Question 1

When moving down along a linear demand curve

Accepted Answer

A)  the elasticity of demand stays the same. 
B)  the elasticity of demand changes from inelastic to elastic. 
C)  total revenue always stays the same. 
D)  the elasticity of demand changes from elastic to inelastic. 
A)  the elasticity of demand stays the same. 
B)  the elasticity of demand changes from inelastic to elastic. 
C)  total revenue always stays the same. 
D)  the elasticity of demand changes from elastic to inelastic.

Question 2

The short run is always considered to be one year or less.

Accepted Answer

A) True 
 B)False

Question 3

(Figure: Impact of Tax on Market Equilibrium) Based on the graph, implementing a tax

Accepted Answer

A)  lowers equilibrium price from $6 to $4 and lowers equilibrium quantity from 120 to 100 units. 
B)  lowers equilibrium price from $10 to $6 and lowers equilibrium quantity from 120 to 100 units. 
C)  raises equilibrium price from $6 to $10 and lowers equilibrium quantity from 120 to 100 units. 
D)  raises equilibrium price from $6 to $10 and raises equilibrium quantity from 100 to 120 units. 
A)  lowers equilibrium price from $6 to $4 and lowers equilibrium quantity from 120 to 100 units. 
B)  lowers equilibrium price from $10 to $6 and lowers equilibrium quantity from 120 to 100 units. 
C)  raises equilibrium price from $6 to $10 and lowers equilibrium quantity from 120 to 100 units. 
D)  raises equilibrium price from $6 to $10 and raises equilibrium quantity from 100 to 120 units.

Question 4

In the short run, firms

Accepted Answer

A)  exhibit a perfectly inelastic supply curve. 
B)  can hire inputs such as labor and buy more raw materials. 
C)  can build new plants. 
D)  generally make higher-than-normal profits. 
A)  exhibit a perfectly inelastic supply curve. 
B)  can hire inputs such as labor and buy more raw materials. 
C)  can build new plants. 
D)  generally make higher-than-normal profits.

Question 5

Which of these would you expect to have relatively high price elasticity of demand?

Accepted Answer

A)  name-brand cereals 
B)  gasoline 
C)  medications for serious illnesses 
D)  cooking oil 
A)  name-brand cereals 
B)  gasoline 
C)  medications for serious illnesses 
D)  cooking oil

Question 6

A progressive tax is a tax that

Accepted Answer

A)  rises in percentage of income as income increases. 
B)  is a constant proportion of one's income. 
C)  falls in percentage of income as income increases. 
D)  is a fixed amount of tax regardless of income. 
A)  rises in percentage of income as income increases. 
B)  is a constant proportion of one's income. 
C)  falls in percentage of income as income increases. 
D)  is a fixed amount of tax regardless of income.

Question 7

Based on sales history, a retailer calculates that EY for frozen pizza is -0.8. Now, due to a recession, incomes in the market area are down 10%. Based on the given information, it can be estimated that frozen pizza sales will

Accepted Answer

A)  increase by 8%. 
B)  decrease by 8%. 
C)  increase by 80%. 
D)  decrease by 80%. 
A)  increase by 8%. 
B)  decrease by 8%. 
C)  increase by 80%. 
D)  decrease by 80%.

Question 8

(Table) According to the table, what is the price elasticity of honey when the price of a jar of honey is between $2 and $4 (use the midpoint method to calculate your answer)?
$\begin{array}{|l|l|}
\hline \begin{array}{l}
\text { Price of a Jar } \
\text { of Honey }
\end{array} & \begin{array}{l}
\text { Quantity of Honey } \
\text { (millions of jars) }
\end{array} \
\hline \$ 2 & 10 \
\hline 4 & 8 \
\hline 6 & 6 \
\hline
\end{array}$

Accepted Answer

A)  0.33 
B)  3.00 
C)  0.50 
D)  5.00 
A)  0.33 
B)  3.00 
C)  0.50 
D)  5.00

Question 9

Over time, price elasticity of demand increases.

