Question 1

If a product is a normal good,then its income elasticity of demand is

Accepted Answer

A)  zero. 
B)  positive. 
C)  negative. 
D)  indeterminate. 
E)  greater than 1. 
A)  zero. 
B)  positive. 
C)  negative. 
D)  indeterminate. 
E)  greater than 1.

Question 2

The figure above shows the demand curve for Starbucks latte.
-In the figure above,the demand is elastic in the range of prices between

Accepted Answer

A)  $3.50 and $4.50 per cup. 
B)  $2.50 and $3.50 per cup. 
C)  $1.00 and $2.00 per cup. 
D)  $2.00 and $4.00 per cup. 
E)  $1.75 and $2.75 per cup. 
A)  $3.50 and $4.50 per cup. 
B)  $2.50 and $3.50 per cup. 
C)  $1.00 and $2.00 per cup. 
D)  $2.00 and $4.00 per cup. 
E)  $1.75 and $2.75 per cup.

Question 3

A firm lowers the price it charges.The firm's total revenue decreases.What can we conclude about the price elasticity of demand?

Accepted Answer

A)  Demand is elastic. 
B)  Demand is unit elastic. 
C)  Demand is inelastic. 
D)  Demand is perfectly elastic. 
E)  Not enough information is given to conclude anything about price elasticity of demand. 
A)  Demand is elastic. 
B)  Demand is unit elastic. 
C)  Demand is inelastic. 
D)  Demand is perfectly elastic. 
E)  Not enough information is given to conclude anything about price elasticity of demand.

Question 4

When two goods are related such that an increase in the price of one good decreases the quantity demanded of the other good,these goods are definitely

Accepted Answer

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

Question 5

Tacos and pizza are substitutes.If a 2 percent change in the price of a taco leads to a 4 percent change in the demand for pizza,the cross elasticity of demand equals

Accepted Answer

A)  -1/2. 
B)  1/2. 
C)  2. 
D)  -2. 
E)  4. 
A)  -1/2. 
B)  1/2. 
C)  2. 
D)  -2. 
E)  4.

Question 6

Which of the following is true?
i.The demand for a good is elastic if when its price changes,the percentage change in the quantity demanded exceeds the percentage change in price.
ii.Price elasticity of demand equals the percentage change in price divided by the percentage change in the quantity demanded.
iii.If demand is price inelastic,a rise in price leads to a decrease in total revenue.

Accepted Answer

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

Question 7

If a good is inferior,then it has an income elasticity of demand that is

Accepted Answer

A)  equal to zero. 
B)  greater than zero. 
C)  less than zero. 
D)  greater than one. 
E)  undefined. 
A)  equal to zero. 
B)  greater than zero. 
C)  less than zero. 
D)  greater than one. 
E)  undefined.

Question 8

If a substitute good is easy to find,then demand for a good is

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  unit elastic. 
D)  perfectly inelastic. 
E)  Substitutes don't have any effect on elasticity. 
A)  elastic. 
B)  inelastic. 
C)  unit elastic. 
D)  perfectly inelastic. 
E)  Substitutes don't have any effect on elasticity.

Question 9

"If the price falls and,as a result,the total revenue decreases,demand is elastic." Is the previous assertion correct?

Accepted Answer

No,the assertion is incorrect.

Question 10

Because the price elasticity of supply for jumbo jets is 0.35,the supply of jumbo jets is

Accepted Answer

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

Question 11

The price elasticity of demand is a measure of

Accepted Answer

A)  the equilibrium price of a product. 
B)  buyers' responsiveness to changes in the price of a product. 
C)  the amount of a product purchased when income increases. 
D)  whether a product is a substitute or a complement. 
E)  how much a change in demand affects the equilibrium price. 
A)  the equilibrium price of a product. 
B)  buyers' responsiveness to changes in the price of a product. 
C)  the amount of a product purchased when income increases. 
D)  whether a product is a substitute or a complement. 
E)  how much a change in demand affects the equilibrium price.

Question 12

Supply is unit elastic when the

Accepted Answer

A)  supply curve is upward sloping. 
B)  price elasticity of supply is positive. 
C)  percentage change in the quantity supplied equals the percentage change in price. 
D)  supply curve is horizontal. 
E)  supply curve is vertical. 
A)  supply curve is upward sloping. 
B)  price elasticity of supply is positive. 
C)  percentage change in the quantity supplied equals the percentage change in price. 
D)  supply curve is horizontal. 
E)  supply curve is vertical.

Question 13

If the price of a Brita water filtration system increases and the quantity demanded of bottled water increases,then these two goods are

Accepted Answer

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

Question 14

If the price of a six-pack of Pepsi falls from $4 to $3 and the quantity purchased increases 80 percent,then demand 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 15

The figure above shows the demand curve for Starbucks latte.
-In the figure above,at the point where the price is $4 per cup the price elasticity of demand is

Accepted Answer

A)  2. 
B)  0.5. 
C)  1. 
D)  1.5. 
E)  0. 
A)  2. 
B)  0.5. 
C)  1. 
D)  1.5. 
E)  0.

Question 16

When the price of Ford pickup trucks rises from $18,000 to $19,000,the quantity of Chevy trucks demanded increases from 112,000 to 144,000.What does the cross elasticity of demand between Ford and Chevy trucks equal?

