Question 1

Those who support legalizing the sale and use of cocaine and heroin argue that:

Accepted Answer

A)  demand is highly inelastic, so legalization would reduce expenditures on drugs and reduce street crime. 
B)  demand is highly elastic because there are so many substitutes for these drugs. 
C)  addict demand is inelastic, but the demand by occasional users is elastic. 
D)  addict demand is elastic, but the demand by occasional users is inelastic. 
A)  demand is highly inelastic, so legalization would reduce expenditures on drugs and reduce street crime. 
B)  demand is highly elastic because there are so many substitutes for these drugs. 
C)  addict demand is inelastic, but the demand by occasional users is elastic. 
D)  addict demand is elastic, but the demand by occasional users is inelastic. A

Question 2

Refer to the above graph. When the quantity of product X sold increases from 8,000 to 10,000, the price elasticity of demand for product X over that range is:

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  unit-elastic. 
D)  perfectly inelastic. 
A)  elastic. 
B)  inelastic. 
C)  unit-elastic. 
D)  perfectly inelastic. C

Question 3

- Refer to the above data. What is the elasticity of demand between the prices of $4 and $3?

Accepted Answer

A)  0.2 
B)  0.5 
C)  1 
D)  2 
A)  0.2 
B)  0.5 
C)  1 
D)  2 C

Question 4

-  Refer to the figure above. The elasticity of supply for a product will be 2 when:

Accepted Answer

A)  a 1 percent decrease in the price causes a 0.2 percent decrease in quantity supplied. 
B)  a 2 percent decrease in price causes a 1 percent decrease in quantity supplied. 
C)  a 1 percent decrease in price causes a 2 percent decrease in quantity supplied. 
D)  a 2 percent decrease in price causes a 2 percent decrease in quantity supplied. 
A)  a 1 percent decrease in the price causes a 0.2 percent decrease in quantity supplied. 
B)  a 2 percent decrease in price causes a 1 percent decrease in quantity supplied. 
C)  a 1 percent decrease in price causes a 2 percent decrease in quantity supplied. 
D)  a 2 percent decrease in price causes a 2 percent decrease in quantity supplied.

Question 5

In some markets consumers may buy many different brands of a product. Which of the statements below best represents a situation where demand for a particular brand would be very elastic?

Accepted Answer

A)  "The different brands are almost identical so I always buy the cheapest." 
B)  "I use so little of that product that when I do buy it, I don't pay much attention to the price." 
C)  "The brand I buy is so superior to other available brands that I hardly consider the others." 
D)  "I pinch pennies in buying other products, but like most people I feel I owe it to myself to get the best brand of this product." 
A)  "The different brands are almost identical so I always buy the cheapest." 
B)  "I use so little of that product that when I do buy it, I don't pay much attention to the price." 
C)  "The brand I buy is so superior to other available brands that I hardly consider the others." 
D)  "I pinch pennies in buying other products, but like most people I feel I owe it to myself to get the best brand of this product."

Question 6

- Refer to the graph above and assume that the areas of the boxes are the same. Consider a situation where price decreases from P2 to P1. In this price range, demand is relatively:

Accepted Answer

A)  inelastic because the loss in total revenue (areas D + G + I + J) is greater than the gain in total revenue (areas C + F + H). 
B)  elastic because the loss in total revenue (areas C + F + H) is greater than the gain in total revenue (area J). 
C)  elastic because the loss in total revenue (area J) is less than the gain in total revenue (areas C + F + H). 
D)  inelastic because the gain in total revenue (area J) is less than the loss in total revenue (areas C + F + H). 
A)  inelastic because the loss in total revenue (areas D + G + I + J) is greater than the gain in total revenue (areas C + F + H). 
B)  elastic because the loss in total revenue (areas C + F + H) is greater than the gain in total revenue (area J). 
C)  elastic because the loss in total revenue (area J) is less than the gain in total revenue (areas C + F + H). 
D)  inelastic because the gain in total revenue (area J) is less than the loss in total revenue (areas C + F + H).

Question 7

Suppose you are given the following data on demand for a product. The price elasticity of demand when price decreases from $9 to $7 is:

Accepted Answer

A)  0.63. 
B)  1.16. 
C)  1.60. 
D)  2.27. 
A)  0.63. 
B)  1.16. 
C)  1.60. 
D)  2.27.

Question 8

-Refer to the table above. Starting at a $1 price, at what price range does demand become elastic?

