Question 1

If the seller of good X raises the price of good X, it follows that the total revenue of good X will __________, if demand is __________.

Accepted Answer

A) rise; unit elastic 
B) rise; elastic. 
C) fall; unit elastic. 
D) fall; inelastic. 
E) fall; elastic 
A) rise; unit elastic 
B) rise; elastic. 
C) fall; unit elastic. 
D) fall; inelastic. 
E) fall; elastic

Question 2

Suppose that when the price of cigarettes decreases by 20 percent, the quantity demanded increases by 10  percent. The price elasticity of demand for cigarettes is __________, making cigarettes an ____________ product (in this example).

Accepted Answer

A) 0.6; elastic 
B) 1.7; inelastic 
C) 0.5; inelastic 
D) 1.7; elastic 
E) 2.0; elastic 
A) 0.6; elastic 
B) 1.7; inelastic 
C) 0.5; inelastic 
D) 1.7; elastic 
E) 2.0; elastic

Question 3

If for good Z income elasticity is less than 1 but greater than zero, then demand for good Z is income __________, and good Z is a(n)__________ good.

Accepted Answer

A) inelastic; normal 
B) inelastic; inferior 
C) elastic; normal 
D) elastic; an inferior 
E) unit elastic; normal 
A) inelastic; normal 
B) inelastic; inferior 
C) elastic; normal 
D) elastic; an inferior 
E) unit elastic; normal

Question 4

Exhibit 19-3   Refer to Exhibit 19-3. When price decreases from $4.50 to $3.50, the price elasticity of demand is

Accepted Answer

A) 0.4375. 
B) 0.50. 
C) 1.0. 
D) 2.00. 
E) 2.86. 
A) 0.4375. 
B) 0.50. 
C) 1.0. 
D) 2.00. 
E) 2.86.

Question 5

The demand curve for good X is generally highly inelastic at and around the current price. If we assume that the supply curve is neither perfectly elastic nor perfectly inelastic, then who will pay the greater share of a tax placed on the production of good X?

Accepted Answer

A) The buyers will pay the greater share. 
B) The sellers will pay the greater share. 
C) The buyers and the sellers will pay equal shares. 
D) There is not enough information to answer the question. 
A) The buyers will pay the greater share. 
B) The sellers will pay the greater share. 
C) The buyers and the sellers will pay equal shares. 
D) There is not enough information to answer the question.

Question 6

When quantity demanded of a good increases, total revenue

Accepted Answer

A) increases. 
B) decreases. 
C) increases, if demand is elastic. 
D) increases, if demand is inelastic. 
A) increases. 
B) decreases. 
C) increases, if demand is elastic. 
D) increases, if demand is inelastic.

Question 7

It is very important for the seller of a good to know whether the good is elastic, unit elastic, or inelastic in demand so that she will know what will happen to total revenue when she changes the price of the good.

Accepted Answer

A) True 
 B)False

Question 8

If the price elasticity of demand for a given product is 0.7, this means that

Accepted Answer

A) the percentage change in quantity demanded is 0.7 times the percentage change in price. 
B) if quantity demanded fell by 1 percent, price would fall by 7 percent. 
C) if price was raised 7 percent, quantity demanded would fall by 0.7 percent. 
D) if price was raised 7 percent, quantity demanded would rise 0.7 percent. 
E) the percentage change in price is 0.7 times the percentage change in quantity demanded. 
A) the percentage change in quantity demanded is 0.7 times the percentage change in price. 
B) if quantity demanded fell by 1 percent, price would fall by 7 percent. 
C) if price was raised 7 percent, quantity demanded would fall by 0.7 percent. 
D) if price was raised 7 percent, quantity demanded would rise 0.7 percent. 
E) the percentage change in price is 0.7 times the percentage change in quantity demanded.

Question 9

Exhibit 19-6 ​
 
Refer to Exhibit 19-6. Let S1 be the supply curve of a producer. If S2 is the supply curve of the same producer after the government imposes a per-unit tax, the share of the tax paid by the producer as compared to the share of the tax paid by consumers will be

Accepted Answer

A) greater if D1 is the demand curve facing the producer. 
B) greater if D2 is the demand curve facing the producer. 
C) the same regardless of which demand curve the firm faces. 
D) less if D2 is the demand curve facing the producer. 
A) greater if D1 is the demand curve facing the producer. 
B) greater if D2 is the demand curve facing the producer. 
C) the same regardless of which demand curve the firm faces. 
D) less if D2 is the demand curve facing the producer.

Question 10

For a normal good, __________ falls as income __________; for an inferior good, __________ rises as income __________.

