Question 1

If a 10 percent price increase generates a 10 percent decrease in quantity demanded,then demand is

Accepted Answer

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

Question 2

$$\begin{array} { | c | c | } 
\hline \text { Price (dollars) } & \text { Quantity } \
\hline 10 & 0 \
\hline 9 & 1 \
\hline 8 & 2 \
\hline 7 & 3 \
\hline 6 & 4 \
\hline 5 & 5 \
\hline 4 & 6 \
\hline 3 & 7 \
\hline 2 & 8 \
\hline 1 & 9 \
\hline
\end{array}$$
-Using the table above,what is the elasticity of demand between the prices of $9 and $7?

Accepted Answer

A)  1/4 
B)  1 
C)  2 
D)  4 
E)  6 
A)  1/4 
B)  1 
C)  2 
D)  4 
E)  6

Question 3

Moving downward along a linear (straight-line)downward-sloping demand curve,the

Accepted Answer

A)  price elasticity of demand does not change. 
B)  quantity demanded decreases. 
C)  demand becomes more elastic. 
D)  demand becomes less elastic. 
E)  total revenue never changes. 
A)  price elasticity of demand does not change. 
B)  quantity demanded decreases. 
C)  demand becomes more elastic. 
D)  demand becomes less elastic. 
E)  total revenue never changes.

Question 4

Suppose the price of a ticket to a Lenny Kravitz concert is $41 and at that price,the quantity of tickets demanded is 17,000 per concert.Using the midpoint method of calculating percentage changes,if Mr.Kravitz raises the price to $48 and the quantity demanded decreases to 16,000,the price elasticity of demand for his concert tickets is

Accepted Answer

A)  15.73. 
B)  6.06. 
C)  1.00. 
D)  0.39. 
E)  0.93. 
A)  15.73. 
B)  6.06. 
C)  1.00. 
D)  0.39. 
E)  0.93.

Question 5

If we ignore the negative or positive sign,the midpoint method of calculating a percentage change in price between two points on a demand curve results in

Accepted Answer

A)  a smaller percentage change if the price rises than if it falls. 
B)  the same percentage, regardless of whether the price increases or decreases. 
C)  the price elasticity of demand. 
D)  the price elasticity of supply. 
E)  a higher percentage change if the price rises than if it falls. 
A)  a smaller percentage change if the price rises than if it falls. 
B)  the same percentage, regardless of whether the price increases or decreases. 
C)  the price elasticity of demand. 
D)  the price elasticity of supply. 
E)  a higher percentage change if the price rises than if it falls.

Question 6

-In the figure above,when the price falls from $8 to $7,total revenue

Accepted Answer

A)  increases from $120 to $210 so demand is elastic. 
B)  decreases from $210 to $120 so demand is inelastic. 
C)  increases from $120 to $210 so demand is inelastic. 
D)  decreases from $210 to $120 so demand is elastic. 
E)  increases from $120 to $210, but more information is needed to determine whether demand is elastic, inelastic, or unit elastic. 
A)  increases from $120 to $210 so demand is elastic. 
B)  decreases from $210 to $120 so demand is inelastic. 
C)  increases from $120 to $210 so demand is inelastic. 
D)  decreases from $210 to $120 so demand is elastic. 
E)  increases from $120 to $210, but more information is needed to determine whether demand is elastic, inelastic, or unit elastic.

Question 7

If the demand for insulin is inelastic,an increase in insulin prices leads to

Accepted Answer

A)  less total revenue for insulin makers. 
B)  more total revenue for insulin makers. 
C)  no change in total revenue for insulin makers. 
D)  first a decrease, then an increase in total revenue for insulin makers. 
E)  Total revenue probably changes, but we need more information about the change in total expenditures on insulin to determine if the total revenue rises, falls, or stays the same. 
A)  less total revenue for insulin makers. 
B)  more total revenue for insulin makers. 
C)  no change in total revenue for insulin makers. 
D)  first a decrease, then an increase in total revenue for insulin makers. 
E)  Total revenue probably changes, but we need more information about the change in total expenditures on insulin to determine if the total revenue rises, falls, or stays the same.

