Question 1

If the price elasticity of supply has a lower elasticity than the price elasticity of demand, then tax incidence will:

Accepted Answer

A)  fall more heavily on the seller. 
B)  fall equally on buyer and seller. 
C)  fall more heavily on the buyer. 
D)  equal zero. 
A)  fall more heavily on the seller. 
B)  fall equally on buyer and seller. 
C)  fall more heavily on the buyer. 
D)  equal zero.

Question 2

Mr. Arias's income elasticity of demand for pawpaw fruit is -1.5. What happens to the quantity of pawpaw fruit that he buys if his income increases by 10 percent?

Accepted Answer

A)  He buys 15 percent more pawpaw fruit. 
B)  He buys 1.5 percent less pawpaw fruit. 
C)  He buys 15 percent less pawpaw fruit. 
D)  He buys 1.5 percent more pawpaw fruit. 
A)  He buys 15 percent more pawpaw fruit. 
B)  He buys 1.5 percent less pawpaw fruit. 
C)  He buys 15 percent less pawpaw fruit. 
D)  He buys 1.5 percent more pawpaw fruit.

Question 3

Why would a seller of a good care how responsive a consumer's demand for a good is to a change in the consumer's income?

Accepted Answer

A)  The value of the income elasticity indicates whether the seller should raise a good's price to increase revenue. 
B)  The seller can use this information to calculate its tax incidence. 
C)  The value of the income elasticity indicates whether the seller should lower a good's price to increase revenue. 
D)  The sign of the income elasticity indicates whether consumers will buy more of it during an economic downturn. 
A)  The value of the income elasticity indicates whether the seller should raise a good's price to increase revenue. 
B)  The seller can use this information to calculate its tax incidence. 
C)  The value of the income elasticity indicates whether the seller should lower a good's price to increase revenue. 
D)  The sign of the income elasticity indicates whether consumers will buy more of it during an economic downturn.

Question 4

The price elasticity of demand is 0.2, and the price elasticity of supply is 1.2. What happens if a $1 per unit tax is placed on sellers of this good?

Accepted Answer

A)  The sellers' tax incidence is $1. 
B)  Sellers will have a larger tax incidence than buyers. 
C)  Sellers will have a smaller tax incidence than buyers. 
D)  The buyers' tax incidence is greater than $1. 
A)  The sellers' tax incidence is $1. 
B)  Sellers will have a larger tax incidence than buyers. 
C)  Sellers will have a smaller tax incidence than buyers. 
D)  The buyers' tax incidence is greater than $1.

Question 5

A government wants to place a tax on a good, but it wants the burden of the tax to fall more heavily on the sellers of a good than on the buyers of a good. What should the government do to achieve this goal?

Accepted Answer

A)  Tax only sellers. 
B)  Tax goods with price elasticities of supply that are smaller than elasticities of demand. 
C)  Tax goods with price elasticities of demand that are smaller than elasticities of supply. 
D)  Tax only buyers. 
A)  Tax only sellers. 
B)  Tax goods with price elasticities of supply that are smaller than elasticities of demand. 
C)  Tax goods with price elasticities of demand that are smaller than elasticities of supply. 
D)  Tax only buyers.

Question 6

Akna is buying concert tickets at the last minute. The value of her elasticity of demand is most likely to be:

Accepted Answer

A)  less than 1. 
B)  equal to 1. 
C)  greater than 1. 
D)  equal to 0. 
A)  less than 1. 
B)  equal to 1. 
C)  greater than 1. 
D)  equal to 0.

Question 7

A demand curve that is vertical has:

Accepted Answer

A)  perfectly inelastic demand. 
B)  perfectly elastic demand. 
C)  unit elastic demand. 
D)  total elasticity. 
A)  perfectly inelastic demand. 
B)  perfectly elastic demand. 
C)  unit elastic demand. 
D)  total elasticity.