Accepted Answer

A) demand; falls; demand; falls 
B) demand; rises; demand; rises 
C) supply; falls; demand; falls 
D) supply; rises; supply; falls 
A) demand; falls; demand; falls 
B) demand; rises; demand; rises 
C) supply; falls; demand; falls 
D) supply; rises; supply; falls

Question 11

The price elasticity of demand indicates

Accepted Answer

A) buyers'  responsiveness to price changes. 
B) the slope of the demand curve. 
C) how far demand stretches over time. 
D) the extent to which a demand curve shifts as incomes change. 
A) buyers'  responsiveness to price changes. 
B) the slope of the demand curve. 
C) how far demand stretches over time. 
D) the extent to which a demand curve shifts as incomes change.

Question 12

When price = $33, quantity demanded = 460. When price = $31, quantity demanded = 500. The price elasticity of demand is _______________, making this an _____________ good in the price range between $31 and $33.

Accepted Answer

A) 1.33; inelastic 
B) 1.33; elastic 
C) 0.75; elastic 
D) 0.75; inelastic 
E) 6.2; elastic 
A) 1.33; inelastic 
B) 1.33; elastic 
C) 0.75; elastic 
D) 0.75; inelastic 
E) 6.2; elastic

Question 13

An inferior good is

Accepted Answer

A) any good that consumers think is of low quality. 
B) a good for which the quantity demanded increases as its price decreases. 
C) a good for which the demand rises as income falls. 
D) a good for which the demand rises as income rises. 
E) any good that a producer cannot sell a large quantity of, even at a low price. 
A) any good that consumers think is of low quality. 
B) a good for which the quantity demanded increases as its price decreases. 
C) a good for which the demand rises as income falls. 
D) a good for which the demand rises as income rises. 
E) any good that a producer cannot sell a large quantity of, even at a low price.

Question 14

For a certain good, when the good's price falls from $22 to $20, its quantity demanded rises from 2,000 to 2,200 units. Given this information, the price elasticity of demand for this good is approximately

Accepted Answer

A) 2.55. 
B) 0.66. 
C) 0.39. 
D) 0.20. 
E) 1.00 
A) 2.55. 
B) 0.66. 
C) 0.39. 
D) 0.20. 
E) 1.00

Question 15

If the price of good A decreases by 10 percent and the quantity demanded of good B decreases by 10 percent, this is evidence that goods A and B are

Accepted Answer

A) substitutes for one another. 
B) complement goods to one another. 
C) both inferior goods. 
D) both normal goods. 
E) not related. 
A) substitutes for one another. 
B) complement goods to one another. 
C) both inferior goods. 
D) both normal goods. 
E) not related.

Question 16

Exhibit 19-3   Refer to Exhibit 19-3. When price decreases from $5.50 to $4.50, the price elasticity of demand is

Accepted Answer

A) 0.2. 
B) 0.5. 
C) 1.0. 
D) 2.0. 
E) 5.0. 
A) 0.2. 
B) 0.5. 
C) 1.0. 
D) 2.0. 
E) 5.0.

Question 17

For a certain good, when price rises from $90 to $98, quantity demanded falls from 7,400 to 6,500. The price elasticity of demand here is approximately _____________, making the demand for this good ____________ in the price range between $90 and $98.

Accepted Answer

A) 1.52; inelastic 
B) 1.52; elastic 
C) 1.86; elastic 
D) 0.66; elastic 
E) 0.66; inelastic 
A) 1.52; inelastic 
B) 1.52; elastic 
C) 1.86; elastic 
D) 0.66; elastic 
E) 0.66; inelastic

Question 18

Suppose at a price of $4 and at a price of $6, John purchases 40 units of good X. Given this information, we know that

Accepted Answer

A) John's entire demand curve for good X is perfectly elastic. 
B) John's entire demand curve for good X is inelastic. 
C) John's demand for good X is perfectly inelastic between the prices of $4 and $6. 
D) John's demand for good X is perfectly elastic between the prices of $4 and $6. 
E) John's entire demand curve for good X is unit elastic. 
A) John's entire demand curve for good X is perfectly elastic. 
B) John's entire demand curve for good X is inelastic. 
C) John's demand for good X is perfectly inelastic between the prices of $4 and $6. 
D) John's demand for good X is perfectly elastic between the prices of $4 and $6. 
E) John's entire demand curve for good X is unit elastic.

Question 19

If good Z has an income elasticity of 1.0, then demand for good Z is income __________ and the good is __________.

