Question 1

If the percentage increase in price is 15 percent and the value of the price elasticity of demand is -3, then quantity demanded

Accepted Answer

A) will increase by 45 percent. 
B) will increase by 5 percent. 
C) will decrease by 45 percent. 
D) will decrease by 5 percent. 
A) will increase by 45 percent. 
B) will increase by 5 percent. 
C) will decrease by 45 percent. 
D) will decrease by 5 percent.

Question 2

Which of the following statements is true about the price elasticity of demand along a downward sloping linear demand curve?

Accepted Answer

A) It is inelastic at high prices and elastic at low prices. 
B) It is unit-elastic throughout the demand curve. 
C) It is elastic at high prices and inelastic at low prices. 
D) It is perfectly elastic at very high prices and perfectly inelastic at very low prices. 
A) It is inelastic at high prices and elastic at low prices. 
B) It is unit-elastic throughout the demand curve. 
C) It is elastic at high prices and inelastic at low prices. 
D) It is perfectly elastic at very high prices and perfectly inelastic at very low prices.

Question 3

Figure 6.6
  
-Refer to Figure 6.6.A perfectly elastic supply curve is shown in

Accepted Answer

A) Panel A. 
B) Panel B. 
C) Panel C. 
D) Panel D. 
A) Panel A. 
B) Panel B. 
C) Panel C. 
D) Panel D.

Question 4

Figure 6.6
  
-Refer to Figure 6.6.The supply curve on which price elasticity changes at every point is shown in

Accepted Answer

A) Panel A. 
B) Panel B. 
C) Panel C. 
D) Panel D. 
A) Panel A. 
B) Panel B. 
C) Panel C. 
D) Panel D.

Question 5

Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterize the product.

Accepted Answer

A) 2; The product is elastic. 
B) 0.2; The product is inelastic. 
C) 0.5; The product is inelastic. 
D) 50%; The product is inelastic. 
A) 2; The product is elastic. 
B) 0.2; The product is inelastic. 
C) 0.5; The product is inelastic. 
D) 50%; The product is inelastic.

Question 6

Which of the following products comes closest to having a perfectly inelastic demand?

Accepted Answer

A) gasoline 
B) cholesterol medication in general 
C)  iPhones 
D) bus rides 
A) gasoline 
B) cholesterol medication in general 
C)  iPhones 
D) bus rides

Question 7

Total revenue equals

Accepted Answer

A) price per unit times quantity sold. 
B) price per unit times quantity supplied. 
C) price per unit times change in quantity sold. 
D) change in price per unit times quantity sold. 
A) price per unit times quantity sold. 
B) price per unit times quantity supplied. 
C) price per unit times change in quantity sold. 
D) change in price per unit times quantity sold.

Question 8

If, for a given percentage increase in price, quantity supplied increases by a proportionately larger percentage, then supply is

Accepted Answer

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

Question 9

If the price elasticity of demand for canned soup is estimated at -1.62.What happens to sales revenue if the price of canned soup rises?

Accepted Answer

A) It falls by 162 percent. 
B) It rises by 1.62 percent. 
C) It falls. 
D) It rises. 
A) It falls by 162 percent. 
B) It rises by 1.62 percent. 
C) It falls. 
D) It rises.

Question 10

If, when price changes by 35 percent, the quantity demanded changes by 7 percent, then the absolute value of the price elasticity of demand is 5.

Accepted Answer

A) True 
 B)False

Question 11

If at a price of $50, Ghani sells 20 hand-made leather cell-phone covers but at a price of $60, zero units are sold.Based on this information, the demand for his cell-phone covers is

Accepted Answer

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

Question 12

According to a study of the Canadian demand for alcoholic beverages, the price elasticity of demand for beer is -0.17.Which of the following could explain why the price elasticity of demand for beer is low?

Accepted Answer

A) Beer is an inferior alcoholic beverage. 
B) More and more people are switching to wine and cocktails rather than beer. 
C) The price of beer is relatively low and for many people it is a habit forming product. 
D) There are only a few major suppliers of beer. 
A) Beer is an inferior alcoholic beverage. 
B) More and more people are switching to wine and cocktails rather than beer. 
C) The price of beer is relatively low and for many people it is a habit forming product. 
D) There are only a few major suppliers of beer.

Question 13

If demand is perfectly inelastic, the absolute value of the price elasticity of demand is

Accepted Answer

A) zero. 
B) less than one. 
C) more than one. 
D) equal to the absolute value of the slope of the demand curve. 
A) zero. 
B) less than one. 
C) more than one. 
D) equal to the absolute value of the slope of the demand curve.

Question 14

Explain the relationship between price elasticity of demand and total revenue.

Accepted Answer

If demand is elastic, the an increase in

Question 15

The demand for all carbonated beverages is likely to be ________ the demand for Dr.Pepper.

Accepted Answer

A) more elastic than 
B) perfectly elastic compared to 
C) less elastic than 
D) perfectly inelastic compared to 
A) more elastic than 
B) perfectly elastic compared to 
C) less elastic than 
D) perfectly inelastic compared to

Question 16

In recent years, the prices of new domestically produced cars have been falling.Suppose consumers respond by reducing their demand for used cars and mass transport services such as bus travel.This information suggests that the cross-price elasticity between new cars and used cars, and the cross-price elasticity between new cars and bus travel are negative.

Accepted Answer

A) True 
 B)False

Question 17

Figure 6.4
  
-Refer to Figure 6.4.The inelastic segment of the demand curve

Accepted Answer

A) is coincident with the horizontal axis. 
B) is coincident with the vertical axis. 
C) lies below the midpoint of the curve. 
D) lies above the midpoint of the curve. 
A) is coincident with the horizontal axis. 
B) is coincident with the vertical axis. 
C) lies below the midpoint of the curve. 
D) lies above the midpoint of the curve.

Question 18

Suppose at a price of $50, Yoshi's Jazz Bar sells 20 tickets to its nightly jazz performance and
at a price of $40, it sells 25 tickets.Based on this information, the demand for Yoshi's jazz performance is elastic.

Accepted Answer

A) True 
 B)False

Question 19

Figure 6.4
  
-Refer to Figure 6.4.Which of the following statements is true about the price elasticity of demand?

Accepted Answer

A) The elasticity coefficient is constant along the demand curve. 
B) The elastic portion of a straight-line downward sloping demand curve corresponds to the segment above the midpoint. 
C) The inelastic portion of the demand curve corresponds to the segment above the midpoint. 
D) At the midpoint of the demand curve, the elasticity coefficient is zero. 
A) The elasticity coefficient is constant along the demand curve. 
B) The elastic portion of a straight-line downward sloping demand curve corresponds to the segment above the midpoint. 
C) The inelastic portion of the demand curve corresponds to the segment above the midpoint. 
D) At the midpoint of the demand curve, the elasticity coefficient is zero.

Question 20

Suppose Tinsel Town Videos lowers the price of its movie club membership by 10 percent and as a result, CineArts Videos experienced a 16 percent decline in its movie club membership.What is the value of the cross-price elasticity between the two movie club memberships?

Accepted Answer

A) -1.6 
B) -0.625 
C) 0.625 
D) 1.6 
A) -1.6 
B) -0.625 
C) 0.625 
D) 1.6

If the percentage increase in price is 15 percent and the value of the price elasticity of demand is -3, then quantity demanded

Which of the following statements is true about the price elasticity of demand along a downward sloping linear demand curve?

Figure 6.6 -Refer to Figure 6.6.A perfectly elastic supply curve is shown in

Figure 6.6 -Refer to Figure 6.6.The supply curve on which price elasticity changes at every point is shown in

Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterize the product.

Which of the following products comes closest to having a perfectly inelastic demand?