Question 8

Good X has few close substitutes and makes up a small share of a buyer's income. The demand for good X is _____ , and a seller of good X that wants to increase total revenue should _____ price.

Accepted Answer

A)  unit elastic; increase 
B)  inelastic; increase 
C)  elastic; decrease 
D)  elastic; increase 
A)  unit elastic; increase 
B)  inelastic; increase 
C)  elastic; decrease 
D)  elastic; increase

Question 9

People who buy good Z are typically in a hurry when they buy it. Good Z has _____ demand, and if the seller increases the price of good Z, its total revenue will:

Accepted Answer

A)  unit elastic; not change. 
B)  inelastic; increase. 
C)  elastic; increase. 
D)  inelastic; decrease. 
A)  unit elastic; not change. 
B)  inelastic; increase. 
C)  elastic; increase. 
D)  inelastic; decrease.

Question 10

What is true about price elasticity of demand along a straight, downward-sloping demand curve?

Accepted Answer

A)  Elasticity never changes. 
B)  The price elasticity of demand is elastic on the left end of the curve and is inelastic on the right end of the curve. 
C)  The price elasticity of demand is inelastic on the left end of the curve and is elastic on the right end of the curve. 
D)  Elasticity starts at zero and increases as you move from left to right along the demand curve. 
A)  Elasticity never changes. 
B)  The price elasticity of demand is elastic on the left end of the curve and is inelastic on the right end of the curve. 
C)  The price elasticity of demand is inelastic on the left end of the curve and is elastic on the right end of the curve. 
D)  Elasticity starts at zero and increases as you move from left to right along the demand curve.

Question 11

An economist who wants to measure a consumer's sensitivity to price changes would:

Accepted Answer

A)  use a market model. 
B)  calculate the consumer's price elasticity of demand. 
C)  calculate the consumer's income elasticity of demand. 
D)  use a production possibilities frontier. 
A)  use a market model. 
B)  calculate the consumer's price elasticity of demand. 
C)  calculate the consumer's income elasticity of demand. 
D)  use a production possibilities frontier.

Question 12

When Sara decreases the price of the kolaches that she sells at the farmers market by 10 percent, the quantity that she sells increases by 15 percent. What is the price elasticity of demand for Sara's kolaches, and what happened to her total revenue when she lowered the price of kolaches? Explain.

Accepted Answer

Mathematically, this is expressed as15%/

Question 13

Use the table The Price Elasticity of Demand for Paola's Equipment. Paola sells equipment for makerspaces, and the price elasticity of demand for the goods that she sells is given in the table below. Which good has an inelastic demand?
​

Accepted Answer

A)  3-D printer 
B)  maker cart 
C)  magic pen 
D)  filament 
A)  3-D printer 
B)  maker cart 
C)  magic pen 
D)  filament

Question 14

A measure of how responsive firms are to changes in the price of the good that they are selling is:

Accepted Answer

A)  price elasticity of demand. 
B)  price elasticity of supply. 
C)  cross-price elasticity of demand. 
D)  cross-price elasticity of supply. 
A)  price elasticity of demand. 
B)  price elasticity of supply. 
C)  cross-price elasticity of demand. 
D)  cross-price elasticity of supply.

Question 15

Demand is likely to be inelastic for goods that:

Accepted Answer

A)  require a large portion of consumers' income. 
B)  are addictive. 
C)  are luxury items. 
D)  can be purchased after a longer time period. 
A)  require a large portion of consumers' income. 
B)  are addictive. 
C)  are luxury items. 
D)  can be purchased after a longer time period.

Question 16

Use the table The Price Elasticity of Demand for Paola's Equipment. Paola sells equipment for makerspaces, and the price elasticity of demand for the goods that she sells is given in the table below. All else equal, which good has the fewest substitutes?
​

Accepted Answer

A)  3-D printer 
B)  maker cart 
C)  magic pen 
D)  filament 
A)  3-D printer 
B)  maker cart 
C)  magic pen 
D)  filament

Question 17

The price of a good is initially $4, and the quantity demanded is 30. When the price increases to $6, the quantity demanded decreases to 20. What is the price elasticity of demand between these two prices?

