Question 1

Economists use elasticity to measure the responsiveness of quantity to a change in price rather than the slope of the demand curve because elasticity is

Accepted Answer

A)  independent of the units of measurement. 
B)  dependent on the units of measurement. 
C)  easier to calculate. 
D)  harder to calculate. 
E)  always negative whereas the slope is always positive. 
A)  independent of the units of measurement. 
B)  dependent on the units of measurement. 
C)  easier to calculate. 
D)  harder to calculate. 
E)  always negative whereas the slope is always positive.

Question 2

Studies have shown that the price elasticity of demand for necessities,such as food,are higher in developing countries and lower in developed countries.What is the reason for this difference in elasticity?

Accepted Answer

One of the determinants of elasticity is

Question 3

If the price elasticity of demand for razors is 0.32,the demand for razors is

Accepted Answer

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

Question 4

For a product with a rapidly increasing opportunity cost of producing additional units,

Accepted Answer

A)  demand is price elastic. 
B)  supply is price elastic. 
C)  demand is price inelastic. 
D)  supply is price inelastic. 
E)  the demand curve is vertical. 
A)  demand is price elastic. 
B)  supply is price elastic. 
C)  demand is price inelastic. 
D)  supply is price inelastic. 
E)  the demand curve is vertical.

Question 5

What is measured by the price elasticity of supply?

Accepted Answer

A)  The price elasticity of supply measures how responsive producers are to changes in the price of other goods. 
B)  The price elasticity of supply measures how responsive producers are to changes in income. 
C)  The price elasticity of supply measures how responsive producers are to changes in the price of a product. 
D)  The price elasticity of supply is a measure of the slope of the supply curve. 
E)  The price elasticity of supply measures how responsive producers are to changes in the cost of producing a product. 
A)  The price elasticity of supply measures how responsive producers are to changes in the price of other goods. 
B)  The price elasticity of supply measures how responsive producers are to changes in income. 
C)  The price elasticity of supply measures how responsive producers are to changes in the price of a product. 
D)  The price elasticity of supply is a measure of the slope of the supply curve. 
E)  The price elasticity of supply measures how responsive producers are to changes in the cost of producing a product.

Question 6

Suppose the Oakland Raiders football team increases their season ticket prices and total revenue from ticket sales falls,but not to zero.This fact means that the demand for Raiders tickets 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 7

When the price of bananas rises 2 percent,the quantity demanded of peanut butter falls 4 percent.
a.What is the cross elasticity of demand between these two goods?
b.How are these goods related?
c.If the price of bananas rises,how will that affect the demand curve for peanut butter?

Accepted Answer

a.The cross elasticity of demand equals

Question 8

If the cross elasticity of demand is negative,that means the goods

Accepted Answer

A)  have elastic demands. 
B)  have inelastic demands. 
C)  are complements. 
D)  are substitutes. 
E)  are inferior. 
A)  have elastic demands. 
B)  have inelastic demands. 
C)  are complements. 
D)  are substitutes. 
E)  are inferior.

Question 9

Many manufactured goods have an ________ supply if production plans have only a short period to change and as time passes and all production adjustments are made,the supply of the good ________ from the initial response.

Accepted Answer

A)  inelastic; increases 
B)  elastic; decreases 
C)  elastic; increases 
D)  inelastic; decreases 
E)  inelastic; does not change 
A)  inelastic; increases 
B)  elastic; decreases 
C)  elastic; increases 
D)  inelastic; decreases 
E)  inelastic; does not change

Question 10

If a product is narrowly defined,it is likely to

Accepted Answer

A)  have many substitutes and therefore its demand is elastic. 
B)  have few substitutes, and therefore its demand is less elastic. 
C)  be unique, and therefore its demand is inelastic. 
D)  be unique and have many substitutes. 
E)  have a larger proportion of income spent on it. 
A)  have many substitutes and therefore its demand is elastic. 
B)  have few substitutes, and therefore its demand is less elastic. 
C)  be unique, and therefore its demand is inelastic. 
D)  be unique and have many substitutes. 
E)  have a larger proportion of income spent on it.

