Question 1

The price of the good multiplied by the quantity sold is its

Accepted Answer

A)  total revenue. 
B)  total cost. 
C)  total spending. 
D)  total income. 
E)  total quantity. 
A)  total revenue. 
B)  total cost. 
C)  total spending. 
D)  total income. 
E)  total quantity.

Question 2

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Price } \
\text { (dollars per pizza) }
\end{array} & \begin{array} { c } 
\text { Quantity demanded } \
\text { (pizzas per day) }
\end{array} \
\hline 10 & 100 \
9 & 125
\end{array}$$
-The data in the table above give two points on the demand curve for pizza.Using the midpoint method,when the price of a pizza falls from $10 to $9,what is the price elasticity of demand?

Accepted Answer

A)  0.5 
B)  0.6 
C)  0.9 
D)  2.1 
E)  8.6 
A)  0.5 
B)  0.6 
C)  0.9 
D)  2.1 
E)  8.6

Question 3

Is supply more elastic or less elastic as more time passes after a price change? Explain your answer.

Accepted Answer

Supply becomes elastic as more time pass

Question 4

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Income } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity demanded } \
\text { pounds per year) }
\end{array} \
\hline 18,000 & 60 \
22,000 & 140 \
\hline
\end{array}$$
-The table above gives Sharon's demand for ground beef at two different income levels.Use the midpoint method in this problem.
a.What is the percentage change in Sharon's income?
b.What is the percentage change in the quantity demanded?
c.What is Sharon's income elasticity of demand for ground beef?
d.Is ground beef a normal or an inferior good for Sharon?

Accepted Answer

a.The percentage change in Sharon's inco

Question 5

If a lower price for a Pepsi decreases the demand for a Coke,the cross elasticity value for Pepsi and Coke is

Accepted Answer

A)  definitely negative. 
B)  definitely equal to zero. 
C)  definitely positive. 
D)  definitely greater than one. 
E)  possibly negative, positive, or zero, but there is not enough information to decide. 
A)  definitely negative. 
B)  definitely equal to zero. 
C)  definitely positive. 
D)  definitely greater than one. 
E)  possibly negative, positive, or zero, but there is not enough information to decide.

Question 6

If a good has many close substitutes,then its demand is most likely

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  unit elastic. 
D)  perfectly inelastic. 
E)  elastic or inelastic depending on whether the price of the good is increasing or decreasing. 
A)  elastic. 
B)  inelastic. 
C)  unit elastic. 
D)  perfectly inelastic. 
E)  elastic or inelastic depending on whether the price of the good is increasing or decreasing.

Question 7

A product's price elasticity of demand is likely to be greater

Accepted Answer

A)  if it only has a few substitutes. 
B)  if consumers spend a small proportion of income on the product. 
C)  the less time consumers have to adjust to price changes. 
D)  if the product is a luxury good rather than a necessity. 
E)  Both answers C and D are correct. 
A)  if it only has a few substitutes. 
B)  if consumers spend a small proportion of income on the product. 
C)  the less time consumers have to adjust to price changes. 
D)  if the product is a luxury good rather than a necessity. 
E)  Both answers C and D are correct.

Question 8

If the price of a one good increases and the quantity demanded of a different good decreases,then these two goods are

Accepted Answer

A)  substitutes. 
B)  normal goods. 
C)  inferior goods. 
D)  inelastic goods. 
E)  complements. 
A)  substitutes. 
B)  normal goods. 
C)  inferior goods. 
D)  inelastic goods. 
E)  complements.

Question 9

When the price of a pizza is $10,the quantity of soda demanded is 300 drinks.When the price of a pizza is $15,the quantity soda demanded is 100 drinks.The cross elasticity of demand is equal to

Accepted Answer

A)  -0.25. 
B)  -0.40. 
C)  -2.50. 
D)  -25.00. 
E)  4.00. 
A)  -0.25. 
B)  -0.40. 
C)  -2.50. 
D)  -25.00. 
E)  4.00.

Question 10

Suppose an increase in demand causes the price to increase from $2 to $4 and the quantity to increase from 1,000 to 1,800.Using the midpoint method,the elasticity of supply equals

Accepted Answer

A)  0.86. 
B)  1.17. 
C)  2.74. 
D)  0.68. 
E)  None of the above answers is correct. 
A)  0.86. 
B)  1.17. 
C)  2.74. 
D)  0.68. 
E)  None of the above answers is correct.

Question 11

The elasticity of demand is used to

Accepted Answer

A)  determine if consumers will or will not buy a product. 
B)  measure how responsive consumers are to a change in price. 
C)  determine in what direction the demand curve shifts if income changes. 
D)  find the market equilibrium. 
E)  determine if a change in price results in a shortage or a surplus. 
A)  determine if consumers will or will not buy a product. 
B)  measure how responsive consumers are to a change in price. 
C)  determine in what direction the demand curve shifts if income changes. 
D)  find the market equilibrium. 
E)  determine if a change in price results in a shortage or a surplus.

Question 12

The total revenue test says
i.Demand is elastic if a decrease in price results in an increase in total revenue.
ii.Total revenue is maximized when demand is elastic.
iii.Total revenue is minimized when demand is unit elastic.

Accepted Answer

A)  i only 
B)  i and ii 
C)  ii and iii 
D)  i, ii and iii 
E)  ii only 
A)  i only 
B)  i and ii 
C)  ii and iii 
D)  i, ii and iii 
E)  ii only

Question 13

The figure above shows the supply curve for roses.
-In the figure above,at the point where the price is $50 per bunch,the price elasticity of supply is

Accepted Answer

A)  2.14. 
B)  0.47. 
C)  1. 
D)  3. 
E)  0.33. 
A)  2.14. 
B)  0.47. 
C)  1. 
D)  3. 
E)  0.33.

Question 14

If the cross elasticity of demand between Coke and Pepsi is 2.02,then Coke and Pepsi are

Accepted Answer

A)  complements. 
B)  substitutes. 
C)  normal goods. 
D)  inferior goods. 
E)  Both answers B and C are correct. 
A)  complements. 
B)  substitutes. 
C)  normal goods. 
D)  inferior goods. 
E)  Both answers B and C are correct.

Question 15

If we are trying to determine if two different products are substitutes,complements,or not related at all,we should find the value of the

Accepted Answer

A)  price elasticity of demand for both goods. 
B)  price elasticity of supply for both goods. 
C)  income elasticity of demand for both goods. 
D)  cross elasticity of demand. 
E)  price elasticity of demand and the price elasticity of supply for both goods. 
A)  price elasticity of demand for both goods. 
B)  price elasticity of supply for both goods. 
C)  income elasticity of demand for both goods. 
D)  cross elasticity of demand. 
E)  price elasticity of demand and the price elasticity of supply for both goods.

Question 16

When income increases by 6 percent,the demand for potatoes decreases by 2 percent.The income elasticity of demand for potatoes equals

Accepted Answer

A)  -2.00. 
B)  3.00. 
C)  -3.00. 
D)  0.33. 
E)  -0.33. 
A)  -2.00. 
B)  3.00. 
C)  -3.00. 
D)  0.33. 
E)  -0.33.

Question 17

When the price of a textbook is $95,the quantity of textbooks supplied is 90 million a year and when the price rises to $105,the quantity of textbooks supplied is 110 million a year.The supply of textbooks is

Accepted Answer

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

Question 18

It is very difficult for Gourmet Chocolatier to find inexpensive and available inputs for the business.Because of this,we predict that Gourmet Chocolatier's supply to be

Accepted Answer

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

Question 19

If the price of a movie rises 3 percent and,as a result,the quantity demanded of video rentals increases 6 percent,then the cross elasticity of demand is

Accepted Answer

A)  2. 
B)  1/2. 
C)  -1/2. 
D)  -2. 
E)  9. 
A)  2. 
B)  1/2. 
C)  -1/2. 
D)  -2. 
E)  9.

Question 20

$\begin{array}{c}
\begin{array}{c}
\text {Price}\
\text {(dollars per cake)}\
\hline 2\
4
\end{array}
\begin{array}{c}
\text {Quantity demanded}\
\text { (gallons of ice cream per week)}\
\hline 10\
6
\end{array}
\end{array}$

-Based on the data in the table above,ice cream and cake are ________ goods.

Accepted Answer

A)  inferior 
B)  normal 
C)  substitute 
D)  complementary 
E)  Both answers B and D are correct. 
A)  inferior 
B)  normal 
C)  substitute 
D)  complementary 
E)  Both answers B and D are correct.

The price of the good multiplied by the quantity sold is its

Price (dollars per pizza) Quantity demanded (pizzas per day) 10 100 9 125 -The data in the table above give two points on the demand curve for pizza.Using the midpoint method,when the price of a pizza falls from $10 to $9,what is the price elasticity of demand?