Accepted Answer

A)  $1-2 
B)  $2-3 
C)  $3-4 
D)  $4-5 
A)  $1-2 
B)  $2-3 
C)  $3-4 
D)  $4-5

Question 9

- Refer to the graph above and assume that the areas of the boxes are the same. Consider a situation where price increases from P3 to P4. In this price range, demand is relatively:

Accepted Answer

A)  inelastic because the loss in total revenue (areas E + F + G) is greater than the gain in total revenue (area 
A) . 
B)  elastic because the loss in total revenue (areas E + F + G) is greater than the gain in total revenue (area 
A) . 
C)  elastic because the loss in total revenue (area 
A)  is greater than the gain in total revenue (areas E + F + G). 
D)  inelastic because the loss in total revenue (area 
A)  is greater than the gain in total revenue (areas E + F + G). 
A)  inelastic because the loss in total revenue (areas E + F + G) is greater than the gain in total revenue (area 
A) . 
B)  elastic because the loss in total revenue (areas E + F + G) is greater than the gain in total revenue (area 
A) . 
C)  elastic because the loss in total revenue (area 
A)  is greater than the gain in total revenue (areas E + F + G). 
D)  inelastic because the loss in total revenue (area 
A)  is greater than the gain in total revenue (areas E + F + G).

Question 10

If a union argues that a price cut will boost revenues of the firm and management argues that the opposite is true, then the price elasticity of demand is:

Accepted Answer

A)  unit-elastic from the union's perspective and unit-inelastic from management's perspective. 
B)  perfectly inelastic from the union's perspective and perfectly elastic from management's perspective. 
C)  elastic from the union's perspective; inelastic from management's perspective. 
D)  inelastic from the union's perspective; elastic from management's perspective. 
A)  unit-elastic from the union's perspective and unit-inelastic from management's perspective. 
B)  perfectly inelastic from the union's perspective and perfectly elastic from management's perspective. 
C)  elastic from the union's perspective; inelastic from management's perspective. 
D)  inelastic from the union's perspective; elastic from management's perspective.

Question 11

Augi sells 300 cat toys each month when the price is $5 per toy. When Augi lowered the price to $4, she sold 400 toys. The price elasticity of demand over the $4 to $5 range is approximately:

Accepted Answer

A)  0.78 and elastic. 
B)  1.29 and elastic. 
C)  0.78 and inelastic. 
D)  1.29 and inelastic. 
A)  0.78 and elastic. 
B)  1.29 and elastic. 
C)  0.78 and inelastic. 
D)  1.29 and inelastic.

Question 12

- Refer to the above data. Over which price range is the price elasticity of demand elastic?

Accepted Answer

A)  $4-$6 
B)  $6-$8 
C)  $10-$12 
D)  $12-$14 
A)  $4-$6 
B)  $6-$8 
C)  $10-$12 
D)  $12-$14

Question 13

-Refer to the above data. What is the elasticity of demand between the prices of $3 and $2?

Accepted Answer

A)  0.22 
B)  0.40 
C)  0.56 
D)  1.22 
A)  0.22 
B)  0.40 
C)  0.56 
D)  1.22

Question 14

Refer to the figure above. Over the $5-$6 range, the elasticity of demand using the midpoint formula is:

Accepted Answer

A)  0.22. 
B)  0.88. 
C)  1.00. 
D)  1.16. 
A)  0.22. 
B)  0.88. 
C)  1.00. 
D)  1.16.

Question 15

Refer to the graph above. Over the $5-$6 range, the elasticity of supply using the midpoints formula is:

Accepted Answer

A)  0.22. 
B)  0.88. 
C)  1.00. 
D)  1.22. 
A)  0.22. 
B)  0.88. 
C)  1.00. 
D)  1.22.

Question 16

Which of the following consumer goods and services is most like to suffer declining sales during a recession?

Accepted Answer

A)  haircuts. 
B)  ground beef. 
C)  toothpaste. 
D)  restaurant meals. 
A)  haircuts. 
B)  ground beef. 
C)  toothpaste. 
D)  restaurant meals.

Question 17

Those who oppose the legalization of cocaine and heroin argue that:

Accepted Answer

A)  demand is inelastic for both addicts and occasional users. 
B)  demand is highly elastic for both addicts and occasional users. 
C)  addict demand is inelastic, but the demand by occasional users is elastic. 
D)  addict demand is elastic, but the demand by occasional users is inelastic. 
A)  demand is inelastic for both addicts and occasional users. 
B)  demand is highly elastic for both addicts and occasional users. 
C)  addict demand is inelastic, but the demand by occasional users is elastic. 
D)  addict demand is elastic, but the demand by occasional users is inelastic.

Question 18

The government is most likely to block a proposed merger between two companies when:

Accepted Answer

A)  the cross-elasticity between the companies' products is positive and large. 
B)  the cross-elasticity between the companies' products is negative and large. 
C)  the income elasticity of the companies' products is positive. 
D)  the income elasticity of the companies' products is negative. 
A)  the cross-elasticity between the companies' products is positive and large. 
B)  the cross-elasticity between the companies' products is negative and large. 
C)  the income elasticity of the companies' products is positive. 
D)  the income elasticity of the companies' products is negative.

Question 19

-Refer to the above data. What is the price elasticity of demand over the range of $8 to $10?

Accepted Answer

A)  0.11 
B)  0.47 
C)  1.93 
D)  1.43 
A)  0.11 
B)  0.47 
C)  1.93 
D)  1.43

Question 20

- Refer to the figure above. What is the price elasticity of supply between points A and B above?

