Question 1

The cross elasticity between computers and software is

Accepted Answer

A) negative because they are substitutes. 
B) positive because they are substitutes. 
C) negative because they are complements. 
D) positive because they are complements. 
E) positive because they are normal goods. 
A) negative because they are substitutes. 
B) positive because they are substitutes. 
C) negative because they are complements. 
D) positive because they are complements. 
E) positive because they are normal goods.

Question 2

If a lower price for good X increases the demand for good Y, the cross elasticity value for the two goods is

Accepted Answer

A) negative. 
B) equal to zero. 
C) positive and less than one. 
D) positive and greater than one. 
E) possibly negative, positive, or zero, but there is not enough information to decide. 
A) negative. 
B) equal to zero. 
C) positive and less than one. 
D) positive and greater than one. 
E) possibly negative, positive, or zero, but there is not enough information to decide.

Question 3

Which of the following explains why supply is more elastic as more time passes?

Accepted Answer

A) It is difficult or impossible to increase the quantity produced in a short period of time. 
B) Consumers have more time to search for substitutes. 
C) Sellers try to take advantage of a high price in the short term. 
D) The supply curve becomes generally steeper as more time passes. 
E) There is no explanation for this phenomenon. 
A) It is difficult or impossible to increase the quantity produced in a short period of time. 
B) Consumers have more time to search for substitutes. 
C) Sellers try to take advantage of a high price in the short term. 
D) The supply curve becomes generally steeper as more time passes. 
E) There is no explanation for this phenomenon.

Question 4

As more time passes, the price elasticity of gasoline

Accepted Answer

A) increases. 
B) decreases. 
C) stays the same. 
D) becomes perfectly inelastic. 
E) becomes perfectly elastic. 
A) increases. 
B) decreases. 
C) stays the same. 
D) becomes perfectly inelastic. 
E) becomes perfectly elastic.

Question 5

If the cross elasticity of demand between Coke and Pepsi is 2.02, then Coke and Pepsi are

Accepted Answer

A) complements. 
B) substitutes. 
C) normal goods. 
D) inferior goods. 
E) Both answers B and C are correct. 
A) complements. 
B) substitutes. 
C) normal goods. 
D) inferior goods. 
E) Both answers B and C are correct.

Question 6

A firm raises the price it charges.The firm's total revenue decreases.What can we conclude about the price elasticity of demand?

Accepted Answer

A) Demand is elastic. 
B) Demand is unit elastic. 
C) Demand is inelastic. 
D) Demand is perfectly inelastic. 
E) Not enough information is given to conclude anything about price elasticity of demand. 
A) Demand is elastic. 
B) Demand is unit elastic. 
C) Demand is inelastic. 
D) Demand is perfectly inelastic. 
E) Not enough information is given to conclude anything about price elasticity of demand.

Question 7

The total revenue test says
i. Demand is elastic if a decrease in price results in an increase in total revenue.
ii. Total revenue is maximized when demand is elastic.
iii. Total revenue is minimized when demand is unit elastic.

Accepted Answer

A) i only 
B) i and ii 
C) ii and iii 
D) i, ii and iii 
E) ii only 
A) i only 
B) i and ii 
C) ii and iii 
D) i, ii and iii 
E) ii only

Question 8

The greater the amount of time that passes after a price change, the

Accepted Answer

A) less elastic supply becomes. 
B) more elastic supply becomes. 
C) more negative supply becomes. 
D) steeper the supply curve becomes. 
E) None of the above answers is correct. 
A) less elastic supply becomes. 
B) more elastic supply becomes. 
C) more negative supply becomes. 
D) steeper the supply curve becomes. 
E) None of the above answers is correct.

Question 9

If the price of a magazine increases from $5 to $7 and the quantity demanded of the magazines decreases from 10 million per month to 8 million per month, using the midpoint method, what is the price elasticity of demand? Show your work.Is the demand elastic, inelastic, or unit elastic?

Accepted Answer

The price elasticity of demand = (percen

Question 10

If the price elasticity of supply of corn is 3.12, then is the supply of corn elastic or inelastic?

Accepted Answer

Because the price el

Question 11

To determine the price elasticity of demand, we

Accepted Answer

A) need information on consumers' incomes. 
B) need to know how much is available. 
C) compare the percentage change in the quantity demanded to the percentage change in the price. 
D) compare the change in the quantity to the change in price. 
E) divide the quantity by the price. 
A) need information on consumers' incomes. 
B) need to know how much is available. 
C) compare the percentage change in the quantity demanded to the percentage change in the price. 
D) compare the change in the quantity to the change in price. 
E) divide the quantity by the price.

