Question 1

Per-unit taxes have which effect on the equilibrium price of a good?

Accepted Answer

A)  They cause demand curves to shift downward, thus lowering price. 
B)  They cause demand curves to shift downward, thus raising price. 
C)  They cause supply curves to shift downward, thus lowering price. 
D)  They cause supply curves to shift upward, thus lowering price. 
E)  They cause supply curves to shift upward, thus raising price. 
A)  They cause demand curves to shift downward, thus lowering price. 
B)  They cause demand curves to shift downward, thus raising price. 
C)  They cause supply curves to shift downward, thus lowering price. 
D)  They cause supply curves to shift upward, thus lowering price. 
E)  They cause supply curves to shift upward, thus raising price.

Question 2

The price elasticity of supply increases as firms have more time to adjust.

Accepted Answer

A) True 
 B)False

Question 3

When economists look at the percentage change in quantity demanded for air travel generated by a change in income, they are looking at the

Accepted Answer

A)  price elasticity of demand for air travel 
B)  income elasticity of demand for air travel 
C)  price elasticity of demand for airline tickets 
D)  cross elasticity of demand for airline tickets 
E)  cross elasticity of demand for airline travel 
A)  price elasticity of demand for air travel 
B)  income elasticity of demand for air travel 
C)  price elasticity of demand for airline tickets 
D)  cross elasticity of demand for airline tickets 
E)  cross elasticity of demand for airline travel

Question 4

Picture a linear downward-sloping demand curve. If the price continues to fall, the price elasticity will

Accepted Answer

A)  change from elastic, to unit elastic, to inelastic 
B)  remain unchanged whatever the price range 
C)  change from inelastic, to elastic, to unit elastic 
D)  change from unit elastic, to elastic, to inelastic 
E)  change from elastic, to inelastic, to unit elastic 
A)  change from elastic, to unit elastic, to inelastic 
B)  remain unchanged whatever the price range 
C)  change from inelastic, to elastic, to unit elastic 
D)  change from unit elastic, to elastic, to inelastic 
E)  change from elastic, to inelastic, to unit elastic

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

If the demand curve for a good is unit elastic within a specific price range, this implies that within that price range the

Accepted Answer

A)  consumers do not react to a change in price 
B)  quantity demanded remains unchanged 
C)  good has no substitutes 
D)  good has no complements 
E)  percentage change in the quantity demanded equals the percentage change in price 
A)  consumers do not react to a change in price 
B)  quantity demanded remains unchanged 
C)  good has no substitutes 
D)  good has no complements 
E)  percentage change in the quantity demanded equals the percentage change in price

Question 7

Currently there is a market demand for toothpaste with baking soda in it. New medical studies show that baking soda has health benefits beyond clean teeth. After these studiesare published, the market demand is such that at any price, consumers buy 10 more tubesof toothpaste than they used to. This is a parallel, rightward shift of the demand curve.Which of the following statements is true?

Accepted Answer

A)  Because the curves are parallel, the elasticities don't change. 
B)  Despite the fact that the curves are parallel, elasticity has increased. 
C)  Even though the curves are parallel, the new one is more inelastic. 
D)  There is no relationship between the curves and their elasticities. 
E)  Elasticities on the new demand curve have increased at low prices and decreased at high prices. 
A)  Because the curves are parallel, the elasticities don't change. 
B)  Despite the fact that the curves are parallel, elasticity has increased. 
C)  Even though the curves are parallel, the new one is more inelastic. 
D)  There is no relationship between the curves and their elasticities. 
E)  Elasticities on the new demand curve have increased at low prices and decreased at high prices.

Question 8

The textbook tells us that in the short run, people typically ___________ price changes when compared to the long run.

Accepted Answer

A)  are very responsive to 
B)  are more sensitive to 
C)  are less sensitive to 
D)  do not respond to 
E)  are unaware of 
A)  are very responsive to 
B)  are more sensitive to 
C)  are less sensitive to 
D)  do not respond to 
E)  are unaware of

Question 9

Total revenue is equal to

Accepted Answer

A)  price elasticity of demand multiplied by quantity 
B)  price elasticity of demand divided by quantity 
C)  price of the good divided by quantity 
D)  price of the good multiplied by quantity 
E)  price elasticity of demand multiplied by price of the good 
A)  price elasticity of demand multiplied by quantity 
B)  price elasticity of demand divided by quantity 
C)  price of the good divided by quantity 
D)  price of the good multiplied by quantity 
E)  price elasticity of demand multiplied by price of the good

Question 10

Several studies, some cited in the text, show that the price elasticities of demand for basic foods such as corn, potatoes, and milk are consistently

Accepted Answer

A)  inconsistent over time 
B)  less than one 
C)  greater than one 
D)  equal to one 
E)  highly volatile 
A)  inconsistent over time 
B)  less than one 
C)  greater than one 
D)  equal to one 
E)  highly volatile

Question 11

Look at the five goods below to determine which of the five best fits the following statement: How much people spend on a good tends to be independent of its price.

Accepted Answer

A)  birthday candles 
B)  automobile 
C)  mattress 
D)  lobster dinner 
E)  rock concert 
A)  birthday candles 
B)  automobile 
C)  mattress 
D)  lobster dinner 
E)  rock concert

Question 12

-In Exhibit D-1, price elasticity of demand within the price range $8 and $6 is

Accepted Answer

A)  4.27 
B)  1.5 
C)  1.56 
D)  0.636 
E)  0.425 
A)  4.27 
B)  1.5 
C)  1.56 
D)  0.636 
E)  0.425

Question 13

If the income elasticity of a good is negative, say -1.8, we can infer that the good is a(n)

Accepted Answer

A)  luxury good, such as holiday travel 
B)  substitute good, such as Pepsi, with Coke available 
C)  complementary good, such as Pepsi, with a candy bar available 
D)  inferior good, such as a non-color televison 
E)  essential good, such as food 
A)  luxury good, such as holiday travel 
B)  substitute good, such as Pepsi, with Coke available 
C)  complementary good, such as Pepsi, with a candy bar available 
D)  inferior good, such as a non-color televison 
E)  essential good, such as food

Question 14

Using the concept of elasticity, show that a drug enforcement policy aimed at getting rid of heroin suppliers may not be very effective in reducing heroin consumption.

