Question 1

What is measured by the price elasticity of supply?

Accepted Answer

A) The price elasticity of supply measures how responsive producers are to changes in the price of other goods. 
B) The price elasticity of supply measures how responsive producers are to changes in income. 
C) The price elasticity of supply measures how responsive producers are to changes in the price of a product. 
D) The price elasticity of supply is a measure of the slope of the supply curve. 
E) The price elasticity of supply measures how responsive producers are to changes in the cost of producing a product. 
A) The price elasticity of supply measures how responsive producers are to changes in the price of other goods. 
B) The price elasticity of supply measures how responsive producers are to changes in income. 
C) The price elasticity of supply measures how responsive producers are to changes in the price of a product. 
D) The price elasticity of supply is a measure of the slope of the supply curve. 
E) The price elasticity of supply measures how responsive producers are to changes in the cost of producing a product.

Question 2

Suppose the local university charges $85 per credit hour.If tuition increases from $85 to $93 per credit hour, using the midpoint method, what is the percentage change in price?

Accepted Answer

A) 8.99 percent 
B) 8.00 percent 
C) 9.41 percent 
D) 8.62 percent 
E) 9.12 percent 
A) 8.99 percent 
B) 8.00 percent 
C) 9.41 percent 
D) 8.62 percent 
E) 9.12 percent

Question 3

All of the following statements are true EXCEPT

Accepted Answer

A) the demand for food is less elastic than the demand for a Hawaiian vacation. 
B) the demand for clothing is less elastic than the demand for blue jeans. 
C) the demand for gasoline is more elastic the longer the time elapsed. 
D) the smaller the proportion of income spent on a good, the more inelastic demand will be. 
E) the demand for Nike running shoes is less elastic than the demand for shoes. 
A) the demand for food is less elastic than the demand for a Hawaiian vacation. 
B) the demand for clothing is less elastic than the demand for blue jeans. 
C) the demand for gasoline is more elastic the longer the time elapsed. 
D) the smaller the proportion of income spent on a good, the more inelastic demand will be. 
E) the demand for Nike running shoes is less elastic than the demand for shoes.

Question 4

The income elasticity of demand for used cars is less than zero.So, used cars are

Accepted Answer

A) an inferior good. 
B) a normal good. 
C) an inelastic good. 
D) a perfectly inelastic good. 
E) a substitute good. 
A) an inferior good. 
B) a normal good. 
C) an inelastic good. 
D) a perfectly inelastic good. 
E) a substitute good.

Question 5

-The demand curve shown in the figure above is ________ over the price range from $0.90 to $1.10 per pack.

Accepted Answer

A) perfectly elastic 
B) perfectly inelastic 
C) unit elastic 
D) elastic but not perfectly elastic 
E) inelastic but not perfectly inelastic 
A) perfectly elastic 
B) perfectly inelastic 
C) unit elastic 
D) elastic but not perfectly elastic 
E) inelastic but not perfectly inelastic

Question 6

Total revenue equals

Accepted Answer

A) price × quantity sold. 
B) profit - cost. 
C) price. 
D) quantity sold - cost. 
E) cost × price. 
A) price × quantity sold. 
B) profit - cost. 
C) price. 
D) quantity sold - cost. 
E) cost × price.

Question 7

When the price of bananas rises 2 percent, the quantity demanded of peanut butter falls 4 percent.
a∙What is the cross elasticity of demand between these two goods?
b∙How are these goods related?
c∙If the price of bananas rises, how will that affect the demand curve for peanut butter?

Accepted Answer

a∙The cross elasticity of demand equals

Question 8

If demand is price inelastic and the price is lowered, which of the following occurs?

Accepted Answer

A) The quantity sold decreases. 
B) The total expenditure increases and the total revenue decreases. 
C) The total revenue of the firms selling the product is unchanged. 
D) The total revenue of the firms selling the product decreases. 
E) The total expenditure decreases and the total revenue increases. 
A) The quantity sold decreases. 
B) The total expenditure increases and the total revenue decreases. 
C) The total revenue of the firms selling the product is unchanged. 
D) The total revenue of the firms selling the product decreases. 
E) The total expenditure decreases and the total revenue increases.

Question 9

What is the price elasticity of demand? In terms of percentage changes, what is its formula?