Accepted Answer

A)  1 
B)  0.67 
C)  0.4 
D)  10 
A)  1 
B)  0.67 
C)  0.4 
D)  10

Question 18

If the price elasticity of demand is _____ the price elasticity of supply, then buyers will have a _____ tax incidence than sellers have.

Accepted Answer

A)  more elastic than; smaller 
B)  less elastic than; smaller 
C)  equal to; smaller 
D)  more elastic than; higher 
A)  more elastic than; smaller 
B)  less elastic than; smaller 
C)  equal to; smaller 
D)  more elastic than; higher

Question 19

The price elasticity of demand is always:

Accepted Answer

A)  positive because price and quantity supplied are positively related. 
B)  negative because people buy more when income increases. 
C)  positive because price and quantity always move in the same direction. 
D)  negative because price and quantity demanded are inversely related. 
A)  positive because price and quantity supplied are positively related. 
B)  negative because people buy more when income increases. 
C)  positive because price and quantity always move in the same direction. 
D)  negative because price and quantity demanded are inversely related.

Question 20

When the price of football ticket is $100, Eric buys four tickets each year. When the price is $90, he buys six tickets each year. What is Eric's price elasticity of demand when price decreases?

Accepted Answer

A)  5 
B)  0.2 
C)  3 
D)  1.5 
A)  5 
B)  0.2 
C)  3 
D)  1.5

If the price elasticity of supply has a lower elasticity than the price elasticity of demand, then tax incidence will:

Mr. Arias's income elasticity of demand for pawpaw fruit is -1.5. What happens to the quantity of pawpaw fruit that he buys if his income increases by 10 percent?

Why would a seller of a good care how responsive a consumer's demand for a good is to a change in the consumer's income?

The price elasticity of demand is 0.2, and the price elasticity of supply is 1.2. What happens if a $1 per unit tax is placed on sellers of this good?

A government wants to place a tax on a good, but it wants the burden of the tax to fall more heavily on the sellers of a good than on the buyers of a good. What should the government do to achieve this goal?

Akna is buying concert tickets at the last minute. The value of her elasticity of demand is most likely to be:

A demand curve that is vertical has:

Good X has few close substitutes and makes up a small share of a buyer's income. The demand for good X is _ , and a seller of good X that wants to increase total revenue should _ price.

People who buy good Z are typically in a hurry when they buy it. Good Z has _____ demand, and if the seller increases the price of good Z, its total revenue will:

What is true about price elasticity of demand along a straight, downward-sloping demand curve?

An economist who wants to measure a consumer's sensitivity to price changes would:

When Sara decreases the price of the kolaches that she sells at the farmers market by 10 percent, the quantity that she sells increases by 15 percent. What is the price elasticity of demand for Sara's kolaches, and what happened to her total revenue when she lowered the price of kolaches? Explain.

Use the table The Price Elasticity of Demand for Paola's Equipment. Paola sells equipment for makerspaces, and the price elasticity of demand for the goods that she sells is given in the table below. Which good has an inelastic demand?

A measure of how responsive firms are to changes in the price of the good that they are selling is:

Demand is likely to be inelastic for goods that:

Use the table The Price Elasticity of Demand for Paola's Equipment. Paola sells equipment for makerspaces, and the price elasticity of demand for the goods that she sells is given in the table below. All else equal, which good has the fewest substitutes?

The price of a good is initially $4, and the quantity demanded is 30. When the price increases to $6, the quantity demanded decreases to 20. What is the price elasticity of demand between these two prices?

If the price elasticity of demand is _ the price elasticity of supply, then buyers will have a _ tax incidence than sellers have.

The price elasticity of demand is always:

When the price of football ticket is $100, Eric buys four tickets each year. When the price is $90, he buys six tickets each year. What is Eric's price elasticity of demand when price decreases?

