Question 1

The sign of the elasticity of supply is

Accepted Answer

A)  always negative. 
B)  always positive. 
C)  negative for inferior goods and positive for normal goods. 
D)  negative for normal goods and positive for inferior goods. 
A)  always negative. 
B)  always positive. 
C)  negative for inferior goods and positive for normal goods. 
D)  negative for normal goods and positive for inferior goods.

Question 2

If the cross elasticity of demand for two goods is positive, the two goods are _____ goods.

Accepted Answer

A)  inferior 
B)  normal 
C)  substitute 
D)  complementary 
A)  inferior 
B)  normal 
C)  substitute 
D)  complementary

Question 3

If demand is unitary elastic, what happens to total revenue if the price increases by 5%?

Accepted Answer

A)  It increases by 5%. 
B)  It decreases by 5%. 
C)  It decreases by less than 5%. 
D)  It stays the same. 
A)  It increases by 5%. 
B)  It decreases by 5%. 
C)  It decreases by less than 5%. 
D)  It stays the same.

Question 4

For a given supply curve, the more elastic the demand, the _____ the tax incidence on consumers and the _____the deadweight loss will be.

Accepted Answer

A)  higher; larger 
B)  higher; smaller 
C)  lower; larger 
D)  lower; smaller 
A)  higher; larger 
B)  higher; smaller 
C)  lower; larger 
D)  lower; smaller

Question 5

If the price elasticity of demand is 10, then for every 1% increase in price, there is a _____ in quantity demanded.

Accepted Answer

A)  10% decrease 
B)  10% increase 
C)  0.1% increase 
D)  0.1% decrease 
A)  10% decrease 
B)  10% increase 
C)  0.1% increase 
D)  0.1% decrease

Question 6

In the town of Skateville, average income falls by 20% due to a recession. As a result, sales of skateboards fall by 15%. The income elasticity of demand is _____, and skateboards are a(n) _____ good.

Accepted Answer

A)  0.75; inferior 
B)  0.75; normal 
C)  1.33; inferior 
D)  1.33; normal 
A)  0.75; inferior 
B)  0.75; normal 
C)  1.33; inferior 
D)  1.33; normal

Question 7

The more elastic supply is for a given demand curve, the greater the tax incidence on _____ and the _____ the deadweight loss will be.

Accepted Answer

A)  buyers; larger 
B)  buyers; smaller 
C)  sellers; larger 
D)  sellers; smaller 
A)  buyers; larger 
B)  buyers; smaller 
C)  sellers; larger 
D)  sellers; smaller

Question 8

The flatter the demand curve, the less responsive consumers are to changes in price.

Accepted Answer

A) True 
 B)False

Question 9

A perfectly inelastic demand is BEST represented by a(n) _____ demand curve.

Accepted Answer

A)  vertical 
B)  downward-sloping 
C)  horizontal 
D)  upward-sloping 
A)  vertical 
B)  downward-sloping 
C)  horizontal 
D)  upward-sloping

Question 10

If the cross elasticity of demand between chicken and fish is 0.8, then chicken and fish are

Accepted Answer

A)  complements. 
B)  not related. 
C)  substitutes. 
D)  normal goods. 
A)  complements. 
B)  not related. 
C)  substitutes. 
D)  normal goods.

Question 11

Assume the demand for a good is elastic. If the price of the good decreases, then 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 12

Which of these is the MOST income elastic?

Accepted Answer

A)  bread 
B)  alcoholic beverages 
C)  spa visits 
D)  paper towels 
A)  bread 
B)  alcoholic beverages 
C)  spa visits 
D)  paper towels

Question 13

Jonny's Taco Shop faces a price-elastic demand curve for its tacos. It should decrease its price to increase its total revenue.

Accepted Answer

A) True 
 B)False

Question 14

When the price of coffee increased from $4.50 to $5.55, the quantity demanded decreased from 185 units sold to 150 units sold. Using the midpoint method, the price elasticity of demand is

Accepted Answer

A)  0.03. 
B)  6.95. 
C)  1. 
D)  0.81. 
A)  0.03. 
B)  6.95. 
C)  1. 
D)  0.81.

Question 15

Given the demand curve, the more inelastic the supply curve, the

Accepted Answer

A)  more the excise tax incidence is shifted to consumers. 
B)  greater is the deadweight loss. 
C)  smaller is the deadweight loss. 
D)  greater is the increase in price to consumers. 
A)  more the excise tax incidence is shifted to consumers. 
B)  greater is the deadweight loss. 
C)  smaller is the deadweight loss. 
D)  greater is the increase in price to consumers.

Question 16

The Medicare tax is a

Accepted Answer

A)  flat tax. 
B)  progressive tax. 
C)  regressive tax. 
D)  tariff. 
A)  flat tax. 
B)  progressive tax. 
C)  regressive tax. 
D)  tariff.

Question 17

Paradise City imposes a sales tax of 3% on everything that people buy within its city limits. Because this tax rate remains constant, regardless of the amount of goods purchased, this is a lump-sum tax.

Accepted Answer

A) True 
 B)False

Question 18

When a ride-sharing service implements "surge" pricing, raising all fares by 30%, drivers choose to work longer hours and this results in an increase of 40% more rides available. The price elasticity of supply for ride-sharing is _____, and the supply is _____.

