Question 1

If a 10 percent increase in income results in a 10 percent decrease in the consumption of widgets, then

Accepted Answer

A) the price elasticity of demand for widgets equals 1. 
B) the income elasticity of demand for widgets is negative. 
C) the income elasticity of demand for widgets equals 1. 
D) widgets are a normal good. 
E) the price elasticity demand for widgets is negative. 
A) the price elasticity of demand for widgets equals 1. 
B) the income elasticity of demand for widgets is negative. 
C) the income elasticity of demand for widgets equals 1. 
D) widgets are a normal good. 
E) the price elasticity demand for widgets is negative.

Question 2

A technological breakthrough lowers the cost of photocopiers. If the demand for photocopiers is price inelastic, we predict that photocopier sales

Accepted Answer

A) fall and total revenue increases. 
B) fall and total revenue decreases. 
C) rise and total revenue increases. 
D) rise and total revenue decreases. 
E) rise, but changes in total revenue will depend on elasticity of supply. 
A) fall and total revenue increases. 
B) fall and total revenue decreases. 
C) rise and total revenue increases. 
D) rise and total revenue decreases. 
E) rise, but changes in total revenue will depend on elasticity of supply.

Question 3

In 2003, when music downloading first took off, Universal Music slashed the average price of a CD from $21 to $15. The company expected the price cut to boost the quantity of CDs sold by 30 percent, other things remaining the same. What was Universal Music's estimate of the price elasticity of demand for CDs?

Accepted Answer

A) 0.9 
B) 90 
C) 1.11 
D) 0.011 
E) 0.2 
A) 0.9 
B) 90 
C) 1.11 
D) 0.011 
E) 0.2

Question 4

The demand for a good is perfectly elastic when the price elasticity of demand is

Accepted Answer

A) equal to infinity. 
B) between infinity and 1. 
C) equal to 1. 
D) between 1 and zero. 
E) equal to zero. 
A) equal to infinity. 
B) between infinity and 1. 
C) equal to 1. 
D) between 1 and zero. 
E) equal to zero.

Question 5

If a large percentage drop in the price level results in a small percentage increase in the quantity demanded,

Accepted Answer

A) demand is inelastic. 
B) demand is elastic. 
C) demand is unit elastic. 
D) the price elasticity of demand is close to infinity. 
E) the price elasticity of demand is zero. 
A) demand is inelastic. 
B) demand is elastic. 
C) demand is unit elastic. 
D) the price elasticity of demand is close to infinity. 
E) the price elasticity of demand is zero.

Question 6

The price elasticity of demand for oranges ________ if the quantity is measured in pounds instead of kilograms and ________ if the price is measured in dollars instead of cents.

Accepted Answer

A) changes; changes 
B) changes; does not change 
C) does not change; changes 
D) does not change; does not change 
E) increases; decreases 
A) changes; changes 
B) changes; does not change 
C) does not change; changes 
D) does not change; does not change 
E) increases; decreases

If a 10 percent increase in income results in a 10 percent decrease in the consumption of widgets, then

A technological breakthrough lowers the cost of photocopiers. If the demand for photocopiers is price inelastic, we predict that photocopier sales

The demand for a good is perfectly elastic when the price elasticity of demand is

If a large percentage drop in the price level results in a small percentage increase in the quantity demanded,

The price elasticity of demand for oranges if the quantity is measured in pounds instead of kilograms and if the price is measured in dollars instead of cents.

What Is Economics

The Economic Problem

Demand and Supply

Efficiency and Equity

Governments Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

Macro Only: International Trade Policy

Filters

Exam 4: Elasticity

If a 10 percent increase in income results in a 10 percent decrease in the consumption of widgets, then

A technological breakthrough lowers the cost of photocopiers. If the demand for photocopiers is price inelastic, we predict that photocopier sales

The demand for a good is perfectly elastic when the price elasticity of demand is

If a large percentage drop in the price level results in a small percentage increase in the quantity demanded,

The price elasticity of demand for oranges ________ if the quantity is measured in pounds instead of kilograms and ________ if the price is measured in dollars instead of cents.

What Is Economics

The Economic Problem

Demand and Supply

Efficiency and Equity

Governments Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

Macro Only: International Trade Policy

Filters

The price elasticity of demand for oranges if the quantity is measured in pounds instead of kilograms and if the price is measured in dollars instead of cents.