Question 1

As the period for firms to expand output is lengthened, the elasticity of the market supply curve will

Accepted Answer

A) approach zero. 
B) increase. 
C) decrease. 
D) remain the same since time does not affect the elasticity of market supply. 
A) approach zero. 
B) increase. 
C) decrease. 
D) remain the same since time does not affect the elasticity of market supply.

Question 2

Demand will be more inelastic when

Accepted Answer

A) the time the consumer has to adjust to price changes is short. 
B) the price of the good is high. 
C) the number of good substitutes is large. 
D) the consumption of the good is not very essential. 
A) the time the consumer has to adjust to price changes is short. 
B) the price of the good is high. 
C) the number of good substitutes is large. 
D) the consumption of the good is not very essential.

Question 3

If a 50 percent increase in the price of hula hoops led to a 10 percent reduction in the quantity of hula hoops purchased, the price elasticity of demand is

Accepted Answer

A) 5 and the demand for hula hoops is elastic. 
B) 0.2 and the demand for hula hoops is elastic. 
C) 5 and the demand for hula hoops is inelastic. 
D) 0.2 and the demand for hula hoops is inelastic. 
A) 5 and the demand for hula hoops is elastic. 
B) 0.2 and the demand for hula hoops is elastic. 
C) 5 and the demand for hula hoops is inelastic. 
D) 0.2 and the demand for hula hoops is inelastic.

Question 4

An increase in the price of computer diskettes leads to an increase in total expenditures on the diskettes. Which of the following is true for this price change?

Accepted Answer

A) Computer diskettes are an inferior good. 
B) The demand for computer diskettes is perfectly elastic. 
C) The demand for computer diskettes is inelastic. 
D) The demand for computer diskettes is elastic. 
A) Computer diskettes are an inferior good. 
B) The demand for computer diskettes is perfectly elastic. 
C) The demand for computer diskettes is inelastic. 
D) The demand for computer diskettes is elastic.

Question 5

Figure 7-15
  
-Refer to Figure 7-15. Along which of these segments of the supply curve is supply least elastic?

Accepted Answer

A) between E and F 
B) between C and D 
C) between A and C 
D) between A and B 
A) between E and F 
B) between C and D 
C) between A and C 
D) between A and B

Question 6

The schedule of the amount of a product that consumers would be willing to purchase at alternative prices during a specific time period is the

Accepted Answer

A) total utility schedule. 
B) marginal utility schedule. 
C) supply schedule. 
D) demand schedule. 
A) total utility schedule. 
B) marginal utility schedule. 
C) supply schedule. 
D) demand schedule.

Question 7

Which of the following statements is true regarding the price elasticity of supply?

Accepted Answer

A) The price elasticity of supply is always negative. 
B) The price elasticity of supply is always positive. 
C) The price elasticity of supply will be greater when suppliers have a shorter time to respond to a price change. 
D) None of the above statements are true. 
A) The price elasticity of supply is always negative. 
B) The price elasticity of supply is always positive. 
C) The price elasticity of supply will be greater when suppliers have a shorter time to respond to a price change. 
D) None of the above statements are true.

Question 8

The price of product X increases from $35 to $40, and as a result, the quantity demanded decreases from 250 to 200. Over this price range,

Accepted Answer

A) demand is elastic. 
B) demand is inelastic. 
C) demand is of unitary elasticity. 
D) there is insufficient information to determine the price elasticity of demand. 
A) demand is elastic. 
B) demand is inelastic. 
C) demand is of unitary elasticity. 
D) there is insufficient information to determine the price elasticity of demand.

Question 9

Figure 7-13
  
-Refer to Figure 7-13. A decrease in price from $15 to $10 leads to

Accepted Answer

A) a decrease in total revenue of $10, so the price elasticity of demand is greater than 1 in this price range. 
B) a decrease in total revenue of $10, so the price elasticity of demand is less than 1 in this price range. 
C) a decrease in total revenue of $20, so the price elasticity of demand is less than 1 in this price range. 
D) a decrease in total revenue of $20, so demand is elastic in this price range. 
A) a decrease in total revenue of $10, so the price elasticity of demand is greater than 1 in this price range. 
B) a decrease in total revenue of $10, so the price elasticity of demand is less than 1 in this price range. 
C) a decrease in total revenue of $20, so the price elasticity of demand is less than 1 in this price range. 
D) a decrease in total revenue of $20, so demand is elastic in this price range.

