Question 1

Knowing a product's price elasticity of demand allows economists to predict

Accepted Answer

A)  the amount by which quantity demanded will change in response to a change in price. 
B)  how changes in consumers' income will affect sales. 
C)  the amount by which quantity supplied will change in response to a change in price. 
D)  how quickly consumers will respond to tariff changes. 
A)  the amount by which quantity demanded will change in response to a change in price. 
B)  how changes in consumers' income will affect sales. 
C)  the amount by which quantity supplied will change in response to a change in price. 
D)  how quickly consumers will respond to tariff changes. A

Question 2

If the quantity of a good sold varies greatly from small changes in the price, the good is

Accepted Answer

A)  highly inelastic. 
B)  unitary elastic. 
C)  not elastic. 
D)  highly elastic. 
A)  highly inelastic. 
B)  unitary elastic. 
C)  not elastic. 
D)  highly elastic. D

Question 3

If a 10% increase in income causes the quantity demanded of macaroni and cheese to fall by 5%, then macaroni and cheese is a(n) _____.

Accepted Answer

A)  normal 
B)  substitute 
C)  income-superior 
D)  inferior 
A)  normal 
B)  substitute 
C)  income-superior 
D)  inferior D

Question 4

A unitary elastic demand means that if the percentage change in price is _____, then the percentage change in quantity demanded is _____.

Accepted Answer

A)  2%; 1% 
B)  5%; 5% 
C)  2%; 4% 
D)  5%; 0% 
A)  2%; 1% 
B)  5%; 5% 
C)  2%; 4% 
D)  5%; 0%

Question 5

If the income elasticity of demand for ramen noodles is 0.25, ramen noodles are a(n) _____ good.

Accepted Answer

A)  luxury 
B)  normal 
C)  superior 
D)  inferior 
A)  luxury 
B)  normal 
C)  superior 
D)  inferior

Question 6

A popular restaurant makes 2,000 of its famous soup dumplings each morning, and once it sells out, the chefs cannot make more until the next day. This restaurant is operating in the

Accepted Answer

A)  market period. 
B)  short run. 
C)  medium run. 
D)  long run. 
A)  market period. 
B)  short run. 
C)  medium run. 
D)  long run.

Question 7

The short run is defined as a period in which

Accepted Answer

A)  all inputs are fixed. 
B)  all inputs are variable. 
C)  plant size is fixed but labor is variable. 
D)  labor is fixed but plant size is variable. 
A)  all inputs are fixed. 
B)  all inputs are variable. 
C)  plant size is fixed but labor is variable. 
D)  labor is fixed but plant size is variable.

Question 8

If price increases by 10% while quantity supplied increases by 25%, then the price elasticity of supply equals 2.5.

Accepted Answer

A) True 
 B)False

Question 9

Which of these is a determinant of price elasticity of supply?

Accepted Answer

A)  substitutability 
B)  the amount of income spent on the good 
C)  the time it takes to change plant capacity, and the number of firms in the industry 
D)  resource costs associated with the good 
A)  substitutability 
B)  the amount of income spent on the good 
C)  the time it takes to change plant capacity, and the number of firms in the industry 
D)  resource costs associated with the good

Question 10

Assume the demand for coffee is inelastic. If the price of coffee increases, total revenue

Accepted Answer

A)  decreases. 
B)  remains constant. 
C)  increases. 
D)  is negative. 
A)  decreases. 
B)  remains constant. 
C)  increases. 
D)  is negative.

Question 11

A tax in which the percentage of income tax rises as income falls is known as a _____ tax.

Accepted Answer

A)  flat 
B)  lump-sum 
C)  progressive 
D)  regressive 
A)  flat 
B)  lump-sum 
C)  progressive 
D)  regressive

Question 12

A good with an income elasticity that is positive, but less than 1, is a(n) _____ good.

Accepted Answer

A)  inferior 
B)  superior 
C)  normal 
D)  luxury 
A)  inferior 
B)  superior 
C)  normal 
D)  luxury

Question 13

Suppose that at P = $4, Qd = 10. At P = $5, Qd = 9. Calculate the elasticity of demand for this product (using the base method) if the price changes from $4 to $5. Is demand elastic or inelastic? How should the firm selling this product change its price to increase total revenue?

Accepted Answer

0.47; demand is inelastic; the

Question 14

A vertical demand curve has a price elasticity of demand equal to

Accepted Answer

A)  1. 
B)  0. 
C)  infinity. 
D)  0 at low quantities and 1 at higher quantities. 
A)  1. 
B)  0. 
C)  infinity. 
D)  0 at low quantities and 1 at higher quantities.

Question 15

The cross elasticity of demand for substitute goods will always be negative.

Accepted Answer

A) True 
 B)False

Question 16

Tax incidence is defined as

Accepted Answer

A)  how federal and local taxes are collected. 
B)  which goods and services are taxed. 
C)  who bears the burden of a federal or local tax. 
D)  who collects a federal or local tax. 
A)  how federal and local taxes are collected. 
B)  which goods and services are taxed. 
C)  who bears the burden of a federal or local tax. 
D)  who collects a federal or local tax.

