Question 1

To raise the most tax revenue, governments should tax which of the following goods?

Accepted Answer

A)  SUVs 
B)  gasoline 
C)  designer shoes 
D)  sofas 
A)  SUVs 
B)  gasoline 
C)  designer shoes 
D)  sofas

Question 2

If the quantity of concert tickets sold decreases by 10 percent when the price increases by 5 percent, this market is operating in which section of its downward-sloping straight-line demand curve?

Accepted Answer

A)  the section above the point of unit elasticity 
B)  the point equal to unit elasticity 
C)  the section below the point of unit elasticity 
D)  This market show elastic demand which could occur at any point along the demand curve. 
A)  the section above the point of unit elasticity 
B)  the point equal to unit elasticity 
C)  the section below the point of unit elasticity 
D)  This market show elastic demand which could occur at any point along the demand curve.

Question 3

Exhibit 5-1 Demand curve
 
In Exhibit 5-1, between points b and c, the price elasticity of demand measures

Accepted Answer

A)  0.425. 
B)  1.571. 
C)  0.143 
D)  0.636. 
A)  0.425. 
B)  1.571. 
C)  0.143 
D)  0.636.

Question 4

Suppose the president of a textbook publisher argues that a 10 percent increase in the price of textbooks will raise total revenue for the publisher. It can be concluded that the company president thinks that demand for textbooks is:

Accepted Answer

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

Question 5

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 6

Suppose a good has a downward-sloping, straight-line demand curve. If the price elasticity of demand is 2.5 when the price is $10 per unit, then the price elasticity of demand when the price is $7 per unit could be

Accepted Answer

A)  approaching infinity. 
B)  2.7. 
C)  2.5. 
D)  1.7. 
A)  approaching infinity. 
B)  2.7. 
C)  2.5. 
D)  1.7.

Question 7

A public transit company finds that when it reduces the price of a bus ticket, total revenues remain the same. One can conclude from this that:

Accepted Answer

A)  the demand curve is horizontal, reflecting infinite price elasticity. 
B)  if the price is lowered further total revenue will increase. 
C)  the demand curve for bus tickets must have shifted to the right. 
D)  the firm is operating in a range of the demand curve that is unit elastic. 
A)  the demand curve is horizontal, reflecting infinite price elasticity. 
B)  if the price is lowered further total revenue will increase. 
C)  the demand curve for bus tickets must have shifted to the right. 
D)  the firm is operating in a range of the demand curve that is unit elastic.

To raise the most tax revenue, governments should tax which of the following goods?

If the quantity of concert tickets sold decreases by 10 percent when the price increases by 5 percent, this market is operating in which section of its downward-sloping straight-line demand curve?

Exhibit 5-1 Demand curve In Exhibit 5-1, between points b and c, the price elasticity of demand measures

Suppose the president of a textbook publisher argues that a 10 percent increase in the price of textbooks will raise total revenue for the publisher. It can be concluded that the company president thinks that demand for textbooks is:

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?

Suppose a good has a downward-sloping, straight-line demand curve. If the price elasticity of demand is 2.5 when the price is $10 per unit, then the price elasticity of demand when the price is $7 per unit could be

A public transit company finds that when it reduces the price of a bus ticket, total revenues remain the same. One can conclude from this that:

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

Monetary Policy

International Trade and Finance

Economies in Transition

Growth and the Less Developed Countries

Filters

Exam 5: Price Elasticity of Demand and Supply

To raise the most tax revenue, governments should tax which of the following goods?

If the quantity of concert tickets sold decreases by 10 percent when the price increases by 5 percent, this market is operating in which section of its downward-sloping straight-line demand curve?

Exhibit 5-1 Demand curve In Exhibit 5-1, between points b and c, the price elasticity of demand measures

Suppose the president of a textbook publisher argues that a 10 percent increase in the price of textbooks will raise total revenue for the publisher. It can be concluded that the company president thinks that demand for textbooks is:

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?

Suppose a good has a downward-sloping, straight-line demand curve. If the price elasticity of demand is 2.5 when the price is $10 per unit, then the price elasticity of demand when the price is $7 per unit could be

A public transit company finds that when it reduces the price of a bus ticket, total revenues remain the same. One can conclude from this that:

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

Monetary Policy

International Trade and Finance

Economies in Transition

Growth and the Less Developed Countries

Filters