Question 1

If the cross-price elasticity of demand between beer and wine is 0.31, then beer and wine are

Accepted Answer

A) complements. 
B) price-inelastic goods. 
C) substitutes. 
D) necessities. 
A) complements. 
B) price-inelastic goods. 
C) substitutes. 
D) necessities.

Question 2

The cross-price elasticity of demand measures the

Accepted Answer

A) absolute change in the quantity demanded of one good divided by the absolute change in the price of another good. 
B) percentage change in the quantity demanded of one good divided by the percentage change in the price of another good. 
C) percentage change in the price of one good divided by the percentage change in the quantity demanded of another good. 
D) percentage change in the quantity demanded of one good in one location divided by the price of the same good in another location. 
A) absolute change in the quantity demanded of one good divided by the absolute change in the price of another good. 
B) percentage change in the quantity demanded of one good divided by the percentage change in the price of another good. 
C) percentage change in the price of one good divided by the percentage change in the quantity demanded of another good. 
D) percentage change in the quantity demanded of one good in one location divided by the price of the same good in another location.

Question 3

The larger the share of a good in a consumer's budget, holding everything else constant, the

Accepted Answer

A) more price elastic is a consumer's demand. 
B) more vertical is a consumer's demand curve. 
C) more price inelastic is a consumer's demand. 
D) more unit elastic is a consumer's demand. 
A) more price elastic is a consumer's demand. 
B) more vertical is a consumer's demand curve. 
C) more price inelastic is a consumer's demand. 
D) more unit elastic is a consumer's demand.

Question 4

To calculate the price elasticity of demand, we divide

Accepted Answer

A) the percentage change in quantity demanded by the percentage change in price. 
B) the percentage change in price by the percentage change in quantity demanded. 
C) rise by the run. 
D) the average price by the average quantity demanded. 
A) the percentage change in quantity demanded by the percentage change in price. 
B) the percentage change in price by the percentage change in quantity demanded. 
C) rise by the run. 
D) the average price by the average quantity demanded.

Question 5

Suppose when the price of jean-jackets increased by 10 percent, the quantity supplied increased by 16 percent.Based on this information the price elasticity of supply of jean-jackets is

Accepted Answer

A) 0.625. 
B) 6%. 
C) 1.6. 
D) 1.6%. 
A) 0.625. 
B) 6%. 
C) 1.6. 
D) 1.6%.

Question 6

If at a price of $10, a vendor sells 5 units of a product and at a price of $8, 6 units are sold.Using the midpoint formula, the demand for this good is inelastic.

Accepted Answer

A) True 
 B)False

Question 7

The demand for all carbonated beverages as a whole 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 8

With the increased usage of cell phone services, what has happened to the price elasticity of demand for land-line telephone services?

Accepted Answer

A) It has become more price inelastic. 
B) It has become more price elastic. 
C) It has become more income elastic. 
D) The absolute value of the price elasticity coefficient has probably gone down. 
A) It has become more price inelastic. 
B) It has become more price elastic. 
C) It has become more income elastic. 
D) The absolute value of the price elasticity coefficient has probably gone down.

Question 9

If the absolute value of the price elasticity of demand for aspirin equals 0.8 then

Accepted Answer

A) aspirin is a normal good. 
B) the demand for aspirin is inelastic. 
C) aspirin has few substitutes. 
D) the demand for aspirin is elastic. 
A) aspirin is a normal good. 
B) the demand for aspirin is inelastic. 
C) aspirin has few substitutes. 
D) the demand for aspirin is elastic.

Question 10

A supply curve that is vertical

Accepted Answer

A) is perfectly elastic. 
B) is perfectly inelastic. 
C) is impossible. 
D) has an elasticity equal to 1. 
A) is perfectly elastic. 
B) is perfectly inelastic. 
C) is impossible. 
D) has an elasticity equal to 1.

Question 11

Suppose the value of the price elasticity of demand is -3.What does this mean?

