and how are they different from the price elasticity of demand?

Accepted Answer

The cross and income elasticities are si

Question 3

-The figure shows the demand curve for popsicles. The price elasticity of demand when the price of a popsicle increases from $0.30 to $0.50 is

Accepted Answer

A)  0. 
B)  1. 
C)  1/2. 
D)  2. 
A)  0. 
B)  1. 
C)  1/2. 
D)  2.

Question 4

-The table above gives the demand schedule for peas. Between point C and point D, the price elasticity of demand is

Accepted Answer

A)  elastic. 
B)  unit elastic. 
C)  0.75. 
D)  3.00. 
A)  elastic. 
B)  unit elastic. 
C)  0.75. 
D)  3.00.

Question 5

The closer the substitutes for a good, the

Accepted Answer

A)  more elastic is the demand for the good. 
B)  less elastic is the demand for the good. 
C)  smaller the degree of substitutability between the goods. 
D)  larger the proportion of income that is spent on the good. 
A)  more elastic is the demand for the good. 
B)  less elastic is the demand for the good. 
C)  smaller the degree of substitutability between the goods. 
D)  larger the proportion of income that is spent on the good.

Question 6

The demand for bus rides is a downward-sloping straight line demand curve. The price elasticity of demand for bus rides

Accepted Answer

A)  increases as the price of a bus ride falls. 
B)  decreases as the price of a bus ride falls. 
C)  is the same no matter what the price of a bus ride. 
D)  decreases as the price of a bus ride rises. 
A)  increases as the price of a bus ride falls. 
B)  decreases as the price of a bus ride falls. 
C)  is the same no matter what the price of a bus ride. 
D)  decreases as the price of a bus ride rises.

Question 7

The elasticity of supply does NOT depend on

Accepted Answer

A)  resource substitution possibilities. 
B)  the fraction of income spent on the product. 
C)  the time elapsed since the price change. 
D)  none of the above because all of the factors listed affect the elasticity of supply. 
A)  resource substitution possibilities. 
B)  the fraction of income spent on the product. 
C)  the time elapsed since the price change. 
D)  none of the above because all of the factors listed affect the elasticity of supply.

Question 8

Apple, the consumer electronics giant, on Tuesday rolled out new versions of its popular iPod music player. CEO Steve Jobs also unveiled cheaper models of its Touch music player, a touchscreen-only device. An 8-gigabyte version now costs $230, down from $300. A 32-gigabyte model costs $400, down from $500. Calculate the price elasticity of demand for a 32 gigabyte Touch player if the quantity demanded increases from 850,000 to 950,000 the month after the price decrease.

Accepted Answer

A)  0.5 
B)  1.5 
C)  1 
D)  0.75 
A)  0.5 
B)  1.5 
C)  1 
D)  0.75

Question 9

When does a decrease in supply raise the price more: When demand is elastic or when demand is inelastic? When OPEC decreases the supply of oil, the price of gasoline skyrockets. Hence is the demand for gasoline elastic or inelastic?

Accepted Answer

A decrease in supply raises th

Question 10

The income elasticity of demand is ________ for a normal good and ________ for an inferior good.

Accepted Answer

A)  positive; positive 
B)  positive; negative 
C)  negative; positive 
D)  negative; negative 
A)  positive; positive 
B)  positive; negative 
C)  negative; positive 
D)  negative; negative

Question 11

Donuts and coffee are complements. When the price of a donut increases, the demand for coffee ________ and the cross elasticity of demand for coffee with respect to the price of a donut is ________.

Accepted Answer

A)  decreases; negative 
B)  increases; negative 
C)  increases; positive 
D)  decreases; positive 
A)  decreases; negative 
B)  increases; negative 
C)  increases; positive 
D)  decreases; positive

Question 12

The price elasticity of demand for new cars is 1.2. Hence, a 10 percent price increase will

Accepted Answer

A)  decrease the quantity of new cars demanded by 1.2 percent. 
B)  increase consumer expenditure on new cars by 1.2 percent. 
C)  decrease the quantity of new cars demanded by 12 percent. 
D)  increase consumer expenditure on new cars by 12 percent. 
A)  decrease the quantity of new cars demanded by 1.2 percent. 
B)  increase consumer expenditure on new cars by 1.2 percent. 
C)  decrease the quantity of new cars demanded by 12 percent. 
D)  increase consumer expenditure on new cars by 12 percent.

