Question 1

Which of the following factors will make the demand for a product more elastic?

Accepted Answer

A)  The product has no close substitutes. 
B)  A very small proportion of income is spent on the good. 
C)  A long time period has elapsed since the product's price changed. 
D)  The change in the product's price was unexpected. 
A)  The product has no close substitutes. 
B)  A very small proportion of income is spent on the good. 
C)  A long time period has elapsed since the product's price changed. 
D)  The change in the product's price was unexpected.

Question 2

Because there are numerous choices for fast food purchases, the price elasticity of demand for Taco Bell food is likely

Accepted Answer

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

Question 3

If a 6 percent decrease in the price leads to a 5 percent increase in the quantity demanded, the price elasticity of demand is

Accepted Answer

A)  0.30. 
B)  0.60. 
C)  0.83. 
D)  1.20. 
A)  0.30. 
B)  0.60. 
C)  0.83. 
D)  1.20.

Question 4

The concept of elasticity of supply measures the responsiveness of the

Accepted Answer

A)  quantity supplied to a change in the price. 
B)  price to a change in the quantity supplied. 
C)  quantity supplied to a change in the quantity demanded. 
D)  quantity demanded to a change in the quantity supplied. 
A)  quantity supplied to a change in the price. 
B)  price to a change in the quantity supplied. 
C)  quantity supplied to a change in the quantity demanded. 
D)  quantity demanded to a change in the quantity supplied.

Question 5

Peter's monthly income increases from $1,500 to $1,600. As a result, he increases the number of DVDs he buys per month from 2 to 3. Peter's demand for DVDs is

Accepted Answer

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

Question 6

Suppose the price of flour increases from $0.80 to $1.00 a pound and the quantity demanded decreases from 100 pounds to 95 pounds. Using the midpoint method, what is the price elasticity of demand for flour? Is the demand for flour elastic or inelastic?

Accepted Answer

The price elasticity of demand is 0.23.

Question 7

If a college wanted to increase its revenues from tuition payments, should it increase the tuition of day and evening students alike?

Accepted Answer

If the demand from each class of student

Question 8

The price elasticity of demand for movies is approximately 1 and 500,000 tickets are sold per day. If the average price of a movie ticket increases by 20 percent, the number of tickets sold each day decreases to

Accepted Answer

A)  400,000. 
B)  300,000. 
C)  420,000. 
D)  475,000. 
A)  400,000. 
B)  300,000. 
C)  420,000. 
D)  475,000.

Question 9

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

Accepted Answer

A)  consumer incomes tend to increase over time. 
B)  inflation increases all prices and incomes over time. 
C)  the ability to find good substitutes for the product whose price rose increases over time. 
D)  All of the above answers are correct. 
A)  consumer incomes tend to increase over time. 
B)  inflation increases all prices and incomes over time. 
C)  the ability to find good substitutes for the product whose price rose increases over time. 
D)  All of the above answers are correct.

Question 10

-Consider the straight-line demand curve illustrated in the above figure. At what price is total revenue maximized?

Accepted Answer

A)  at a price of $8 
B)  at a price of $6 
C)  at a price of $4 
D)  More information is needed to determine the price at which total revenue is maximized. 
A)  at a price of $8 
B)  at a price of $6 
C)  at a price of $4 
D)  More information is needed to determine the price at which total revenue is maximized.

Question 11

The price elasticity of demand is equal to the ________ in the ________ divided by the ________ in the ________.

Accepted Answer

A)  percentage change; price; percentage change; quantity demanded 
B)  change; price; change; quantity demanded 
C)  percentage change; quantity demanded; percentage change; price 
D)  change; quantity demanded; change; price 
A)  percentage change; price; percentage change; quantity demanded 
B)  change; price; change; quantity demanded 
C)  percentage change; quantity demanded; percentage change; price 
D)  change; quantity demanded; change; price

Question 12

What is the price elasticity of supply? List and briefly define three cases of the price elasticity of supply.

Accepted Answer

The price elasticity of supply measures

Question 13

A straight-line demand curve along which the price elasticity of demand equals 0 is one that

Accepted Answer

A)  forms a 45 degree angle with the vertical axis. 
B)  forms a 60 degree angle with the horizontal axis. 
C)  is vertical. 
D)  is horizontal. 
A)  forms a 45 degree angle with the vertical axis. 
B)  forms a 60 degree angle with the horizontal axis. 
C)  is vertical. 
D)  is horizontal.

Question 14

If the supply curve is vertical, then supply is

Accepted Answer

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

Question 15

Along a perfectly vertical demand curve, the price elasticity of demand

Accepted Answer

A)  equals 0. 
B)  is greater than 0 but less than 1.0. 
C)  equals 1.0. 
D)  is negative. 
A)  equals 0. 
B)  is greater than 0 but less than 1.0. 
C)  equals 1.0. 
D)  is negative.

Question 16

If the price of a pumpkin rises and consumers' total expenditure on pumpkins increases, then the demand for pumpkins is inelastic.

