Question 1

If the price of coffee falls by 10 percent and the quantitysupplied of coffee falls by 1.5 percent then the elasticity ofsupply of coffee is:

Accepted Answer

A) 10. 
B) 1.5. 
C) 0.15. 
D) 6.67. 
A) 10. 
B) 1.5. 
C) 0.15. 
D) 6.67.

Question 2

The supply curve for manufactured goods is usually moreelastic because production can often be:

Accepted Answer

A) increased at higher cost per unit by building more factories. 
B) increased at lower cost per unit by building more factories. 
C) decreased at the same cost per unit by building more factories. 
D) increased at the same cost per unit by building more factories. 
A) increased at higher cost per unit by building more factories. 
B) increased at lower cost per unit by building more factories. 
C) decreased at the same cost per unit by building more factories. 
D) increased at the same cost per unit by building more factories.

Question 3

If the price of music CDs increases by 10 percent and thequantity supplied increases by 20 percent, the elasticity ofsupply is equal to 2.0, perhaps indicating the ease of increasedproduction at a relatively constant unit cost.

Accepted Answer

A) True 
 B)False

Question 4

(Figure: Price Elasticity of Demand) Refer to the figure. Whichof the four demand curves has the greatest responsiveness toprice changes?
Figure: Price Elasticity of Demand

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 5

Evidence from the Sudan indicates that the supply of slaves islikely:

Accepted Answer

A) perfectly elastic. 
B) perfectly inelastic. 
C) more elastic than inelastic. 
D) more inelastic than elastic. 
A) perfectly elastic. 
B) perfectly inelastic. 
C) more elastic than inelastic. 
D) more inelastic than elastic.

Question 6

With certain goods, such as high quality Scotch whiskey, it isnearly impossible to increase output easily, suggesting a supplyelasticity value greater than 1.

Accepted Answer

A) True 
 B)False

Question 7

Accepted Answer

A) increase by $800 so the demand curve must be inelastic. 
B) increase by $100 so the demand curve must be inelastic. 
C) decrease by $800 so the demand curve must be elastic. 
D) decrease by $100 so the demand curve must be elastic. 
A) increase by $800 so the demand curve must be inelastic. 
B) increase by $100 so the demand curve must be inelastic. 
C) decrease by $800 so the demand curve must be elastic. 
D) decrease by $100 so the demand curve must be elastic.

Question 8

The elasticity of demand measures:

Accepted Answer

A) the height of the demand curve. 
B) how sensitive the quantity demanded is to a change in price. 
C) how sensitive the price is to a change in demand. 
D) the extent to which demand shifts in response to supply changes. 
A) the height of the demand curve. 
B) how sensitive the quantity demanded is to a change in price. 
C) how sensitive the price is to a change in demand. 
D) the extent to which demand shifts in response to supply changes.

Question 9

When the demand curve for a good is unit elastic, raising theprice of the good by 25 percent will raise the revenue of thefirm by:

Accepted Answer

A) 125 percent. 
B) 100 percent. 
C) 25 percent. 
D) There is not enough information to answer the question. 
A) 125 percent. 
B) 100 percent. 
C) 25 percent. 
D) There is not enough information to answer the question.

Question 10

Suppose that it is extremely inexpensive to acquire additionalacres of land to grow bananas. We would then expect that theelasticity of supply of bananas is elastic.

Accepted Answer

A) True 
 B)False

Question 11

The quantity demanded for cosmetic surgery increased by 12percent following a period of strong economic growth thatraised consumer income by 4 percent. What type of good iscosmetic surgery?

Accepted Answer

A) It is a luxury good since the income elasticity of demand exceeds 1. 
B) It is a normal good since the income elasticity is less than 1. 
C) It is a necessity since the income elasticity of demand is equal to 1. 
D) It is a super normal good since the income elasticity is greater than 2. 
A) It is a luxury good since the income elasticity of demand exceeds 1. 
B) It is a normal good since the income elasticity is less than 1. 
C) It is a necessity since the income elasticity of demand is equal to 1. 
D) It is a super normal good since the income elasticity is greater than 2.

Question 12

Assume a product has an inelastic demand curve. If theproducer of the good raises the price of the product, thatproducer's total revenue will decrease.

Accepted Answer

A) True 
 B)False

Question 13

Compared to the 1980s, the price of computer chips is muchlower today but revenues from computer chips are ________because demand is elastic.

Accepted Answer

A) higher 
B) lower 
C) approximately unchanged 
D) about $14 trillion higher 
A) higher 
B) lower 
C) approximately unchanged 
D) about $14 trillion higher

Question 14

When production of a good can be expanded withoutsignificantly increasing the overall demand for its inputs:

Accepted Answer

A) supply for this good will tend to be more inelastic. 
B) supply for this good will tend to be more elastic.(True Answer )Correct 
C) price for the good will be constant. 
D) the elasticity of supply of the product will equal the elasticity of supply of the inputs. 
A) supply for this good will tend to be more inelastic. 
B) supply for this good will tend to be more elastic.(True Answer )Correct 
C) price for the good will be constant. 
D) the elasticity of supply of the product will equal the elasticity of supply of the inputs.

Question 15

The fundamental determinant of the elasticity of supply is howquickly per-unit costs increase with an increase in production.

Accepted Answer

A) True 
 B)False

Question 16

Nobel prize-winning economist Gary Becker suggests that a taxcould be set so that it raised drug seller costs withoutprohibition, and in turn would:

Accepted Answer

A) increase seller revenues. 
B) decrease seller revenues. 
C) increase government revenues. 
D) decrease government revenues. 
A) increase seller revenues. 
B) decrease seller revenues. 
C) increase government revenues. 
D) decrease government revenues.