Question 13

If your annual income rose by 10 percent and you increased your purchases of shoes from 2 pairs to 3 pairs each year, then your demand for shoes is

Accepted Answer

A)  income inelastic and equal to 0.50. 
B)  income elastic and equal to 1.50. 
C)  income inelastic. 
D)  income elastic. 
A)  income inelastic and equal to 0.50. 
B)  income elastic and equal to 1.50. 
C)  income inelastic. 
D)  income elastic.

Question 14

In Brazil, the income elasticity of demand for dairy is 0.7 and for fruit and vegetables it is 0.5. These elasticities mean that if the income of Brazilians decreases, they will purchase ________ dairy and ________ fruits and vegetables.

Accepted Answer

A)  less; less 
B)  more; more 
C)  more; less 
D)  less; more 
A)  less; less 
B)  more; more 
C)  more; less 
D)  less; more

Question 15

The "Economics in Action" in the text mentions that the elasticity of demand for agricultural products is 0.42. If a drought boosts the price of corn 25 percent, then we can calculate the quantity of corn demanded

Accepted Answer

A)  increased by 10.5 percent. 
B)  decreased by 10.5 percent. 
C)  increased by 8.4 percent. 
D)  decreased by 8.4 percent. 
A)  increased by 10.5 percent. 
B)  decreased by 10.5 percent. 
C)  increased by 8.4 percent. 
D)  decreased by 8.4 percent.

Question 16

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

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 17

The cross elasticity of demand is calculated as the percentage change in the

Accepted Answer

A)  quantity demanded of one good divided by the percentage change in the price of another good 
B)  price of one good divided by the percentage change in the quantity demanded of another good. 
C)  quantity demanded of one good divided by the percentage change in the quantity demanded of another good. 
D)  price of one good divided by the percentage change in the price of another good. 
A)  quantity demanded of one good divided by the percentage change in the price of another good 
B)  price of one good divided by the percentage change in the quantity demanded of another good. 
C)  quantity demanded of one good divided by the percentage change in the quantity demanded of another good. 
D)  price of one good divided by the percentage change in the price of another good.

Question 18

A 20 percent increase in the quantity of pizza demanded results from a 10 percent decline in its price. The price elasticity of demand for pizza is

Accepted Answer

A)  0.5. 
B)  2.0. 
C)  10.0. 
D)  20.0. 
A)  0.5. 
B)  2.0. 
C)  10.0. 
D)  20.0.

Question 19

If the income elasticity for chocolate chip cookies is 1.84, then chocolate chip cookies are

Accepted Answer

A)  a normal good and income inelastic. 
B)  a normal good and income elastic. 
C)  an inferior good and income inelastic. 
D)  an inferior good and income elastic. 
A)  a normal good and income inelastic. 
B)  a normal good and income elastic. 
C)  an inferior good and income inelastic. 
D)  an inferior good and income elastic.

Question 20

If the quantity demanded of a good decreases by 10 percent when the price of the good increases by 5 percent, the elasticity of demand is -2.00.

Accepted Answer

A) True 
 B)False

If the cross elasticity of demand between Jeep Cherokees and Chevy Lumina Vans is 1.55, then the two vehicles are not substitutes in the eyes of car buyers.

How are the cross elasticity of demand and income elasticity of demand similar and how are they different from the price elasticity of demand?

-The figure shows the demand curve for popsicles. The price elasticity of demand when the price of a popsicle increases from $0.30 to $0.50 is

-The table above gives the demand schedule for peas. Between point C and point D, the price elasticity of demand is

The closer the substitutes for a good, the

The demand for bus rides is a downward-sloping straight line demand curve. The price elasticity of demand for bus rides

The elasticity of supply does NOT depend on

When does a decrease in supply raise the price more: When demand is elastic or when demand is inelastic? When OPEC decreases the supply of oil, the price of gasoline skyrockets. Hence is the demand for gasoline elastic or inelastic?