Question 17

The reason economists use the midpoint method to compute elasticity is that

Accepted Answer

A)  it is the only viable way to measure total revenue. 
B)  economists want the elasticity to be the same whether the price is increasing or decreasing. 
C)  it better measures consumers' responsiveness to price changes. 
D)  it is the only way to avoid always using negative numbers. 
A)  it is the only viable way to measure total revenue. 
B)  economists want the elasticity to be the same whether the price is increasing or decreasing. 
C)  it better measures consumers' responsiveness to price changes. 
D)  it is the only way to avoid always using negative numbers.

Question 18

The incidence of tax refers to how the economic burden of the tax is shared between the buyer and the seller.

Accepted Answer

A) True 
 B)False

Question 19

Excise taxes are usually imposed on products with elastic demand.

Accepted Answer

A) True 
 B)False

Question 20

In the short run, plants may

Accepted Answer

A)  change plant capacity. 
B)  face new competitors. 
C)  hire more workers. 
D)  change plant capacity, face new competitors, and hire more workers. 
A)  change plant capacity. 
B)  face new competitors. 
C)  hire more workers. 
D)  change plant capacity, face new competitors, and hire more workers.

Knowing a product's price elasticity of demand allows economists to predict

If the quantity of a good sold varies greatly from small changes in the price, the good is

If a 10% increase in income causes the quantity demanded of macaroni and cheese to fall by 5%, then macaroni and cheese is a(n) _____.

A unitary elastic demand means that if the percentage change in price is _, then the percentage change in quantity demanded is _.

If the income elasticity of demand for ramen noodles is 0.25, ramen noodles are a(n) _____ good.

A popular restaurant makes 2,000 of its famous soup dumplings each morning, and once it sells out, the chefs cannot make more until the next day. This restaurant is operating in the

The short run is defined as a period in which

If price increases by 10% while quantity supplied increases by 25%, then the price elasticity of supply equals 2.5.

Which of these is a determinant of price elasticity of supply?

Assume the demand for coffee is inelastic. If the price of coffee increases, total revenue

A tax in which the percentage of income tax rises as income falls is known as a _____ tax.

A good with an income elasticity that is positive, but less than 1, is a(n) _____ good.

Suppose that at P = $4, Q_d = 10. At P = $5, Q_d = 9. Calculate the elasticity of demand for this product (using the base method) if the price changes from $4 to $5. Is demand elastic or inelastic? How should the firm selling this product change its price to increase total revenue?

A vertical demand curve has a price elasticity of demand equal to

The cross elasticity of demand for substitute goods will always be negative.

Tax incidence is defined as

The reason economists use the midpoint method to compute elasticity is that

The incidence of tax refers to how the economic burden of the tax is shared between the buyer and the seller.

Excise taxes are usually imposed on products with elastic demand.

In the short run, plants may

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Exam 5: Elasticity

Knowing a product's price elasticity of demand allows economists to predict

If the quantity of a good sold varies greatly from small changes in the price, the good is

If a 10% increase in income causes the quantity demanded of macaroni and cheese to fall by 5%, then macaroni and cheese is a(n) _____.

A unitary elastic demand means that if the percentage change in price is _____, then the percentage change in quantity demanded is _____.

If the income elasticity of demand for ramen noodles is 0.25, ramen noodles are a(n) _____ good.

A popular restaurant makes 2,000 of its famous soup dumplings each morning, and once it sells out, the chefs cannot make more until the next day. This restaurant is operating in the

The short run is defined as a period in which

If price increases by 10% while quantity supplied increases by 25%, then the price elasticity of supply equals 2.5.

Which of these is a determinant of price elasticity of supply?

Assume the demand for coffee is inelastic. If the price of coffee increases, total revenue

A tax in which the percentage of income tax rises as income falls is known as a _____ tax.

A good with an income elasticity that is positive, but less than 1, is a(n) _____ good.

Suppose that at P = $4, Qd = 10. At P = $5, Qd = 9. Calculate the elasticity of demand for this product (using the base method) if the price changes from $4 to $5. Is demand elastic or inelastic? How should the firm selling this product change its price to increase total revenue?

A vertical demand curve has a price elasticity of demand equal to

The cross elasticity of demand for substitute goods will always be negative.

Tax incidence is defined as

The reason economists use the midpoint method to compute elasticity is that

The incidence of tax refers to how the economic burden of the tax is shared between the buyer and the seller.

Excise taxes are usually imposed on products with elastic demand.

In the short run, plants may

Exploring Economics

Production, Economic Growth, and Trade

Supply and Demand

Markets and Government

Consumer Choice and Demand

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition, Oligopoly, and Game Theory

The Labor Market

Land, Capital Markets, and Innovation

Externalities and Public Goods

Network Goods

Poverty and Income Distribution

International Trade

Filters

A unitary elastic demand means that if the percentage change in price is _, then the percentage change in quantity demanded is _.

Suppose that at P = $4, Q_d = 10. At P = $5, Q_d = 9. Calculate the elasticity of demand for this product (using the base method) if the price changes from $4 to $5. Is demand elastic or inelastic? How should the firm selling this product change its price to increase total revenue?