Question 1

Along a linear demand curve, as the price increases from zero,

Accepted Answer

A) demand decreases 
B) demand increases 
C) quantity demanded increases 
D) total revenue first increases but eventually decreases 
E) total revenue first decreases but eventually increases 
A) demand decreases 
B) demand increases 
C) quantity demanded increases 
D) total revenue first increases but eventually decreases 
E) total revenue first decreases but eventually increases D

Question 2

The price elasticity of demand helps determine the effect of price changeson a firm's

Accepted Answer

A) property taxes 
B) profits 
C) quantity supplied 
D) revenues 
E) total costs 
A) property taxes 
B) profits 
C) quantity supplied 
D) revenues 
E) total costs D

Question 3

Along a straight­line downward­sloping demand curve, elasticity is

Accepted Answer

A) constant, but its value cannot be determined without measurement 
B) constant and equal to an absolute value of one 
C) greater at higher prices 
D) greater at lower prices 
E) greater in the middle 
A) constant, but its value cannot be determined without measurement 
B) constant and equal to an absolute value of one 
C) greater at higher prices 
D) greater at lower prices 
E) greater in the middle C

Question 4

It has been suggested that if NHL hockey teams would lower ticket prices,they could increase revenue from ticket sales.Which of the followingassumptions forms the basis for this suggestion?

Accepted Answer

A) Both d and e are correct. 
B) All of the following are correct. 
C) Demand for NHL hockey is income inelastic. 
D) Demand for NHL hockey is price elastic. 
E) There are many substitutes for NHL hockey. 
A) Both d and e are correct. 
B) All of the following are correct. 
C) Demand for NHL hockey is income inelastic. 
D) Demand for NHL hockey is price elastic. 
E) There are many substitutes for NHL hockey.

Question 5

In Exhibit 5­5, what is the total revenue at point a?

Accepted Answer

A) $4 
B) $5 
C) $10 
D) $50 
E) $100 
A) $4 
B) $5 
C) $10 
D) $50 
E) $100

Question 6

Demand is inelastic only if

Accepted Answer

A) price elasticity has an absolute value of 1 
B) price elasticity has an absolute value greater than 1 
C) price elasticity has an absolute value less than 1 
D) price elasticity is negative 
E) consumers do not respond to a change in price 
A) price elasticity has an absolute value of 1 
B) price elasticity has an absolute value greater than 1 
C) price elasticity has an absolute value less than 1 
D) price elasticity is negative 
E) consumers do not respond to a change in price

Question 7

Exhibit 5­9   Between points a and b on the demand curve in Exhibit 5­9, demand is

Accepted Answer

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

Question 8

Total revenue is the same for every price­quantity combination along a unitelastic demand curve.

Accepted Answer

A) True 
 B)False

Question 9

Price elasticity is unit elastic at the midpoint of a linear, downward­slopingdemand curve.

Accepted Answer

A) True 
 B)False

Question 10

)   Refer to Exhibit 5­12.What can be said of the price elasticity of demandfor this good?

Accepted Answer

A) Demand is inelastic. 
B) Demand is unit elastic. 
C) Demand is elastic. 
D) Demand is perfectly elastic. 
E) Not enough information is given to determine elasticity. 
A) Demand is inelastic. 
B) Demand is unit elastic. 
C) Demand is elastic. 
D) Demand is perfectly elastic. 
E) Not enough information is given to determine elasticity.

Question 11

If an increase in the price of a product from $1 to $2 per unit leads to adecrease in the quantity demanded from 100 to 80 units, then the value ofprice elasticity of demand is

Accepted Answer

A) elastic 
B) inelastic 
C) unit elastic 
D) suggestive of an inferior good 
E) equal to ­20 
A) elastic 
B) inelastic 
C) unit elastic 
D) suggestive of an inferior good 
E) equal to ­20

Question 12

If an increase in the price of a product from $1 to $2 per unit leads to adecrease in the quantity demanded from 100 to 80 units, then the value ofprice elasticity of demand is

Accepted Answer

A) ­1/3 
B) ­2 1/3 
C) ­1/4 
D) ­3 
E) ­2/3 
A) ­1/3 
B) ­2 1/3 
C) ­1/4 
D) ­3 
E) ­2/3

Question 13

Demand is elastic whenever

Accepted Answer

A) price elasticity has an absolute value of 1 
B) price elasticity has an absolute value greater than 1 
C) price elasticity has an absolute value less than 1 
D) price elasticity is negative 
E) consumers respond to a change in price 
A) price elasticity has an absolute value of 1 
B) price elasticity has an absolute value greater than 1 
C) price elasticity has an absolute value less than 1 
D) price elasticity is negative 
E) consumers respond to a change in price