Question 17

The demand curve for oil is inelastic, meaning that the quantityof oil demanded:

Accepted Answer

A) rises by a lot even when the price of oil increases by only a little. 
B) rises by only a little even when the price of oil increases by a lot. 
C) falls by a lot even when the price of oil increases by only a little. 
D) falls by only a little even when the price of oil increases by a lot. 
A) rises by a lot even when the price of oil increases by only a little. 
B) rises by only a little even when the price of oil increases by a lot. 
C) falls by a lot even when the price of oil increases by only a little. 
D) falls by only a little even when the price of oil increases by a lot.

Question 18

The demand for oil is inelastic because there are:

Accepted Answer

A) many complements for oil in its major use. 
B) few complements for oil in its major use. 
C) many substitutes for oil in its major use. 
D) few substitutes for oil in its major use.(True Answer )Correct 
A) many complements for oil in its major use. 
B) few complements for oil in its major use. 
C) many substitutes for oil in its major use. 
D) few substitutes for oil in its major use.(True Answer )Correct

Question 19

The flatter the demand curve, the less is the elasticity ofdemand.

Accepted Answer

A) True 
 B)False

Question 20

Good X and Good Y are related goods. When the price of goodX rises by 20 percent, the quantity demanded for good Y fallsby 40 percent. What is the cross-price elasticity?

Accepted Answer

A) 2 
B) 4 
C) -0.5 
D) -2 
A) 2 
B) 4 
C) -0.5 
D) -2

If the price of coffee falls by 10 percent and the quantitysupplied of coffee falls by 1.5 percent then the elasticity ofsupply of coffee is:

The supply curve for manufactured goods is usually moreelastic because production can often be:

If the price of music CDs increases by 10 percent and thequantity supplied increases by 20 percent, the elasticity ofsupply is equal to 2.0, perhaps indicating the ease of increasedproduction at a relatively constant unit cost.

(Figure: Price Elasticity of Demand) Refer to the figure. Whichof the four demand curves has the greatest responsiveness toprice changes? Figure: Price Elasticity of Demand

Evidence from the Sudan indicates that the supply of slaves islikely:

With certain goods, such as high quality Scotch whiskey, it isnearly impossible to increase output easily, suggesting a supplyelasticity value greater than 1.

The elasticity of demand measures:

When the demand curve for a good is unit elastic, raising theprice of the good by 25 percent will raise the revenue of thefirm by:

Suppose that it is extremely inexpensive to acquire additionalacres of land to grow bananas. We would then expect that theelasticity of supply of bananas is elastic.

The quantity demanded for cosmetic surgery increased by 12percent following a period of strong economic growth thatraised consumer income by 4 percent. What type of good iscosmetic surgery?

Assume a product has an inelastic demand curve. If theproducer of the good raises the price of the product, thatproducer's total revenue will decrease.

Compared to the 1980s, the price of computer chips is muchlower today but revenues from computer chips are ________because demand is elastic.

When production of a good can be expanded withoutsignificantly increasing the overall demand for its inputs:

The fundamental determinant of the elasticity of supply is howquickly per-unit costs increase with an increase in production.

Nobel prize-winning economist Gary Becker suggests that a taxcould be set so that it raised drug seller costs withoutprohibition, and in turn would:

The demand curve for oil is inelastic, meaning that the quantityof oil demanded:

The demand for oil is inelastic because there are:

The flatter the demand curve, the less is the elasticity ofdemand.

Good X and Good Y are related goods. When the price of goodX rises by 20 percent, the quantity demanded for good Y fallsby 40 percent. What is the cross-price elasticity?

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

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Exam 5: Elasticity

If the price of coffee falls by 10 percent and the quantitysupplied of coffee falls by 1.5 percent then the elasticity ofsupply of coffee is:

The supply curve for manufactured goods is usually moreelastic because production can often be:

If the price of music CDs increases by 10 percent and thequantity supplied increases by 20 percent, the elasticity ofsupply is equal to 2.0, perhaps indicating the ease of increasedproduction at a relatively constant unit cost.

(Figure: Price Elasticity of Demand) Refer to the figure. Whichof the four demand curves has the greatest responsiveness toprice changes? Figure: Price Elasticity of Demand

Evidence from the Sudan indicates that the supply of slaves islikely:

With certain goods, such as high quality Scotch whiskey, it isnearly impossible to increase output easily, suggesting a supplyelasticity value greater than 1.

The elasticity of demand measures:

When the demand curve for a good is unit elastic, raising theprice of the good by 25 percent will raise the revenue of thefirm by:

Suppose that it is extremely inexpensive to acquire additionalacres of land to grow bananas. We would then expect that theelasticity of supply of bananas is elastic.

The quantity demanded for cosmetic surgery increased by 12percent following a period of strong economic growth thatraised consumer income by 4 percent. What type of good iscosmetic surgery?

Assume a product has an inelastic demand curve. If theproducer of the good raises the price of the product, thatproducer's total revenue will decrease.

Compared to the 1980s, the price of computer chips is muchlower today but revenues from computer chips are ________because demand is elastic.

When production of a good can be expanded withoutsignificantly increasing the overall demand for its inputs:

The fundamental determinant of the elasticity of supply is howquickly per-unit costs increase with an increase in production.

Nobel prize-winning economist Gary Becker suggests that a taxcould be set so that it raised drug seller costs withoutprohibition, and in turn would:

The demand curve for oil is inelastic, meaning that the quantityof oil demanded:

The demand for oil is inelastic because there are:

The flatter the demand curve, the less is the elasticity ofdemand.

Good X and Good Y are related goods. When the price of goodX rises by 20 percent, the quantity demanded for good Y fallsby 40 percent. What is the cross-price elasticity?

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