Question 1

When the price elasticity of demand for a good is 1.5, this means that a 1 percent change in price creates a ______ in quantity demanded.

Accepted Answer

A)  0.1 percent increase 
B)  1.5 percent decrease 
C)  1.5 percent increase 
D)  15 percent increase 
E)  15 percent decrease 
A)  0.1 percent increase 
B)  1.5 percent decrease 
C)  1.5 percent increase 
D)  15 percent increase 
E)  15 percent decrease

Question 2

The air we breathe is essential, yet a tax on air is not feasible for all the following reasons except

Accepted Answer

A)  a lack of public support for the tax 
B)  the demand for air is elastic 
C)  non-taxpayers could breathe 
D)  citizens could move away from taxed regions 
E)  it would require a tyrannical leader/government 
A)  a lack of public support for the tax 
B)  the demand for air is elastic 
C)  non-taxpayers could breathe 
D)  citizens could move away from taxed regions 
E)  it would require a tyrannical leader/government

Question 3

The Grinch is now the mayor of your hometown, and he's still trying to steal Christmas. On the day after Thanksgiving, he announces a $25 tax on fresh Christmas trees. Tree farmers are angry to hear this because they have already delivered this season's freshly cut trees to the tree lots in your town. You hear your neighbors planning to buy an artificial tree, and your family decides to drive to the next town to buy a tree.
a. Who will bear the biggest share of the burden the first Christmas season this tax is in effect? Why?
 b. Will your answer change for subsequent Christmases? Why?

Accepted Answer

a. The tree farmers will bear the bigges

Question 4

The absolute value of the price elasticity of demand for hamburger is higher than that of meat in general.

Accepted Answer

A) True 
 B)False

Question 5

If the quantity you buy of a good increases when your income increases, the good is clearly a(n)

Accepted Answer

A)  essential good 
B)  inferior good 
C)  substitute good 
D)  complementary good 
E)  normal good 
A)  essential good 
B)  inferior good 
C)  substitute good 
D)  complementary good 
E)  normal good

Question 6

If the income elasticity of demand for dental services is -0.6, this means that people purchase more dental services when the price is lowered.

Accepted Answer

A) True 
 B)False

Question 7

The price elasticity of demand for a good is influenced by which of the following factors?

Accepted Answer

A)  the responsiveness to changes in income 
B)  the cost of resources to produce the good 
C)  the availability of substitutes 
D)  the level of competition among sellers 
E)  the number of uses for the good 
A)  the responsiveness to changes in income 
B)  the cost of resources to produce the good 
C)  the availability of substitutes 
D)  the level of competition among sellers 
E)  the number of uses for the good

Question 8

Price elasticity of demand relates to the

Accepted Answer

A)  sensitivity of people's quantity demanded to changes in price 
B)  sensitivity of price to changes in people's quantity demanded 
C)  percentage shifts in demand when price changes 
D)  percentage shifts in demand for every one-percent change in price 
E)  ratio of actual to expected price changes 
A)  sensitivity of people's quantity demanded to changes in price 
B)  sensitivity of price to changes in people's quantity demanded 
C)  percentage shifts in demand when price changes 
D)  percentage shifts in demand for every one-percent change in price 
E)  ratio of actual to expected price changes

Question 9

One response to increased oil prices, which reflects long-run elasticity and not short-run elasticity, is

Accepted Answer

A)  gasoline rationing 
B)  fewer joy rides 
C)  shorter family vacations 
D)  smaller cars 
E)  less winter heat 
A)  gasoline rationing 
B)  fewer joy rides 
C)  shorter family vacations 
D)  smaller cars 
E)  less winter heat

Question 10

After reading the chapter on elasticity, which of the following statements do you know Is not true?

Accepted Answer

A)  Price elasticity of demand for basic foods is low. 
B)  When price elasticity of demand is very high, the seller can raise price with confidence knowing that only a few buyers will leave the market. 
C)  The availability of close substitutes affects the elasticity of demand for a good. 
D)  Goods that are low priced usually have price elasticities of demand that are low as well. 
E)  Elasticities increase as the price of the good increases. 
A)  Price elasticity of demand for basic foods is low. 
B)  When price elasticity of demand is very high, the seller can raise price with confidence knowing that only a few buyers will leave the market. 
C)  The availability of close substitutes affects the elasticity of demand for a good. 
D)  Goods that are low priced usually have price elasticities of demand that are low as well. 
E)  Elasticities increase as the price of the good increases.

Question 11

Suppose that the price of gasoline doubles overnight. Why is the short-run price elasticity of demand for gasoline different from the long run?

