Question 1

If demand is inelastic, the percentage change in price is greater than theresulting percentage change in quantity demanded.

Accepted Answer

A) True 
 B)False

Question 2

If the demand for swordfish is price elastic and the price of swordfishincreases, then

Accepted Answer

A) the quantity of swordfish demanded will increase 
B) the total revenue from swordfish sales will decrease 
C) the total revenue from swordfish sales will increase 
D) the total revenue from swordfish sales will not change 
E) whether total revenue rises or falls depends on how much the price of swordfish increases 
A) the quantity of swordfish demanded will increase 
B) the total revenue from swordfish sales will decrease 
C) the total revenue from swordfish sales will increase 
D) the total revenue from swordfish sales will not change 
E) whether total revenue rises or falls depends on how much the price of swordfish increases

Question 3

If the price of Pepsi­Cola increases from 40 cents to 50 cents per can andthe quantity demanded decreases from 100 cans to 50 cans, then, accordingto the midpoint formula, the value of price elasticity of demand for Pepsi­Cola is

Accepted Answer

A) ­0.5 
B) ­0.25 
C) ­1 
D) ­3 
E) ­2 
A) ­0.5 
B) ­0.25 
C) ­1 
D) ­3 
E) ­2

Question 4

Dusty Rags, Inc.provides janitorial services to retail stores.Dusty had beencharging $10 per hour and selling 400 hours of service per week at that rate.When he raised his price to $15 per hour, his customers cut back to 300weekly hours of service.Which of the following is true?

Accepted Answer

A) Revenue went from $4,000 per week to $4,500 per week, indicating that the demand curve for his services
Must have shifted to the right. 
B) Revenue went from $4,000 per week to $4,500 per week, indicating that the demand for his services must
Be elastic. 
C) Revenue went from $4,000 per week to $4,500 per week, indicating that the demand for his services must
Be inelastic. 
D) Revenue went from $400 to $300 per week, indicating that demand must be elastic. 
E) Revenue went from $10 to $15 per week, indicating that demand must be inelastic. 
A) Revenue went from $4,000 per week to $4,500 per week, indicating that the demand curve for his services
Must have shifted to the right. 
B) Revenue went from $4,000 per week to $4,500 per week, indicating that the demand for his services must
Be elastic. 
C) Revenue went from $4,000 per week to $4,500 per week, indicating that the demand for his services must
Be inelastic. 
D) Revenue went from $400 to $300 per week, indicating that demand must be elastic. 
E) Revenue went from $10 to $15 per week, indicating that demand must be inelastic.

Question 5

If a price reduction leads to larger total revenue, demand is

Accepted Answer

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

Question 6

If demand is elastic, a decrease in price leads to a decrease in totalrevenue.

Accepted Answer

A) True 
 B)False

Question 7

When quantity is measured in gallons, the price elasticity of demand formilk will be __________ the price elasticity when quantity is measured inquarts.

Accepted Answer

A) the same as 
B) four times 
C) one quarter 
D) two times 
E) less than 
A) the same as 
B) four times 
C) one quarter 
D) two times 
E) less than

Question 8

Price elasticity of demand is calculated as

Accepted Answer

A) the percentage change in quantity demanded divided by the percentage change in price 
B) the percentage change in price divided by the percentage change in quantity demanded 
C) the absolute change in quantity demanded divided by the absolute change in price 
D) the absolute change in price divided by the absolute change in quantity demanded 
E) none of the above 
A) the percentage change in quantity demanded divided by the percentage change in price 
B) the percentage change in price divided by the percentage change in quantity demanded 
C) the absolute change in quantity demanded divided by the absolute change in price 
D) the absolute change in price divided by the absolute change in quantity demanded 
E) none of the above

Question 9

Some demand curves have constant elasticity everywhere.

Accepted Answer

A) True 
 B)False

Question 10

Unit elastic demand occurs when

Accepted Answer

A) a one­unit increase in price leads to a one­unit decrease in quantity demanded 
B) a 1% increase in price leads to a one­unit decrease in quantity demanded 
C) price elasticity of demand is positive 
D) price elasticity of demand is exactly zero 
E) price elasticity of demand is exactly ­1 
A) a one­unit increase in price leads to a one­unit decrease in quantity demanded 
B) a 1% increase in price leads to a one­unit decrease in quantity demanded 
C) price elasticity of demand is positive 
D) price elasticity of demand is exactly zero 
E) price elasticity of demand is exactly ­1

Question 11

The total revenue curve that corresponds to a downward­sloping lineardemand curve

Accepted Answer

A) slopes downward 
B) slopes upward 
C) is a horizontal line 
D) first rises, then falls 
E) first falls, then rises 
A) slopes downward 
B) slopes upward 
C) is a horizontal line 
D) first rises, then falls 
E) first falls, then rises

Question 12

The midpoint quantity between 100 and 300 units is

Accepted Answer

A) 100 units 
B) 200 units 
C) 300 units 
D) 150 units 
E) 20,000 units 
A) 100 units 
B) 200 units 
C) 300 units 
D) 150 units 
E) 20,000 units

Question 13

If a $1 increase in price leads to a 3­unit decrease in quantity demanded,then demand must be elastic.

Accepted Answer

A) True 
 B)False

Question 14

The general term elasticity refers to a relationship between

Accepted Answer

A) quantity demanded and price only 
B) quantity supplied and price only 
C) quantity supplied or demanded and price only 
D) quantity supplied or demanded and anything other than price 
E) percentage changes in any two variables 
A) quantity demanded and price only 
B) quantity supplied and price only 
C) quantity supplied or demanded and price only 
D) quantity supplied or demanded and anything other than price 
E) percentage changes in any two variables

Question 15

Suppose consumers spent $42 million on Christmas trees last year when theaverage tree cost $30 and this year spent $42 million when the average treecosts $25.Assuming nothing else changed, this data suggests that

Accepted Answer

A) consumers bought the same number of Christmas trees this year as last year 
B) the price of Christmas trees stayed the same 
C) total revenues to tree producers rose this year 
D) the demand for trees is unit elastic 
E) the demand for trees is inelastic 
A) consumers bought the same number of Christmas trees this year as last year 
B) the price of Christmas trees stayed the same 
C) total revenues to tree producers rose this year 
D) the demand for trees is unit elastic 
E) the demand for trees is inelastic

Question 16

The total revenue from selling trucks is equal to

Accepted Answer

A) the price of a truck times the quantity sold 
B) the change in quantity sold divided by the change in price 
C) average cost times quantity produced 
D) the price of a truck times the quantity produced 
E) the price of a truck times the price elasticity of demand 
A) the price of a truck times the quantity sold 
B) the change in quantity sold divided by the change in price 
C) average cost times quantity produced 
D) the price of a truck times the quantity produced 
E) the price of a truck times the price elasticity of demand

Question 17

When demand is elastic, an increase in price will lead to an increase intotal revenue

Accepted Answer

A) True 
 B)False

Question 18

Wheat farmers in Kansas would benefit from a devastating crop failure inNorth Dakota (another major wheat­producing state) if the U.S.demand forwheat is

Accepted Answer

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

Question 19

Elasticity rises as price falls along a linear, downward­sloping demandcurve.

Accepted Answer

A) True 
 B)False

Question 20

The price elasticity of demand

Accepted Answer

A) is of no use to producers 
B) tells producers what will happen to total profit if they change product price 
C) tells producers what will happen to quantity supplied if they change product price 
D) tells producers what will happen to total revenue if they change product price 
E) tells producers what will happen to price in the following time period 
A) is of no use to producers 
B) tells producers what will happen to total profit if they change product price 
C) tells producers what will happen to quantity supplied if they change product price 
D) tells producers what will happen to total revenue if they change product price 
E) tells producers what will happen to price in the following time period

Exam 5: Elasticity of Demand and Supply

If demand is inelastic, the percentage change in price is greater than theresulting percentage change in quantity demanded.

If the demand for swordfish is price elastic and the price of swordfishincreases, then

If the price of Pepsi­Cola increases from 40 cents to 50 cents per can andthe quantity demanded decreases from 100 cans to 50 cans, then, accordingto the midpoint formula, the value of price elasticity of demand for Pepsi­Cola is

Dusty Rags, Inc.provides janitorial services to retail stores.Dusty had beencharging $10 per hour and selling 400 hours of service per week at that rate.When he raised his price to $15 per hour, his customers cut back to 300weekly hours of service.Which of the following is true?

If a price reduction leads to larger total revenue, demand is

If demand is elastic, a decrease in price leads to a decrease in totalrevenue.

When quantity is measured in gallons, the price elasticity of demand formilk will be __________ the price elasticity when quantity is measured inquarts.

Price elasticity of demand is calculated as

Some demand curves have constant elasticity everywhere.

Unit elastic demand occurs when

The total revenue curve that corresponds to a downward­sloping lineardemand curve

The midpoint quantity between 100 and 300 units is

If a $1 increase in price leads to a 3­unit decrease in quantity demanded,then demand must be elastic.

The general term elasticity refers to a relationship between

Suppose consumers spent $42 million on Christmas trees last year when theaverage tree cost $30 and this year spent $42 million when the average treecosts $25.Assuming nothing else changed, this data suggests that

The total revenue from selling trucks is equal to

When demand is elastic, an increase in price will lead to an increase intotal revenue

Wheat farmers in Kansas would benefit from a devastating crop failure inNorth Dakota (another major wheat­producing state) if the U.S.demand forwheat is

Elasticity rises as price falls along a linear, downward­sloping demandcurve.

The price elasticity of demand

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If the price of PepsiCola increases from 40 cents to 50 cents per can andthe quantity demanded decreases from 100 cans to 50 cans, then, accordingto the midpoint formula, the value of price elasticity of demand for PepsiCola is

The total revenue curve that corresponds to a downwardsloping lineardemand curve

If a $1 increase in price leads to a 3unit decrease in quantity demanded,then demand must be elastic.

Wheat farmers in Kansas would benefit from a devastating crop failure inNorth Dakota (another major wheatproducing state) if the U.S.demand forwheat is

Elasticity rises as price falls along a linear, downwardsloping demandcurve.