Accepted Answer

A policy that targets suppliers will shi

Question 15

You would expect the demand for food to be more inelastic than the demand for cookies.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following pairs best represents complementary goods?

Accepted Answer

A)  leather shoes and leather boots 
B)  leather shoes and shoe laces 
C)  leather shoes and leather sandals 
D)  leather shoes and cow hides 
E)  leather shoes and fabric shoes 
A)  leather shoes and leather boots 
B)  leather shoes and shoe laces 
C)  leather shoes and leather sandals 
D)  leather shoes and cow hides 
E)  leather shoes and fabric shoes

Question 17

Dr. Franke, a perpetual critic of economics, notes that a recent consultant to his medical practice had advised him to raise the prices he charged in order to raise his business revenues. At a university fund raising event he commented to the Chancellor regarding "how ludicrous"some of his faculty members were in giving advice that would drive customers away. He advised the Chancellor that more "practical, experienced faculty" such as hired by the local Technical College were needed. If demand for Dr. Franke's services is inelastic

Accepted Answer

A)  customers would increase and revenues drop 
B)  customers would increase and revenues expand 
C)  customers would decrease and revenues drop 
D)  customers would decrease and revenues expand 
E)  only cross-price elasticity is related to revenues 
A)  customers would increase and revenues drop 
B)  customers would increase and revenues expand 
C)  customers would decrease and revenues drop 
D)  customers would decrease and revenues expand 
E)  only cross-price elasticity is related to revenues

Question 18

-According to the textbook discussion of income elasticity, which country in Exhibit D-4 would be the most industrialized?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
E)  E 
A)  A 
B)  B 
C)  C 
D)  D 
E)  E

Question 19

The table in the textbook shows that income elasticity of food in industrialized nations is

Accepted Answer

A)  higher than in less industrialized nations 
B)  negative 
C)  income elastic 
D)  lower than in less industrialized nations 
E)  the same as in less industrialized nations because food is an essential good 
A)  higher than in less industrialized nations 
B)  negative 
C)  income elastic 
D)  lower than in less industrialized nations 
E)  the same as in less industrialized nations because food is an essential good

Question 20

The price elasticity of supply for the market-day supply curve of fish is

Accepted Answer

A)  equal to zero 
B)  equal to one 
C)  less than one 
D)  more than one 
E)  less than zero 
A)  equal to zero 
B)  equal to one 
C)  less than one 
D)  more than one 
E)  less than zero

Per-unit taxes have which effect on the equilibrium price of a good?

The price elasticity of supply increases as firms have more time to adjust.

When economists look at the percentage change in quantity demanded for air travel generated by a change in income, they are looking at the

Picture a linear downward-sloping demand curve. If the price continues to fall, the price elasticity will

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

If the demand curve for a good is unit elastic within a specific price range, this implies that within that price range the

The textbook tells us that in the short run, people typically ___________ price changes when compared to the long run.

Total revenue is equal to

Several studies, some cited in the text, show that the price elasticities of demand for basic foods such as corn, potatoes, and milk are consistently

Look at the five goods below to determine which of the five best fits the following statement: How much people spend on a good tends to be independent of its price.

-In Exhibit D-1, price elasticity of demand within the price range $8 and $6 is

If the income elasticity of a good is negative, say -1.8, we can infer that the good is a(n)

Using the concept of elasticity, show that a drug enforcement policy aimed at getting rid of heroin suppliers may not be very effective in reducing heroin consumption.

You would expect the demand for food to be more inelastic than the demand for cookies.

Which of the following pairs best represents complementary goods?

-According to the textbook discussion of income elasticity, which country in Exhibit D-4 would be the most industrialized?

The table in the textbook shows that income elasticity of food in industrialized nations is

The price elasticity of supply for the market-day supply curve of fish is

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

Per-unit taxes have which effect on the equilibrium price of a good?

The price elasticity of supply increases as firms have more time to adjust.

When economists look at the percentage change in quantity demanded for air travel generated by a change in income, they are looking at the

Picture a linear downward-sloping demand curve. If the price continues to fall, the price elasticity will

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

If the demand curve for a good is unit elastic within a specific price range, this implies that within that price range the

The textbook tells us that in the short run, people typically ___________ price changes when compared to the long run.

Total revenue is equal to

Several studies, some cited in the text, show that the price elasticities of demand for basic foods such as corn, potatoes, and milk are consistently

Look at the five goods below to determine which of the five best fits the following statement: How much people spend on a good tends to be independent of its price.

-In Exhibit D-1, price elasticity of demand within the price range $8 and $6 is

If the income elasticity of a good is negative, say -1.8, we can infer that the good is a(n)

Using the concept of elasticity, show that a drug enforcement policy aimed at getting rid of heroin suppliers may not be very effective in reducing heroin consumption.

You would expect the demand for food to be more inelastic than the demand for cookies.

Which of the following pairs best represents complementary goods?

-According to the textbook discussion of income elasticity, which country in Exhibit D-4 would be the most industrialized?

The table in the textbook shows that income elasticity of food in industrialized nations is

The price elasticity of supply for the market-day supply curve of fish is

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