Question 1

If a decrease in the price of football tickets increases the total revenue of the athletic department, this is evidence that demand is:

Accepted Answer

A)  price elastic. 
B)  price inelastic. 
C)  unit elastic with respect to price. 
D)  perfectly inelastic. 
A)  price elastic. 
B)  price inelastic. 
C)  unit elastic with respect to price. 
D)  perfectly inelastic.

Question 2

If the quantity demanded increases by 20 percent in response to a 10 percent decrease in price, demand is classified as:

Accepted Answer

A)  unstable. 
B)  relatively inelastic. 
C)  relatively elastic. 
D)  of unitary elasticity. 
A)  unstable. 
B)  relatively inelastic. 
C)  relatively elastic. 
D)  of unitary elasticity.

Question 3

Tara buys four music cassettes when the price is $10 and two cassettes when the price is $14. Her price elasticity of demand is:

Accepted Answer

A)  0. 
B)  1. 
C)  2. 
D)  3. 
E)  4. 
A)  0. 
B)  1. 
C)  2. 
D)  3. 
E)  4.

Question 4

Along the elastic range of a demand curve, a decrease in price causes:

Accepted Answer

A)  no change in total revenue. 
B)  a decrease in total revenue. 
C)  an increase in total revenue. 
D)  an unpredictable change in total revenue. 
A)  no change in total revenue. 
B)  a decrease in total revenue. 
C)  an increase in total revenue. 
D)  an unpredictable change in total revenue.

Question 5

It is Valentine's Day and Jason is desperately looking all over town for a dozen roses to give to Judy. Most likely, Jason's price elasticity of demand is:

Accepted Answer

A)  infinitely large. 
B)  negative. 
C)  equal to one. 
D)  greater than one. 
E)  less than one. 
A)  infinitely large. 
B)  negative. 
C)  equal to one. 
D)  greater than one. 
E)  less than one.

Question 6

A measure of sensitivity or responsiveness to changes in price or income is called:

Accepted Answer

A)  elasticity. 
B)  technology. 
C)  supply and demand. 
D)  social pressure. 
E)  kickback. 
A)  elasticity. 
B)  technology. 
C)  supply and demand. 
D)  social pressure. 
E)  kickback.

Question 7

What does the "price elasticity of demand" measure? What does a price elasticity of demand coefficient of 1.2 mean? Does the product have an elastic, unitary elastic or inelastic demand?

Accepted Answer

The price elasticity of demand measures

Question 8

The longer the time period under study,

Accepted Answer

A)  the more elastic is the price elasticity of demand. 
B)  the less sensitive consumers will be to price changes. 
C)  the less adjustment consumers will make to price changes. 
D)  the more inelastic is the price elasticity of demand. 
E)  the more likely any given price cut will result in a smaller reaction by the consumer. 
A)  the more elastic is the price elasticity of demand. 
B)  the less sensitive consumers will be to price changes. 
C)  the less adjustment consumers will make to price changes. 
D)  the more inelastic is the price elasticity of demand. 
E)  the more likely any given price cut will result in a smaller reaction by the consumer.

Question 9

Demand sensitivity depends on all of the following except:

Accepted Answer

A)  how low is the price of the good. 
B)  the sensitivity of firms' output to changes in its price. 
C)  the consumer's income. 
D)  the availability and closeness of substitutes. 
E)  the amount of time a consumer has to adjust to price changes. 
A)  how low is the price of the good. 
B)  the sensitivity of firms' output to changes in its price. 
C)  the consumer's income. 
D)  the availability and closeness of substitutes. 
E)  the amount of time a consumer has to adjust to price changes.

Question 10

Exhibit 5-2  Price and quantity demanded data   Using Exhibit 5-2, what is the price elasticity of demand when the price falls from five dollars to four?

Accepted Answer

A)  1. 
B)  1.25. 
C)  0.8. 
D)  2.0. 
E)  0.4. 
A)  1. 
B)  1.25. 
C)  0.8. 
D)  2.0. 
E)  0.4.

Question 11

Exhibit 5-4  Demand curves for silver   Assume that a wealthy buyer, Mr. Hunt, declares that he will purchase any amount of silver at a price of $125 an ounce. In Exhibit 5-4, which graph illustrates the shape of the demand curve for silver?

Accepted Answer

A)  Graph A. 
B)  Graph B. 
C)  Graph C. 
D)  Graph D. 
A)  Graph A. 
B)  Graph B. 
C)  Graph C. 
D)  Graph D.

Question 12

Which of the following is true for a lower price elasticity of demand coefficient?

Accepted Answer

A)  The market is broadly defined. 
B)  The quantity demanded is more responsive. 
C)  Few substitutes exist. 
D)  Many substitutes exist. 
E)  All of the above. 
A)  The market is broadly defined. 
B)  The quantity demanded is more responsive. 
C)  Few substitutes exist. 
D)  Many substitutes exist. 
E)  All of the above.

