Question 1

The income elasticity of demand is ________ if the good is ________ good.

Accepted Answer

A)  positive; a normal 
B)  positive; an inferior 
C)  negative; a normal 
D)  less than one; an inferior 
E)  positive; a substitute 
A)  positive; a normal 
B)  positive; an inferior 
C)  negative; a normal 
D)  less than one; an inferior 
E)  positive; a substitute

Question 2

A ________ curve means that ________.

Accepted Answer

A)  horizontal demand; a change in price does not change total revenue 
B)  horizontal demand; the elasticity of demand is less than 1 
C)  horizontal supply; the elasticity of supply is infinite 
D)  horizontal supply; the elasticity of demand is infinite 
E)  vertical demand; a change in price does not change total revenue 
A)  horizontal demand; a change in price does not change total revenue 
B)  horizontal demand; the elasticity of demand is less than 1 
C)  horizontal supply; the elasticity of supply is infinite 
D)  horizontal supply; the elasticity of demand is infinite 
E)  vertical demand; a change in price does not change total revenue

Question 3

The measure used to determine whether two products are complements or substitutes is called the

Accepted Answer

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

Question 4

The price elasticity of supply is always a positive value because
i.there is a direct relationship between the price and the quantity supplied.
ii.as the equilibrium price increases,the equilibrium quantity also always increases.
iii.buyers are willing to pay a higher price for larger quantities.

Accepted Answer

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

Question 5

Suppose the price of a box of cereal rises from $4 to $6.Using the midpoint method,what is the percentage change in price?

Accepted Answer

A)  50 percent 
B)  40 percent 
C)  33 percent 
D)  67 percent 
E)  None of the above answers is correct. 
A)  50 percent 
B)  40 percent 
C)  33 percent 
D)  67 percent 
E)  None of the above answers is correct.

Question 6

Pete feeds his dog 100 percent more Pup-Peronis when Zuke's treats increase in price by 50 percent.For Pete,Pup-Peronis and Zuke's are ________ and the cross-price elasticity of demand is ________.

Accepted Answer

A)  complements; -1/2 
B)  substitutes; 2 
C)  substitutes; -2 
D)  complements; 2 
E)  substitutes; 1/2 
A)  complements; -1/2 
B)  substitutes; 2 
C)  substitutes; -2 
D)  complements; 2 
E)  substitutes; 1/2

Question 7

If substitutes for a good are readily available,the demand for that good

Accepted Answer

A)  does not change substantially if the price rises. 
B)  does not change substantially if the price falls. 
C)  is inelastic. 
D)  is elastic. 
E)  Both answers A and B are correct. 
A)  does not change substantially if the price rises. 
B)  does not change substantially if the price falls. 
C)  is inelastic. 
D)  is elastic. 
E)  Both answers A and B are correct.

Question 8

If you know the cross elasticity between two goods is negative,then you know the goods are

Accepted Answer

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

Question 9

Perfectly inelastic demand means that consumers

Accepted Answer

A)  are willing to buy any quantity of the good at a given price, but none at higher prices. 
B)  decrease their consumption as price rises. 
C)  increase their consumption as price rises. 
D)  will buy a certain quantity, regardless of price. 
E)  will buy a huge, almost infinite amount more, if the price falls just a little. 
A)  are willing to buy any quantity of the good at a given price, but none at higher prices. 
B)  decrease their consumption as price rises. 
C)  increase their consumption as price rises. 
D)  will buy a certain quantity, regardless of price. 
E)  will buy a huge, almost infinite amount more, if the price falls just a little.

Question 10

One reason why the price elasticity of supply for DVD players is greater than one is that

Accepted Answer

A)  the cost of producing DVD players is small. 
B)  the storage of DVD players is not possible. 
C)  DVD players can be easily stored. 
D)  the demand for DVD players is fairly large. 
E)  DVD players require relatively advanced technology for their production. 
A)  the cost of producing DVD players is small. 
B)  the storage of DVD players is not possible. 
C)  DVD players can be easily stored. 
D)  the demand for DVD players is fairly large. 
E)  DVD players require relatively advanced technology for their production.

Question 11

As more time passes,the price elasticity of gasoline

Accepted Answer

A)  increases. 
B)  decreases. 
C)  stays the same. 
D)  becomes perfectly inelastic. 
E)  becomes perfectly elastic. 
A)  increases. 
B)  decreases. 
C)  stays the same. 
D)  becomes perfectly inelastic. 
E)  becomes perfectly elastic.

Question 12

-The figure above shows the supply curve for a good with

Accepted Answer

A)  a perfectly elastic supply. 
B)  a perfectly inelastic supply. 
C)  an elastic supply. 
D)  an inelastic supply. 
E)  a unit elastic supply. 
A)  a perfectly elastic supply. 
B)  a perfectly inelastic supply. 
C)  an elastic supply. 
D)  an inelastic supply. 
E)  a unit elastic supply.

Question 13

Suppose the Chicago Bears football team raises ticket prices by 13 percent and as a result the quantity of tickets demanded decreases by 21 percent.This response means that the demand for Bears tickets is

Accepted Answer

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

Question 14

The demand for a necessity generally is

Accepted Answer

A)  very elastic. 
B)  infinitely elastic. 
C)  unaffected by income. 
D)  inelastic. 
E)  unit elastic. 
A)  very elastic. 
B)  infinitely elastic. 
C)  unaffected by income. 
D)  inelastic. 
E)  unit elastic.