Accepted Answer

takes time to adjust. In the s

Question 12

In differentiating between the short-run and long-run elasticities for the same good, when economists talk about short-run elasticities,

Accepted Answer

A)  they cannot distinguish between the two types 
B)  there is no differentiation if it's the same good 
C)  they are the same as long-run elasticities for the same good 
D)  they are usually higher than long-run elasticities 
E)  they are usually lower than long-run elasticities 
A)  they cannot distinguish between the two types 
B)  there is no differentiation if it's the same good 
C)  they are the same as long-run elasticities for the same good 
D)  they are usually higher than long-run elasticities 
E)  they are usually lower than long-run elasticities

Question 13

In order to raise the most revenue, the government is better off taxing the producers of a good for which demand is elastic.

Accepted Answer

A) True 
 B)False

Question 14

Demand for farm products, in general, is said to be relatively price inelastic. Therefore, U.S. farm policy, which is designed to keep farm prices above equilibrium, should

Accepted Answer

A)  decrease farm incomes 
B)  increase farm incomes 
C)  not affect farm incomes 
D)  reduce the number of farmers 
E)  lower food prices for consumers 
A)  decrease farm incomes 
B)  increase farm incomes 
C)  not affect farm incomes 
D)  reduce the number of farmers 
E)  lower food prices for consumers

Question 15

A health club sells 50 memberships when the monthly price is $60 and 70 memberships when the monthly price is $40. Using the method of average values, the price elasticity of demand for memberships at this health club is

Accepted Answer

A)  6.00 
B)  0.10 
C)  1.00 
D)  0.25 
E)  0.83 
A)  6.00 
B)  0.10 
C)  1.00 
D)  0.25 
E)  0.83

Question 16

Elasticity of supply becomes ________ elastic over time because ________.

Accepted Answer

A)  less; of the growing scarcity of resources 
B)  less; suppliers have more time to acquire additional resources to achieve desired capacity 
C)  more; demand becomes more inelastic 
D)  more; demand will always continue to increase 
E)  more; suppliers have more time to acquire additional resources to achieve desired capacity 
A)  less; of the growing scarcity of resources 
B)  less; suppliers have more time to acquire additional resources to achieve desired capacity 
C)  more; demand becomes more inelastic 
D)  more; demand will always continue to increase 
E)  more; suppliers have more time to acquire additional resources to achieve desired capacity

Question 17

If Lisa Beth needs special film for her expensive new camera, then for her these two goods are

Accepted Answer

A)  substitute 
B)  complementary 
C)  unit elastic 
D)  elastic 
E)  inelastic 
A)  substitute 
B)  complementary 
C)  unit elastic 
D)  elastic 
E)  inelastic

Question 18

If the price elasticity of demand for a good is 0.45, it is most likely that the good

Accepted Answer

A)  has many close substitutes 
B)  is a luxury good 
C)  is high-priced 
D)  is a complementary good 
E)  has few close substitutes 
A)  has many close substitutes 
B)  is a luxury good 
C)  is high-priced 
D)  is a complementary good 
E)  has few close substitutes

Question 19

-Short-run and long-run supply curves are depicted in Exhibit D-3. Which of the following statements is true?

Accepted Answer

A)  Supply curve S1 is the long-run supply curve. 
B)  Supply curve S1 is more elastic than supply curve S2. 
C)  Supply curve S2 is more elastic than supply curve S3. 
D)  Supply curve S3 is the long-run supply curve. 
E)  Supply curve S3 is less elastic than supply curve S2. 
A)  Supply curve S1 is the long-run supply curve. 
B)  Supply curve S1 is more elastic than supply curve S2. 
C)  Supply curve S2 is more elastic than supply curve S3. 
D)  Supply curve S3 is the long-run supply curve. 
E)  Supply curve S3 is less elastic than supply curve S2.

Question 20

If the price elasticity of demand for a good is 3.0, it is clear that the good

Accepted Answer

A)  would be a poor choice to tax if the object is to raise tax revenue 
B)  would be an excellent choice to tax if the object is to raise revenue 
C)  is an essential good 
D)  has a demand curve that is price inelastic at every price level 
E)  is a complementary good 
A)  would be a poor choice to tax if the object is to raise tax revenue 
B)  would be an excellent choice to tax if the object is to raise revenue 
C)  is an essential good 
D)  has a demand curve that is price inelastic at every price level 
E)  is a complementary good

When the price elasticity of demand for a good is 1.5, this means that a 1 percent change in price creates a ______ in quantity demanded.

The air we breathe is essential, yet a tax on air is not feasible for all the following reasons except

The absolute value of the price elasticity of demand for hamburger is higher than that of meat in general.

