Question 1

If demand is unitary elastic, a reduction in price leaves total revenue unchanged because

Accepted Answer

A)  the percentage increase in quantity demanded exceeds the percentage decrease in price. 
B)  the percentage decrease in price exceeds the percentage increase in quantity demanded. 
C)  demand is unresponsive to changes in price. 
D)  the percentage changes in quantity demanded and price are equal. 
A)  the percentage increase in quantity demanded exceeds the percentage decrease in price. 
B)  the percentage decrease in price exceeds the percentage increase in quantity demanded. 
C)  demand is unresponsive to changes in price. 
D)  the percentage changes in quantity demanded and price are equal.

Question 2

Which of these is a possible value for an inelastic demand coefficient?

Accepted Answer

A)  1.0 
B)  2.3 
C)  0.7 
D)  1.5 
A)  1.0 
B)  2.3 
C)  0.7 
D)  1.5

Question 3

(Figure) The figure shows a basic demand curve with four points labeled A through

Accepted Answer

A)  
 $\begin{array}{|l|l|}
\hline \begin{array}{l}
\text { Price } \
\text { Change }
\end{array} & E D \
\hline A \text { to } B & 2.33 \
\hline B \text { to } C & 2.33 \
\hline C \text { to } D & 2.33 \
\hline
\end{array}$ 
B)  
 $\begin{array}{|l|l|}
\hline \begin{array}{l}
\text { Price } \
\text { Change }
\end{array} & E D \
\hline A \text { to } B & 2.33 \
\hline B \text { to } C & 1 \
\hline C \text { to } D & 0.43 \
\hline
\end{array}$ 
C)  
 $\begin{array}{|l|l|}
\hline \begin{array}{l}
\text { Price } \
\text { Change }
\end{array} & E D \
\hline A \text { to } B & 0.43 \
\hline B \text { to } C & 1 \
\hline C \text { to } D & 2.33 \
\hline
\end{array}$ 
D)  
 $\begin{array}{|l|l|}
\hline \begin{array}{l}
\text { Price } \
\text { Change }
\end{array} & E D \
\hline A \text { to } B & 1 \
\hline B \text { to } C & 2.33 \
\hline C \text { to } D & 0.43 \
\hline
\end{array}$ 
A)  
 $\begin{array}{|l|l|}
\hline \begin{array}{l}
\text { Price } \
\text { Change }
\end{array} & E D \
\hline A \text { to } B & 2.33 \
\hline B \text { to } C & 2.33 \
\hline C \text { to } D & 2.33 \
\hline
\end{array}$ 
B)  
 $\begin{array}{|l|l|}
\hline \begin{array}{l}
\text { Price } \
\text { Change }
\end{array} & E D \
\hline A \text { to } B & 2.33 \
\hline B \text { to } C & 1 \
\hline C \text { to } D & 0.43 \
\hline
\end{array}$ 
C)  
 $\begin{array}{|l|l|}
\hline \begin{array}{l}
\text { Price } \
\text { Change }
\end{array} & E D \
\hline A \text { to } B & 0.43 \
\hline B \text { to } C & 1 \
\hline C \text { to } D & 2.33 \
\hline
\end{array}$ 
D)  
 $\begin{array}{|l|l|}
\hline \begin{array}{l}
\text { Price } \
\text { Change }
\end{array} & E D \
\hline A \text { to } B & 1 \
\hline B \text { to } C & 2.33 \
\hline C \text { to } D & 0.43 \
\hline
\end{array}$

Question 4

Home heating gas tends to have _____ demand because _____.

Accepted Answer

A)  elastic; it has few close substitutes 
B)  elastic; people have lots of time to adjust their consumption patters 
C)  inelastic; people spend a large share of their incomes on heat 
D)  inelastic; it is a necessity 
A)  elastic; it has few close substitutes 
B)  elastic; people have lots of time to adjust their consumption patters 
C)  inelastic; people spend a large share of their incomes on heat 
D)  inelastic; it is a necessity

Question 5

Which period describes when companies can alter their output but not their plant capacity?

Accepted Answer

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

Question 6

Describe the time periods economists use to study elasticity of supply and describe the variables that companies can change during each time period.

Accepted Answer

Economists typically distinguish among t

Question 7

When consumers are given more time to adjust to higher prices

Accepted Answer

A)  demand becomes less elastic. 
B)  consumers have fewer choices from which to select. 
C)  consumers have more choices from which to select. 
D)  consumers can earn more income to spend on goods. 
A)  demand becomes less elastic. 
B)  consumers have fewer choices from which to select. 
C)  consumers have more choices from which to select. 
D)  consumers can earn more income to spend on goods.

Question 8

In which period can firms decide to leave an industry?

Accepted Answer

A)  long run 
B)  short run 
C)  market period 
D)  present time period 
A)  long run 
B)  short run 
C)  market period 
D)  present time period

Question 9

A good is said to be highly inelastic if

Accepted Answer

A)  the absolute value of the elasticity is 1. 
B)  the absolute value of the elasticity is greater than 1. 
C)  there is a small change in quantity with a change in price. 
D)  there is a large change in quantity with a change in price. 
A)  the absolute value of the elasticity is 1. 
B)  the absolute value of the elasticity is greater than 1. 
C)  there is a small change in quantity with a change in price. 
D)  there is a large change in quantity with a change in price.

Question 10

The availability of substitutes is one determinant of price elasticity of demand.

Accepted Answer

A) True 
 B)False

Question 11

If the price elasticity of supply is less than 1, then supply of the good is

Accepted Answer

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

Question 12

If the cross elasticity of demand between fly rods and reels is -0.8, a decrease in the price of rods would _____ sales of reels because the two goods are _____.

Accepted Answer

A)  decrease; complements 
B)  increase; complements 
C)  decrease; substitutes 
D)  increase; substitutes 
A)  decrease; complements 
B)  increase; complements 
C)  decrease; substitutes 
D)  increase; substitutes

Question 13

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

Accepted Answer

A)  whether a good is a luxury item 
B)  the availability of substitutes 
C)  the time available to make changes to manufacturing plants 
D)  the proportion of household income spent on the product or service 
A)  whether a good is a luxury item 
B)  the availability of substitutes 
C)  the time available to make changes to manufacturing plants 
D)  the proportion of household income spent on the product or service

Question 14

The price elasticity of supply is the greatest in the

Accepted Answer

A)  short run. 
B)  market period. 
C)  present time. 
D)  long run. 
A)  short run. 
B)  market period. 
C)  present time. 
D)  long run.

Question 15

An inelastic demand curve will have an elasticity value greater than 1.

Accepted Answer

A) True 
 B)False

Question 16

In general, tax incidence falls more on the _____ if demand for the product taxed is elastic, and falls more on the _____ if demand for the product is inelastic.

Accepted Answer

A)  buyer; buyer 
B)  buyer; seller 
C)  seller; buyer 
D)  seller; seller 
A)  buyer; buyer 
B)  buyer; seller 
C)  seller; buyer 
D)  seller; seller

Question 17

The price elasticity of supply measures the responsiveness of quantity _____ to changes in _____.

Accepted Answer

A)  supplied; the price of the product 
B)  demanded; the price of the product 
C)  supplied; production cost 
D)  demanded; production cost 
A)  supplied; the price of the product 
B)  demanded; the price of the product 
C)  supplied; production cost 
D)  demanded; production cost

Question 18

(Figure) The figure shows a market with a supply tax with quantity measured in thousands. The dead weight loss due to the tax is _____ and the tax incidence is _____.

Accepted Answer

A)  $6,250; borne evenly 
B)  $12,500; borne more heavily by producers 
C)  $3,125; borne more heavily by consumers 
D)  $18,750; zero 
A)  $6,250; borne evenly 
B)  $12,500; borne more heavily by producers 
C)  $3,125; borne more heavily by consumers 
D)  $18,750; zero

Question 19

The day after Halloween, grocery stores discount the price of candy from $4 per bag to $2 per bag. The percentage change in price using the base method is _____ and using the midpoint method is _____.