Question 8

If the price elasticity of demand for a product is 2.5,then a price increase of 1.5 percent decreases the quantity demanded by

Accepted Answer

A)  1.55 percent. 
B)  3.50 percent. 
C)  5.00 percent. 
D)  3.75 percent. 
E)  1.00 percent. 
A)  1.55 percent. 
B)  3.50 percent. 
C)  5.00 percent. 
D)  3.75 percent. 
E)  1.00 percent.

Question 9

The price of a bag of pretzels rises from $2 to $3 and the quantity demanded decreases from 100 to 60.What is the price elasticity of demand?

Accepted Answer

A)  1.0 
B)  1.25 
C)  40.0 
D)  20.0 
E)  0.80 
A)  1.0 
B)  1.25 
C)  40.0 
D)  20.0 
E)  0.80

Question 10

When the price of a burrito increases from $2 to $4,the quantity demanded decreases from 50 to 40.Using the midpoint method,the price elasticity of demand equals

Accepted Answer

A)  1/3. 
B)  3. 
C)  2. 
D)  1. 
E)  1/2. 
A)  1/3. 
B)  3. 
C)  2. 
D)  1. 
E)  1/2.

Question 11

If a 4 percent change in the price of a good leads to a 3 percent change in quantity demanded,the price elasticity of demand equals

Accepted Answer

A)  1.33. 
B)  0.75. 
C)  4.00. 
D)  3.44. 
E)  None of the above answers is correct. 
A)  1.33. 
B)  0.75. 
C)  4.00. 
D)  3.44. 
E)  None of the above answers is correct.

Question 12

The price elasticity of demand is always positive,as is the price elasticity of supply.Is the cross elasticity of demand always positive? Explain your answer.

Accepted Answer

No,the cross elasticity of demand is not

Question 13

Alan purchases 10 percent fewer bags of chips when his income decreases by 5 percent.Based on only this information,we know that for Alan

Accepted Answer

A)  chips are a normal good. 
B)  chips are a complement to salsa. 
C)  chips are a substitute for pretzels. 
D)  chips are an inferior good. 
E)  the price of chips fell. 
A)  chips are a normal good. 
B)  chips are a complement to salsa. 
C)  chips are a substitute for pretzels. 
D)  chips are an inferior good. 
E)  the price of chips fell.

Question 14

The cross elasticity of demand is a measure of how

Accepted Answer

A)  responsive consumers are to changes in the price of a product. 
B)  responsive suppliers are to changes in the price of a product. 
C)  demand for a product changes when the price of a substitute or complement changes. 
D)  total revenue changes when the price of a product changes. 
E)  demand for a product changes when income changes. 
A)  responsive consumers are to changes in the price of a product. 
B)  responsive suppliers are to changes in the price of a product. 
C)  demand for a product changes when the price of a substitute or complement changes. 
D)  total revenue changes when the price of a product changes. 
E)  demand for a product changes when income changes.

Question 15

What effect does a price hike have on the total revenue of the producers?

Accepted Answer

The effect of a price hike on total reve

Question 16

What is an inferior good?

Accepted Answer

A)  a product of low quality that we do not want to purchase 
B)  a product for which demand increases when income increases, and demand decreases when income decreases 
C)  a product for which demand increases when income decreases, and demand decreases when income increases 
D)  a product that is complementary 
E)  a product that is a substitute for another, better good 
A)  a product of low quality that we do not want to purchase 
B)  a product for which demand increases when income increases, and demand decreases when income decreases 
C)  a product for which demand increases when income decreases, and demand decreases when income increases 
D)  a product that is complementary 
E)  a product that is a substitute for another, better good

Question 17

If a decrease in price increases total revenue,what can you determine about the elasticity of demand for the good?

Accepted Answer

If a decrease in price increas

Question 18

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Price } \
\text { (dollars per skirt) }
\end{array} & \begin{array} { c } 
\text { Quantity demanded } \
\text { (skirts per year) }
\end{array} \
\hline 20 & 30 \
35 & 25 \
\hline
\end{array}$$
-Using the data in the table above,when the price of a skirt rises from $20 to $35,what is the price elasticity of demand? (Use the midpoint method.)

Accepted Answer

A)  0.33 
B)  0.25 
C)  1.00 
D)  1.33 
E)  3.00 
A)  0.33 
B)  0.25 
C)  1.00 
D)  1.33 
E)  3.00

Question 19

When the percentage change in the quantity supplied is less than the percentage change in price,the supply is

Accepted Answer

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

Question 20

Which of the following is most likely to have an income elasticity of demand that exceeds 1?

Accepted Answer

A)  tobacco 
B)  alcoholic beverages 
C)  airline travel 
D)  food 
E)  telephone 
A)  tobacco 
B)  alcoholic beverages 
C)  airline travel 
D)  food 
E)  telephone

If a 10 percent price increase generates a 10 percent decrease in quantity demanded,then demand is

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,what is the elasticity of demand between the prices of $9 and $7?

Moving downward along a linear (straight-line)downward-sloping demand curve,the

If we ignore the negative or positive sign,the midpoint method of calculating a percentage change in price between two points on a demand curve results in

-In the figure above,when the price falls from $8 to $7,total revenue

If the demand for insulin is inelastic,an increase in insulin prices leads to

If the price elasticity of demand for a product is 2.5,then a price increase of 1.5 percent decreases the quantity demanded by

The price of a bag of pretzels rises from $2 to $3 and the quantity demanded decreases from 100 to 60.What is the price elasticity of demand?

When the price of a burrito increases from $2 to $4,the quantity demanded decreases from 50 to 40.Using the midpoint method,the price elasticity of demand equals

If a 4 percent change in the price of a good leads to a 3 percent change in quantity demanded,the price elasticity of demand equals

The price elasticity of demand is always positive,as is the price elasticity of supply.Is the cross elasticity of demand always positive? Explain your answer.

Alan purchases 10 percent fewer bags of chips when his income decreases by 5 percent.Based on only this information,we know that for Alan

The cross elasticity of demand is a measure of how

What effect does a price hike have on the total revenue of the producers?

What is an inferior good?

If a decrease in price increases total revenue,what can you determine about the elasticity of demand for the good?

Price (dollars per skirt) Quantity demanded (skirts per year) 20 30 35 25 -Using the data in the table above,when the price of a skirt rises from $20 to $35,what is the price elasticity of demand? (Use the midpoint method.)

When the percentage change in the quantity supplied is less than the percentage change in price,the supply is

Which of the following is most likely to have an income elasticity of demand that exceeds 1?

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 a 10 percent price increase generates a 10 percent decrease in quantity demanded,then demand is

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,what is the elasticity of demand between the prices of $9 and $7?

Moving downward along a linear (straight-line)downward-sloping demand curve,the

If we ignore the negative or positive sign,the midpoint method of calculating a percentage change in price between two points on a demand curve results in

-In the figure above,when the price falls from $8 to $7,total revenue

If the demand for insulin is inelastic,an increase in insulin prices leads to

If the price elasticity of demand for a product is 2.5,then a price increase of 1.5 percent decreases the quantity demanded by

The price of a bag of pretzels rises from $2 to $3 and the quantity demanded decreases from 100 to 60.What is the price elasticity of demand?

When the price of a burrito increases from $2 to $4,the quantity demanded decreases from 50 to 40.Using the midpoint method,the price elasticity of demand equals

If a 4 percent change in the price of a good leads to a 3 percent change in quantity demanded,the price elasticity of demand equals

The price elasticity of demand is always positive,as is the price elasticity of supply.Is the cross elasticity of demand always positive? Explain your answer.

Alan purchases 10 percent fewer bags of chips when his income decreases by 5 percent.Based on only this information,we know that for Alan

The cross elasticity of demand is a measure of how

What effect does a price hike have on the total revenue of the producers?

What is an inferior good?

If a decrease in price increases total revenue,what can you determine about the elasticity of demand for the good?

Price (dollars per skirt) Quantity demanded (skirts per year) 20 30 35 25 -Using the data in the table above,when the price of a skirt rises from $20 to $35,what is the price elasticity of demand? (Use the midpoint method.)

When the percentage change in the quantity supplied is less than the percentage change in price,the supply is

Which of the following is most likely to have an income elasticity of demand that exceeds 1?

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