Question 1

Figure 6-4  
-In Figure 6-4, total expenditure ____ as price falls from P = 12 to P = 10.

Accepted Answer

A) falls 
B) remains constant 
C) rises 
D) rises by more than $12 
A) falls 
B) remains constant 
C) rises 
D) rises by more than $12

Question 2

Would a profit-maximizing firm sell where demand is inelastic?

Accepted Answer

A) No, this would not follow the rule of MC = MR. 
B) No, the firm could not profitably raise price. 
C) Yes, the firm could profitably lower price to attract sales. 
D) Yes, in this case there are few substitutes for the good. 
A) No, this would not follow the rule of MC = MR. 
B) No, the firm could not profitably raise price. 
C) Yes, the firm could profitably lower price to attract sales. 
D) Yes, in this case there are few substitutes for the good.

Question 3

Necessities such as food and shelter have inelastic demand.

Accepted Answer

A) True 
 B)False

Question 4

Regarding the price elasticities of demand, which of the following statements is true?

Accepted Answer

A) Price elasticities vary considerably from product to product. 
B) Luxurious goods are generally less price elastic. 
C) Necessities are generally more price elastic. 
D) All of these statements are true. 
A) Price elasticities vary considerably from product to product. 
B) Luxurious goods are generally less price elastic. 
C) Necessities are generally more price elastic. 
D) All of these statements are true.

Question 5

Figure 6-1  
-In Figure 6-1,

Accepted Answer

A) D1 is more elastic than D2 below P2 and less elastic above P2. 
B) D1 is less elastic than D2 at all prices. 
C) D2 is less elastic than D1 at all prices. 
D) D2 is more elastic than D2 above P2 but less elastic below P2. 
A) D1 is more elastic than D2 below P2 and less elastic above P2. 
B) D1 is less elastic than D2 at all prices. 
C) D2 is less elastic than D1 at all prices. 
D) D2 is more elastic than D2 above P2 but less elastic below P2.

Question 6

Figure 6-5  
-A demand curve is described as perfectly inelastic if

Accepted Answer

A) the same quantity is purchased regardless of price. 
B) the same price is charged regardless of quantity sold. 
C) neither price nor quantity demanded ever change. 
D) only quantity demanded can change. 
A) the same quantity is purchased regardless of price. 
B) the same price is charged regardless of quantity sold. 
C) neither price nor quantity demanded ever change. 
D) only quantity demanded can change.

Question 7

Which of the following goods will have the most inelastic demand at any time?

Accepted Answer

A) Jewelry 
B) Big Macs 
C) Electricity 
D) Pork chops 
A) Jewelry 
B) Big Macs 
C) Electricity 
D) Pork chops

Question 8

The demand for French Roast coffee is likely to be

Accepted Answer

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

Question 9

Figure 6-5  
-If the demand curve for a good is unit elastic, then total expenditure will _____ as the price of the good decreases.

Accepted Answer

A) remain constant 
B) fall 
C) rise 
D) go to zero 
A) remain constant 
B) fall 
C) rise 
D) go to zero

Question 10

Along a straight-line demand curve, why does the price elasticity of demand grow steadily smaller as we move from left to right?

Accepted Answer

As we move from left to right, the quant

Question 11

A perfectly elastic demand curve for a firm

Accepted Answer

A) is represented by a vertical line. 
B) means that with every unit price increase there will be a unit decrease in demand. 
C) is formulated by P × Q = a constant, for all prices and quantities. 
D) indicates that any increase in price will eliminate all purchases of its product. 
A) is represented by a vertical line. 
B) means that with every unit price increase there will be a unit decrease in demand. 
C) is formulated by P × Q = a constant, for all prices and quantities. 
D) indicates that any increase in price will eliminate all purchases of its product.

Question 12

The demand for Exxon gasoline is ____ the demand for all gasoline.

Accepted Answer

A) exactly as elastic as and has a different slope than 
B) more elastic than 
C) less elastic than 
D) exactly as elastic and has the same slope as 
A) exactly as elastic as and has a different slope than 
B) more elastic than 
C) less elastic than 
D) exactly as elastic and has the same slope as

Question 13

Elasticity of demand is likely to be higher for less-expensive goods, other things being equal.

Accepted Answer

A) True 
 B)False

Question 14

The slope of the demand curve conveys all the useful information about elasticity.

Accepted Answer

A) True 
 B)False

Question 15

A price cut will decrease the revenue a firm receives if the demand for its product is

Accepted Answer

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

Question 16

The unit-elastic demand curve bends in the middle toward the origin of the graph and at either end moves closer to the axes.

Accepted Answer

A) True 
 B)False

Question 17

Why are time series data unlikely to give an accurate estimate of demand?

Accepted Answer

Demand may have shifted over time, so th

Question 18

Figure 6-2  
-From Figure 6-2, we can determine that demand is ____ between P = 12 and P = 10 and ____ between P = 6 and P = 4.

Accepted Answer

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

Question 19

If the price elasticity of demand for smart watches is 1.4 (dropping the minus sign), then a 50 percent increase in the price of smart watches will lead to

Accepted Answer

A) the sale of 200 additional smart watches. 
B) the sale of 125 percent fewer smart watches than before. 
C) the sale of 70 percent fewer smart watches than before. 
D) the sale of 25 percent fewer smart watches than before. 
A) the sale of 200 additional smart watches. 
B) the sale of 125 percent fewer smart watches than before. 
C) the sale of 70 percent fewer smart watches than before. 
D) the sale of 25 percent fewer smart watches than before.

Question 20

Certain goods are related such that an increase in the price of one good decreases the quantity demanded of the other.These goods are

Accepted Answer

A) complements. 
B) substitutes. 
C) luxury goods. 
D) competing goods. 
A) complements. 
B) substitutes. 
C) luxury goods. 
D) competing goods.

Exam 6: Demand and Elasticity

Figure 6-4 -In Figure 6-4, total expenditure ____ as price falls from P = 12 to P = 10.

Would a profit-maximizing firm sell where demand is inelastic?

Necessities such as food and shelter have inelastic demand.

Regarding the price elasticities of demand, which of the following statements is true?

Figure 6-1 -In Figure 6-1,

Figure 6-5 -A demand curve is described as perfectly inelastic if

Which of the following goods will have the most inelastic demand at any time?

The demand for French Roast coffee is likely to be

Figure 6-5 -If the demand curve for a good is unit elastic, then total expenditure will _____ as the price of the good decreases.

Along a straight-line demand curve, why does the price elasticity of demand grow steadily smaller as we move from left to right?

A perfectly elastic demand curve for a firm

The demand for Exxon gasoline is ____ the demand for all gasoline.

Elasticity of demand is likely to be higher for less-expensive goods, other things being equal.

The slope of the demand curve conveys all the useful information about elasticity.

A price cut will decrease the revenue a firm receives if the demand for its product is

The unit-elastic demand curve bends in the middle toward the origin of the graph and at either end moves closer to the axes.

Why are time series data unlikely to give an accurate estimate of demand?

Figure 6-2 -From Figure 6-2, we can determine that demand is ____ between P = 12 and P = 10 and ____ between P = 6 and P = 4.

If the price elasticity of demand for smart watches is 1.4 (dropping the minus sign), then a 50 percent increase in the price of smart watches will lead to

Certain goods are related such that an increase in the price of one good decreases the quantity demanded of the other.These goods are

What Is Economics

The Economony: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

The Economics of the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

The Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

Contemporary Issues in the Useconomy

Filters

Figure 6-2 -From Figure 6-2, we can determine that demand is between P = 12 and P = 10 and between P = 6 and P = 4.