Accepted Answer

A)  -1 
B)  1/3 
C)  1 
D)  2 
A)  -1 
B)  1/3 
C)  1 
D)  2

Those who support legalizing the sale and use of cocaine and heroin argue that:

Refer to the above graph. When the quantity of product X sold increases from 8,000 to 10,000, the price elasticity of demand for product X over that range is:

- Refer to the above data. What is the elasticity of demand between the prices of $4 and $3?

- Refer to the figure above. The elasticity of supply for a product will be 2 when:

In some markets consumers may buy many different brands of a product. Which of the statements below best represents a situation where demand for a particular brand would be very elastic?

- Refer to the graph above and assume that the areas of the boxes are the same. Consider a situation where price decreases from P₂ to P₁. In this price range, demand is relatively:

Suppose you are given the following data on demand for a product. The price elasticity of demand when price decreases from $9 to $7 is:

-Refer to the table above. Starting at a $1 price, at what price range does demand become elastic?

- Refer to the graph above and assume that the areas of the boxes are the same. Consider a situation where price increases from P₃ to P₄. In this price range, demand is relatively:

If a union argues that a price cut will boost revenues of the firm and management argues that the opposite is true, then the price elasticity of demand is:

Augi sells 300 cat toys each month when the price is $5 per toy. When Augi lowered the price to $4, she sold 400 toys. The price elasticity of demand over the $4 to $5 range is approximately:

- Refer to the above data. Over which price range is the price elasticity of demand elastic?

-Refer to the above data. What is the elasticity of demand between the prices of $3 and $2?

Refer to the figure above. Over the $5-$6 range, the elasticity of demand using the midpoint formula is:

Refer to the graph above. Over the $5-$6 range, the elasticity of supply using the midpoints formula is:

Which of the following consumer goods and services is most like to suffer declining sales during a recession?

Those who oppose the legalization of cocaine and heroin argue that:

The government is most likely to block a proposed merger between two companies when:

-Refer to the above data. What is the price elasticity of demand over the range of $8 to $10?

- Refer to the figure above. What is the price elasticity of supply between points A and B above?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Businesses and Their Costs

Pure Competition

Pure Monopoly

Monopolistic Competition and Oligopoly

GDP and Economic Growth

Business Cycles, Unemployment, and Inflation

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Interest Rates and Monetary Policy

International Trade and Exchange Rates

Wage Determination

Income Inequality and Poverty

Filters

Exam 4: Elasticity of Demand and Supply

Those who support legalizing the sale and use of cocaine and heroin argue that:

Refer to the above graph. When the quantity of product X sold increases from 8,000 to 10,000, the price elasticity of demand for product X over that range is:

- Refer to the above data. What is the elasticity of demand between the prices of $4 and $3?

- Refer to the figure above. The elasticity of supply for a product will be 2 when:

In some markets consumers may buy many different brands of a product. Which of the statements below best represents a situation where demand for a particular brand would be very elastic?

- Refer to the graph above and assume that the areas of the boxes are the same. Consider a situation where price decreases from P2 to P1. In this price range, demand is relatively:

Suppose you are given the following data on demand for a product. The price elasticity of demand when price decreases from $9 to $7 is:

-Refer to the table above. Starting at a $1 price, at what price range does demand become elastic?

- Refer to the graph above and assume that the areas of the boxes are the same. Consider a situation where price increases from P3 to P4. In this price range, demand is relatively:

If a union argues that a price cut will boost revenues of the firm and management argues that the opposite is true, then the price elasticity of demand is:

Augi sells 300 cat toys each month when the price is $5 per toy. When Augi lowered the price to $4, she sold 400 toys. The price elasticity of demand over the $4 to $5 range is approximately:

- Refer to the above data. Over which price range is the price elasticity of demand elastic?

-Refer to the above data. What is the elasticity of demand between the prices of $3 and $2?

Refer to the figure above. Over the $5-$6 range, the elasticity of demand using the midpoint formula is:

Refer to the graph above. Over the $5-$6 range, the elasticity of supply using the midpoints formula is:

Which of the following consumer goods and services is most like to suffer declining sales during a recession?

Those who oppose the legalization of cocaine and heroin argue that:

The government is most likely to block a proposed merger between two companies when:

-Refer to the above data. What is the price elasticity of demand over the range of $8 to $10?

- Refer to the figure above. What is the price elasticity of supply between points A and B above?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Businesses and Their Costs

Pure Competition

Pure Monopoly

Monopolistic Competition and Oligopoly

GDP and Economic Growth

Business Cycles, Unemployment, and Inflation

Aggregate Demand and Aggregate Supply

Fiscal Policy, Deficits, and Debt

Money, Banking, and Financial Institutions

Interest Rates and Monetary Policy

International Trade and Exchange Rates

Wage Determination

Income Inequality and Poverty

Filters

- Refer to the graph above and assume that the areas of the boxes are the same. Consider a situation where price decreases from P₂ to P₁. In this price range, demand is relatively:

- Refer to the graph above and assume that the areas of the boxes are the same. Consider a situation where price increases from P₃ to P₄. In this price range, demand is relatively: