Question 1

Rank the price elasticities of the following goods in descending order (from highest to lowest).

Accepted Answer

A)  chewing gum, sport shirt, 4-bedroom house 
B)  4-bedroom house, chewing gum, sport shirt 
C)  chewing gum, 4-bedroom house, sport shirt 
D)  4-bedroom house, sport shirt, chewing gum 
E)  sport shirt, chewing gum, 4-bedroom house 
A)  chewing gum, sport shirt, 4-bedroom house 
B)  4-bedroom house, chewing gum, sport shirt 
C)  chewing gum, 4-bedroom house, sport shirt 
D)  4-bedroom house, sport shirt, chewing gum 
E)  sport shirt, chewing gum, 4-bedroom house

Question 2

When comparing price elasticities of demand in the long run to the short run, what can we can say about the long-run elasticities?

Accepted Answer

A)  Within every price range, the price elasticity of demand is more elastic. 
B)  Consumers are less sensitive to price changes. 
C)  Consumers are inclined to make fewer adjustments to quantity demanded when price changes. 
D)  Within every price range, the price elasticity of demand is less elastic. 
E)  Because consumers had more time to adjust to a price decrease or increase, their reaction to either is much smaller. 
A)  Within every price range, the price elasticity of demand is more elastic. 
B)  Consumers are less sensitive to price changes. 
C)  Consumers are inclined to make fewer adjustments to quantity demanded when price changes. 
D)  Within every price range, the price elasticity of demand is less elastic. 
E)  Because consumers had more time to adjust to a price decrease or increase, their reaction to either is much smaller.

Question 3

If a specific segment of a demand curve is price elastic, then we know that anywhere along that segment, the

Accepted Answer

A)  percentage change in the quantity demanded exceeds one 
B)  percentage change in quantity demanded exceeds the percentage change in price 
C)  percentage change in price exceeds the percentage change in quantity demanded 
D)  the change in quantity demanded exceeds the change in price 
E)  the good has no close substitutes 
A)  percentage change in the quantity demanded exceeds one 
B)  percentage change in quantity demanded exceeds the percentage change in price 
C)  percentage change in price exceeds the percentage change in quantity demanded 
D)  the change in quantity demanded exceeds the change in price 
E)  the good has no close substitutes

Question 4

Within different price ranges along a demand curve, price elasticities of demand are

Accepted Answer

A)  constant across all price ranges 
B)  different, and greater, equal to, or less than one depending on the price range 
C)  positive or negative, depending upon whether they are elastic or inelastic 
D)  always less than one because total revenue increases when price falls 
E)  always greater than one because total revenue increases when price falls 
A)  constant across all price ranges 
B)  different, and greater, equal to, or less than one depending on the price range 
C)  positive or negative, depending upon whether they are elastic or inelastic 
D)  always less than one because total revenue increases when price falls 
E)  always greater than one because total revenue increases when price falls

Question 5

When the price elasticity of demand is calculated, if price increases, quantity demanded decreases and if price decreases, quantity demanded increases so the result will be

Accepted Answer

A)  positive when price increases and negative when it decreases 
B)  negative when price increases and positive when it decreases 
C)  greater than one when price increases and less than one when it decreases 
D)  less than one when price increases and greater than one when it decreases 
E)  negative whether we look at a price increase or decrease 
A)  positive when price increases and negative when it decreases 
B)  negative when price increases and positive when it decreases 
C)  greater than one when price increases and less than one when it decreases 
D)  less than one when price increases and greater than one when it decreases 
E)  negative whether we look at a price increase or decrease

Question 6

There are two methods of calculating elasticities. One calculates the ratio of the percentage changes in quantity and price, and the other calculates the average percentage changes in quantity and price. We use the second method because it

Accepted Answer

A)  involves an additional calculation 
B)  is not sensitive to direction of movement 
C)  is sensitive to direction of movement 
D)  is never wrong 
E)  always has the same sign 
A)  involves an additional calculation 
B)  is not sensitive to direction of movement 
C)  is sensitive to direction of movement 
D)  is never wrong 
E)  always has the same sign

Question 7

The cross-price elasticity of demand for generic brand pasta, an inferior good, would be expected to be less than zero.

Accepted Answer

A) True 
 B)False

Question 8

The reason for the use of the "averaging equation" to compute the price elasticity ofdemand is that

Accepted Answer

A)  it would be impossible to connect a change in price specifically to a change inquantity demanded otherwise 
B)  the elasticity within a price range differs depending on whether you are measuringprice increases or decreases 
C)  otherwise, the answer is sometimes negative and sometimes positive 
D)  it measure sensitivity to price changes more accurately 
E)  economists find the average elasticity to be a useful tool in their research 
A)  it would be impossible to connect a change in price specifically to a change inquantity demanded otherwise 
B)  the elasticity within a price range differs depending on whether you are measuringprice increases or decreases 
C)  otherwise, the answer is sometimes negative and sometimes positive 
D)  it measure sensitivity to price changes more accurately 
E)  economists find the average elasticity to be a useful tool in their research

Question 9

According to the text, the income elasticity of demand for food in industrialized nations is lower than that of poorer nations.

Accepted Answer

A) True 
 B)False

Question 10

It is Valentine's Day and Fred is desperately searching all over town for a dozen roses to give to Diane. "I'll pay anything for a dozen roses," he says. Whether he really means it or not, the statement implies that his price elasticity of demand for roses is

Accepted Answer

A)  infinite 
B)  negative 
C)  one 
D)  greater than one 
E)  zero 
A)  infinite 
B)  negative 
C)  one 
D)  greater than one 
E)  zero

Question 11

-In Exhibit D-1, price elasticity of demand within the price range $10 and $8 is

Accepted Answer

A)  0.67 
B)  1.5 
C)  2.0 
D)  1.56 
E)  1.0 
A)  0.67 
B)  1.5 
C)  2.0 
D)  1.56 
E)  1.0

Question 12

If a good has a price elasticity of demand equal to 0.4, and the price elasticity of supply is equal to 6.5, the good is a strong candidate for a unit tax.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following pairs best represents substitute goods?

Accepted Answer

A)  French fries and uncooked potatoes 
B)  French fries and hot dogs 
C)  French fries and French toast 
D)  French fries and fried onion rings 
E)  French fries and the French chef 
A)  French fries and uncooked potatoes 
B)  French fries and hot dogs 
C)  French fries and French toast 
D)  French fries and fried onion rings 
E)  French fries and the French chef

Question 14

To raise the most tax revenue, governments should consider taxing goods whose

Accepted Answer

A)  income elasticity of demand is high 
B)  price elasticity of demand is low 
C)  income elasticity of supply is low 
D)  income elasticity of demand is high. 
E)  cross elasticity of demand is positive 
A)  income elasticity of demand is high 
B)  price elasticity of demand is low 
C)  income elasticity of supply is low 
D)  income elasticity of demand is high. 
E)  cross elasticity of demand is positive

Question 15

Larissa is a famous courtroom attorney. She charges clients $300 per hour for her legal services. Last year she earned $450,000. This year, she raised her price to $350 per hour and her income increased to $490,000. Which of the following is most likely to represent the price elasticity of demand for Larissa's legal services?

Accepted Answer

A)  It is approximately 2.30. 
B)  It is approximately 1.60. 
C)  It is approximately 1.00. 
D)  It is approximately 0.45. 
E)  It is approximately 6.10. 
A)  It is approximately 2.30. 
B)  It is approximately 1.60. 
C)  It is approximately 1.00. 
D)  It is approximately 0.45. 
E)  It is approximately 6.10.

Question 16

The percentage change in the quantity demanded of film divided by the percentage change in the price of cameras indicates

Accepted Answer

A)  the price elasticity of demand for film 
B)  the price elasticity of demand for cameras 
C)  the price elasticity of supply for film 
D)  the price elasticity of supply for cameras 
E)  nothing, because the two goods fall into the broadly defined category of photographic equipment 
A)  the price elasticity of demand for film 
B)  the price elasticity of demand for cameras 
C)  the price elasticity of supply for film 
D)  the price elasticity of supply for cameras 
E)  nothing, because the two goods fall into the broadly defined category of photographic equipment

Question 17

Price elasticity of supply refers to the

Accepted Answer

A)  change in supply that results from a change in demand 
B)  percentage change in supply generated by a percentage change in demand 
C)  change in price that results from a change in supply 
D)  percentage change in price generated by a percentage change in supply 
E)  percentage change in supply generated by a percentage change in price 
A)  change in supply that results from a change in demand 
B)  percentage change in supply generated by a percentage change in demand 
C)  change in price that results from a change in supply 
D)  percentage change in price generated by a percentage change in supply 
E)  percentage change in supply generated by a percentage change in price

Question 18

You are part of a local community theater group. Its goal is to raise as much revenue as possible. Mary suggests raising ticket prices. Is she right?

Accepted Answer

A)  yes if the demand for tickets is price inelastic 
B)  no if the demand for tickets is price inelastic 
C)  yes because raising prices always increases revenue 
D)  no because raising prices reduces sales and revenue 
E)  most likely because the demand curve for theater tickets is typically inelastic 
A)  yes if the demand for tickets is price inelastic 
B)  no if the demand for tickets is price inelastic 
C)  yes because raising prices always increases revenue 
D)  no because raising prices reduces sales and revenue 
E)  most likely because the demand curve for theater tickets is typically inelastic

Question 19

Which of the following events would most likely increase the price elasticity of demand for scalping tickets to Chicago Bears games?