The income elasticity of demand is for a normal good and for an inferior good.

Donuts and coffee are complements. When the price of a donut increases, the demand for coffee and the cross elasticity of demand for coffee with respect to the price of a donut is .

The price elasticity of demand for new cars is 1.2. Hence, a 10 percent price increase will

If your annual income rose by 10 percent and you increased your purchases of shoes from 2 pairs to 3 pairs each year, then your demand for shoes is

In Brazil, the income elasticity of demand for dairy is 0.7 and for fruit and vegetables it is 0.5. These elasticities mean that if the income of Brazilians decreases, they will purchase dairy and fruits and vegetables.

The "Economics in Action" in the text mentions that the elasticity of demand for agricultural products is 0.42. If a drought boosts the price of corn 25 percent, then we can calculate the quantity of corn demanded

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

The cross elasticity of demand is calculated as the percentage change in the

A 20 percent increase in the quantity of pizza demanded results from a 10 percent decline in its price. The price elasticity of demand for pizza is

If the income elasticity for chocolate chip cookies is 1.84, then chocolate chip cookies are

If the quantity demanded of a good decreases by 10 percent when the price of the good increases by 5 percent, the elasticity of demand is -2.00.

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 the cross elasticity of demand between Jeep Cherokees and Chevy Lumina Vans is 1.55, then the two vehicles are not substitutes in the eyes of car buyers.

How are the cross elasticity of demand and income elasticity of demand similar and how are they different from the price elasticity of demand?

-The figure shows the demand curve for popsicles. The price elasticity of demand when the price of a popsicle increases from $0.30 to $0.50 is

-The table above gives the demand schedule for peas. Between point C and point D, the price elasticity of demand is

The closer the substitutes for a good, the

The demand for bus rides is a downward-sloping straight line demand curve. The price elasticity of demand for bus rides

The elasticity of supply does NOT depend on

When does a decrease in supply raise the price more: When demand is elastic or when demand is inelastic? When OPEC decreases the supply of oil, the price of gasoline skyrockets. Hence is the demand for gasoline elastic or inelastic?

The income elasticity of demand is ________ for a normal good and ________ for an inferior good.

Donuts and coffee are complements. When the price of a donut increases, the demand for coffee ________ and the cross elasticity of demand for coffee with respect to the price of a donut is ________.

The price elasticity of demand for new cars is 1.2. Hence, a 10 percent price increase will

If your annual income rose by 10 percent and you increased your purchases of shoes from 2 pairs to 3 pairs each year, then your demand for shoes is

In Brazil, the income elasticity of demand for dairy is 0.7 and for fruit and vegetables it is 0.5. These elasticities mean that if the income of Brazilians decreases, they will purchase ________ dairy and ________ fruits and vegetables.

The "Economics in Action" in the text mentions that the elasticity of demand for agricultural products is 0.42. If a drought boosts the price of corn 25 percent, then we can calculate the quantity of corn demanded

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

The cross elasticity of demand is calculated as the percentage change in the

A 20 percent increase in the quantity of pizza demanded results from a 10 percent decline in its price. The price elasticity of demand for pizza is

If the income elasticity for chocolate chip cookies is 1.84, then chocolate chip cookies are

If the quantity demanded of a good decreases by 10 percent when the price of the good increases by 5 percent, the elasticity of demand is -2.00.

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 for a normal good and for an inferior good.

Donuts and coffee are complements. When the price of a donut increases, the demand for coffee and the cross elasticity of demand for coffee with respect to the price of a donut is .

In Brazil, the income elasticity of demand for dairy is 0.7 and for fruit and vegetables it is 0.5. These elasticities mean that if the income of Brazilians decreases, they will purchase dairy and fruits and vegetables.