Question 1

The emigration of some of Whoville's workers reduces the quantity of thingamabobs supplied at every price by 50.The new supply curve will ____ the old supply curve.

Accepted Answer

A) be steeper and less elastic at every price than 
B) have the same slope and the same elasticity at every price as 
C) have the same slope and be more elastic at every price than 
D) More information is needed to predict the relationship between the elasticities of the two supply curves. 
A) be steeper and less elastic at every price than 
B) have the same slope and the same elasticity at every price as 
C) have the same slope and be more elastic at every price than 
D) More information is needed to predict the relationship between the elasticities of the two supply curves.

Question 2

Explain what happens to the magnitude of price elasticity of demand as price increases along a straight-line demand curve.

Accepted Answer

Price elasticity is the ratio of percent

Question 3

Figure 6-7
  
-In Figure 6-7, which total expenditure curve belongs to a demand curve that is unit elastic throughout?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 4

Two economists from Ohio University estimated that the demand curve for kerosene in Indonesia was such that a 10 percent increase in the price reduced the quantity demanded by 2.2 percent and that a 10 percent increase in the price of electricity increased the demand for kerosene by 1.6 percent.This indicates that (i) the demand for kerosene is price inelastic and (ii) kerosene and electricity are substitutes.Which of these two statements is correct?

Accepted Answer

A) i and ii 
B) i not ii 
C) ii not i 
D) neither i nor ii 
A) i and ii 
B) i not ii 
C) ii not i 
D) neither i nor ii

Question 5

Elasticity computations related to demand carry a minus sign to show that the demand curve is negatively sloped.

Accepted Answer

A) True 
 B)False

Question 6

If demand is inelastic, a drop in price will raise total expenditure.

Accepted Answer

A) True 
 B)False

Question 7

A decrease in the price of a good will cause a movement along the demand schedule to a higher quantity demanded.

Accepted Answer

A) True 
 B)False

Question 8

The relationship between a change in consumer income and a resulting change in demand for a good is

Accepted Answer

A) demand elasticity. 
B) income elasticity of demand. 
C) cross elasticity of income demand. 
D) supply elasticity. 
A) demand elasticity. 
B) income elasticity of demand. 
C) cross elasticity of income demand. 
D) supply elasticity.

Question 9

The demand for Exxon gasoline is ____ the demand for all gasoline.

Accepted Answer

A) exactly as elastic as, and of a different slope from 
B) more elastic than 
C) less elastic than 
D) exactly as elastic and of a different slope from 
A) exactly as elastic as, and of a different slope from 
B) more elastic than 
C) less elastic than 
D) exactly as elastic and of a different slope from

Question 10

If demand is elastic, an increase in price will increase total revenue.

Accepted Answer

A) True 
 B)False

Question 11

An accurate demand curve can be derived by examining the quantities of a good that are sold over time as the price varies.

Accepted Answer

A) True 
 B)False

Question 12

Why are time series data unlikely to give an accurate estimate of demand?

Accepted Answer

Demand may have shifted over time, so th

Question 13

Price elasticity of demand is a numerical measure of how much quantity demanded rises as price falls or quantity demanded falls as price rises.

Accepted Answer

A) True 
 B)False

Question 14

The law of demand states that a lower price increases the amount of a commodity that people are willing to buy.

Accepted Answer

A) True 
 B)False

Question 15

A line that is perfectly elastic has an elasticity of demand of zero.

Accepted Answer

A) True 
 B)False

Question 16

Figure 6-6
  
-The purchase of premium cable channels is an "all or nothing" choice.Which graph in Figure 6-6 best illustrates the cable market demand curve?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 17

What does cross elasticity of demand between goods reveal about the nature of relationship between them?

Accepted Answer

Its sign reveals whether the goods are s

Question 18

The demand for French Roast coffee is likely to be

Accepted Answer

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

Question 19

Arrange the following goods from least to most elastic, explaining your ordering: gasoline, Exxon gas, Exxon gas at a particular gas station.

Accepted Answer

Gasoline is least elastic, since there a

Question 20

The cross elasticity between two goods has been measured at ?1.2.How are the goods related? Explain.Give an example of goods for which this might be a reasonable measure of cross elasticity.

Accepted Answer

The goods are complements.An increase in

Exam 6: Demand and Elasticity

The emigration of some of Whoville's workers reduces the quantity of thingamabobs supplied at every price by 50.The new supply curve will ____ the old supply curve.

Explain what happens to the magnitude of price elasticity of demand as price increases along a straight-line demand curve.

Figure 6-7 -In Figure 6-7, which total expenditure curve belongs to a demand curve that is unit elastic throughout?

Elasticity computations related to demand carry a minus sign to show that the demand curve is negatively sloped.

If demand is inelastic, a drop in price will raise total expenditure.

A decrease in the price of a good will cause a movement along the demand schedule to a higher quantity demanded.

The relationship between a change in consumer income and a resulting change in demand for a good is

The demand for Exxon gasoline is ____ the demand for all gasoline.

If demand is elastic, an increase in price will increase total revenue.

An accurate demand curve can be derived by examining the quantities of a good that are sold over time as the price varies.

Why are time series data unlikely to give an accurate estimate of demand?

Price elasticity of demand is a numerical measure of how much quantity demanded rises as price falls or quantity demanded falls as price rises.

The law of demand states that a lower price increases the amount of a commodity that people are willing to buy.

A line that is perfectly elastic has an elasticity of demand of zero.

Figure 6-6 -The purchase of premium cable channels is an "all or nothing" choice.Which graph in Figure 6-6 best illustrates the cable market demand curve?

What does cross elasticity of demand between goods reveal about the nature of relationship between them?

The demand for French Roast coffee is likely to be

Arrange the following goods from least to most elastic, explaining your ordering: gasoline, Exxon gas, Exxon gas at a particular gas station.

The cross elasticity between two goods has been measured at ?1.2.How are the goods related? Explain.Give an example of goods for which this might be a reasonable measure of cross elasticity.

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: an Initial Look

Consumer Choice: Individual and Market Demand

Production, Inputs, and Cost: Building Blocks for Supply Analysis

Output, Price, and Profit: the Importance of Marginal Analysis

Securities: Business Finance and the Economy: the Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets: the Price System

The Shortcomings of Free Markets

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: the Human Inputs

Poverty, Inequality, and Discrimination

Is Useconomic Leadership Threatened

An Introduction to Macroeconomics

The Goals of Macroeconomic Policy

Economic Growth: Theory and Policy

Aggregate Demand and the Powerful Consumer

Demand-Side Equilibrium: Unemployment or Inflation

Bringing in the Supply Side: Unemployment and Inflation

Managing Aggregate Demand: Fiscal Policy

Money and the Banking System

Monetary Policy: Conventional and Unconventional

He Financial Crisis and the Great Recession

The Debate Over Monetary and Fiscal Policy

Budget Deficits in the Short and Long Run

The Trade-Off Between Inflation and Unemployment

International Trade and Comparative Advantage

The International Monetary System: Order or Disorder

Exchange Rates and the Macroeconomy

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