Accepted Answer

A) A 1 percent increase in the price of the good causes quantity demanded to increase by 3 percent. 
B) A 1 percent increase in the price of the good causes quantity demanded to decrease by 3 percent. 
C) A 3 percent increase in the price of the good causes quantity demanded to decrease by 1 percent. 
D) A $1 increase in price causes quantity demanded to fall by 3 units. 
A) A 1 percent increase in the price of the good causes quantity demanded to increase by 3 percent. 
B) A 1 percent increase in the price of the good causes quantity demanded to decrease by 3 percent. 
C) A 3 percent increase in the price of the good causes quantity demanded to decrease by 1 percent. 
D) A $1 increase in price causes quantity demanded to fall by 3 units.

Question 12

If the market for a product is narrowly defined, then there are likely to be many substitutes for the product and the demand for the product is relatively elastic.

Accepted Answer

A) True 
 B)False

Question 13

Suppose the current price of copper is $3 per pound and the quantity supplied is 200 pounds per day.If the price of copper falls to $2.50 per pound, the quantity supplied drops to 180 pounds per day.Use the midpoint formula to calculate the price elasticity of supply for copper.

Accepted Answer

The price elasticity

Question 14

Consider a demand curve that has a constant elasticity value of 0.What happens to quantity demanded and total revenue when price increases?

Accepted Answer

A) The quantity demanded and total revenue remain the same. 
B) The quantity demanded does not change but total revenue increases. 
C) The quantity demanded and total revenue fall to zero. 
D) The quantity demanded does not change but total revenue decreases. 
A) The quantity demanded and total revenue remain the same. 
B) The quantity demanded does not change but total revenue increases. 
C) The quantity demanded and total revenue fall to zero. 
D) The quantity demanded does not change but total revenue decreases.

Question 15

The price elasticity of demand for beef is estimated to be 0.60 (in absolute value).This means that a 20 percent increase in the price of beef, holding every thing else constant, will cause the quantity of beef demanded to

Accepted Answer

A) decrease by 12 percent. 
B) decrease by 26 percent. 
C) decrease by 32 percent. 
D) decrease by 60 percent. 
A) decrease by 12 percent. 
B) decrease by 26 percent. 
C) decrease by 32 percent. 
D) decrease by 60 percent.

Question 16

Suppose the price elasticity of demand for cigarettes is -0.4.The FDA decides to regulate tobacco production, which increases the price of cigarettes and causes the quantity of cigarettes demanded to decrease by 25 percent.What is the percentage increase in price which would lead to the 25 percent decrease in quantity demanded? If the price elasticity was -4, what would be the percentage increase in price?

Accepted Answer

If price elasticity of demand is -0.4, a

Question 17

Figure 6-4
  
-Refer to Figure 6-4.The absolute value of the price elasticity of demand at the midpoint of the demand curve is

Accepted Answer

A) at a maximum. 
B) at a minimum. 
C) zero. 
D) one. 
A) at a maximum. 
B) at a minimum. 
C) zero. 
D) one.

Question 18

If the income elasticity for canned food is 0.8, then canned food is an inferior good.

Accepted Answer

A) True 
 B)False

Question 19

If the slope of a demand curve is equal to -0.1 then

Accepted Answer

A) demand is inelastic. 
B) we don't know whether the demand is elastic or inelastic. 
C) the demand is elastic at low prices and inelastic at high prices. 
D) as price increases by 10 percent quantity demanded decreases by 1 percent. 
A) demand is inelastic. 
B) we don't know whether the demand is elastic or inelastic. 
C) the demand is elastic at low prices and inelastic at high prices. 
D) as price increases by 10 percent quantity demanded decreases by 1 percent.

Question 20

Figure 6-8
  
-Refer to Figure 6-8.Identify the two goods which are substitutes.