Question 15

The income elasticity of demand is

Accepted Answer

A)  positive for a normal good. 
B)  zero for an inferior good. 
C)  less than one for an income elastic normal good. 
D)  Only answers A and B are correct. 
E)  Answers A, B, and C are correct. 
A)  positive for a normal good. 
B)  zero for an inferior good. 
C)  less than one for an income elastic normal good. 
D)  Only answers A and B are correct. 
E)  Answers A, B, and C are correct.

Question 16

-The demand curve shown in the figure above reflects demand that is

Accepted Answer

A)  perfectly elastic. 
B)  perfectly inelastic. 
C)  unit elastic. 
D)  elastic but not perfectly elastic. 
E)  inelastic but not perfectly inelastic. 
A)  perfectly elastic. 
B)  perfectly inelastic. 
C)  unit elastic. 
D)  elastic but not perfectly elastic. 
E)  inelastic but not perfectly inelastic.

Question 17

"The price elasticity of demand is a measure of how sensitive demanders are to changes in the price of a product." Is this statement true or false?

Accepted Answer

The assertion is true.All elasticities m

Question 18

The price elasticity of supply is a measure of the extent to which the quantity supplied of a good changes when the

Accepted Answer

A)  cost of producing the product increases. 
B)  quantity of the good demanded increases. 
C)  supply increases. 
D)  price changes. 
E)  number of firms supplying the good changes. 
A)  cost of producing the product increases. 
B)  quantity of the good demanded increases. 
C)  supply increases. 
D)  price changes. 
E)  number of firms supplying the good changes.

Question 19

The price of lumber increased by 10 percent and the quantity supplied increased by 20 percent.The supply of lumber is

Accepted Answer

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

Question 20

-The demand curve shown in the figure above is ________ over the price range from $95 to $105 per unit.

Accepted Answer

A)  perfectly elastic 
B)  perfectly inelastic 
C)  unit elastic 
D)  elastic but not perfectly elastic 
E)  inelastic but not perfectly inelastic 
A)  perfectly elastic 
B)  perfectly inelastic 
C)  unit elastic 
D)  elastic but not perfectly elastic 
E)  inelastic but not perfectly inelastic

The income elasticity of demand is if the good is good.

A curve means that .

The measure used to determine whether two products are complements or substitutes is called the

The price elasticity of supply is always a positive value because i.there is a direct relationship between the price and the quantity supplied. ii.as the equilibrium price increases,the equilibrium quantity also always increases. iii.buyers are willing to pay a higher price for larger quantities.

Suppose the price of a box of cereal rises from $4 to $6.Using the midpoint method,what is the percentage change in price?

Pete feeds his dog 100 percent more Pup-Peronis when Zuke's treats increase in price by 50 percent.For Pete,Pup-Peronis and Zuke's are and the cross-price elasticity of demand is .

If substitutes for a good are readily available,the demand for that good

If you know the cross elasticity between two goods is negative,then you know the goods are

Perfectly inelastic demand means that consumers

One reason why the price elasticity of supply for DVD players is greater than one is that

As more time passes,the price elasticity of gasoline

-The figure above shows the supply curve for a good with

Suppose the Chicago Bears football team raises ticket prices by 13 percent and as a result the quantity of tickets demanded decreases by 21 percent.This response means that the demand for Bears tickets is

The demand for a necessity generally is

The income elasticity of demand is

-The demand curve shown in the figure above reflects demand that is

"The price elasticity of demand is a measure of how sensitive demanders are to changes in the price of a product." Is this statement true or false?

The price elasticity of supply is a measure of the extent to which the quantity supplied of a good changes when the

The price of lumber increased by 10 percent and the quantity supplied increased by 20 percent.The supply of lumber is

-The demand curve shown in the figure above is ________ over the price range from $95 to $105 per unit.

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 income elasticity of demand is ________ if the good is ________ good.

A ________ curve means that ________.

The measure used to determine whether two products are complements or substitutes is called the

The price elasticity of supply is always a positive value because i.there is a direct relationship between the price and the quantity supplied. ii.as the equilibrium price increases,the equilibrium quantity also always increases. iii.buyers are willing to pay a higher price for larger quantities.

Suppose the price of a box of cereal rises from $4 to $6.Using the midpoint method,what is the percentage change in price?

Pete feeds his dog 100 percent more Pup-Peronis when Zuke's treats increase in price by 50 percent.For Pete,Pup-Peronis and Zuke's are ________ and the cross-price elasticity of demand is ________.

If substitutes for a good are readily available,the demand for that good

If you know the cross elasticity between two goods is negative,then you know the goods are

Perfectly inelastic demand means that consumers

One reason why the price elasticity of supply for DVD players is greater than one is that

As more time passes,the price elasticity of gasoline

-The figure above shows the supply curve for a good with

Suppose the Chicago Bears football team raises ticket prices by 13 percent and as a result the quantity of tickets demanded decreases by 21 percent.This response means that the demand for Bears tickets is

The demand for a necessity generally is

The income elasticity of demand is

-The demand curve shown in the figure above reflects demand that is

"The price elasticity of demand is a measure of how sensitive demanders are to changes in the price of a product." Is this statement true or false?

The price elasticity of supply is a measure of the extent to which the quantity supplied of a good changes when the

The price of lumber increased by 10 percent and the quantity supplied increased by 20 percent.The supply of lumber is

-The demand curve shown in the figure above is ________ over the price range from $95 to $105 per unit.

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

The income elasticity of demand is if the good is good.

A curve means that .

Pete feeds his dog 100 percent more Pup-Peronis when Zuke's treats increase in price by 50 percent.For Pete,Pup-Peronis and Zuke's are and the cross-price elasticity of demand is .