Is supply more elastic or less elastic as more time passes after a price change? Explain your answer.

If a lower price for a Pepsi decreases the demand for a Coke,the cross elasticity value for Pepsi and Coke is

If a good has many close substitutes,then its demand is most likely

A product's price elasticity of demand is likely to be greater

If the price of a one good increases and the quantity demanded of a different good decreases,then these two goods are

When the price of a pizza is $10,the quantity of soda demanded is 300 drinks.When the price of a pizza is $15,the quantity soda demanded is 100 drinks.The cross elasticity of demand is equal to

Suppose an increase in demand causes the price to increase from $2 to $4 and the quantity to increase from 1,000 to 1,800.Using the midpoint method,the elasticity of supply equals

The elasticity of demand is used to

The total revenue test says i.Demand is elastic if a decrease in price results in an increase in total revenue. ii.Total revenue is maximized when demand is elastic. iii.Total revenue is minimized when demand is unit elastic.

The figure above shows the supply curve for roses. -In the figure above,at the point where the price is $50 per bunch,the price elasticity of supply is

If the cross elasticity of demand between Coke and Pepsi is 2.02,then Coke and Pepsi are

If we are trying to determine if two different products are substitutes,complements,or not related at all,we should find the value of the

When income increases by 6 percent,the demand for potatoes decreases by 2 percent.The income elasticity of demand for potatoes equals

When the price of a textbook is $95,the quantity of textbooks supplied is 90 million a year and when the price rises to $105,the quantity of textbooks supplied is 110 million a year.The supply of textbooks is

It is very difficult for Gourmet Chocolatier to find inexpensive and available inputs for the business.Because of this,we predict that Gourmet Chocolatier's supply to be

If the price of a movie rises 3 percent and,as a result,the quantity demanded of video rentals increases 6 percent,then the cross elasticity of demand is

Price (dollars per cake) 2 4 Quantity demanded (gallons of ice cream per week) 10 6 -Based on the data in the table above,ice cream and cake are ________ goods.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 5: Elasticities of Demand and Supply

The price of the good multiplied by the quantity sold is its

Price (dollars per pizza) Quantity demanded (pizzas per day) 10 100 9 125 -The data in the table above give two points on the demand curve for pizza.Using the midpoint method,when the price of a pizza falls from $10 to $9,what is the price elasticity of demand?

Is supply more elastic or less elastic as more time passes after a price change? Explain your answer.

If a lower price for a Pepsi decreases the demand for a Coke,the cross elasticity value for Pepsi and Coke is

If a good has many close substitutes,then its demand is most likely

A product's price elasticity of demand is likely to be greater

If the price of a one good increases and the quantity demanded of a different good decreases,then these two goods are

When the price of a pizza is $10,the quantity of soda demanded is 300 drinks.When the price of a pizza is $15,the quantity soda demanded is 100 drinks.The cross elasticity of demand is equal to

Suppose an increase in demand causes the price to increase from $2 to $4 and the quantity to increase from 1,000 to 1,800.Using the midpoint method,the elasticity of supply equals

The elasticity of demand is used to

The total revenue test says i.Demand is elastic if a decrease in price results in an increase in total revenue. ii.Total revenue is maximized when demand is elastic. iii.Total revenue is minimized when demand is unit elastic.

The figure above shows the supply curve for roses. -In the figure above,at the point where the price is $50 per bunch,the price elasticity of supply is

If the cross elasticity of demand between Coke and Pepsi is 2.02,then Coke and Pepsi are

If we are trying to determine if two different products are substitutes,complements,or not related at all,we should find the value of the

When income increases by 6 percent,the demand for potatoes decreases by 2 percent.The income elasticity of demand for potatoes equals

When the price of a textbook is $95,the quantity of textbooks supplied is 90 million a year and when the price rises to $105,the quantity of textbooks supplied is 110 million a year.The supply of textbooks is

It is very difficult for Gourmet Chocolatier to find inexpensive and available inputs for the business.Because of this,we predict that Gourmet Chocolatier's supply to be

If the price of a movie rises 3 percent and,as a result,the quantity demanded of video rentals increases 6 percent,then the cross elasticity of demand is

Price (dollars per cake) 2 4 Quantity demanded (gallons of ice cream per week) 10 6 -Based on the data in the table above,ice cream and cake are ________ goods.

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters