Question 1

If the percentage change in price is 10 percent and the demand is elastic,then the percentage change in the quantity demanded

Accepted Answer

A)  is greater than 0 percent but less than 10 percent. 
B)  is larger than 10 percent. 
C)  equals 0 percent. 
D)  equals 10 percent. 
E)  More information is needed to determine the magnitude of the change in the quantity demanded. 
A)  is greater than 0 percent but less than 10 percent. 
B)  is larger than 10 percent. 
C)  equals 0 percent. 
D)  equals 10 percent. 
E)  More information is needed to determine the magnitude of the change in the quantity demanded.

Question 2

If a lower price for good X increases the demand for good Y,the cross elasticity value for the two goods is

Accepted Answer

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

Question 3

In a study session,your friend says,"Demand is elastic if the percentage change in the price exceeds the percentage change in quantity demanded." Is your friend correct?

Accepted Answer

No,your friend is incorrect.De

Question 4

$$\begin{array} { | c | c | } 
\hline \text { Price (dollars) } & \text { Quantity } \
\hline 10 & 0 \
\hline 9 & 1 \
\hline 8 & 2 \
\hline 7 & 3 \
\hline 6 & 4 \
\hline 5 & 5 \
\hline 4 & 6 \
\hline 3 & 7 \
\hline 2 & 8 \
\hline 1 & 9 \
\hline
\end{array}$$
-Using the table above,the elasticity of demand is equal to 1 at a price of

Accepted Answer

A)  $8. 
B)  $6. 
C)  $5. 
D)  $3. 
E)  $1. 
A)  $8. 
B)  $6. 
C)  $5. 
D)  $3. 
E)  $1.

Question 5

The total revenue test says that if a price decrease leads to

Accepted Answer

A)  an increase in total revenue, demand is income elastic. 
B)  a decrease in total revenue, demand is income inelastic. 
C)  a decrease in total revenue, demand is price inelastic. 
D)  a decrease in total revenue, supply is price inelastic. 
E)  a decrease in total revenue, supply is price elastic. 
A)  an increase in total revenue, demand is income elastic. 
B)  a decrease in total revenue, demand is income inelastic. 
C)  a decrease in total revenue, demand is price inelastic. 
D)  a decrease in total revenue, supply is price inelastic. 
E)  a decrease in total revenue, supply is price elastic.

Question 6

If the price doubles and the quantity supplied also doubles,the price elasticity of supply for the good is

Accepted Answer

A)  -1. 
B)  1. 
C)  -2. 
D)  2. 
E)  100 percent. 
A)  -1. 
B)  1. 
C)  -2. 
D)  2. 
E)  100 percent.

Question 7

The lower the level of income in a country,the

Accepted Answer

A)  less income elastic is the demand for food. 
B)  more income elastic is the demand for food. 
C)  more negative the income elasticity of the demand for food. 
D)  Both answers A and C are correct. 
E)  None of the above is correct. 
A)  less income elastic is the demand for food. 
B)  more income elastic is the demand for food. 
C)  more negative the income elasticity of the demand for food. 
D)  Both answers A and C are correct. 
E)  None of the above is correct.

Question 8

Goods are ________ when the income elasticity of demand is less than zero.

Accepted Answer

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

Question 9

Assume that it is predicted that for the years after you graduate from college,the entire economy will experience a long period of recession during which people's incomes decrease.What type of industry would be the best for you to find employment if this prediction is correct? An industry that produces a product that

Accepted Answer

A)  is income elastic. 
B)  is income inelastic. 
C)  is inferior. 
D)  is a complement. 
E)  none of these industries 
A)  is income elastic. 
B)  is income inelastic. 
C)  is inferior. 
D)  is a complement. 
E)  none of these industries

Question 10

The price elasticity of supply equals 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)  supply divided by the percentage change in the demand. 
E)  quantity supplied divided by the percentage change in the quantity demanded. 
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)  supply divided by the percentage change in the demand. 
E)  quantity supplied divided by the percentage change in the quantity demanded.

Question 11

List factors that increase the price elasticity of supply.

Accepted Answer

Factors that increase the price elastici

Question 12

The cross elasticity between computers and software is

Accepted Answer

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

Question 13

When the price of a cup of coffee falls from $3.00 to $2.50,the quantity demanded increases from 1,000 per month to 1,150 per month.Using the midpoint method,the price elasticity of demand is

Accepted Answer

A)  0.77. 
B)  1.30. 
C)  0.07. 
D)  3.00. 
E)  2.50. 
A)  0.77. 
B)  1.30. 
C)  0.07. 
D)  3.00. 
E)  2.50.

Question 14

All of the following statements are true EXCEPT

Accepted Answer

A)  the demand for food is less elastic than the demand for a Hawaiian vacation. 
B)  the demand for clothing is less elastic than the demand for blue jeans. 
C)  the demand for gasoline is more elastic the longer the time elapsed. 
D)  the smaller the proportion of income spent on a good, the more inelastic demand will be. 
E)  the demand for Nike running shoes is less elastic than the demand for shoes. 
A)  the demand for food is less elastic than the demand for a Hawaiian vacation. 
B)  the demand for clothing is less elastic than the demand for blue jeans. 
C)  the demand for gasoline is more elastic the longer the time elapsed. 
D)  the smaller the proportion of income spent on a good, the more inelastic demand will be. 
E)  the demand for Nike running shoes is less elastic than the demand for shoes.

Question 15

If a 30 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

Accepted Answer

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

Question 16

Of the following,which good has the most elastic demand?

Accepted Answer

A)  food 
B)  breakfast food 
C)  cereal 
D)  Post Raisin Bran 
E)  Post Raisin Brand purchased at a Safeway grocery store 
A)  food 
B)  breakfast food 
C)  cereal 
D)  Post Raisin Bran 
E)  Post Raisin Brand purchased at a Safeway grocery store

Question 17

If wheat can be produced at a constant opportunity cost,then the supply of wheat is

Accepted Answer

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

Question 18

In the mid-1970s,Newsweek magazine reported that the city of Atlanta lowered its city bus fares from 40 cents to 15 cents a passenger.The number of bus riders increased by 15 percent after the fare cut.This set of results indicates that the demand for bus rides in Atlanta at that time was

Accepted Answer

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

Question 19

If a 1 percent increase in the price of X increases the quantity demanded of Y by 2 percent,then X and Y are

Accepted Answer

A)  complements and the cross elasticity of demand equals 2. 
B)  substitutes and the cross elasticity of demand equals 1/2. 
C)  substitutes and the cross elasticity of demand equals 2. 
D)  complements and the income elasticity of demand equals 2. 
E)  normal goods and the income elasticity of demand of each equals 2. 
A)  complements and the cross elasticity of demand equals 2. 
B)  substitutes and the cross elasticity of demand equals 1/2. 
C)  substitutes and the cross elasticity of demand equals 2. 
D)  complements and the income elasticity of demand equals 2. 
E)  normal goods and the income elasticity of demand of each equals 2.

Question 20

When we use the midpoint method to compute the price elasticity of demand we use

Accepted Answer

A)  the original quantity and the average price. 
B)  the original price and the average quantity. 
C)  the average price and the average quantity. 
D)  either the original or new price, and the average quantity. 
E)  the average price and the original quantity. 
A)  the original quantity and the average price. 
B)  the original price and the average quantity. 
C)  the average price and the average quantity. 
D)  either the original or new price, and the average quantity. 
E)  the average price and the original quantity.

If the percentage change in price is 10 percent and the demand is elastic,then the percentage change in the quantity demanded

If a lower price for good X increases the demand for good Y,the cross elasticity value for the two goods is

In a study session,your friend says,"Demand is elastic if the percentage change in the price exceeds the percentage change in quantity demanded." Is your friend correct?

Price (dollars) Quantity 10 0 9 1 8 2 7 3 6 4 5 5 4 6 3 7 2 8 1 9 -Using the table above,the elasticity of demand is equal to 1 at a price of

The total revenue test says that if a price decrease leads to

If the price doubles and the quantity supplied also doubles,the price elasticity of supply for the good is

The lower the level of income in a country,the

Goods are ________ when the income elasticity of demand is less than zero.

The price elasticity of supply equals the percentage change in the

List factors that increase the price elasticity of supply.

The cross elasticity between computers and software is

When the price of a cup of coffee falls from $3.00 to $2.50,the quantity demanded increases from 1,000 per month to 1,150 per month.Using the midpoint method,the price elasticity of demand is

All of the following statements are true EXCEPT

If a 30 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

Of the following,which good has the most elastic demand?

If wheat can be produced at a constant opportunity cost,then the supply of wheat is

In the mid-1970s,Newsweek magazine reported that the city of Atlanta lowered its city bus fares from 40 cents to 15 cents a passenger.The number of bus riders increased by 15 percent after the fare cut.This set of results indicates that the demand for bus rides in Atlanta at that time was

If a 1 percent increase in the price of X increases the quantity demanded of Y by 2 percent,then X and Y are

When we use the midpoint method to compute the price elasticity of demand we use

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

If the percentage change in price is 10 percent and the demand is elastic,then the percentage change in the quantity demanded

If a lower price for good X increases the demand for good Y,the cross elasticity value for the two goods is

In a study session,your friend says,"Demand is elastic if the percentage change in the price exceeds the percentage change in quantity demanded." Is your friend correct?

Price (dollars) Quantity 10 0 9 1 8 2 7 3 6 4 5 5 4 6 3 7 2 8 1 9 -Using the table above,the elasticity of demand is equal to 1 at a price of

The total revenue test says that if a price decrease leads to

If the price doubles and the quantity supplied also doubles,the price elasticity of supply for the good is

The lower the level of income in a country,the

Goods are ________ when the income elasticity of demand is less than zero.

The price elasticity of supply equals the percentage change in the

List factors that increase the price elasticity of supply.

The cross elasticity between computers and software is

When the price of a cup of coffee falls from $3.00 to $2.50,the quantity demanded increases from 1,000 per month to 1,150 per month.Using the midpoint method,the price elasticity of demand is

All of the following statements are true EXCEPT

If a 30 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

Of the following,which good has the most elastic demand?

If wheat can be produced at a constant opportunity cost,then the supply of wheat is

In the mid-1970s,Newsweek magazine reported that the city of Atlanta lowered its city bus fares from 40 cents to 15 cents a passenger.The number of bus riders increased by 15 percent after the fare cut.This set of results indicates that the demand for bus rides in Atlanta at that time was

If a 1 percent increase in the price of X increases the quantity demanded of Y by 2 percent,then X and Y are

When we use the midpoint method to compute the price elasticity of demand we use

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