If the quantity you buy of a good increases when your income increases, the good is clearly a(n)

If the income elasticity of demand for dental services is -0.6, this means that people purchase more dental services when the price is lowered.

The price elasticity of demand for a good is influenced by which of the following factors?

Price elasticity of demand relates to the

One response to increased oil prices, which reflects long-run elasticity and not short-run elasticity, is

After reading the chapter on elasticity, which of the following statements do you know Is not true?

Suppose that the price of gasoline doubles overnight. Why is the short-run price elasticity of demand for gasoline different from the long run?

In differentiating between the short-run and long-run elasticities for the same good, when economists talk about short-run elasticities,

In order to raise the most revenue, the government is better off taxing the producers of a good for which demand is elastic.

Demand for farm products, in general, is said to be relatively price inelastic. Therefore, U.S. farm policy, which is designed to keep farm prices above equilibrium, should

A health club sells 50 memberships when the monthly price is $60 and 70 memberships when the monthly price is $40. Using the method of average values, the price elasticity of demand for memberships at this health club is

Elasticity of supply becomes elastic over time because .

If Lisa Beth needs special film for her expensive new camera, then for her these two goods are

If the price elasticity of demand for a good is 0.45, it is most likely that the good

-Short-run and long-run supply curves are depicted in Exhibit D-3. Which of the following statements is true?

If the price elasticity of demand for a good is 3.0, it is clear that the good

Introduction

Production Possibilities and Opportunity Costs

Demand and Supply

Happiness, Utility, and Consumer Choice

Price Ceilings and Price Floors

Entrepreneurship and Business Ownership

Costs of Production

Maximizing Profit

Identifying Markets and Market Structures

Price and Output in Monopoly, Monopolistic Competition, and Perfect Competition

Price and Output Determination Under Oligopoly

Antitrust and Regulation

Externalities, Market Failure, and Public Choice

Wage Rates in Competitive Labor Markets

Wages and Employment: Monopsony and Labor Unions

Interest, Rent, and Profit

Income Distribution and Poverty

International Trade

Exchange Rates, Balance of Payments, and International Debt

The Economic Problems of Less-Developed Economies

Filters

Exam 4: Elasticity

When the price elasticity of demand for a good is 1.5, this means that a 1 percent change in price creates a ______ in quantity demanded.

The air we breathe is essential, yet a tax on air is not feasible for all the following reasons except

The absolute value of the price elasticity of demand for hamburger is higher than that of meat in general.

If the quantity you buy of a good increases when your income increases, the good is clearly a(n)

If the income elasticity of demand for dental services is -0.6, this means that people purchase more dental services when the price is lowered.

The price elasticity of demand for a good is influenced by which of the following factors?

Price elasticity of demand relates to the

One response to increased oil prices, which reflects long-run elasticity and not short-run elasticity, is

After reading the chapter on elasticity, which of the following statements do you know Is not true?

Suppose that the price of gasoline doubles overnight. Why is the short-run price elasticity of demand for gasoline different from the long run?

In differentiating between the short-run and long-run elasticities for the same good, when economists talk about short-run elasticities,

In order to raise the most revenue, the government is better off taxing the producers of a good for which demand is elastic.

Demand for farm products, in general, is said to be relatively price inelastic. Therefore, U.S. farm policy, which is designed to keep farm prices above equilibrium, should

A health club sells 50 memberships when the monthly price is $60 and 70 memberships when the monthly price is $40. Using the method of average values, the price elasticity of demand for memberships at this health club is

Elasticity of supply becomes ________ elastic over time because ________.

If Lisa Beth needs special film for her expensive new camera, then for her these two goods are

If the price elasticity of demand for a good is 0.45, it is most likely that the good

-Short-run and long-run supply curves are depicted in Exhibit D-3. Which of the following statements is true?

If the price elasticity of demand for a good is 3.0, it is clear that the good

Introduction

Production Possibilities and Opportunity Costs

Demand and Supply

Happiness, Utility, and Consumer Choice

Price Ceilings and Price Floors

Entrepreneurship and Business Ownership

Costs of Production

Maximizing Profit

Identifying Markets and Market Structures

Price and Output in Monopoly, Monopolistic Competition, and Perfect Competition

Price and Output Determination Under Oligopoly

Antitrust and Regulation

Externalities, Market Failure, and Public Choice

Wage Rates in Competitive Labor Markets

Wages and Employment: Monopsony and Labor Unions

Interest, Rent, and Profit

Income Distribution and Poverty

International Trade

Exchange Rates, Balance of Payments, and International Debt

The Economic Problems of Less-Developed Economies

Filters

Elasticity of supply becomes elastic over time because .