Question 13

If the quantity of concert tickets sold decreases by 10 percent when the price increases by 5 percent, the price elasticity of demand over this range of the demand curve is:

Accepted Answer

A)  price elastic. 
B)  price inelastic. 
C)  perfectly inelastic. 
D)  unitary elastic. 
A)  price elastic. 
B)  price inelastic. 
C)  perfectly inelastic. 
D)  unitary elastic.

Question 14

The percentage change in the quantity demanded of film divided by the percentage change in the price of cameras indicates:

Accepted Answer

A)  the price elasticity of demand for film. 
B)  the price elasticity of demand for cameras. 
C)  the price elasticity of supply for film. 
D)  the price elasticity of supply for cameras. 
E)  nothing, because the two goods fall into the broadly defined category of photographic equipment. 
A)  the price elasticity of demand for film. 
B)  the price elasticity of demand for cameras. 
C)  the price elasticity of supply for film. 
D)  the price elasticity of supply for cameras. 
E)  nothing, because the two goods fall into the broadly defined category of photographic equipment.

Question 15

Exhibit 5-9  Supply and demand curves for good X   As shown in Exhibit 5-9, the price elasticity of demand for good X between points E and D is:

Accepted Answer

A)  1/5 = 0.20. 
B)  3/7 = 0.43. 
C)  1/2 = 0.50. 
D)  1. 
A)  1/5 = 0.20. 
B)  3/7 = 0.43. 
C)  1/2 = 0.50. 
D)  1.

Question 16

Elasticity measures how "sensitive" consumers are by measuring their change in ____ as the price of the product changes.

Accepted Answer

A)  attitude 
B)  income 
C)  quantity demanded 
D)  supply 
E)  taxes 
A)  attitude 
B)  income 
C)  quantity demanded 
D)  supply 
E)  taxes

Question 17

Exhibit 5-7  Demand curve for concert tickets   In Exhibit 5-7, If promoters charge a price of $10 per ticket, then their total revenue is:

Accepted Answer

A)  $240,000. 
B)  $300,000. 
C)  $333,333. 
D)  $800,000. 
A)  $240,000. 
B)  $300,000. 
C)  $333,333. 
D)  $800,000.

Question 18

If the price elasticity of demand coefficient equals 2, this means a 10 percent increase in price will result in a 20 percent decrease in the quantity demanded.

Accepted Answer

A) True 
 B)False

Question 19

If the percentage change in the quantity demanded of a good equals the percentage change in price, price elasticity of demand is:

Accepted Answer

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

Question 20

If the price elasticity of demand for a product measures .45,

Accepted Answer

A)  this good has many available substitutes. 
B)  this good must be a nonessential good. 
C)  this good is a high-priced good. 
D)  a decrease in price will increase total revenue. 
E)  this good is demand price inelastic. 
A)  this good has many available substitutes. 
B)  this good must be a nonessential good. 
C)  this good is a high-priced good. 
D)  a decrease in price will increase total revenue. 
E)  this good is demand price inelastic.

Exam 5: Price Elasticity of Demand

If a decrease in the price of football tickets increases the total revenue of the athletic department, this is evidence that demand is:

If the quantity demanded increases by 20 percent in response to a 10 percent decrease in price, demand is classified as:

Tara buys four music cassettes when the price is $10 and two cassettes when the price is $14. Her price elasticity of demand is:

Along the elastic range of a demand curve, a decrease in price causes:

It is Valentine's Day and Jason is desperately looking all over town for a dozen roses to give to Judy. Most likely, Jason's price elasticity of demand is:

A measure of sensitivity or responsiveness to changes in price or income is called:

What does the "price elasticity of demand" measure? What does a price elasticity of demand coefficient of 1.2 mean? Does the product have an elastic, unitary elastic or inelastic demand?

The longer the time period under study,

Demand sensitivity depends on all of the following except:

Exhibit 5-2 Price and quantity demanded data Using Exhibit 5-2, what is the price elasticity of demand when the price falls from five dollars to four?

Exhibit 5-4 Demand curves for silver Assume that a wealthy buyer, Mr. Hunt, declares that he will purchase any amount of silver at a price of $125 an ounce. In Exhibit 5-4, which graph illustrates the shape of the demand curve for silver?

Which of the following is true for a lower price elasticity of demand coefficient?

If the quantity of concert tickets sold decreases by 10 percent when the price increases by 5 percent, the price elasticity of demand over this range of the demand curve is:

The percentage change in the quantity demanded of film divided by the percentage change in the price of cameras indicates:

Exhibit 5-9 Supply and demand curves for good X As shown in Exhibit 5-9, the price elasticity of demand for good X between points E and D is:

Elasticity measures how "sensitive" consumers are by measuring their change in ____ as the price of the product changes.

Exhibit 5-7 Demand curve for concert tickets In Exhibit 5-7, If promoters charge a price of $10 per ticket, then their total revenue is:

If the price elasticity of demand coefficient equals 2, this means a 10 percent increase in price will result in a 20 percent decrease in the quantity demanded.

If the percentage change in the quantity demanded of a good equals the percentage change in price, price elasticity of demand is:

If the price elasticity of demand for a product measures .45,

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

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