Accepted Answer

The price elasticity of demand is a meas

Question 10

The price of one bedroom apartments in Cheyenne increased from $55,000 to $65,000 and the quantity of apartment for sale increased from 25 to 30.Using the midpoint method, the price elasticity of supply for apartments in Cheyenne is equal to

Accepted Answer

A) 0.916. 
B) 0.75. 
C) 1.09. 
D) 2.18. 
E) 0.08. 
A) 0.916. 
B) 0.75. 
C) 1.09. 
D) 2.18. 
E) 0.08.

Question 11

Products X, Y, and Z have price elasticities of 3.0, 0.80, and 1.0 respectively.Total revenue decreases if the price of

Accepted Answer

A) product X falls. 
B) product Y falls. 
C) product Z falls. 
D) product X or product Z fall. 
E) product Y or product Z fall. 
A) product X falls. 
B) product Y falls. 
C) product Z falls. 
D) product X or product Z fall. 
E) product Y or product Z fall.

Question 12

The long-run price elasticity of demand for electricity is ________ the short-run price elasticity of demand for electricity.

Accepted Answer

A) greater than 
B) less than 
C) equal to 
D) not comparable to 
E) unrelated to 
A) greater than 
B) less than 
C) equal to 
D) not comparable to 
E) unrelated to

Question 13

Anna owns the Sweet Alps Chocolate store.She charges $10 per pound for her hand made chocolate.You, the economist, have calculated the elasticity of demand for chocolate in her town to be 2.5.If she wants to increase her total revenue, what advice will you give her?

Accepted Answer

You should tell her to lower h

Question 14

-The figure above shows the supply curve for a good with

Accepted Answer

A) a perfectly elastic supply. 
B) a perfectly inelastic supply. 
C) an elastic supply. 
D) an inelastic supply. 
E) a unit elastic supply. 
A) a perfectly elastic supply. 
B) a perfectly inelastic supply. 
C) an elastic supply. 
D) an inelastic supply. 
E) a unit elastic supply.

Question 15

If the price of suntan lotion increases from $6 to $8 per bottle and quantity demanded decreases from 900,000 bottles to 845,000 bottles, using the midpoint method, what is the price elasticity of demand for suntan lotion?

Accepted Answer

The price elasticity of demand = (percen

Question 16

What is the formula for the cross elasticity of demand? The percentage change in the

Accepted Answer

A) quantity demanded divided by the percentage change in the price of a substitute or complement. 
B) quantity supplied divided by the percentage change in price. 
C) quantity demanded divided by the percentage change in price. 
D) quantity demanded divided by the percentage change in income. 
E) equilibrium quantity demanded divided by the equilibrium quantity supplied. 
A) quantity demanded divided by the percentage change in the price of a substitute or complement. 
B) quantity supplied divided by the percentage change in price. 
C) quantity demanded divided by the percentage change in price. 
D) quantity demanded divided by the percentage change in income. 
E) equilibrium quantity demanded divided by the equilibrium quantity supplied.

Question 17

Which of the following does NOT influence the price elasticity of demand?

Accepted Answer

A) the amount by which the demand curve shifts when the price of another good changes 
B) the number of substitutes available to consumers 
C) the price of the good relative to total income 
D) the time period buyers have to respond to a price change 
E) whether the good is a necessity or a luxury 
A) the amount by which the demand curve shifts when the price of another good changes 
B) the number of substitutes available to consumers 
C) the price of the good relative to total income 
D) the time period buyers have to respond to a price change 
E) whether the good is a necessity or a luxury

Question 18

If two goods have a cross elasticity of demand of -2, then when the price of one good increases, the demand curve of the other good

Accepted Answer

A) shifts rightward. 
B) shifts leftward. 
C) remains unchanged and the supply curve also remains unchanged. 
D) might shift rightward, leftward, or remain unchanged. 
E) remains unchanged but the supply curve shifts leftward. 
A) shifts rightward. 
B) shifts leftward. 
C) remains unchanged and the supply curve also remains unchanged. 
D) might shift rightward, leftward, or remain unchanged. 
E) remains unchanged but the supply curve shifts leftward.

Question 19

A ________ curve means that ________.

Accepted Answer

A) horizontal demand; a change in price does not change total revenue 
B) horizontal demand; the elasticity of demand is less than 1 
C) horizontal supply; the elasticity of supply is infinite 
D) horizontal supply; the elasticity of demand is infinite 
E) vertical demand; a change in price does not change total revenue 
A) horizontal demand; a change in price does not change total revenue 
B) horizontal demand; the elasticity of demand is less than 1 
C) horizontal supply; the elasticity of supply is infinite 
D) horizontal supply; the elasticity of demand is infinite 
E) vertical demand; a change in price does not change total revenue

Question 20

If the price of a six-pack of Pepsi falls from $4 to $3 and the quantity purchased increases 80 percent, then demand is

Accepted Answer

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

What is measured by the price elasticity of supply?