Accepted Answer

A) Good X and Good Y 
B) Good Y and Good Z 
C) Good X and Good Z 
D) It is not possible to distinguish any relationship among the goods. 
A) Good X and Good Y 
B) Good Y and Good Z 
C) Good X and Good Z 
D) It is not possible to distinguish any relationship among the goods.

If the cross-price elasticity of demand between beer and wine is 0.31, then beer and wine are

The cross-price elasticity of demand measures the

The larger the share of a good in a consumer's budget, holding everything else constant, the

To calculate the price elasticity of demand, we divide

Suppose when the price of jean-jackets increased by 10 percent, the quantity supplied increased by 16 percent.Based on this information the price elasticity of supply of jean-jackets is

If at a price of $10, a vendor sells 5 units of a product and at a price of $8, 6 units are sold.Using the midpoint formula, the demand for this good is inelastic.

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

With the increased usage of cell phone services, what has happened to the price elasticity of demand for land-line telephone services?

If the absolute value of the price elasticity of demand for aspirin equals 0.8 then

A supply curve that is vertical

Suppose the value of the price elasticity of demand is -3.What does this mean?

If the market for a product is narrowly defined, then there are likely to be many substitutes for the product and the demand for the product is relatively elastic.

Suppose the current price of copper is $3 per pound and the quantity supplied is 200 pounds per day.If the price of copper falls to $2.50 per pound, the quantity supplied drops to 180 pounds per day.Use the midpoint formula to calculate the price elasticity of supply for copper.

Consider a demand curve that has a constant elasticity value of 0.What happens to quantity demanded and total revenue when price increases?

The price elasticity of demand for beef is estimated to be 0.60 (in absolute value).This means that a 20 percent increase in the price of beef, holding every thing else constant, will cause the quantity of beef demanded to

Figure 6-4 -Refer to Figure 6-4.The absolute value of the price elasticity of demand at the midpoint of the demand curve is

If the income elasticity for canned food is 0.8, then canned food is an inferior good.

If the slope of a demand curve is equal to -0.1 then

Figure 6-8 -Refer to Figure 6-8.Identify the two goods which are substitutes.

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

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Exam 6: Elasticity: the Responsiveness of Demand and Supply

If the cross-price elasticity of demand between beer and wine is 0.31, then beer and wine are

The cross-price elasticity of demand measures the

The larger the share of a good in a consumer's budget, holding everything else constant, the

To calculate the price elasticity of demand, we divide

Suppose when the price of jean-jackets increased by 10 percent, the quantity supplied increased by 16 percent.Based on this information the price elasticity of supply of jean-jackets is

If at a price of $10, a vendor sells 5 units of a product and at a price of $8, 6 units are sold.Using the midpoint formula, the demand for this good is inelastic.

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

With the increased usage of cell phone services, what has happened to the price elasticity of demand for land-line telephone services?

If the absolute value of the price elasticity of demand for aspirin equals 0.8 then

A supply curve that is vertical

Suppose the value of the price elasticity of demand is -3.What does this mean?

If the market for a product is narrowly defined, then there are likely to be many substitutes for the product and the demand for the product is relatively elastic.

Suppose the current price of copper is $3 per pound and the quantity supplied is 200 pounds per day.If the price of copper falls to $2.50 per pound, the quantity supplied drops to 180 pounds per day.Use the midpoint formula to calculate the price elasticity of supply for copper.

Consider a demand curve that has a constant elasticity value of 0.What happens to quantity demanded and total revenue when price increases?

The price elasticity of demand for beef is estimated to be 0.60 (in absolute value).This means that a 20 percent increase in the price of beef, holding every thing else constant, will cause the quantity of beef demanded to

Figure 6-4 -Refer to Figure 6-4.The absolute value of the price elasticity of demand at the midpoint of the demand curve is

If the income elasticity for canned food is 0.8, then canned food is an inferior good.

If the slope of a demand curve is equal to -0.1 then

Figure 6-8 -Refer to Figure 6-8.Identify the two goods which are substitutes.

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

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters