Question 1

A rise in price will always result in an increase in the total amount consumers spend on a product.

Accepted Answer

A) True 
 B)False

Question 2

The price elasticity of a vertical demand curve is always

Accepted Answer

A) infinitely large. 
B) zero. 
C) one. 
D) increasing as price increases. 
A) infinitely large. 
B) zero. 
C) one. 
D) increasing as price increases.

Question 3

As one moves down a straight-line demand curve away from the vertical axis, demand becomes less elastic and then inelastic.

Accepted Answer

A) True 
 B)False

Question 4

As a result of a decline in interest rates and a rise in household income, the demand curve for housing has shifted to the right, but has retained the same slope.Consequently, the elasticity of demand for housing

Accepted Answer

A) has declined. 
B) has increased. 
C) has remained unchanged. 
D) cannot be compared. 
A) has declined. 
B) has increased. 
C) has remained unchanged. 
D) cannot be compared.

Question 5

Demand is said to be price elastic at a point on a demand curve if a

Accepted Answer

A) 1 percent rise in price reduces the quantity demanded by more than 1 percent. 
B) 1 percent rise in price reduces the quantity demanded by less than 1 percent. 
C) 1 percent rise in price reduces the quantity demanded by more than 10 percent. 
D) 10 percent rise in price reduces the quantity demanded by less than 10 percent. 
A) 1 percent rise in price reduces the quantity demanded by more than 1 percent. 
B) 1 percent rise in price reduces the quantity demanded by less than 1 percent. 
C) 1 percent rise in price reduces the quantity demanded by more than 10 percent. 
D) 10 percent rise in price reduces the quantity demanded by less than 10 percent.

Question 6

The elasticity of a demand curve at any point can be ascertained by its steepness.

Accepted Answer

A) True 
 B)False

Question 7

Figure 6-9
  
-In 1983, government price supports raised the price of sugar above its equilibrium value.Which graph in Figure 6-9 illustrates the impact of sugar price supports on the sugar substitute fructose?

Accepted Answer

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

Question 8

At $6 per steak, consumers are willing to buy two steaks.At a price of $2, consumers are willing to buy six steaks.The elasticity of the market demand curve between P = $6 and P = $2 (dropping all minus signs) is

Accepted Answer

A) 0.33. 
B) 1. 
C) 2. 
D) 4. 
A) 0.33. 
B) 1. 
C) 2. 
D) 4.

Question 9

The slope of the demand curve conveys all the useful information about elasticity.

Accepted Answer

A) True 
 B)False

Question 10

Demand is said to be elastic when percentage changes in quantity demanded are

Accepted Answer

A) less than the percentage changes in price. 
B) higher than the percentage changes in price. 
C) equal to the percentage changes in price. 
D) zero when price changes. 
A) less than the percentage changes in price. 
B) higher than the percentage changes in price. 
C) equal to the percentage changes in price. 
D) zero when price changes.

Question 11

A buyer's response to a change in income is an example of a "change in demand."

Accepted Answer

A) True 
 B)False

Question 12

The demand for a new effective drug for the cure of AIDS would most likely be

Accepted Answer

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

Question 13

As one moves down a straight-line demand curve, the elasticity increases.

Accepted Answer

A) True 
 B)False

Question 14

Tele-Com, Inc., the nation's largest cable TV company, tested the effect of a price reduction for the Disney Channel.It lowered prices from $10.75 to $7.95 and found that the number of customers more than doubled.This means the

Accepted Answer

A) demand curve for the Disney Channel shifted to the right. 
B) supply curve of the Disney Channel shifted to the left. 
C) demand for the Disney Channel is elastic in this price range. 
D) demand for the Disney Channel is inelastic in this price range. 
A) demand curve for the Disney Channel shifted to the right. 
B) supply curve of the Disney Channel shifted to the left. 
C) demand for the Disney Channel is elastic in this price range. 
D) demand for the Disney Channel is inelastic in this price range.

Question 15

Which of the following is more likely be the price elasticity of demand for anti-venom?

Accepted Answer

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

Question 16

​Regarding the price elasticities of demand, which of the following statements is true?

Accepted Answer

A) ​Price elasticities vary considerably from product to product 
B) ​Luxurious goods are generally less price elastic. 
C) ​Necessities are generally more price elastic. 
D) ​All of these statements are true. 
A) ​Price elasticities vary considerably from product to product 
B) ​Luxurious goods are generally less price elastic. 
C) ​Necessities are generally more price elastic. 
D) ​All of these statements are true.

Question 17

Regarding demand elasticity, which of the following statements is correct?

Accepted Answer

A) If demand for seller's product is elastic, a price increase will decrease total revenue. 
B) If demand for seller's product is elastic, a price increase will increase total revenue. 
C) If demand is exactly unit-elastic, an increase in price will raise total revenue. 
D) ​If demand is exactly unit-elastic, an increase in price will raise total revenue. 
A) If demand for seller's product is elastic, a price increase will decrease total revenue. 
B) If demand for seller's product is elastic, a price increase will increase total revenue. 
C) If demand is exactly unit-elastic, an increase in price will raise total revenue. 
D) ​If demand is exactly unit-elastic, an increase in price will raise total revenue.

Question 18

Elasticity of demand equals the ratio of the percentage change in quantity demanded to the percentage change in the price of the good.

Accepted Answer

A) True 
 B)False

Question 19

If two goods are complements, their cross elasticity of demand will normally be

Accepted Answer

A) zero. 
B) a negative number. 
C) a positive number. 
D) infinity. 
A) zero. 
B) a negative number. 
C) a positive number. 
D) infinity.

Question 20

The elasticity formula solves the units problem because percentages are unaffected by the units of measure.

Accepted Answer

A) True 
 B)False

Exam 6: Demand and Elasticity

A rise in price will always result in an increase in the total amount consumers spend on a product.

The price elasticity of a vertical demand curve is always

As one moves down a straight-line demand curve away from the vertical axis, demand becomes less elastic and then inelastic.

As a result of a decline in interest rates and a rise in household income, the demand curve for housing has shifted to the right, but has retained the same slope.Consequently, the elasticity of demand for housing

Demand is said to be price elastic at a point on a demand curve if a

The elasticity of a demand curve at any point can be ascertained by its steepness.

Figure 6-9 -In 1983, government price supports raised the price of sugar above its equilibrium value.Which graph in Figure 6-9 illustrates the impact of sugar price supports on the sugar substitute fructose?

At $6 per steak, consumers are willing to buy two steaks.At a price of $2, consumers are willing to buy six steaks.The elasticity of the market demand curve between P = $6 and P = $2 (dropping all minus signs) is

The slope of the demand curve conveys all the useful information about elasticity.

Demand is said to be elastic when percentage changes in quantity demanded are

A buyer's response to a change in income is an example of a "change in demand."

The demand for a new effective drug for the cure of AIDS would most likely be

As one moves down a straight-line demand curve, the elasticity increases.

Tele-Com, Inc., the nation's largest cable TV company, tested the effect of a price reduction for the Disney Channel.It lowered prices from $10.75 to $7.95 and found that the number of customers more than doubled.This means the

Which of the following is more likely be the price elasticity of demand for anti-venom?

​Regarding the price elasticities of demand, which of the following statements is true?

Regarding demand elasticity, which of the following statements is correct?

Elasticity of demand equals the ratio of the percentage change in quantity demanded to the percentage change in the price of the good.

If two goods are complements, their cross elasticity of demand will normally be

The elasticity formula solves the units problem because percentages are unaffected by the units of measure.

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

Filters

Regarding the price elasticities of demand, which of the following statements is true?