Accepted Answer

A) True 
 B)False

Question 10

The price elasticity of demand for lychee fruit is 1.3, while the price elasticity of supply is 0.7. The incidence of a $0.25 excise tax placed on lychee fruit will be

Accepted Answer

A)  higher for producers. 
B)  higher for consumers. 
C)  equal for producers and consumers. 
D)  nonexistent for both producers and consumers. 
A)  higher for producers. 
B)  higher for consumers. 
C)  equal for producers and consumers. 
D)  nonexistent for both producers and consumers.

Question 11

A good that has inelastic demand has an elasticity coefficient

Accepted Answer

A)  greater than 1. 
B)  greater than or equal to 1. 
C)  equal to 1. 
D)  between 0 and 1. 
A)  greater than 1. 
B)  greater than or equal to 1. 
C)  equal to 1. 
D)  between 0 and 1.

Question 12

If the price of a product with elastic demand increases

Accepted Answer

A)  total revenue will fall. 
B)  total revenue will be unchanged. 
C)  total revenue will rise. 
D)  the effect on total revenue cannot be predicted with the information given. 
A)  total revenue will fall. 
B)  total revenue will be unchanged. 
C)  total revenue will rise. 
D)  the effect on total revenue cannot be predicted with the information given.

Question 13

The percentage of the household budget spent on pencils is less than 1%, while that spent on housing is about 40%. If the price of both goods increases by 10%, the

Accepted Answer

A)  percentage change in quantity demanded for pencils would drop by more than 10%. 
B)  percentage change in quantity demanded for housing would be near zero. 
C)  elasticity of demand for pencils would exceed that for housing. 
D)  elasticity of demand for housing would exceed that for pencils. 
A)  percentage change in quantity demanded for pencils would drop by more than 10%. 
B)  percentage change in quantity demanded for housing would be near zero. 
C)  elasticity of demand for pencils would exceed that for housing. 
D)  elasticity of demand for housing would exceed that for pencils.

Question 14

Which of these products would have the highest price elasticity of demand?

Accepted Answer

A)  cigarettes 
B)  hot dogs sold by a street vendor 
C)  gasoline 
D)  blood-thinning medication prescribed to patients who have had a stroke 
A)  cigarettes 
B)  hot dogs sold by a street vendor 
C)  gasoline 
D)  blood-thinning medication prescribed to patients who have had a stroke

Question 15

If an increase in income of 10% causes an increase in quantity demanded of 20% for a good, the good is a(n) _____ good.

Accepted Answer

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

Question 16

Which event is a long-run adjustment for a university?

Accepted Answer

A)  A new science building is being constructed. 
B)  More staff are hired. 
C)  More laptops are purchased for faculty use. 
D)  Two hundred new books are purchased by the library. 
A)  A new science building is being constructed. 
B)  More staff are hired. 
C)  More laptops are purchased for faculty use. 
D)  Two hundred new books are purchased by the library.

Question 17

Which tax structure would be an example of a progressive tax?

Accepted Answer

A)  $10,000 in taxes collected on $50,000 of income, and $20,000 in taxes collected on $100,000 
B)  $5,000 in taxes collected on $30,000 of income, and $9,000 in taxes collected on $60,000 
C)  $20,000 in taxes collected on $80,000 of income, and $40,000 in taxes collected on $160,000 
D)  $4,000 in taxes collected on $20,000 of income, and $10,000 in taxes collected on $40,000 
A)  $10,000 in taxes collected on $50,000 of income, and $20,000 in taxes collected on $100,000 
B)  $5,000 in taxes collected on $30,000 of income, and $9,000 in taxes collected on $60,000 
C)  $20,000 in taxes collected on $80,000 of income, and $40,000 in taxes collected on $160,000 
D)  $4,000 in taxes collected on $20,000 of income, and $10,000 in taxes collected on $40,000

Question 18

Walmart is thinking about offering a 25% discount on a brand of shoes. If the elasticity of demand is 2, then the discount would increase sales by

Accepted Answer

A)  12.5%. 
B)  200%. 
C)  50%. 
D)  25%. 
A)  12.5%. 
B)  200%. 
C)  50%. 
D)  25%.

Question 19

If a store sells a good that has a unitary elastic demand, what would be the net result on their total revenue from an increase in price?

Accepted Answer

A)  There would be a decrease in total revenue. 
B)  There would be no change in total revenue. 
C)  There would be an increase in total revenue. 
D)  There would be an initial increase, followed by a decrease, in total revenue. 
A)  There would be a decrease in total revenue. 
B)  There would be no change in total revenue. 
C)  There would be an increase in total revenue. 
D)  There would be an initial increase, followed by a decrease, in total revenue.

Question 20

Demand for a product category (such as pizza) may be inelastic, while the demand for specific brands of this product (such as Pizza Hut) may be elastic.

Accepted Answer

A) True 
 B)False

When moving down along a linear demand curve

The short run is always considered to be one year or less.

(Figure: Impact of Tax on Market Equilibrium) Based on the graph, implementing a tax

In the short run, firms

Which of these would you expect to have relatively high price elasticity of demand?

A progressive tax is a tax that

Based on sales history, a retailer calculates that E_Y for frozen pizza is -0.8. Now, due to a recession, incomes in the market area are down 10%. Based on the given information, it can be estimated that frozen pizza sales will

(Table) According to the table, what is the price elasticity of honey when the price of a jar of honey is between $2 and $4 (use the midpoint method to calculate your answer)? Price of a Jar of Honey Quantity of Honey (millions of jars) \ 2 10 4 8 6 6

Over time, price elasticity of demand increases.

The price elasticity of demand for lychee fruit is 1.3, while the price elasticity of supply is 0.7. The incidence of a $0.25 excise tax placed on lychee fruit will be

A good that has inelastic demand has an elasticity coefficient

If the price of a product with elastic demand increases

The percentage of the household budget spent on pencils is less than 1%, while that spent on housing is about 40%. If the price of both goods increases by 10%, the

Which of these products would have the highest price elasticity of demand?

If an increase in income of 10% causes an increase in quantity demanded of 20% for a good, the good is a(n) _____ good.

Which event is a long-run adjustment for a university?

Which tax structure would be an example of a progressive tax?

Walmart is thinking about offering a 25% discount on a brand of shoes. If the elasticity of demand is 2, then the discount would increase sales by

If a store sells a good that has a unitary elastic demand, what would be the net result on their total revenue from an increase in price?

Demand for a product category (such as pizza) may be inelastic, while the demand for specific brands of this product (such as Pizza Hut) may be elastic.

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Exam 5: Elasticity

When moving down along a linear demand curve

The short run is always considered to be one year or less.

(Figure: Impact of Tax on Market Equilibrium) Based on the graph, implementing a tax

In the short run, firms

Which of these would you expect to have relatively high price elasticity of demand?

A progressive tax is a tax that

Based on sales history, a retailer calculates that EY for frozen pizza is -0.8. Now, due to a recession, incomes in the market area are down 10%. Based on the given information, it can be estimated that frozen pizza sales will

(Table) According to the table, what is the price elasticity of honey when the price of a jar of honey is between $2 and $4 (use the midpoint method to calculate your answer)? Price of a Jar of Honey Quantity of Honey (millions of jars) \ 2 10 4 8 6 6

Over time, price elasticity of demand increases.

The price elasticity of demand for lychee fruit is 1.3, while the price elasticity of supply is 0.7. The incidence of a $0.25 excise tax placed on lychee fruit will be

A good that has inelastic demand has an elasticity coefficient

If the price of a product with elastic demand increases

The percentage of the household budget spent on pencils is less than 1%, while that spent on housing is about 40%. If the price of both goods increases by 10%, the

Which of these products would have the highest price elasticity of demand?

If an increase in income of 10% causes an increase in quantity demanded of 20% for a good, the good is a(n) _____ good.

Which event is a long-run adjustment for a university?

Which tax structure would be an example of a progressive tax?

Walmart is thinking about offering a 25% discount on a brand of shoes. If the elasticity of demand is 2, then the discount would increase sales by

If a store sells a good that has a unitary elastic demand, what would be the net result on their total revenue from an increase in price?

Demand for a product category (such as pizza) may be inelastic, while the demand for specific brands of this product (such as Pizza Hut) may be elastic.

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

Based on sales history, a retailer calculates that E_Y for frozen pizza is -0.8. Now, due to a recession, incomes in the market area are down 10%. Based on the given information, it can be estimated that frozen pizza sales will