Question 10

Diminishing marginal utility means that

Accepted Answer

A) as you consume more of a good, other things constant, the total satisfaction you obtain from consuming this good tends to fall. 
B) as you hire more labor, other things constant, the total amount produced begins to fall. 
C) as you consume more of a good, other things constant, the additional satisfaction you obtain from each additional unit of the good tends to fall. 
D) as you consume more of a good, other things constant, the extra satisfaction you obtain from each additional unit becomes negative. 
A) as you consume more of a good, other things constant, the total satisfaction you obtain from consuming this good tends to fall. 
B) as you hire more labor, other things constant, the total amount produced begins to fall. 
C) as you consume more of a good, other things constant, the additional satisfaction you obtain from each additional unit of the good tends to fall. 
D) as you consume more of a good, other things constant, the extra satisfaction you obtain from each additional unit becomes negative.

Question 11

If the price elasticity of demand for football tickets is estimated to be 4.5, then a 10 percent increase in football ticket prices would be expected to cause a

Accepted Answer

A) 4.5 percent decrease in quantity demanded. 
B) 4.5 percent increase in quantity demanded. 
C) 45 percent decrease in quantity demanded. 
D) 45 percent increase in quantity demanded. 
E) 450 percent increase in quantity demanded 
A) 4.5 percent decrease in quantity demanded. 
B) 4.5 percent increase in quantity demanded. 
C) 45 percent decrease in quantity demanded. 
D) 45 percent increase in quantity demanded. 
E) 450 percent increase in quantity demanded

Question 12

Figure 7-12
  
-Refer to Figure 7-12. An increase in price from $30 to $35 would

Accepted Answer

A) increase total revenue by $250 
B) decrease total revenue by $250. 
C) increase total revenue by $500. 
D) decrease total revenue by $500. 
A) increase total revenue by $250 
B) decrease total revenue by $250. 
C) increase total revenue by $500. 
D) decrease total revenue by $500.

Question 13

Figure 7-4
  
-Which of the following is true for the demand curve depicted in Figure 7-4?

Accepted Answer

A) An increase in price from $2 to $3 will reduce total expenditures on the product. 
B) In the $2 to $3 range, the price elasticity of the demand curve is approximately unitary. 
C) At a price of $2, the price elasticity of the demand curve equals approximately -2.5. 
D) In the $2 to $3 range, the demand curve is inelastic. 
A) An increase in price from $2 to $3 will reduce total expenditures on the product. 
B) In the $2 to $3 range, the price elasticity of the demand curve is approximately unitary. 
C) At a price of $2, the price elasticity of the demand curve equals approximately -2.5. 
D) In the $2 to $3 range, the demand curve is inelastic.

Question 14

Studies indicate that the demand for fresh tomatoes is much more elastic than the demand for salt. These findings reflect that

Accepted Answer

A) tomatoes are a necessity while salt is a luxury. 
B) it takes longer for consumers to adjust to a change in the price of salt than to a change in the price of tomatoes. 
C) salt will not spoil as easily as fresh tomatoes. 
D) more good substitutes exist for fresh tomatoes than for salt. 
A) tomatoes are a necessity while salt is a luxury. 
B) it takes longer for consumers to adjust to a change in the price of salt than to a change in the price of tomatoes. 
C) salt will not spoil as easily as fresh tomatoes. 
D) more good substitutes exist for fresh tomatoes than for salt.

Question 15

If the price elasticity of demand is computed for two products, and product A measures .79, and product B measures 1.6, then:

Accepted Answer

A) product A is more price elastic than product B. 
B) product B is more price elastic than product A. 
C) consumers are more sensitive to price changes in product A than in product B. 
D) product B is more price inelastic than product A. 
E) products A and B must be substitutes. 
A) product A is more price elastic than product B. 
B) product B is more price elastic than product A. 
C) consumers are more sensitive to price changes in product A than in product B. 
D) product B is more price inelastic than product A. 
E) products A and B must be substitutes.

Question 16

Figure 7-5
  
-Which of the following is true for the demand curve depicted in Figure 7-5?

Accepted Answer

A) In the $3 to $4 range, the price elasticity of the demand curve equals 1. 
B) At a price of $3, the price elasticity of the demand curve equals approximately -3.3. 
C) In the $3 to $4 range, the demand curve is inelastic. 
D) In the $3 to $4 range, the demand curve is elastic. 
A) In the $3 to $4 range, the price elasticity of the demand curve equals 1. 
B) At a price of $3, the price elasticity of the demand curve equals approximately -3.3. 
C) In the $3 to $4 range, the demand curve is inelastic. 
D) In the $3 to $4 range, the demand curve is elastic.

Question 17

If Russell values a ticket to a rock concert at $100 and is able to purchase it for only $40, he has received ____ in consumer surplus on his purchase. (Fill in the blank.)

Accepted Answer

A) $40 
B) $60 
C) $100 
D) $140 
A) $40 
B) $60 
C) $100 
D) $140

Question 18

Suppose a city that operates local electric and natural gas companies wants to raise revenues by increasing its rates for electricity and natural gas. The price rise will increase city revenues if the elasticity of demand for electricity and natural gas is

Accepted Answer

A) inelastic. 
B) elastic. 
C) negative. 
D) equal to -1. 
A) inelastic. 
B) elastic. 
C) negative. 
D) equal to -1.

Question 19

A local restaurant offers an "all you can eat" ribs special. You pay $11.95, and then you can eat as many servings as you desire at no additional cost. It would follow that you will stop eating when

Accepted Answer

A) your marginal utility (or value) derived from eating another serving is zero. 
B) your total utility (or value) derived from all of the servings consumed just equals $11.95. 
C) your marginal utility (or value) derived from another serving equals $11.95. 
D) it is physically impossible for you to eat any more. 
A) your marginal utility (or value) derived from eating another serving is zero. 
B) your total utility (or value) derived from all of the servings consumed just equals $11.95. 
C) your marginal utility (or value) derived from another serving equals $11.95. 
D) it is physically impossible for you to eat any more.

Question 20

The price elasticity of demand for a product tends to be large (more elastic) when

Accepted Answer

A) people spend a large share of their income on the product. 
B) the population in the market area is small. 
C) few good substitutes for the product are available. 
D) many complementary products are available. 
A) people spend a large share of their income on the product. 
B) the population in the market area is small. 
C) few good substitutes for the product are available. 
D) many complementary products are available.

Exam 7: Consumer Choice and Elasticity

As the period for firms to expand output is lengthened, the elasticity of the market supply curve will

Demand will be more inelastic when

If a 50 percent increase in the price of hula hoops led to a 10 percent reduction in the quantity of hula hoops purchased, the price elasticity of demand is

An increase in the price of computer diskettes leads to an increase in total expenditures on the diskettes. Which of the following is true for this price change?

Figure 7-15 -Refer to Figure 7-15. Along which of these segments of the supply curve is supply least elastic?

The schedule of the amount of a product that consumers would be willing to purchase at alternative prices during a specific time period is the

Which of the following statements is true regarding the price elasticity of supply?

The price of product X increases from $35 to $40, and as a result, the quantity demanded decreases from 250 to 200. Over this price range,

Figure 7-13 -Refer to Figure 7-13. A decrease in price from $15 to $10 leads to

Diminishing marginal utility means that

If the price elasticity of demand for football tickets is estimated to be 4.5, then a 10 percent increase in football ticket prices would be expected to cause a

Figure 7-12 -Refer to Figure 7-12. An increase in price from $30 to $35 would

Figure 7-4 -Which of the following is true for the demand curve depicted in Figure 7-4?

Studies indicate that the demand for fresh tomatoes is much more elastic than the demand for salt. These findings reflect that

If the price elasticity of demand is computed for two products, and product A measures .79, and product B measures 1.6, then:

Figure 7-5 -Which of the following is true for the demand curve depicted in Figure 7-5?

If Russell values a ticket to a rock concert at $100 and is able to purchase it for only $40, he has received ____ in consumer surplus on his purchase. (Fill in the blank.)

Suppose a city that operates local electric and natural gas companies wants to raise revenues by increasing its rates for electricity and natural gas. The price rise will increase city revenues if the elasticity of demand for electricity and natural gas is

A local restaurant offers an "all you can eat" ribs special. You pay $11.95, and then you can eat as many servings as you desire at no additional cost. It would follow that you will stop eating when

The price elasticity of demand for a product tends to be large (more elastic) when

The Economic Approach

A: Some Tools of the Economist

B: Some Tools of the Economist

A: Supply, Demand, and the Market Process

B: Supply, Demand, and the Market Process

A: Supply and Demand: Applications and Extensions

B: Supply and Demand: Applications and Extensions

Difficult Cases for the Market and the Role of Government

The Economics of Collective Decision-Making

A: Costs and the Supply of Goods

B: Costs and the Supply of Goods

A: Price Takers and the Competitive Process

B: Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

A: Price-Searcher Markets With High Entry Barriers

B: Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Appendix: Government Spending and Taxation

Appendix: the Economics of Social Security

Appendix: the Stock Market: Its Function, Performance, and Potential As an Investment Opportunity

Appendix: Great Debates in Economics: Keynes Versus Hayek

Appendix: the Crisis of 2008: Causes and Lessons for the Future

Appendix: Lessons From the Great Depression

Appendix: the Economics of Healthcare

Appendix:education: Problems and Performance

Appendix: Earnings Differences Between Men and Women

Appendix: the Question of Resource Exhaustion

Appendix: Do Labor Unions Increase the Wages of Workers

Appendix: Difficult Environmental Cases and the Role of Government

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