Total revenue equals

If, for a given percentage increase in price, quantity supplied increases by a proportionately larger percentage, then supply is

If the price elasticity of demand for canned soup is estimated at -1.62.What happens to sales revenue if the price of canned soup rises?

If, when price changes by 35 percent, the quantity demanded changes by 7 percent, then the absolute value of the price elasticity of demand is 5.

If at a price of $50, Ghani sells 20 hand-made leather cell-phone covers but at a price of $60, zero units are sold.Based on this information, the demand for his cell-phone covers is

According to a study of the Canadian demand for alcoholic beverages, the price elasticity of demand for beer is -0.17.Which of the following could explain why the price elasticity of demand for beer is low?

If demand is perfectly inelastic, the absolute value of the price elasticity of demand is

Explain the relationship between price elasticity of demand and total revenue.

The demand for all carbonated beverages is likely to be ________ the demand for Dr.Pepper.

Figure 6.4 -Refer to Figure 6.4.The inelastic segment of the demand curve

Suppose at a price of $50, Yoshi's Jazz Bar sells 20 tickets to its nightly jazz performance and at a price of $40, it sells 25 tickets.Based on this information, the demand for Yoshi's jazz performance is elastic.

Figure 6.4 -Refer to Figure 6.4.Which of the following statements is true about the price elasticity of demand?

Suppose Tinsel Town Videos lowers the price of its movie club membership by 10 percent and as a result, CineArts Videos experienced a 16 percent decline in its movie club membership.What is the value of the cross-price elasticity between the two movie club memberships?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

The Markets for Labour and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Pricing Strategy

Firms, the Stock Market, and Corporate Governance

Filters

Exam 6: Elasticity: the Responsiveness of Demand and Supply

If the percentage increase in price is 15 percent and the value of the price elasticity of demand is -3, then quantity demanded

Which of the following statements is true about the price elasticity of demand along a downward sloping linear demand curve?

Figure 6.6 -Refer to Figure 6.6.A perfectly elastic supply curve is shown in

Figure 6.6 -Refer to Figure 6.6.The supply curve on which price elasticity changes at every point is shown in

Suppose a 4 percent increase in price results in a 2 percent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterize the product.

Which of the following products comes closest to having a perfectly inelastic demand?

Total revenue equals

If, for a given percentage increase in price, quantity supplied increases by a proportionately larger percentage, then supply is

If the price elasticity of demand for canned soup is estimated at -1.62.What happens to sales revenue if the price of canned soup rises?

If, when price changes by 35 percent, the quantity demanded changes by 7 percent, then the absolute value of the price elasticity of demand is 5.

If at a price of $50, Ghani sells 20 hand-made leather cell-phone covers but at a price of $60, zero units are sold.Based on this information, the demand for his cell-phone covers is

According to a study of the Canadian demand for alcoholic beverages, the price elasticity of demand for beer is -0.17.Which of the following could explain why the price elasticity of demand for beer is low?

If demand is perfectly inelastic, the absolute value of the price elasticity of demand is

Explain the relationship between price elasticity of demand and total revenue.

The demand for all carbonated beverages is likely to be ________ the demand for Dr.Pepper.

Figure 6.4 -Refer to Figure 6.4.The inelastic segment of the demand curve

Suppose at a price of $50, Yoshi's Jazz Bar sells 20 tickets to its nightly jazz performance and at a price of $40, it sells 25 tickets.Based on this information, the demand for Yoshi's jazz performance is elastic.

Figure 6.4 -Refer to Figure 6.4.Which of the following statements is true about the price elasticity of demand?

Suppose Tinsel Town Videos lowers the price of its movie club membership by 10 percent and as a result, CineArts Videos experienced a 16 percent decline in its movie club membership.What is the value of the cross-price elasticity between the two movie club memberships?

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

The Markets for Labour and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Pricing Strategy

Firms, the Stock Market, and Corporate Governance

Filters