Question 1

What does a horizontal demand curve indicate about the price elasticity of demand?

Accepted Answer

If the demand curve for a good

Question 2

If demand is inelastic and the price falls,the total revenue

Accepted Answer

A)  rises. 
B)  falls. 
C)  remains constant. 
D)  might rise, fall, or remain constant. 
E)  becomes negative. 
A)  rises. 
B)  falls. 
C)  remains constant. 
D)  might rise, fall, or remain constant. 
E)  becomes negative.

Question 3

If income increases from $50,000 to $60,000 while the demand for a good increases from 100 units to 125 units,what is the income elasticity of demand? Is the good a normal good or an inferior good?

Accepted Answer

The income elasticity equals 1

Question 4

-In the figure above,using the midpoint method,what is the price elasticity of demand when the price falls from $8 to $7?

Accepted Answer

A)  4.0 
B)  5.0 
C)  0.5 
D)  0.4 
E)  0.25 
A)  4.0 
B)  5.0 
C)  0.5 
D)  0.4 
E)  0.25

Question 5

The cross elasticity of demand for strawberry jelly and grape jelly is likely to be

Accepted Answer

A)  positive because they are substitutes. 
B)  positive because they are complements. 
C)  negative because they are substitutes. 
D)  negative because they are complements. 
E)  negative because they are inferior goods. 
A)  positive because they are substitutes. 
B)  positive because they are complements. 
C)  negative because they are substitutes. 
D)  negative because they are complements. 
E)  negative because they are inferior goods.

Question 6

The demand for luxury suites at basketball games is more elastic if

Accepted Answer

A)  these suites are a necessity. 
B)  these suites are a luxury item. 
C)  few close substitutes exist for these suites. 
D)  basketball fans have little time to look for alternative suites. 
E)  poorer fans cannot afford luxury suites. 
A)  these suites are a necessity. 
B)  these suites are a luxury item. 
C)  few close substitutes exist for these suites. 
D)  basketball fans have little time to look for alternative suites. 
E)  poorer fans cannot afford luxury suites.

Question 7

When the percentage change in the quantity supplied equals the percentage change in price,the supply is

Accepted Answer

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

Question 8

"The fewer the number of substitutes for a product,the more elastic the demand for that product." Is the previous statement true or false?

Accepted Answer

The statement is false.The greater the n

Question 9

The cross elasticity of demand

Accepted Answer

A)  means that an increase in the demand for one good leads to a decrease in demand for another good. 
B)  measures how a change in the price of one good impacts the demand for another good. 
C)  measures how a change in supply impacts the demand for the good. 
D)  means that an increase in the price of one good leads to an increase in the price of another good. 
E)  measures how a change in income impacts the demand for the good. 
A)  means that an increase in the demand for one good leads to a decrease in demand for another good. 
B)  measures how a change in the price of one good impacts the demand for another good. 
C)  measures how a change in supply impacts the demand for the good. 
D)  means that an increase in the price of one good leads to an increase in the price of another good. 
E)  measures how a change in income impacts the demand for the good.

Question 10

When the percentage change in the quantity demanded exceeds the percentage change in price,then demand is

Accepted Answer

A)  inelastic. 
B)  unit elastic. 
C)  elastic. 
D)  irrelevant. 
E)  undefined. 
A)  inelastic. 
B)  unit elastic. 
C)  elastic. 
D)  irrelevant. 
E)  undefined.

Question 11

The figure above shows the demand curve for Starbucks latte.
-In the figure above,when the price falls from $5 to $4,the price elasticity of demand is

Accepted Answer

A)  2. 
B)  3. 
C)  0.75. 
D)  1.5. 
E)  0.33. 
A)  2. 
B)  3. 
C)  0.75. 
D)  1.5. 
E)  0.33.

Question 12

The figure above shows the demand curve for Starbucks latte.
-Suppose Starbucks currently charges $2.50 per cup for its latte.If Starbucks raises the price to $3.00 per cup,based on the demand curve in the figure above,its total revenue will ________ because the demand for Starbucks latte is ________ over this price range.

Accepted Answer

A)  increase; elastic 
B)  decrease; elastic 
C)  increase; inelastic 
D)  increase; unit elastic 
E)  not change; unit elastic 
A)  increase; elastic 
B)  decrease; elastic 
C)  increase; inelastic 
D)  increase; unit elastic 
E)  not change; unit elastic

Question 13

If the price of a product increases by 5 percent and the quantity demanded decreases by 5 percent,then the elasticity of demand is

Accepted Answer

A)  0. 
B)  1. 
C)  indeterminate. 
D)  5. 
E)  25. 
A)  0. 
B)  1. 
C)  indeterminate. 
D)  5. 
E)  25.

Question 14

-In the figure above,using the midpoint method,what is the price elasticity of demand between points A and B?

Accepted Answer

A)  0.05 
B)  0.13 
C)  0.43 
D)  1.00 
E)  2.33 
A)  0.05 
B)  0.13 
C)  0.43 
D)  1.00 
E)  2.33

Question 15

Goods are ________ when the income elasticity of demand is positive.

Accepted Answer

A)  complements 
B)  elastic 
C)  inferior 
D)  substitutes 
E)  normal 
A)  complements 
B)  elastic 
C)  inferior 
D)  substitutes 
E)  normal

Question 16

If Microsoft wanted to prove to the Justice Department that its Windows software has many substitutes that personal computer owners can use,Microsoft hopes to find

Accepted Answer

A)  that the demand for Windows' is inelastic. 
B)  that the demand for Windows is elastic. 
C)  a large positive value for the cross elasticity of Windows and other software. 
D)  a negative income elasticity for Windows. 
E)  a positive income elasticity for Windows. 
A)  that the demand for Windows' is inelastic. 
B)  that the demand for Windows is elastic. 
C)  a large positive value for the cross elasticity of Windows and other software. 
D)  a negative income elasticity for Windows. 
E)  a positive income elasticity for Windows.

Question 17

The price elasticity of supply measures

Accepted Answer

A)  the percentage change in supply from a percentage change in demand. 
B)  the extent to which the quantity supplied of a good changes when the price of a good changes, other things remaining the same. 
C)  the slope of the supply curve. 
D)  how the equilibrium price changes in response to a change in the equilibrium quantity supplied. 
E)  Both answers B and C are correct. 
A)  the percentage change in supply from a percentage change in demand. 
B)  the extent to which the quantity supplied of a good changes when the price of a good changes, other things remaining the same. 
C)  the slope of the supply curve. 
D)  how the equilibrium price changes in response to a change in the equilibrium quantity supplied. 
E)  Both answers B and C are correct.

Question 18

What is the formula for the cross elasticity of demand? The percentage change in the

Accepted Answer

A)  quantity demanded divided by the percentage change in the price of a substitute or complement. 
B)  quantity supplied divided by the percentage change in price. 
C)  quantity demanded divided by the percentage change in price. 
D)  quantity demanded divided by the percentage change in income. 
E)  equilibrium quantity demanded divided by the equilibrium quantity supplied. 
A)  quantity demanded divided by the percentage change in the price of a substitute or complement. 
B)  quantity supplied divided by the percentage change in price. 
C)  quantity demanded divided by the percentage change in price. 
D)  quantity demanded divided by the percentage change in income. 
E)  equilibrium quantity demanded divided by the equilibrium quantity supplied.

Question 19

The extent to which the demand for a good changes when the price of a substitute or complement changes,other things remaining the same,is measured as the

Accepted Answer

A)  income elasticity of demand. 
B)  cross elasticity of demand. 
C)  price elasticity of demand. 
D)  price elasticity of supply. 
E)  cross income elasticity of demand. 
A)  income elasticity of demand. 
B)  cross elasticity of demand. 
C)  price elasticity of demand. 
D)  price elasticity of supply. 
E)  cross income elasticity of demand.

Question 20

Which of the following is correct?

Accepted Answer

A)  The cross elasticity of demand for substitute goods is positive. 
B)  The cross elasticity of demand for substitute goods is negative. 
C)  The cross elasticity of demand equals the percentage change in demand divided by the percentage change in income. 
D)  The income elasticity of demand for a normal good is negative. 
E)  The cross elasticity of demand for normal goods is positive. 
A)  The cross elasticity of demand for substitute goods is positive. 
B)  The cross elasticity of demand for substitute goods is negative. 
C)  The cross elasticity of demand equals the percentage change in demand divided by the percentage change in income. 
D)  The income elasticity of demand for a normal good is negative. 
E)  The cross elasticity of demand for normal goods is positive.

What does a horizontal demand curve indicate about the price elasticity of demand?

If demand is inelastic and the price falls,the total revenue

If income increases from $50,000 to $60,000 while the demand for a good increases from 100 units to 125 units,what is the income elasticity of demand? Is the good a normal good or an inferior good?

-In the figure above,using the midpoint method,what is the price elasticity of demand when the price falls from $8 to $7?

The cross elasticity of demand for strawberry jelly and grape jelly is likely to be

The demand for luxury suites at basketball games is more elastic if

When the percentage change in the quantity supplied equals the percentage change in price,the supply is

"The fewer the number of substitutes for a product,the more elastic the demand for that product." Is the previous statement true or false?

The cross elasticity of demand

When the percentage change in the quantity demanded exceeds the percentage change in price,then demand is

The figure above shows the demand curve for Starbucks latte. -In the figure above,when the price falls from $5 to $4,the price elasticity of demand is

If the price of a product increases by 5 percent and the quantity demanded decreases by 5 percent,then the elasticity of demand is

-In the figure above,using the midpoint method,what is the price elasticity of demand between points A and B?

Goods are ________ when the income elasticity of demand is positive.

If Microsoft wanted to prove to the Justice Department that its Windows software has many substitutes that personal computer owners can use,Microsoft hopes to find

The price elasticity of supply measures

What is the formula for the cross elasticity of demand? The percentage change in the

The extent to which the demand for a good changes when the price of a substitute or complement changes,other things remaining the same,is measured as the

Which of the following is correct?

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

What does a horizontal demand curve indicate about the price elasticity of demand?

If demand is inelastic and the price falls,the total revenue

If income increases from $50,000 to $60,000 while the demand for a good increases from 100 units to 125 units,what is the income elasticity of demand? Is the good a normal good or an inferior good?

-In the figure above,using the midpoint method,what is the price elasticity of demand when the price falls from $8 to $7?

The cross elasticity of demand for strawberry jelly and grape jelly is likely to be

The demand for luxury suites at basketball games is more elastic if

When the percentage change in the quantity supplied equals the percentage change in price,the supply is

"The fewer the number of substitutes for a product,the more elastic the demand for that product." Is the previous statement true or false?

The cross elasticity of demand

When the percentage change in the quantity demanded exceeds the percentage change in price,then demand is

The figure above shows the demand curve for Starbucks latte. -In the figure above,when the price falls from $5 to $4,the price elasticity of demand is

If the price of a product increases by 5 percent and the quantity demanded decreases by 5 percent,then the elasticity of demand is

-In the figure above,using the midpoint method,what is the price elasticity of demand between points A and B?

Goods are ________ when the income elasticity of demand is positive.

If Microsoft wanted to prove to the Justice Department that its Windows software has many substitutes that personal computer owners can use,Microsoft hopes to find

The price elasticity of supply measures

What is the formula for the cross elasticity of demand? The percentage change in the

The extent to which the demand for a good changes when the price of a substitute or complement changes,other things remaining the same,is measured as the

Which of the following is correct?

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