Accepted Answer

A) True 
 B)False

Question 17

If a 1 percent decrease in the price of a pound of squash results in a larger 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 18

The demand for movies is unit elastic if

Accepted Answer

A)  a 5 percent decrease in the price leads to an infinite increase in the quantity demanded. 
B)  a 5 percent increase in the price leads to a 5 percent decrease in the quantity demanded. 
C)  any increase in the price leads to a 1 percent decrease in the quantity demanded. 
D)  a 5 percent increase in the price leads to a 5 percent increase in total revenue. 
A)  a 5 percent decrease in the price leads to an infinite increase in the quantity demanded. 
B)  a 5 percent increase in the price leads to a 5 percent decrease in the quantity demanded. 
C)  any increase in the price leads to a 1 percent decrease in the quantity demanded. 
D)  a 5 percent increase in the price leads to a 5 percent increase in total revenue.

Question 19

A shift of the supply curve of oil raises the price from $70 a barrel to $80 a barrel and reduces the quantity demanded from 40 million to 38 million barrels a day. You can conclude that the

Accepted Answer

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

Question 20

-In the above figure, at which point on the demand curve is the price elasticity of demand equal to 1?

Accepted Answer

A)  a 
B)  b 
C)  c 
D)  It is impossible to say at which point the elasticity equals one. 
A)  a 
B)  b 
C)  c 
D)  It is impossible to say at which point the elasticity equals one.

Which of the following factors will make the demand for a product more elastic?

Because there are numerous choices for fast food purchases, the price elasticity of demand for Taco Bell food is likely

If a 6 percent decrease in the price leads to a 5 percent increase in the quantity demanded, the price elasticity of demand is

The concept of elasticity of supply measures the responsiveness of the

Peter's monthly income increases from $1,500 to $1,600. As a result, he increases the number of DVDs he buys per month from 2 to 3. Peter's demand for DVDs is

Suppose the price of flour increases from $0.80 to $1.00 a pound and the quantity demanded decreases from 100 pounds to 95 pounds. Using the midpoint method, what is the price elasticity of demand for flour? Is the demand for flour elastic or inelastic?

If a college wanted to increase its revenues from tuition payments, should it increase the tuition of day and evening students alike?

The price elasticity of demand for movies is approximately 1 and 500,000 tickets are sold per day. If the average price of a movie ticket increases by 20 percent, the number of tickets sold each day decreases to

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

-Consider the straight-line demand curve illustrated in the above figure. At what price is total revenue maximized?

The price elasticity of demand is equal to the in the divided by the in the .

What is the price elasticity of supply? List and briefly define three cases of the price elasticity of supply.

A straight-line demand curve along which the price elasticity of demand equals 0 is one that

If the supply curve is vertical, then supply is

Along a perfectly vertical demand curve, the price elasticity of demand

If the price of a pumpkin rises and consumers' total expenditure on pumpkins increases, then the demand for pumpkins is inelastic.

If a 1 percent decrease in the price of a pound of squash results in a larger percentage decrease in the quantity supplied

The demand for movies is unit elastic if

A shift of the supply curve of oil raises the price from $70 a barrel to $80 a barrel and reduces the quantity demanded from 40 million to 38 million barrels a day. You can conclude that the

-In the above figure, at which point on the demand curve is the price elasticity of demand equal to 1?

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

Which of the following factors will make the demand for a product more elastic?

Because there are numerous choices for fast food purchases, the price elasticity of demand for Taco Bell food is likely

If a 6 percent decrease in the price leads to a 5 percent increase in the quantity demanded, the price elasticity of demand is

The concept of elasticity of supply measures the responsiveness of the

Peter's monthly income increases from $1,500 to $1,600. As a result, he increases the number of DVDs he buys per month from 2 to 3. Peter's demand for DVDs is

Suppose the price of flour increases from $0.80 to $1.00 a pound and the quantity demanded decreases from 100 pounds to 95 pounds. Using the midpoint method, what is the price elasticity of demand for flour? Is the demand for flour elastic or inelastic?

If a college wanted to increase its revenues from tuition payments, should it increase the tuition of day and evening students alike?

The price elasticity of demand for movies is approximately 1 and 500,000 tickets are sold per day. If the average price of a movie ticket increases by 20 percent, the number of tickets sold each day decreases to

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

-Consider the straight-line demand curve illustrated in the above figure. At what price is total revenue maximized?

The price elasticity of demand is equal to the ________ in the ________ divided by the ________ in the ________.

What is the price elasticity of supply? List and briefly define three cases of the price elasticity of supply.

A straight-line demand curve along which the price elasticity of demand equals 0 is one that

If the supply curve is vertical, then supply is

Along a perfectly vertical demand curve, the price elasticity of demand

If the price of a pumpkin rises and consumers' total expenditure on pumpkins increases, then the demand for pumpkins is inelastic.

If a 1 percent decrease in the price of a pound of squash results in a larger percentage decrease in the quantity supplied

The demand for movies is unit elastic if

A shift of the supply curve of oil raises the price from $70 a barrel to $80 a barrel and reduces the quantity demanded from 40 million to 38 million barrels a day. You can conclude that the

-In the above figure, at which point on the demand curve is the price elasticity of demand equal to 1?

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 price elasticity of demand is equal to the in the divided by the in the .