Accepted Answer

A)  new uniforms for the players 
B)  a winning season 
C)  a decrease in the number of seats available at the stadium 
D)  a losing season 
E)  an increase in the number of seats available at the stadium 
A)  new uniforms for the players 
B)  a winning season 
C)  a decrease in the number of seats available at the stadium 
D)  a losing season 
E)  an increase in the number of seats available at the stadium

Question 20

Engel's Law, relating to the demand for food,

Accepted Answer

A)  states that food demand is inelastic 
B)  holds more strongly in developed countries 
C)  indicates why the food sector experiences more than proportionate increases in quantities demanded as incomes rise 
D)  shows why food demand expands as citizen education improves 
E)  was only relevant when established in the 1800s 
A)  states that food demand is inelastic 
B)  holds more strongly in developed countries 
C)  indicates why the food sector experiences more than proportionate increases in quantities demanded as incomes rise 
D)  shows why food demand expands as citizen education improves 
E)  was only relevant when established in the 1800s

Rank the price elasticities of the following goods in descending order (from highest to lowest).

When comparing price elasticities of demand in the long run to the short run, what can we can say about the long-run elasticities?

If a specific segment of a demand curve is price elastic, then we know that anywhere along that segment, the

Within different price ranges along a demand curve, price elasticities of demand are

When the price elasticity of demand is calculated, if price increases, quantity demanded decreases and if price decreases, quantity demanded increases so the result will be

There are two methods of calculating elasticities. One calculates the ratio of the percentage changes in quantity and price, and the other calculates the average percentage changes in quantity and price. We use the second method because it

The cross-price elasticity of demand for generic brand pasta, an inferior good, would be expected to be less than zero.

The reason for the use of the "averaging equation" to compute the price elasticity ofdemand is that

According to the text, the income elasticity of demand for food in industrialized nations is lower than that of poorer nations.

It is Valentine's Day and Fred is desperately searching all over town for a dozen roses to give to Diane. "I'll pay anything for a dozen roses," he says. Whether he really means it or not, the statement implies that his price elasticity of demand for roses is

-In Exhibit D-1, price elasticity of demand within the price range $10 and $8 is

If a good has a price elasticity of demand equal to 0.4, and the price elasticity of supply is equal to 6.5, the good is a strong candidate for a unit tax.

Which of the following pairs best represents substitute goods?

To raise the most tax revenue, governments should consider taxing goods whose

The percentage change in the quantity demanded of film divided by the percentage change in the price of cameras indicates

Price elasticity of supply refers to the

You are part of a local community theater group. Its goal is to raise as much revenue as possible. Mary suggests raising ticket prices. Is she right?

Which of the following events would most likely increase the price elasticity of demand for scalping tickets to Chicago Bears games?

Engel's Law, relating to the demand for food,

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

Rank the price elasticities of the following goods in descending order (from highest to lowest).

When comparing price elasticities of demand in the long run to the short run, what can we can say about the long-run elasticities?

If a specific segment of a demand curve is price elastic, then we know that anywhere along that segment, the

Within different price ranges along a demand curve, price elasticities of demand are

When the price elasticity of demand is calculated, if price increases, quantity demanded decreases and if price decreases, quantity demanded increases so the result will be

There are two methods of calculating elasticities. One calculates the ratio of the percentage changes in quantity and price, and the other calculates the average percentage changes in quantity and price. We use the second method because it

The cross-price elasticity of demand for generic brand pasta, an inferior good, would be expected to be less than zero.

The reason for the use of the "averaging equation" to compute the price elasticity ofdemand is that

According to the text, the income elasticity of demand for food in industrialized nations is lower than that of poorer nations.

It is Valentine's Day and Fred is desperately searching all over town for a dozen roses to give to Diane. "I'll pay anything for a dozen roses," he says. Whether he really means it or not, the statement implies that his price elasticity of demand for roses is

-In Exhibit D-1, price elasticity of demand within the price range $10 and $8 is

If a good has a price elasticity of demand equal to 0.4, and the price elasticity of supply is equal to 6.5, the good is a strong candidate for a unit tax.

Which of the following pairs best represents substitute goods?

To raise the most tax revenue, governments should consider taxing goods whose

The percentage change in the quantity demanded of film divided by the percentage change in the price of cameras indicates

Price elasticity of supply refers to the

You are part of a local community theater group. Its goal is to raise as much revenue as possible. Mary suggests raising ticket prices. Is she right?

Which of the following events would most likely increase the price elasticity of demand for scalping tickets to Chicago Bears games?

Engel's Law, relating to the demand for food,

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