Foundations of Economics

Extension: Understanding Graphs

Markets and Economies

Demand

Supply

Market Equilibrium

Consumer Behavior

Production Costs

Perfect Competition

Market Power

Factor Markets

Market Failure and Government Failure

Measuring an Economys Performance

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and Banking

Monetary Policy

Economic Growth and Development

International Trade and Finance

Filters

Exam 6: Elasticity

If the price elasticity of supply has a lower elasticity than the price elasticity of demand, then tax incidence will:

Mr. Arias's income elasticity of demand for pawpaw fruit is -1.5. What happens to the quantity of pawpaw fruit that he buys if his income increases by 10 percent?

Why would a seller of a good care how responsive a consumer's demand for a good is to a change in the consumer's income?

The price elasticity of demand is 0.2, and the price elasticity of supply is 1.2. What happens if a $1 per unit tax is placed on sellers of this good?

A government wants to place a tax on a good, but it wants the burden of the tax to fall more heavily on the sellers of a good than on the buyers of a good. What should the government do to achieve this goal?

Akna is buying concert tickets at the last minute. The value of her elasticity of demand is most likely to be:

A demand curve that is vertical has:

Good X has few close substitutes and makes up a small share of a buyer's income. The demand for good X is _____ , and a seller of good X that wants to increase total revenue should _____ price.

People who buy good Z are typically in a hurry when they buy it. Good Z has _____ demand, and if the seller increases the price of good Z, its total revenue will:

What is true about price elasticity of demand along a straight, downward-sloping demand curve?

An economist who wants to measure a consumer's sensitivity to price changes would:

When Sara decreases the price of the kolaches that she sells at the farmers market by 10 percent, the quantity that she sells increases by 15 percent. What is the price elasticity of demand for Sara's kolaches, and what happened to her total revenue when she lowered the price of kolaches? Explain.

Use the table The Price Elasticity of Demand for Paola's Equipment. Paola sells equipment for makerspaces, and the price elasticity of demand for the goods that she sells is given in the table below. Which good has an inelastic demand? ​

A measure of how responsive firms are to changes in the price of the good that they are selling is:

Demand is likely to be inelastic for goods that:

Use the table The Price Elasticity of Demand for Paola's Equipment. Paola sells equipment for makerspaces, and the price elasticity of demand for the goods that she sells is given in the table below. All else equal, which good has the fewest substitutes? ​

The price of a good is initially $4, and the quantity demanded is 30. When the price increases to $6, the quantity demanded decreases to 20. What is the price elasticity of demand between these two prices?

If the price elasticity of demand is _____ the price elasticity of supply, then buyers will have a _____ tax incidence than sellers have.

The price elasticity of demand is always:

When the price of football ticket is $100, Eric buys four tickets each year. When the price is $90, he buys six tickets each year. What is Eric's price elasticity of demand when price decreases?

Foundations of Economics

Extension: Understanding Graphs

Markets and Economies

Demand

Supply

Market Equilibrium

Consumer Behavior

Production Costs

Perfect Competition

Market Power

Factor Markets

Market Failure and Government Failure

Measuring an Economys Performance

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and Banking

Monetary Policy

Economic Growth and Development

International Trade and Finance

Filters

Good X has few close substitutes and makes up a small share of a buyer's income. The demand for good X is _ , and a seller of good X that wants to increase total revenue should _ price.

Use the table The Price Elasticity of Demand for Paola's Equipment. Paola sells equipment for makerspaces, and the price elasticity of demand for the goods that she sells is given in the table below. Which good has an inelastic demand?

Use the table The Price Elasticity of Demand for Paola's Equipment. Paola sells equipment for makerspaces, and the price elasticity of demand for the goods that she sells is given in the table below. All else equal, which good has the fewest substitutes?

If the price elasticity of demand is _ the price elasticity of supply, then buyers will have a _ tax incidence than sellers have.