Question 1

(Figure: Calculating Elasticities) Refer to the figure. Theabsolute value of the demand elasticity of the demand curve inthe right panel is:

Accepted Answer

A) less than 1. 
B) equal to 1. 
C) greater than 1. 
D) Not enough information is provided. 
A) less than 1. 
B) equal to 1. 
C) greater than 1. 
D) Not enough information is provided.

Question 2

Demand for necessities is elastic, while demand for luxuries isinelastic.

Accepted Answer

A) True 
 B)False

Question 3

If the income elasticity of demand of a good is positive, we canconclude that the good is:

Accepted Answer

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

Question 4

At a price $4 for Good X, a firm is willing to supply 1,400 unitsof X. For a price of $5 for Good X, the firm is willing to supply 1,500 units X. The change in revenue for the firm when theprice of the good rises from $4 to $5 is a:

Accepted Answer

A) $100 increase in total revenue. 
B) $1,500 increase in total revenue. 
C) $7,500 increase in total revenue. 
D) There is not enough information to answer the question. 
A) $100 increase in total revenue. 
B) $1,500 increase in total revenue. 
C) $7,500 increase in total revenue. 
D) There is not enough information to answer the question.

Question 5

Because producing more oil requires a significant increase inexploration and drilling costs, the supply curve for oil is:

Accepted Answer

A) relatively elastic. 
B) relatively inelastic. 
C) either elastic or inelastic. 
D) unit elastic. 
A) relatively elastic. 
B) relatively inelastic. 
C) either elastic or inelastic. 
D) unit elastic.

Question 6

The elasticity of demand measures how sensitive the:

Accepted Answer

A) price is to a change in quantity demanded. 
B) quantity demanded is to a change in price.(True Answer )Correct 
C) price is to a change in the quantity supplied. 
D) demand is to a change in the number of suppliers. 
A) price is to a change in quantity demanded. 
B) quantity demanded is to a change in price.(True Answer )Correct 
C) price is to a change in the quantity supplied. 
D) demand is to a change in the number of suppliers.

Question 7

Economic theory suggests that gun buyback programs:

Accepted Answer

A) are effective in reducing the number of guns on city streets. 
B) do not reduce the number of guns on city streets.(True Answer )Correct 
C) are most effective if the supply curve of guns is perfectly elastic. 
D) reduce the demand for new and better functioning guns. 
A) are effective in reducing the number of guns on city streets. 
B) do not reduce the number of guns on city streets.(True Answer )Correct 
C) are most effective if the supply curve of guns is perfectly elastic. 
D) reduce the demand for new and better functioning guns.

Question 8

If a 3.67 percent increase in price causes a 1.97 percentdecrease in quantity demanded, then total revenue must fallfollowing an increase in price.

Accepted Answer

A) True 
 B)False

Question 9

The demand for oil would become less elastic if the price of oilincreases by a significant amount for a long period of time.

Accepted Answer

A) True 
 B)False

Question 10

The demand curve is elastic if an increase in price reduces thequantity demanded by only a little.

Accepted Answer

A) True 
 B)False

Question 11

If the price of cocoa rises by 20 percent, the quantity suppliedof cocoa rises by 4 percent. What is the elasticity of supply?

Accepted Answer

A) 5 
B) 2 
C) 0.2 
D) 0.008 
A) 5 
B) 2 
C) 0.2 
D) 0.008

Question 12

If the demand curve is elastic a price ________ causes a(n)________ in revenues.

Accepted Answer

A) decrease; decrease 
B) increase; increase 
C) decrease; increase 
D) There is not enough information to answer. 
A) decrease; decrease 
B) increase; increase 
C) decrease; increase 
D) There is not enough information to answer.

Question 13

If the cross-price elasticity of demand of two goods is positive,we can conclude that the two goods are:

Accepted Answer

A) normal goods. 
B) inferior goods. 
C) substitutes. 
D) complements. 
A) normal goods. 
B) inferior goods. 
C) substitutes. 
D) complements.

Question 14

Which of the following statements about the price elasticity ofsupply for slaves is correct?

Accepted Answer

A) When the supply curve is more elastic every slave bought by the redeemers is one fewer slave held in captivity. 
B) When the supply curve is perfectly inelastic every slave bought by the redeemers is one fewer slave held in
Captivity. 
C) When the supply curve is less elastic every slave bought by the redeemers is one additional enslaved person. 
D) When the supply curve is more inelastic every slave bought by the redeemers is one additional enslaved person. 
A) When the supply curve is more elastic every slave bought by the redeemers is one fewer slave held in captivity. 
B) When the supply curve is perfectly inelastic every slave bought by the redeemers is one fewer slave held in
Captivity. 
C) When the supply curve is less elastic every slave bought by the redeemers is one additional enslaved person. 
D) When the supply curve is more inelastic every slave bought by the redeemers is one additional enslaved person.

Question 15

Accepted Answer

A) $120; inelastic 
B) $480; elastic 
C) $360; inelastic 
D) $120; elastic 
A) $120; inelastic 
B) $480; elastic 
C) $360; inelastic 
D) $120; elastic

Question 16

Total revenue is:

Accepted Answer

A) price X quantity. 
B) quantity/price. 
C) the elasticity of demand X price. 
D) price + quantity. 
A) price X quantity. 
B) quantity/price. 
C) the elasticity of demand X price. 
D) price + quantity.

Question 17

Which of the following would NOT make elasticity of demandfor a good more elastic?

Accepted Answer

A) more substitutes 
B) luxuries 
C) large part of budget 
D) less time 
A) more substitutes 
B) luxuries 
C) large part of budget 
D) less time

Question 18

The demand curve for Froot Loops breakfast cereal is veryelastic because:

Accepted Answer

A) most breakfast cereals are considered a luxury good. 
B) there are many good substitutes for Froot Loops.(True Answer )Correct 
C) the demand curve is negatively sloped. 
D) it is one of the most advertised cereals in the world. 
A) most breakfast cereals are considered a luxury good. 
B) there are many good substitutes for Froot Loops.(True Answer )Correct 
C) the demand curve is negatively sloped. 
D) it is one of the most advertised cereals in the world.

Question 19

Why do supply curves tend to be more elastic over time?

Accepted Answer

A) Sellers have time to adjust and increase production.(True Answer )Correct 
B) Consumers have time to look for substitutes for the good. 
C) Consumers have time to reduce their consumption of the good. 
D) All of the answers are correct. 
A) Sellers have time to adjust and increase production.(True Answer )Correct 
B) Consumers have time to look for substitutes for the good. 
C) Consumers have time to reduce their consumption of the good. 
D) All of the answers are correct.

Question 20

If an increase in the price of oil by 10 percent would cause thequantity demanded for oil to fall by 5 percent, the elasticity ofdemand for oil in absolute terms is:

Accepted Answer

A) 10. 
B) 5. 
C) 2. 
D) 0.5. 
A) 10. 
B) 5. 
C) 2. 
D) 0.5.

(Figure: Calculating Elasticities) Refer to the figure. Theabsolute value of the demand elasticity of the demand curve inthe right panel is:

Demand for necessities is elastic, while demand for luxuries isinelastic.

If the income elasticity of demand of a good is positive, we canconclude that the good is:

At a price $4 for Good X, a firm is willing to supply 1,400 unitsof X. For a price of $5 for Good X, the firm is willing to supply 1,500 units X. The change in revenue for the firm when theprice of the good rises from $4 to $5 is a:

Because producing more oil requires a significant increase inexploration and drilling costs, the supply curve for oil is:

The elasticity of demand measures how sensitive the:

Economic theory suggests that gun buyback programs:

If a 3.67 percent increase in price causes a 1.97 percentdecrease in quantity demanded, then total revenue must fallfollowing an increase in price.

The demand for oil would become less elastic if the price of oilincreases by a significant amount for a long period of time.

The demand curve is elastic if an increase in price reduces thequantity demanded by only a little.

If the price of cocoa rises by 20 percent, the quantity suppliedof cocoa rises by 4 percent. What is the elasticity of supply?

If the demand curve is elastic a price causes a(n) in revenues.

If the cross-price elasticity of demand of two goods is positive,we can conclude that the two goods are:

Which of the following statements about the price elasticity ofsupply for slaves is correct?

Total revenue is:

Which of the following would NOT make elasticity of demandfor a good more elastic?

The demand curve for Froot Loops breakfast cereal is veryelastic because:

Why do supply curves tend to be more elastic over time?

If an increase in the price of oil by 10 percent would cause thequantity demanded for oil to fall by 5 percent, the elasticity ofdemand for oil in absolute terms is:

Welcome to Economics

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Labor and Financial Markets

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Monopoly

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Monopoly and Antitrust Policy

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Exam 5: Elasticity

(Figure: Calculating Elasticities) Refer to the figure. Theabsolute value of the demand elasticity of the demand curve inthe right panel is:

Demand for necessities is elastic, while demand for luxuries isinelastic.

If the income elasticity of demand of a good is positive, we canconclude that the good is:

At a price $4 for Good X, a firm is willing to supply 1,400 unitsof X. For a price of $5 for Good X, the firm is willing to supply 1,500 units X. The change in revenue for the firm when theprice of the good rises from $4 to $5 is a:

Because producing more oil requires a significant increase inexploration and drilling costs, the supply curve for oil is:

The elasticity of demand measures how sensitive the:

Economic theory suggests that gun buyback programs:

If a 3.67 percent increase in price causes a 1.97 percentdecrease in quantity demanded, then total revenue must fallfollowing an increase in price.

The demand for oil would become less elastic if the price of oilincreases by a significant amount for a long period of time.

The demand curve is elastic if an increase in price reduces thequantity demanded by only a little.

If the price of cocoa rises by 20 percent, the quantity suppliedof cocoa rises by 4 percent. What is the elasticity of supply?

If the demand curve is elastic a price ________ causes a(n)________ in revenues.

If the cross-price elasticity of demand of two goods is positive,we can conclude that the two goods are:

Which of the following statements about the price elasticity ofsupply for slaves is correct?

Total revenue is:

Which of the following would NOT make elasticity of demandfor a good more elastic?

The demand curve for Froot Loops breakfast cereal is veryelastic because:

Why do supply curves tend to be more elastic over time?

If an increase in the price of oil by 10 percent would cause thequantity demanded for oil to fall by 5 percent, the elasticity ofdemand for oil in absolute terms is:

Welcome to Economics

Choice in a World of Scarcity

Demand and Supply

Labor and Financial Markets

Consumer Choices

Production, Costs, and Industry Structure

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Monopoly and Antitrust Policy

Environmental Protection and Negative Externalities

Positive Externalities and Public Goods

Labor Markets and Income

Poverty and Economic Inequality

Information, Risk, and Insurance

Financial Markets

Public Economy

International Trade

Globalization and Protectionism

Consumer Utility and Optimization

Filters

If the demand curve is elastic a price causes a(n) in revenues.