Accepted Answer

In this case,the cross elasticity of dem

Question 17

The opportunity cost of producing a good rises only slightly as the quantity produced increases.This good has

Accepted Answer

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

Question 18

$$\begin{array} { c c c } 
\hline & \begin{array} { c } 
\text { Price } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity demanded } \
\text { (units per week) }
\end{array} \
\hline A & 100 & 40 \
B & 80 & 60 \
C & 60 & 80 \
D & 40 & 100 \
E & 20 & 120 \
\hline
\end{array}$$
-The table above gives the demand schedule for a good.Using the midpoint method,find the price elasticity of demand between points A and B,between B and C,between C and D,and between D and E.

Accepted Answer

The price elasticity of demand between p

Question 19

Which of the following does NOT influence the price elasticity of demand?

Accepted Answer

A)  the amount by which the demand curve shifts when the price of another good changes 
B)  the number of substitutes available to consumers 
C)  the price of the good relative to total income 
D)  the time period buyers have to respond to a price change 
E)  whether the good is a necessity or a luxury 
A)  the amount by which the demand curve shifts when the price of another good changes 
B)  the number of substitutes available to consumers 
C)  the price of the good relative to total income 
D)  the time period buyers have to respond to a price change 
E)  whether the good is a necessity or a luxury

Question 20

Suppose the price of a movie falls from $9 to $7.Using the midpoint method,what is the percentage change in price?

Accepted Answer

A)  33 percent 
B)  -33 percent 
C)  25 percent 
D)  -25 percent 
E)  -97 percent 
A)  33 percent 
B)  -33 percent 
C)  25 percent 
D)  -25 percent 
E)  -97 percent

If a product is a normal good,then its income elasticity of demand is

The figure above shows the demand curve for Starbucks latte. -In the figure above,the demand is elastic in the range of prices between

A firm lowers the price it charges.The firm's total revenue decreases.What can we conclude about the price elasticity of demand?

When two goods are related such that an increase in the price of one good decreases the quantity demanded of the other good,these goods are definitely

Tacos and pizza are substitutes.If a 2 percent change in the price of a taco leads to a 4 percent change in the demand for pizza,the cross elasticity of demand equals

If a good is inferior,then it has an income elasticity of demand that is

If a substitute good is easy to find,then demand for a good is

"If the price falls and,as a result,the total revenue decreases,demand is elastic." Is the previous assertion correct?

Because the price elasticity of supply for jumbo jets is 0.35,the supply of jumbo jets is

The price elasticity of demand is a measure of

Supply is unit elastic when the

If the price of a Brita water filtration system increases and the quantity demanded of bottled water increases,then these two goods are

If the price of a six-pack of Pepsi falls from $4 to $3 and the quantity purchased increases 80 percent,then demand is

The figure above shows the demand curve for Starbucks latte. -In the figure above,at the point where the price is $4 per cup the price elasticity of demand is

When the price of Ford pickup trucks rises from $18,000 to $19,000,the quantity of Chevy trucks demanded increases from 112,000 to 144,000.What does the cross elasticity of demand between Ford and Chevy trucks equal?

The opportunity cost of producing a good rises only slightly as the quantity produced increases.This good has

Price (dollars) Quantity demanded (units per week) A 100 40 B 80 60 C 60 80 D 40 100 E 20 120 -The table above gives the demand schedule for a good.Using the midpoint method,find the price elasticity of demand between points A and B,between B and C,between C and D,and between D and E.

Which of the following does NOT influence the price elasticity of demand?

Suppose the price of a movie falls from $9 to $7.Using the midpoint method,what is the percentage change in price?

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 product is a normal good,then its income elasticity of demand is

The figure above shows the demand curve for Starbucks latte. -In the figure above,the demand is elastic in the range of prices between

A firm lowers the price it charges.The firm's total revenue decreases.What can we conclude about the price elasticity of demand?

When two goods are related such that an increase in the price of one good decreases the quantity demanded of the other good,these goods are definitely

Tacos and pizza are substitutes.If a 2 percent change in the price of a taco leads to a 4 percent change in the demand for pizza,the cross elasticity of demand equals

If a good is inferior,then it has an income elasticity of demand that is

If a substitute good is easy to find,then demand for a good is

"If the price falls and,as a result,the total revenue decreases,demand is elastic." Is the previous assertion correct?

Because the price elasticity of supply for jumbo jets is 0.35,the supply of jumbo jets is

The price elasticity of demand is a measure of

Supply is unit elastic when the

If the price of a Brita water filtration system increases and the quantity demanded of bottled water increases,then these two goods are

If the price of a six-pack of Pepsi falls from $4 to $3 and the quantity purchased increases 80 percent,then demand is

The figure above shows the demand curve for Starbucks latte. -In the figure above,at the point where the price is $4 per cup the price elasticity of demand is

When the price of Ford pickup trucks rises from $18,000 to $19,000,the quantity of Chevy trucks demanded increases from 112,000 to 144,000.What does the cross elasticity of demand between Ford and Chevy trucks equal?

The opportunity cost of producing a good rises only slightly as the quantity produced increases.This good has

Price (dollars) Quantity demanded (units per week) A 100 40 B 80 60 C 60 80 D 40 100 E 20 120 -The table above gives the demand schedule for a good.Using the midpoint method,find the price elasticity of demand between points A and B,between B and C,between C and D,and between D and E.

Which of the following does NOT influence the price elasticity of demand?

Suppose the price of a movie falls from $9 to $7.Using the midpoint method,what is the percentage change in price?

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