Accepted Answer

A)  -50%; -50% 
B)  -50%; -67% 
C)  -67%; -50% 
D)  -67%; -67% 
A)  -50%; -50% 
B)  -50%; -67% 
C)  -67%; -50% 
D)  -67%; -67%

Question 20

Elasticity is a measure of the responsiveness of a change in one variable to a change in another variable.

Accepted Answer

A) True 
 B)False

If demand is unitary elastic, a reduction in price leaves total revenue unchanged because

Which of these is a possible value for an inelastic demand coefficient?

(Figure) The figure shows a basic demand curve with four points labeled A through

Home heating gas tends to have _ demand because _.

Which period describes when companies can alter their output but not their plant capacity?

Describe the time periods economists use to study elasticity of supply and describe the variables that companies can change during each time period.

When consumers are given more time to adjust to higher prices

In which period can firms decide to leave an industry?

A good is said to be highly inelastic if

The availability of substitutes is one determinant of price elasticity of demand.

If the price elasticity of supply is less than 1, then supply of the good is

If the cross elasticity of demand between fly rods and reels is -0.8, a decrease in the price of rods would _ sales of reels because the two goods are _.

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

The price elasticity of supply is the greatest in the

An inelastic demand curve will have an elasticity value greater than 1.

In general, tax incidence falls more on the _ if demand for the product taxed is elastic, and falls more on the _ if demand for the product is inelastic.

The price elasticity of supply measures the responsiveness of quantity _ to changes in _.

(Figure) The figure shows a market with a supply tax with quantity measured in thousands. The dead weight loss due to the tax is _ and the tax incidence is _.

The day after Halloween, grocery stores discount the price of candy from $4 per bag to $2 per bag. The percentage change in price using the base method is _ and using the midpoint method is _.

Elasticity is a measure of the responsiveness of a change in one variable to a change in another variable.

Exploring Economics

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Supply and Demand

Markets and Government

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Production and Costs

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Exam 5: Elasticity

If demand is unitary elastic, a reduction in price leaves total revenue unchanged because

Which of these is a possible value for an inelastic demand coefficient?

(Figure) The figure shows a basic demand curve with four points labeled A through

Home heating gas tends to have _____ demand because _____.

Which period describes when companies can alter their output but not their plant capacity?

Describe the time periods economists use to study elasticity of supply and describe the variables that companies can change during each time period.

When consumers are given more time to adjust to higher prices

In which period can firms decide to leave an industry?

A good is said to be highly inelastic if

The availability of substitutes is one determinant of price elasticity of demand.

If the price elasticity of supply is less than 1, then supply of the good is

If the cross elasticity of demand between fly rods and reels is -0.8, a decrease in the price of rods would _____ sales of reels because the two goods are _____.

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

The price elasticity of supply is the greatest in the

An inelastic demand curve will have an elasticity value greater than 1.

In general, tax incidence falls more on the _____ if demand for the product taxed is elastic, and falls more on the _____ if demand for the product is inelastic.

The price elasticity of supply measures the responsiveness of quantity _____ to changes in _____.

(Figure) The figure shows a market with a supply tax with quantity measured in thousands. The dead weight loss due to the tax is _____ and the tax incidence is _____.

The day after Halloween, grocery stores discount the price of candy from $4 per bag to $2 per bag. The percentage change in price using the base method is _____ and using the midpoint method is _____.

Elasticity is a measure of the responsiveness of a change in one variable to a change in another variable.

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

Home heating gas tends to have _ demand because _.

If the cross elasticity of demand between fly rods and reels is -0.8, a decrease in the price of rods would _ sales of reels because the two goods are _.

In general, tax incidence falls more on the _ if demand for the product taxed is elastic, and falls more on the _ if demand for the product is inelastic.

The price elasticity of supply measures the responsiveness of quantity _ to changes in _.

(Figure) The figure shows a market with a supply tax with quantity measured in thousands. The dead weight loss due to the tax is _ and the tax incidence is _.

The day after Halloween, grocery stores discount the price of candy from $4 per bag to $2 per bag. The percentage change in price using the base method is _ and using the midpoint method is _.