Accepted Answer

A) inelastic, normal 
B) inelastic, inferior 
C) elastic, normal 
D) elastic, inferior 
E) unit elastic, normal 
A) inelastic, normal 
B) inelastic, inferior 
C) elastic, normal 
D) elastic, inferior 
E) unit elastic, normal

Question 20

If the demand for a product is perfectly elastic, a tax of $1 per unit imposed on sellers will

Accepted Answer

A) increase the market price by $1 per unit. 
B) increase the market price by less than $1 per unit. 
C) decrease the market price by $1 per unit. 
D) decrease the market price by less than $1 per unit. 
E) not affect the market price. 
A) increase the market price by $1 per unit. 
B) increase the market price by less than $1 per unit. 
C) decrease the market price by $1 per unit. 
D) decrease the market price by less than $1 per unit. 
E) not affect the market price.

Exam 6: Elasticity

If the seller of good X raises the price of good X, it follows that the total revenue of good X will __________, if demand is __________.

Suppose that when the price of cigarettes decreases by 20 percent, the quantity demanded increases by 10 percent. The price elasticity of demand for cigarettes is __________, making cigarettes an ____________ product (in this example).

If for good Z income elasticity is less than 1 but greater than zero, then demand for good Z is income __________, and good Z is a(n)__________ good.

Exhibit 19-3 Refer to Exhibit 19-3. When price decreases from $4.50 to $3.50, the price elasticity of demand is

The demand curve for good X is generally highly inelastic at and around the current price. If we assume that the supply curve is neither perfectly elastic nor perfectly inelastic, then who will pay the greater share of a tax placed on the production of good X?

When quantity demanded of a good increases, total revenue

It is very important for the seller of a good to know whether the good is elastic, unit elastic, or inelastic in demand so that she will know what will happen to total revenue when she changes the price of the good.

If the price elasticity of demand for a given product is 0.7, this means that

Exhibit 19-6 ​ Refer to Exhibit 19-6. Let S1 be the supply curve of a producer. If S2 is the supply curve of the same producer after the government imposes a per-unit tax, the share of the tax paid by the producer as compared to the share of the tax paid by consumers will be

For a normal good, __________ falls as income __________; for an inferior good, __________ rises as income __________.

The price elasticity of demand indicates

When price = $33, quantity demanded = 460. When price = $31, quantity demanded = 500. The price elasticity of demand is _______________, making this an _____________ good in the price range between $31 and $33.

An inferior good is

For a certain good, when the good's price falls from $22 to $20, its quantity demanded rises from 2,000 to 2,200 units. Given this information, the price elasticity of demand for this good is approximately

If the price of good A decreases by 10 percent and the quantity demanded of good B decreases by 10 percent, this is evidence that goods A and B are

Exhibit 19-3 Refer to Exhibit 19-3. When price decreases from $5.50 to $4.50, the price elasticity of demand is

For a certain good, when price rises from $90 to $98, quantity demanded falls from 7,400 to 6,500. The price elasticity of demand here is approximately _____________, making the demand for this good ____________ in the price range between $90 and $98.

Suppose at a price of $4 and at a price of $6, John purchases 40 units of good X. Given this information, we know that

If good Z has an income elasticity of 1.0, then demand for good Z is income __________ and the good is __________.

If the demand for a product is perfectly elastic, a tax of $1 per unit imposed on sellers will

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand: Theory

Prices: Free, Controlled, and Relative

Supply, Demand, and Price: Applications

Consumer Choice: Maximizing Utility and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

Government and Product Markets: Antitrust and Regulation

Factor Markets: With Emphasis on the Labor Market

Wages, Union, and Labor

The Distribution of Income and Poverty

Interest, Rent, and Profit

Market Failure: Externalities, Public Goods, and Asymmetric Information

Public Choice and Special-Interest-Group Politics

Building Theories to Explain Everyday Life: From Observations to Questions to Theories to Predictions

International Trade

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The Economic Case for and Against Government: Five Topics Considered

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If the seller of good X raises the price of good X, it follows that the total revenue of good X will , if demand is .

Suppose that when the price of cigarettes decreases by 20 percent, the quantity demanded increases by 10 percent. The price elasticity of demand for cigarettes is , making cigarettes an __ product (in this example).

If for good Z income elasticity is less than 1 but greater than zero, then demand for good Z is income , and good Z is a(n) good.

Exhibit 19-6 Refer to Exhibit 19-6. Let S₁ be the supply curve of a producer. If S₂ is the supply curve of the same producer after the government imposes a per-unit tax, the share of the tax paid by the producer as compared to the share of the tax paid by consumers will be

For a normal good, falls as income ; for an inferior good, rises as income .

When price = $33, quantity demanded = 460. When price = $31, quantity demanded = 500. The price elasticity of demand is ___, making this an _ good in the price range between $31 and $33.

For a certain good, when price rises from $90 to $98, quantity demanded falls from 7,400 to 6,500. The price elasticity of demand here is approximately _, making the demand for this good in the price range between $90 and $98.

If good Z has an income elasticity of 1.0, then demand for good Z is income and the good is .