Suppose the local university charges $85 per credit hour.If tuition increases from $85 to $93 per credit hour, using the midpoint method, what is the percentage change in price?

All of the following statements are true EXCEPT

The income elasticity of demand for used cars is less than zero.So, used cars are

-The demand curve shown in the figure above is ________ over the price range from $0.90 to $1.10 per pack.

Total revenue equals

When the price of bananas rises 2 percent, the quantity demanded of peanut butter falls 4 percent. a∙What is the cross elasticity of demand between these two goods? b∙How are these goods related? c∙If the price of bananas rises, how will that affect the demand curve for peanut butter?

If demand is price inelastic and the price is lowered, which of the following occurs?

What is the price elasticity of demand? In terms of percentage changes, what is its formula?

The price of one bedroom apartments in Cheyenne increased from $55,000 to $65,000 and the quantity of apartment for sale increased from 25 to 30.Using the midpoint method, the price elasticity of supply for apartments in Cheyenne is equal to

Products X, Y, and Z have price elasticities of 3.0, 0.80, and 1.0 respectively.Total revenue decreases if the price of

The long-run price elasticity of demand for electricity is ________ the short-run price elasticity of demand for electricity.

Anna owns the Sweet Alps Chocolate store.She charges $10 per pound for her hand made chocolate.You, the economist, have calculated the elasticity of demand for chocolate in her town to be 2.5.If she wants to increase her total revenue, what advice will you give her?

-The figure above shows the supply curve for a good with

If the price of suntan lotion increases from $6 to $8 per bottle and quantity demanded decreases from 900,000 bottles to 845,000 bottles, using the midpoint method, what is the price elasticity of demand for suntan lotion?

What is the formula for the cross elasticity of demand? The percentage change in the

Which of the following does NOT influence the price elasticity of demand?

If two goods have a cross elasticity of demand of -2, then when the price of one good increases, the demand curve of the other good

A curve means that .

If the price of a six-pack of Pepsi falls from $4 to $3 and the quantity purchased increases 80 percent, then demand is

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets With Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 5: Elasticities of Demand and Supply

What is measured by the price elasticity of supply?

Suppose the local university charges $85 per credit hour.If tuition increases from $85 to $93 per credit hour, using the midpoint method, what is the percentage change in price?

All of the following statements are true EXCEPT

The income elasticity of demand for used cars is less than zero.So, used cars are

-The demand curve shown in the figure above is ________ over the price range from $0.90 to $1.10 per pack.

Total revenue equals

When the price of bananas rises 2 percent, the quantity demanded of peanut butter falls 4 percent. a∙What is the cross elasticity of demand between these two goods? b∙How are these goods related? c∙If the price of bananas rises, how will that affect the demand curve for peanut butter?

If demand is price inelastic and the price is lowered, which of the following occurs?

What is the price elasticity of demand? In terms of percentage changes, what is its formula?

The price of one bedroom apartments in Cheyenne increased from $55,000 to $65,000 and the quantity of apartment for sale increased from 25 to 30.Using the midpoint method, the price elasticity of supply for apartments in Cheyenne is equal to

Products X, Y, and Z have price elasticities of 3.0, 0.80, and 1.0 respectively.Total revenue decreases if the price of

The long-run price elasticity of demand for electricity is ________ the short-run price elasticity of demand for electricity.

Anna owns the Sweet Alps Chocolate store.She charges $10 per pound for her hand made chocolate.You, the economist, have calculated the elasticity of demand for chocolate in her town to be 2.5.If she wants to increase her total revenue, what advice will you give her?

-The figure above shows the supply curve for a good with

If the price of suntan lotion increases from $6 to $8 per bottle and quantity demanded decreases from 900,000 bottles to 845,000 bottles, using the midpoint method, what is the price elasticity of demand for suntan lotion?

What is the formula for the cross elasticity of demand? The percentage change in the

Which of the following does NOT influence the price elasticity of demand?

If two goods have a cross elasticity of demand of -2, then when the price of one good increases, the demand curve of the other good

A ________ curve means that ________.

If the price of a six-pack of Pepsi falls from $4 to $3 and the quantity purchased increases 80 percent, then demand is

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets With Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

A curve means that .