Question 1

If the demand for good X is inelastic in the short run, then it will be __________ in the long run (as more time passes).

Accepted Answer

A) inelastic 
B) elastic 
C) unit elastic 
D) perfectly inelastic 
E) There is not enough information to answer the question. 
A) inelastic 
B) elastic 
C) unit elastic 
D) perfectly inelastic 
E) There is not enough information to answer the question.

Question 2

The percentage change in the quantity demanded of good X is 20 percent and the percentage change in the price of good Y is 10 percent. It follows that the __________ elasticity of demand is __________ and that the two goods are __________.

Accepted Answer

A) income; 0.50; substitutes 
B) cross; 2.00; complements 
C) cross; 0.50; substitutes 
D) cross; 2.00; substitutes 
E) price; 2.00; substitutes 
A) income; 0.50; substitutes 
B) cross; 2.00; complements 
C) cross; 0.50; substitutes 
D) cross; 2.00; substitutes 
E) price; 2.00; substitutes

Question 3

If income elasticity of demand is 2.12, it means that quantity demanded will __________ by 2.12 percent for every __________ percent __________ in income.

Accepted Answer

A) rise; 2.12; fall 
B) rise; 1.0; rise 
C) fall; 1.0; rise 
D) fall; 2.12; fall 
A) rise; 2.12; fall 
B) rise; 1.0; rise 
C) fall; 1.0; rise 
D) fall; 2.12; fall

Question 4

If the demand for a good is inelastic and the price of the good decreases, then

Accepted Answer

A) total revenue increases. 
B) total revenue decreases. 
C) total revenue is not affected. 
D) the direction of the change in total revenue cannot be determined from the information given. 
A) total revenue increases. 
B) total revenue decreases. 
C) total revenue is not affected. 
D) the direction of the change in total revenue cannot be determined from the information given.

Question 5

If total revenue falls as a result of a decrease in the price of a given good, it follows that demand is

Accepted Answer

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

Question 6

If the demand for health care is elastic and health care co-payments are lowered, the percentage change in the quantity demanded of health care will be _______________ than the percentage decrease in co-payments, and the total dollar amount spent on health care will ___________.

Accepted Answer

A) greater; rise 
B) less; rise 
C) greater; fall 
D) less; fall 
A) greater; rise 
B) less; rise 
C) greater; fall 
D) less; fall

Question 7

How does price elasticity of demand vary along a straight-line downward-sloping demand curve?  Why does this occur?

Accepted Answer

The price elasticity of demand becomes h

Question 8

Suppose that the quantity demanded of good X rises by 8 percent when the price of good X falls by 2 percent. This information indicates that the price elasticity of demand equals

Accepted Answer

A) 4. 
B) 2.50. 
C) 0.25. 
D) 10. 
E) There is not enough information provided to answer this question. 
A) 4. 
B) 2.50. 
C) 0.25. 
D) 10. 
E) There is not enough information provided to answer this question.

Question 9

If a 5 percent reduction in the price of a commodity results in a 3 percent increase in the quantity demanded, demand is said to be

Accepted Answer

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

Question 10

Which of the following statements is false ?

Accepted Answer

A) Income elasticity of demand measures the responsiveness of quantity demanded to changes in income. 
B) Price elasticity of demand measures the responsiveness of quantity demanded to changes in price. 
C) Price elasticity of demand and the slope of a demand curve are the same thing. 
D) The more substitutes for a good, the higher the price elasticity of demand, ceteris paribus. 
A) Income elasticity of demand measures the responsiveness of quantity demanded to changes in income. 
B) Price elasticity of demand measures the responsiveness of quantity demanded to changes in price. 
C) Price elasticity of demand and the slope of a demand curve are the same thing. 
D) The more substitutes for a good, the higher the price elasticity of demand, ceteris paribus.

Question 11

Exhibit 19-4 ​
 
Refer to Exhibit 19-4. As a consequence of the depicted change in the supply of X, the demand curve for Y shifted from D1 to D2. Which of the following pairs of goods are most likely represented by X and Y?

Accepted Answer

A) cars and gasoline 
B) brand A peanut butter and brand B peanut butter 
C) water and diamonds 
D) milk and cereal 
A) cars and gasoline 
B) brand A peanut butter and brand B peanut butter 
C) water and diamonds 
D) milk and cereal

Question 12

The cross elasticity of demand coefficient between Coca-Cola and Pepsi Cola would be expected to be negative.

Accepted Answer

A) True 
 B)False

Question 13

Price elasticity of supply measures the responsiveness of __________ to changes in __________.

Accepted Answer

A) quantity supplied; income 
B) quantity supplied; price 
C) quantity supplied; quantity demanded 
D) income; quantity demanded 
A) quantity supplied; income 
B) quantity supplied; price 
C) quantity supplied; quantity demanded 
D) income; quantity demanded

Question 14

As the price of a product rises the product will become more elastic in demand, assuming that the demand curve for the product is a downward-sloping straight line.

Accepted Answer

A) True 
 B)False

Question 15

If a good is perfectly inelastic in a given price range, it will be perfectly inelastic at all prices.

Accepted Answer

A) True 
 B)False

Question 16

If two goods are substitute goods,

Accepted Answer

A) an increase in the price of one will cause a decrease in the demand for the other. 
B) an increase in the price of one will cause an increase in the demand for the other. 
C) the price elasticity of demand for both goods will be greater than 1. 
D) the price elasticity of demand for both goods will be less than 1. 
A) an increase in the price of one will cause a decrease in the demand for the other. 
B) an increase in the price of one will cause an increase in the demand for the other. 
C) the price elasticity of demand for both goods will be greater than 1. 
D) the price elasticity of demand for both goods will be less than 1.

Question 17

Explain the difference between price elasticity of demand and the slope of a demand curve.

Accepted Answer

There are two main differences between p

Question 18

Exhibit 19-5 ​
 
Refer to Exhibit 19-5. Which of the graphs represents a greater percentage change in quantity demanded than the percentage change in price?

Accepted Answer

A) (1) 
B) (2) 
C) (3) 
D) (2)and (3) 
A) (1) 
B) (2) 
C) (3) 
D) (2)and (3)

Question 19

A normal good is

Accepted Answer

A) any good that consumers normally buy. 
B) any good for which other goods can substitute. 
C) a good for which the demand rises as income falls. 
D) a good for which the demand rises as income rises. 
E) a good for which the quantity demanded rises as its price falls. 
A) any good that consumers normally buy. 
B) any good for which other goods can substitute. 
C) a good for which the demand rises as income falls. 
D) a good for which the demand rises as income rises. 
E) a good for which the quantity demanded rises as its price falls.

Question 20

When the cross elasticity of demand between two goods is __________, the goods are __________.

Accepted Answer

A) negative; substitutes for one another 
B) negative; complements for one another 
C) positive; normal goods 
D) positive; inferior goods 
A) negative; substitutes for one another 
B) negative; complements for one another 
C) positive; normal goods 
D) positive; inferior goods

Exam 6: Elasticity

If the demand for good X is inelastic in the short run, then it will be __________ in the long run (as more time passes).

The percentage change in the quantity demanded of good X is 20 percent and the percentage change in the price of good Y is 10 percent. It follows that the __________ elasticity of demand is __________ and that the two goods are __________.

If income elasticity of demand is 2.12, it means that quantity demanded will __________ by 2.12 percent for every __________ percent __________ in income.

If the demand for a good is inelastic and the price of the good decreases, then

If total revenue falls as a result of a decrease in the price of a given good, it follows that demand is

If the demand for health care is elastic and health care co-payments are lowered, the percentage change in the quantity demanded of health care will be _______________ than the percentage decrease in co-payments, and the total dollar amount spent on health care will ___________.

How does price elasticity of demand vary along a straight-line downward-sloping demand curve? Why does this occur?

Suppose that the quantity demanded of good X rises by 8 percent when the price of good X falls by 2 percent. This information indicates that the price elasticity of demand equals

If a 5 percent reduction in the price of a commodity results in a 3 percent increase in the quantity demanded, demand is said to be

Which of the following statements is false ?

Exhibit 19-4 ​ Refer to Exhibit 19-4. As a consequence of the depicted change in the supply of X, the demand curve for Y shifted from D1 to D2. Which of the following pairs of goods are most likely represented by X and Y?

The cross elasticity of demand coefficient between Coca-Cola and Pepsi Cola would be expected to be negative.

Price elasticity of supply measures the responsiveness of __________ to changes in __________.

As the price of a product rises the product will become more elastic in demand, assuming that the demand curve for the product is a downward-sloping straight line.

If a good is perfectly inelastic in a given price range, it will be perfectly inelastic at all prices.

If two goods are substitute goods,

Explain the difference between price elasticity of demand and the slope of a demand curve.

Exhibit 19-5 ​ Refer to Exhibit 19-5. Which of the graphs represents a greater percentage change in quantity demanded than the percentage change in price?

A normal good is

When the cross elasticity of demand between two goods is __________, the goods are __________.

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

International Finance

The Economic Case for and Against Government: Five Topics Considered

Stocks, Bonds, Futures, and Options

Filters

The percentage change in the quantity demanded of good X is 20 percent and the percentage change in the price of good Y is 10 percent. It follows that the elasticity of demand is and that the two goods are __.

If income elasticity of demand is 2.12, it means that quantity demanded will by 2.12 percent for every percent __ in income.

If the demand for health care is elastic and health care co-payments are lowered, the percentage change in the quantity demanded of health care will be _____ than the percentage decrease in co-payments, and the total dollar amount spent on health care will _.

Exhibit 19-4 Refer to Exhibit 19-4. As a consequence of the depicted change in the supply of X, the demand curve for Y shifted from D₁ to D₂. Which of the following pairs of goods are most likely represented by X and Y?

Price elasticity of supply measures the responsiveness of to changes in .

Exhibit 19-5 Refer to Exhibit 19-5. Which of the graphs represents a greater percentage change in quantity demanded than the percentage change in price?

When the cross elasticity of demand between two goods is , the goods are .