Question 14

If a firm facing a perfectly elastic demand curve raises its price,

Accepted Answer

A) it will still sell exactly the same amount of output as it did at the lower price 
B) it will lose some, but not all, of its sales 
C) its sales will decrease to zero 
D) its sales will increase 
E) it is impossible to predict what will happen to its sales 
A) it will still sell exactly the same amount of output as it did at the lower price 
B) it will lose some, but not all, of its sales 
C) its sales will decrease to zero 
D) its sales will increase 
E) it is impossible to predict what will happen to its sales

Question 15

Price elasticity of demand is typically negative because

Accepted Answer

A) as price decreases, quantity demanded decreases 
B) as price decreases, quantity demanded increases 
C) as price decreases, demand decreases 
D) as price decreases, demand increases 
E) consumers rarely respond to a change in price 
A) as price decreases, quantity demanded decreases 
B) as price decreases, quantity demanded increases 
C) as price decreases, demand decreases 
D) as price decreases, demand increases 
E) consumers rarely respond to a change in price

Question 16

A good synonym for elasticity would be

Accepted Answer

A) stability 
B) volatility 
C) stickiness 
D) demand 
E) responsiveness 
A) stability 
B) volatility 
C) stickiness 
D) demand 
E) responsiveness

Question 17

Use the information in Exhibit 5­2 to calculate the value of price elasticityof demand.

Accepted Answer

A) ­2/3 
B) ­1/3 
C) ­3/5 
D) ­5/3 
E) 0 
A) ­2/3 
B) ­1/3 
C) ­3/5 
D) ­5/3 
E) 0

Question 18

)   Based on the information in Exhibit 5­2, the demand for the good is__________ and an increase in price from $40 to $60 per unit will__________ total revenue.

Accepted Answer

A) unit elastic; increase 
B) elastic; decrease 
C) unit elastic; not change 
D) inelastic; increase 
E) elastic; decrease. 
A) unit elastic; increase 
B) elastic; decrease 
C) unit elastic; not change 
D) inelastic; increase 
E) elastic; decrease.

Question 19

John spends exactly the same dollar amount on candy bars each week,regardless of their price.John's demand curve for candy bars is

Accepted Answer

A) upward­sloping 
B) backward­bending 
C) perfectly inelastic 
D) perfectly elastic 
E) unit elastic 
A) upward­sloping 
B) backward­bending 
C) perfectly inelastic 
D) perfectly elastic 
E) unit elastic

Question 20

If there is no change in equilibrium price after a $1 per unit tax is imposedon suppliers, demand must be perfectly inelastic.

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity of Demand and Supply

Along a linear demand curve, as the price increases from zero,

The price elasticity of demand helps determine the effect of price changeson a firm's

Along a straight­line downward­sloping demand curve, elasticity is

It has been suggested that if NHL hockey teams would lower ticket prices,they could increase revenue from ticket sales.Which of the followingassumptions forms the basis for this suggestion?

In Exhibit 5­5, what is the total revenue at point a?

Demand is inelastic only if

Exhibit 5­9 Between points a and b on the demand curve in Exhibit 5­9, demand is

Total revenue is the same for every price­quantity combination along a unitelastic demand curve.

Price elasticity is unit elastic at the midpoint of a linear, downward­slopingdemand curve.

) Refer to Exhibit 5­12.What can be said of the price elasticity of demandfor this good?

If an increase in the price of a product from $1 to $2 per unit leads to adecrease in the quantity demanded from 100 to 80 units, then the value ofprice elasticity of demand is

If an increase in the price of a product from $1 to $2 per unit leads to adecrease in the quantity demanded from 100 to 80 units, then the value ofprice elasticity of demand is

Demand is elastic whenever

If a firm facing a perfectly elastic demand curve raises its price,

Price elasticity of demand is typically negative because

A good synonym for elasticity would be

Use the information in Exhibit 5­2 to calculate the value of price elasticityof demand.

) Based on the information in Exhibit 5­2, the demand for the good is__________ and an increase in price from $40 to $60 per unit will__________ total revenue.

John spends exactly the same dollar amount on candy bars each week,regardless of their price.John's demand curve for candy bars is

If there is no change in equilibrium price after a $1 per unit tax is imposedon suppliers, demand must be perfectly inelastic.

The Art and Science of Economic Analysis

Economic Tools and Economics Systems

Economic Decision Makers

Demand Supply and Markets

Consumer Choice and Demand

Production and Cost in the Firm

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital Interest Entrepreneurship and Corporate Finance

Transaction Costs Imperfect Information and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

Filters

Along a straightline downwardsloping demand curve, elasticity is

In Exhibit 55, what is the total revenue at point a?

Exhibit 59 Between points a and b on the demand curve in Exhibit 59, demand is

Total revenue is the same for every pricequantity combination along a unitelastic demand curve.

Price elasticity is unit elastic at the midpoint of a linear, downwardslopingdemand curve.

) Refer to Exhibit 512.What can be said of the price elasticity of demandfor this good?

Use the information in Exhibit 52 to calculate the value of price elasticityof demand.

) Based on the information in Exhibit 52, the demand for the good is and an increase in price from $40 to $60 per unit will total revenue.