Accepted Answer

A)  0.75; elastic 
B)  0.75; inelastic 
C)  1.33; elastic 
D)  1.33; inelastic 
A)  0.75; elastic 
B)  0.75; inelastic 
C)  1.33; elastic 
D)  1.33; inelastic

Question 19

If the cross elasticity of demand for good A with respect to good B is -4.4, then good A could be _____ and good B could be _____.

Accepted Answer

A)  beef; chicken 
B)  DVD player; DVDs 
C)  the University of Texas; the University of Oklahoma 
D)  Miller beer; Schlitz beer 
A)  beef; chicken 
B)  DVD player; DVDs 
C)  the University of Texas; the University of Oklahoma 
D)  Miller beer; Schlitz beer

Question 20

Cross elasticity of demand is calculated by dividing the percentage change of the quantity demanded of good A by the percentage change of the price of good

Accepted Answer

A) True 
 B)False

The sign of the elasticity of supply is

If the cross elasticity of demand for two goods is positive, the two goods are _____ goods.

If demand is unitary elastic, what happens to total revenue if the price increases by 5%?

For a given supply curve, the more elastic the demand, the _ the tax incidence on consumers and the _the deadweight loss will be.

If the price elasticity of demand is 10, then for every 1% increase in price, there is a _____ in quantity demanded.

In the town of Skateville, average income falls by 20% due to a recession. As a result, sales of skateboards fall by 15%. The income elasticity of demand is _, and skateboards are a(n) _ good.

The more elastic supply is for a given demand curve, the greater the tax incidence on _ and the _ the deadweight loss will be.

The flatter the demand curve, the less responsive consumers are to changes in price.

A perfectly inelastic demand is BEST represented by a(n) _____ demand curve.

If the cross elasticity of demand between chicken and fish is 0.8, then chicken and fish are

Assume the demand for a good is elastic. If the price of the good decreases, then total revenue

Which of these is the MOST income elastic?

Jonny's Taco Shop faces a price-elastic demand curve for its tacos. It should decrease its price to increase its total revenue.

When the price of coffee increased from $4.50 to $5.55, the quantity demanded decreased from 185 units sold to 150 units sold. Using the midpoint method, the price elasticity of demand is

Given the demand curve, the more inelastic the supply curve, the

The Medicare tax is a

Paradise City imposes a sales tax of 3% on everything that people buy within its city limits. Because this tax rate remains constant, regardless of the amount of goods purchased, this is a lump-sum tax.

When a ride-sharing service implements "surge" pricing, raising all fares by 30%, drivers choose to work longer hours and this results in an increase of 40% more rides available. The price elasticity of supply for ride-sharing is _, and the supply is _.

If the cross elasticity of demand for good A with respect to good B is -4.4, then good A could be _ and good B could be _.

Cross elasticity of demand is calculated by dividing the percentage change of the quantity demanded of good A by the percentage change of the price of good

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Exam 5: Elasticity

The sign of the elasticity of supply is

If the cross elasticity of demand for two goods is positive, the two goods are _____ goods.

If demand is unitary elastic, what happens to total revenue if the price increases by 5%?

For a given supply curve, the more elastic the demand, the _____ the tax incidence on consumers and the _____the deadweight loss will be.

If the price elasticity of demand is 10, then for every 1% increase in price, there is a _____ in quantity demanded.

In the town of Skateville, average income falls by 20% due to a recession. As a result, sales of skateboards fall by 15%. The income elasticity of demand is _____, and skateboards are a(n) _____ good.

The more elastic supply is for a given demand curve, the greater the tax incidence on _____ and the _____ the deadweight loss will be.

The flatter the demand curve, the less responsive consumers are to changes in price.

A perfectly inelastic demand is BEST represented by a(n) _____ demand curve.

If the cross elasticity of demand between chicken and fish is 0.8, then chicken and fish are

Assume the demand for a good is elastic. If the price of the good decreases, then total revenue

Which of these is the MOST income elastic?

Jonny's Taco Shop faces a price-elastic demand curve for its tacos. It should decrease its price to increase its total revenue.

When the price of coffee increased from $4.50 to $5.55, the quantity demanded decreased from 185 units sold to 150 units sold. Using the midpoint method, the price elasticity of demand is

Given the demand curve, the more inelastic the supply curve, the

The Medicare tax is a

Paradise City imposes a sales tax of 3% on everything that people buy within its city limits. Because this tax rate remains constant, regardless of the amount of goods purchased, this is a lump-sum tax.

When a ride-sharing service implements "surge" pricing, raising all fares by 30%, drivers choose to work longer hours and this results in an increase of 40% more rides available. The price elasticity of supply for ride-sharing is _____, and the supply is _____.

If the cross elasticity of demand for good A with respect to good B is -4.4, then good A could be _____ and good B could be _____.

Cross elasticity of demand is calculated by dividing the percentage change of the quantity demanded of good A by the percentage change of the price of 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

For a given supply curve, the more elastic the demand, the _ the tax incidence on consumers and the _the deadweight loss will be.

In the town of Skateville, average income falls by 20% due to a recession. As a result, sales of skateboards fall by 15%. The income elasticity of demand is _, and skateboards are a(n) _ good.

The more elastic supply is for a given demand curve, the greater the tax incidence on _ and the _ the deadweight loss will be.

When a ride-sharing service implements "surge" pricing, raising all fares by 30%, drivers choose to work longer hours and this results in an increase of 40% more rides available. The price elasticity of supply for ride-sharing is _, and the supply is _.

If the cross elasticity of demand for good A with respect to good B is -4.4, then good A could be _ and good B could be _.