Question 11

The price elasticity of demand measures the extent to which the quantity demanded changes when

Accepted Answer

A)  the price of the good changes. 
B)  the price of a related good changes. 
C)  the expected future price of a good changes. 
D)  consumer preferences change. 
E)  both the demand and supply of the good change. 
A)  the price of the good changes. 
B)  the price of a related good changes. 
C)  the expected future price of a good changes. 
D)  consumer preferences change. 
E)  both the demand and supply of the good change.

Question 12

If demand is price inelastic and the price is lowered,which of the following occurs?

Accepted Answer

A)  The quantity sold decreases. 
B)  The total expenditure increases and the total revenue decreases. 
C)  The total revenue of the firms selling the product is unchanged. 
D)  The total revenue of the firms selling the product decreases. 
E)  The total expenditure decreases and the total revenue increases. 
A)  The quantity sold decreases. 
B)  The total expenditure increases and the total revenue decreases. 
C)  The total revenue of the firms selling the product is unchanged. 
D)  The total revenue of the firms selling the product decreases. 
E)  The total expenditure decreases and the total revenue increases.

Question 13

A firm can sell 10 units if the price is $100 and can sell 8 units if the price is $125.Using the midpoint method,what is the price elasticity of demand?

Accepted Answer

A)  0.75 
B)  1.00 
C)  1.25 
D)  0.50 
E)  0.0 
A)  0.75 
B)  1.00 
C)  1.25 
D)  0.50 
E)  0.0

Question 14

-In the figure above,using the midpoint method,the price elasticity of demand when the price falls from $7 to $6 is equal to

Accepted Answer

A)  2.50. 
B)  1.63. 
C)  0.40. 
D)  0.62. 
E)  1.00. 
A)  2.50. 
B)  1.63. 
C)  0.40. 
D)  0.62. 
E)  1.00.

Question 15

If the percentage change in the price of a good exceeds the percentage change in the quantity supplied,then 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 16

If the price of a a good increases by 10 percent and the quantity supplied increases by 5 percent,then the elasticity of supply is

Accepted Answer

A)  greater than one and supply is elastic. 
B)  negative and supply is inelastic. 
C)  less than one and supply is elastic. 
D)  less than one and supply is inelastic. 
E)  greater than one and supply is inelastic. 
A)  greater than one and supply is elastic. 
B)  negative and supply is inelastic. 
C)  less than one and supply is elastic. 
D)  less than one and supply is inelastic. 
E)  greater than one and supply is inelastic.

Question 17

The income elasticity of demand for used cars is less than zero.So,used cars are

Accepted Answer

A)  an inferior good. 
B)  a normal good. 
C)  an inelastic good. 
D)  a perfectly inelastic good. 
E)  a substitute good. 
A)  an inferior good. 
B)  a normal good. 
C)  an inelastic good. 
D)  a perfectly inelastic good. 
E)  a substitute good.

Question 18

Consider two goods: peanut butter and jelly.If the price of jelly increases from $2 a jar to $3 per jar and the quantity demanded of peanut butter decreases from 50 jars to 45 jars,what is the cross elasticity of demand? Are the goods substitutes or complements?

Accepted Answer

The cross elasticity

Question 19

The long-run price elasticity of demand for electricity is ________ the short-run price elasticity of demand for electricity.

Accepted Answer

A)  greater than 
B)  less than 
C)  equal to 
D)  not comparable to 
E)  unrelated to 
A)  greater than 
B)  less than 
C)  equal to 
D)  not comparable to 
E)  unrelated to

Question 20

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Price } \
\text { (dollars per skirt) }
\end{array} & \begin{array} { c } 
\text { Quantity demanded } \
\text { (skirts per year) }
\end{array} \
\hline 20 & 30 \
35 & 25 \
\hline
\end{array}$$
-Using the data in the table above,the demand for skirts is

Accepted Answer

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

Economists use elasticity to measure the responsiveness of quantity to a change in price rather than the slope of the demand curve because elasticity is

Studies have shown that the price elasticity of demand for necessities,such as food,are higher in developing countries and lower in developed countries.What is the reason for this difference in elasticity?

If the price elasticity of demand for razors is 0.32,the demand for razors is

For a product with a rapidly increasing opportunity cost of producing additional units,

What is measured by the price elasticity of supply?

Suppose the Oakland Raiders football team increases their season ticket prices and total revenue from ticket sales falls,but not to zero.This fact means that the demand for Raiders tickets is

When the price of bananas rises 2 percent,the quantity demanded of peanut butter falls 4 percent. a.What is the cross elasticity of demand between these two goods? b.How are these goods related? c.If the price of bananas rises,how will that affect the demand curve for peanut butter?

If the cross elasticity of demand is negative,that means the goods

Many manufactured goods have an supply if production plans have only a short period to change and as time passes and all production adjustments are made,the supply of the good from the initial response.

If a product is narrowly defined,it is likely to

The price elasticity of demand measures the extent to which the quantity demanded changes when

If demand is price inelastic and the price is lowered,which of the following occurs?

A firm can sell 10 units if the price is $100 and can sell 8 units if the price is $125.Using the midpoint method,what is the price elasticity of demand?

-In the figure above,using the midpoint method,the price elasticity of demand when the price falls from $7 to $6 is equal to

If the percentage change in the price of a good exceeds the percentage change in the quantity supplied,then the supply is

If the price of a a good increases by 10 percent and the quantity supplied increases by 5 percent,then the elasticity of supply is

The income elasticity of demand for used cars is less than zero.So,used cars are

Consider two goods: peanut butter and jelly.If the price of jelly increases from $2 a jar to $3 per jar and the quantity demanded of peanut butter decreases from 50 jars to 45 jars,what is the cross elasticity of demand? Are the goods substitutes or complements?

The long-run price elasticity of demand for electricity is ________ the short-run price elasticity of demand for electricity.

Price (dollars per skirt) Quantity demanded (skirts per year) 20 30 35 25 -Using the data in the table above,the demand for skirts is

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

Economists use elasticity to measure the responsiveness of quantity to a change in price rather than the slope of the demand curve because elasticity is

Studies have shown that the price elasticity of demand for necessities,such as food,are higher in developing countries and lower in developed countries.What is the reason for this difference in elasticity?

If the price elasticity of demand for razors is 0.32,the demand for razors is

For a product with a rapidly increasing opportunity cost of producing additional units,

What is measured by the price elasticity of supply?

Suppose the Oakland Raiders football team increases their season ticket prices and total revenue from ticket sales falls,but not to zero.This fact means that the demand for Raiders tickets is

When the price of bananas rises 2 percent,the quantity demanded of peanut butter falls 4 percent. a.What is the cross elasticity of demand between these two goods? b.How are these goods related? c.If the price of bananas rises,how will that affect the demand curve for peanut butter?

If the cross elasticity of demand is negative,that means the goods

Many manufactured goods have an ________ supply if production plans have only a short period to change and as time passes and all production adjustments are made,the supply of the good ________ from the initial response.

If a product is narrowly defined,it is likely to

The price elasticity of demand measures the extent to which the quantity demanded changes when

If demand is price inelastic and the price is lowered,which of the following occurs?

A firm can sell 10 units if the price is $100 and can sell 8 units if the price is $125.Using the midpoint method,what is the price elasticity of demand?

-In the figure above,using the midpoint method,the price elasticity of demand when the price falls from $7 to $6 is equal to

If the percentage change in the price of a good exceeds the percentage change in the quantity supplied,then the supply is

If the price of a a good increases by 10 percent and the quantity supplied increases by 5 percent,then the elasticity of supply is

The income elasticity of demand for used cars is less than zero.So,used cars are

Consider two goods: peanut butter and jelly.If the price of jelly increases from $2 a jar to $3 per jar and the quantity demanded of peanut butter decreases from 50 jars to 45 jars,what is the cross elasticity of demand? Are the goods substitutes or complements?

The long-run price elasticity of demand for electricity is ________ the short-run price elasticity of demand for electricity.

Price (dollars per skirt) Quantity demanded (skirts per year) 20 30 35 25 -Using the data in the table above,the demand for skirts is

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

Many manufactured goods have an supply if production plans have only a short period to change and as time passes and all production adjustments are made,the supply of the good from the initial response.