Question 1

Which of the following goods will have the most inelastic demand at any time?

Accepted Answer

A) Jewelry 
B) Big Macs 
C) Electricity 
D) Pork chops 
A) Jewelry 
B) Big Macs 
C) Electricity 
D) Pork chops

Question 2

Figure 6-6
 
-An article in the Wall Street Journal reports that "most cable TV operators are aware that cable is price sensitive, and there comes a point where people won't pay the price." Which demand curve in Figure 6-6 best illustrates this situation?

Accepted Answer

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

Question 3

Elasticity of demand equals the ratio of the percentage change in the quantity demanded to the percentage change in the price of the good.

Accepted Answer

A) True 
 B)False

Question 4

Figure 6-2
 
-Using Figure 6-2, calculate the price elasticity of demand (dropping all minus signs)between P = 4 and P = 6.

Accepted Answer

A) 3.0 
B) 0.33 
C) 0.40 
D) 1.25 
A) 3.0 
B) 0.33 
C) 0.40 
D) 1.25

Question 5

A rise in price will always result in an increase in the total amount that consumers spend on a product.

Accepted Answer

A) True 
 B)False

Question 6

Would a profit-maximizing firm sell at a price where demand is inelastic? Explain.

Accepted Answer

No. If demand is inelastic, th

Question 7

If an increase in quantity demanded of a product reduces the quantity demanded of another, then the two goods are said to be substitutes.

Accepted Answer

A) True 
 B)False

Question 8

Along a straight-line demand curve, why does the price elasticity of demand grow steadily smaller as we move from left to right?

Accepted Answer

As we move from left to right, the quant

Question 9

If the price elasticity is 1.50 for the demand of vanilla lattes, then if the seller raises price by 10 percent, then quantity demanded for the product will

Accepted Answer

A) rise by 15 percent. 
B) fall by 15 percent. 
C) fall by 1.5 percent. 
D) fall by 67 percent. 
A) rise by 15 percent. 
B) fall by 15 percent. 
C) fall by 1.5 percent. 
D) fall by 67 percent.

Question 10

If seller increases the price of the good and the total revenue increases, this implies that the demand for the product is inelastic.

Accepted Answer

A) True 
 B)False

Question 11

The current price of concert t-shirts is $20 each, and the company has been selling 400 per week. If price elasticity is 2.5 and the price changes to $21, how many t-shirts will be sold per week?

Accepted Answer

The percentage change in price is 1\20.5

Question 12

Julia knows that the price elasticity of movie rentals is 3. She knows, therefore, that if she raises her price from $2 to $2.50, her rentals will drop by approximately

Accepted Answer

A) 150 percent. 
B) 100 percent. 
C) 75 percent. 
D) 33 percent. 
A) 150 percent. 
B) 100 percent. 
C) 75 percent. 
D) 33 percent.

Question 13

The demand for French Roast coffee is likely to be

Accepted Answer

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

Question 14

Tele-Com, Inc., the nation's largest cable TV company, tested the effect of a price reduction for the Disney Channel. It lowered prices from $10.75 to $7.95 and found that the number of customers more than doubled. This means the

Accepted Answer

A) demand curve for the Disney Channel shifted to the right. 
B) supply curve of the Disney Channel shifted to the left. 
C) demand for the Disney Channel is elastic in this price range. 
D) demand for the Disney Channel is inelastic in this price range. 
A) demand curve for the Disney Channel shifted to the right. 
B) supply curve of the Disney Channel shifted to the left. 
C) demand for the Disney Channel is elastic in this price range. 
D) demand for the Disney Channel is inelastic in this price range.

Which of the following goods will have the most inelastic demand at any time?

Figure 6-6 -An article in the Wall Street Journal reports that "most cable TV operators are aware that cable is price sensitive, and there comes a point where people won't pay the price." Which demand curve in Figure 6-6 best illustrates this situation?

Elasticity of demand equals the ratio of the percentage change in the quantity demanded to the percentage change in the price of the good.

Figure 6-2 -Using Figure 6-2, calculate the price elasticity of demand (dropping all minus signs)between P = 4 and P = 6.

A rise in price will always result in an increase in the total amount that consumers spend on a product.

Would a profit-maximizing firm sell at a price where demand is inelastic? Explain.

If an increase in quantity demanded of a product reduces the quantity demanded of another, then the two goods are said to be substitutes.

Along a straight-line demand curve, why does the price elasticity of demand grow steadily smaller as we move from left to right?

If the price elasticity is 1.50 for the demand of vanilla lattes, then if the seller raises price by 10 percent, then quantity demanded for the product will

If seller increases the price of the good and the total revenue increases, this implies that the demand for the product is inelastic.

The current price of concert t-shirts is $20 each, and the company has been selling 400 per week. If price elasticity is 2.5 and the price changes to $21, how many t-shirts will be sold per week?

Julia knows that the price elasticity of movie rentals is 3. She knows, therefore, that if she raises her price from $2 to $2.50, her rentals will drop by approximately

The demand for French Roast coffee is likely to be

Tele-Com, Inc., the nation's largest cable TV company, tested the effect of a price reduction for the Disney Channel. It lowered prices from $10.75 to $7.95 and found that the number of customers more than doubled. This means the

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

Filters

Exam 6: Demand and Elasticity

Which of the following goods will have the most inelastic demand at any time?

Figure 6-6 -An article in the Wall Street Journal reports that "most cable TV operators are aware that cable is price sensitive, and there comes a point where people won't pay the price." Which demand curve in Figure 6-6 best illustrates this situation?

Elasticity of demand equals the ratio of the percentage change in the quantity demanded to the percentage change in the price of the good.

Figure 6-2 -Using Figure 6-2, calculate the price elasticity of demand (dropping all minus signs)between P = 4 and P = 6.

A rise in price will always result in an increase in the total amount that consumers spend on a product.

Would a profit-maximizing firm sell at a price where demand is inelastic? Explain.

If an increase in quantity demanded of a product reduces the quantity demanded of another, then the two goods are said to be substitutes.

Along a straight-line demand curve, why does the price elasticity of demand grow steadily smaller as we move from left to right?

If the price elasticity is 1.50 for the demand of vanilla lattes, then if the seller raises price by 10 percent, then quantity demanded for the product will

If seller increases the price of the good and the total revenue increases, this implies that the demand for the product is inelastic.

The current price of concert t-shirts is $20 each, and the company has been selling 400 per week. If price elasticity is 2.5 and the price changes to $21, how many t-shirts will be sold per week?

Julia knows that the price elasticity of movie rentals is 3. She knows, therefore, that if she raises her price from $2 to $2.50, her rentals will drop by approximately

The demand for French Roast coffee is likely to be

Tele-Com, Inc., the nation's largest cable TV company, tested the effect of a price reduction for the Disney Channel. It lowered prices from $10.75 to $7.95 and found that the number of customers more than doubled. This means the

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

The Financial Markets and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

The Case for Free Markets: the Price System

Monopoly

Between Competition and Monopoly

Limiting Market Power: Antitrust and Regulation

The Shortcomings of Free Markets

Externalities, Externaliteis, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Contemporary Issues in the Us Economy

Filters