Question 1

The greater the number of substitutes available for a good, the _____ its demand will be.

Accepted Answer

A)  less elastic 
B)  more inelastic 
C)  less responsive to price changes 
D)  more elastic 
A)  less elastic 
B)  more inelastic 
C)  less responsive to price changes 
D)  more elastic

Question 2

A tax in which the dollar amount collected is constant 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 3

The long-run supply curve can have a positive slope because _____ in the long run.

Accepted Answer

A)  wages decline 
B)  profits increase 
C)  industry costs decline 
D)  industry costs increase 
A)  wages decline 
B)  profits increase 
C)  industry costs decline 
D)  industry costs increase

Question 4

The primary determinant of the elasticity of supply is

Accepted Answer

A)  the availability of substitutes. 
B)  the prices of substitutes. 
C)  income. 
D)  time. 
A)  the availability of substitutes. 
B)  the prices of substitutes. 
C)  income. 
D)  time.

Question 5

Luxuries have lower price elasticities of demand than necessities do.

Accepted Answer

A) True 
 B)False

Question 6

The more responsive buyers are to a change in price, the

Accepted Answer

A)  greater the price elasticity of supply. 
B)  closer the price elasticity of demand is to one. 
C)  greater the price elasticity of demand. 
D)  smaller the price elasticity of demand. 
A)  greater the price elasticity of supply. 
B)  closer the price elasticity of demand is to one. 
C)  greater the price elasticity of demand. 
D)  smaller the price elasticity of demand.

Question 7

If a store sells a good with elastic demand, then a decrease in the price would lead to

Accepted Answer

A)  an increase in total revenue. 
B)  a decrease in total revenue. 
C)  a decrease in the quantity sold. 
D)  no change total revenue. 
A)  an increase in total revenue. 
B)  a decrease in total revenue. 
C)  a decrease in the quantity sold. 
D)  no change total revenue.

Question 8

In the graph, which shows the market for perfume, if a $10 excise tax is placed on each bottle of perfume, consumers would pay about _____ after the tax and producers would receive about _____ after the tax.

Accepted Answer

A)  $50; $40 
B)  $45; $35 
C)  $40; $30 
D)  $35; $25 
A)  $50; $40 
B)  $45; $35 
C)  $40; $30 
D)  $35; $25

Question 9

A commodity that has a price elastic demand curve has to compete with significant substitutes.

Accepted Answer

A) True 
 B)False

Question 10

For a given supply of a product, the _____ the price elasticity of demand, the _____ the tax incidence on consumers, and the _____ the incidence on sellers.

Accepted Answer

A)  greater; greater; smaller 
B)  greater; smaller; greater 
C)  smaller; greater; greater 
D)  smaller; smaller; greater 
A)  greater; greater; smaller 
B)  greater; smaller; greater 
C)  smaller; greater; greater 
D)  smaller; smaller; greater

Question 11

For a given demand curve, the greater the price elasticity of supply, the more of the tax burden is shifted onto buyers.

Accepted Answer

A) True 
 B)False

Question 12

The economic burden of a tax borne by each party

Accepted Answer

A)  is not dependent on the price elasticities of demand and supply. 
B)  indicates the incidence of taxation. 
C)  is always the consumer. 
D)  is always the supplier. 
A)  is not dependent on the price elasticities of demand and supply. 
B)  indicates the incidence of taxation. 
C)  is always the consumer. 
D)  is always the supplier.

Question 13

In the long run

Accepted Answer

A)  the supply curve for all firms is more elastic than in the short run. 
B)  more firms may enter the industry. 
C)  plants may change facility capacity. 
D)  the supply curve for all firms is more elastic than in the short run, more firms may enter the industry, and plants may change facility capacity. 
A)  the supply curve for all firms is more elastic than in the short run. 
B)  more firms may enter the industry. 
C)  plants may change facility capacity. 
D)  the supply curve for all firms is more elastic than in the short run, more firms may enter the industry, and plants may change facility capacity.

Question 14

(Figure: Interpreting Elasticity of Supply) How would you describe supply as shown in the graph?

Accepted Answer

A)  unitary for all prices 
B)  elastic at high prices and inelastic at low prices 
C)  perfectly inelastic 
D)  perfectly elastic 
A)  unitary for all prices 
B)  elastic at high prices and inelastic at low prices 
C)  perfectly inelastic 
D)  perfectly elastic

Question 15

If the price of oil increases by 50% but consumption decreases by 25%, then the demand for oil is elastic.

Accepted Answer

A) True 
 B)False

Question 16

If the price of a product falls by 15% and the quantity supplied falls by 25%, the supply of the product is

Accepted Answer

A)  inelastic. 
B)  unitary elastic. 
C)  elastic. 
D)  perfectly elastic. 
A)  inelastic. 
B)  unitary elastic. 
C)  elastic. 
D)  perfectly elastic.

Question 17

An economist collected the following data points on the demand for gadgets.
 $\begin{array}{llcc}
  \text {Price  } &\text { Quantity Demanded }  \
 \$ 10 & 5,000 \
\$ 12 &4,000 \
\end{array}$
 Using the midpoint method, what is the price elasticity of demand? Use your answer to determine whether demand for this product is elastic or inelastic.

Accepted Answer

@#IMG-DLM& = 0.579
D

Question 18

How is price elasticity of supply computed and how does it relate to changes in quantity supplied and changes in price?

Accepted Answer

Price elasticity of supply (E_s) measures

Question 19

Which would characterize the response in equilibrium price and quantity if demand falls during the market period, ceteris paribus?

Accepted Answer

A)  Both price and quantity fall. 
B)  Only price falls. 
C)  Only quantity falls. 
D)  There is no change in either price or quantity. 
A)  Both price and quantity fall. 
B)  Only price falls. 
C)  Only quantity falls. 
D)  There is no change in either price or quantity.

Question 20

Suppose that the quantity demanded of a product falls by 9% as incomes fall by 3%. What is the income elasticity for this good?

Accepted Answer

A)  -3.00 
B)  -0.33 
C)  0.33 
D)  3.00 
A)  -3.00 
B)  -0.33 
C)  0.33 
D)  3.00

The greater the number of substitutes available for a good, the _____ its demand will be.

A tax in which the dollar amount collected is constant as income falls is known as a _____ tax.

The long-run supply curve can have a positive slope because _____ in the long run.

The primary determinant of the elasticity of supply is

Luxuries have lower price elasticities of demand than necessities do.

The more responsive buyers are to a change in price, the

If a store sells a good with elastic demand, then a decrease in the price would lead to

In the graph, which shows the market for perfume, if a $10 excise tax is placed on each bottle of perfume, consumers would pay about _ after the tax and producers would receive about _ after the tax.

A commodity that has a price elastic demand curve has to compete with significant substitutes.

For a given supply of a product, the ___ the price elasticity of demand, the _ the tax incidence on consumers, and the ___ the incidence on sellers.

For a given demand curve, the greater the price elasticity of supply, the more of the tax burden is shifted onto buyers.

The economic burden of a tax borne by each party

In the long run

(Figure: Interpreting Elasticity of Supply) How would you describe supply as shown in the graph?

If the price of oil increases by 50% but consumption decreases by 25%, then the demand for oil is elastic.

If the price of a product falls by 15% and the quantity supplied falls by 25%, the supply of the product is

An economist collected the following data points on the demand for gadgets. Price Quantity Demanded \ 10 5,000 \ 12 4,000 Using the midpoint method, what is the price elasticity of demand? Use your answer to determine whether demand for this product is elastic or inelastic.

How is price elasticity of supply computed and how does it relate to changes in quantity supplied and changes in price?

Which would characterize the response in equilibrium price and quantity if demand falls during the market period, ceteris paribus?

Suppose that the quantity demanded of a product falls by 9% as incomes fall by 3%. What is the income elasticity for this good?

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

Exam 5: Elasticity

The greater the number of substitutes available for a good, the _____ its demand will be.

A tax in which the dollar amount collected is constant as income falls is known as a _____ tax.

The long-run supply curve can have a positive slope because _____ in the long run.

The primary determinant of the elasticity of supply is

Luxuries have lower price elasticities of demand than necessities do.

The more responsive buyers are to a change in price, the

If a store sells a good with elastic demand, then a decrease in the price would lead to

In the graph, which shows the market for perfume, if a $10 excise tax is placed on each bottle of perfume, consumers would pay about _____ after the tax and producers would receive about _____ after the tax.

A commodity that has a price elastic demand curve has to compete with significant substitutes.

For a given supply of a product, the _____ the price elasticity of demand, the _____ the tax incidence on consumers, and the _____ the incidence on sellers.

For a given demand curve, the greater the price elasticity of supply, the more of the tax burden is shifted onto buyers.

The economic burden of a tax borne by each party

In the long run

(Figure: Interpreting Elasticity of Supply) How would you describe supply as shown in the graph?

If the price of oil increases by 50% but consumption decreases by 25%, then the demand for oil is elastic.

If the price of a product falls by 15% and the quantity supplied falls by 25%, the supply of the product is

An economist collected the following data points on the demand for gadgets. Price Quantity Demanded \ 10 5,000 \ 12 4,000 Using the midpoint method, what is the price elasticity of demand? Use your answer to determine whether demand for this product is elastic or inelastic.

How is price elasticity of supply computed and how does it relate to changes in quantity supplied and changes in price?

Which would characterize the response in equilibrium price and quantity if demand falls during the market period, ceteris paribus?

Suppose that the quantity demanded of a product falls by 9% as incomes fall by 3%. What is the income elasticity for this good?

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

In the graph, which shows the market for perfume, if a $10 excise tax is placed on each bottle of perfume, consumers would pay about _ after the tax and producers would receive about _ after the tax.

For a given supply of a product, the ___ the price elasticity of demand, the _ the tax incidence on consumers, and the ___ the incidence on sellers.