Question 12

The income elasticity of demand is a measure of

Accepted Answer

A) how demand for a product changes when the price of a substitute or complement product changes. 
B) how responsive consumers are to changes in the price of a product. 
C) how responsive suppliers are to changes in the price of a product. 
D) the extent to which the demand for a good changes when income changes. 
E) the extent to which the supply of a good changes when the demand changes as a result of a change in income. 
A) how demand for a product changes when the price of a substitute or complement product changes. 
B) how responsive consumers are to changes in the price of a product. 
C) how responsive suppliers are to changes in the price of a product. 
D) the extent to which the demand for a good changes when income changes. 
E) the extent to which the supply of a good changes when the demand changes as a result of a change in income.

Question 13

Which of the following statements is correct?

Accepted Answer

A) The demand for New Balance shoes is more elastic than the demand for shoes in general. 
B) The demand for salt is very elastic. 
C) The demand for luxuries is less elastic than the demand for necessities. 
D) The demand for a narrowly defined good is less elastic than the demand for a more broadly defined good. 
E) The larger the proportion of income spent on a good, the smaller the elasticity of demand. 
A) The demand for New Balance shoes is more elastic than the demand for shoes in general. 
B) The demand for salt is very elastic. 
C) The demand for luxuries is less elastic than the demand for necessities. 
D) The demand for a narrowly defined good is less elastic than the demand for a more broadly defined good. 
E) The larger the proportion of income spent on a good, the smaller the elasticity of demand.

Question 14

If an Atlanta bakery raises the price of their rye bread by 11 percent and the quantity demanded decreases by 11 percent, then the demand for the rye bread is ________ and the bakery's total revenue ________.

Accepted Answer

A) unit elastic; does not change 
B) unit elastic; increases 
C) unit elastic; decreases 
D) elastic; does not change 
E) inelastic; does not change 
A) unit elastic; does not change 
B) unit elastic; increases 
C) unit elastic; decreases 
D) elastic; does not change 
E) inelastic; does not change

Question 15

If a 10 percent price increase generates a 10 percent decrease in quantity demanded, then demand is

Accepted Answer

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

Question 16

When the price of a cup of coffee falls from $3.00 to $2.50, the quantity demanded increases from 1,000 per month to 1,150 per month.Using the midpoint method, the price elasticity of demand is

Accepted Answer

A) 0.77. 
B) 1.30. 
C) 0.07. 
D) 3.00. 
E) 2.50. 
A) 0.77. 
B) 1.30. 
C) 0.07. 
D) 3.00. 
E) 2.50.

Question 17

Alan purchases 10 percent fewer bags of chips when his income decreases by 5 percent.Based on only this information, we know that for Alan

Accepted Answer

A) chips are a normal good. 
B) chips are a complement to salsa. 
C) chips are a substitute to pretzels. 
D) chips are an inferior good. 
E) the price of chips fell. 
A) chips are a normal good. 
B) chips are a complement to salsa. 
C) chips are a substitute to pretzels. 
D) chips are an inferior good. 
E) the price of chips fell.

Question 18

If a 30 percent price increase generates a 20 percent decrease in quantity demanded, then demand is

Accepted Answer

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

Question 19

The price elasticity of demand for Red Delicious apples, a certain type of apple, is likely

Accepted Answer

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

Question 20

Moving downward along a linear (straight-line)downward-sloping demand curve, the

Accepted Answer

A) price elasticity of demand does not change. 
B) quantity demanded decreases. 
C) demand becomes more elastic. 
D) demand becomes less elastic. 
E) total revenue never changes. 
A) price elasticity of demand does not change. 
B) quantity demanded decreases. 
C) demand becomes more elastic. 
D) demand becomes less elastic. 
E) total revenue never changes.

The cross elasticity between computers and software is

If a lower price for good X increases the demand for good Y, the cross elasticity value for the two goods is

Which of the following explains why supply is more elastic as more time passes?

As more time passes, the price elasticity of gasoline

If the cross elasticity of demand between Coke and Pepsi is 2.02, then Coke and Pepsi are

A firm raises the price it charges.The firm's total revenue decreases.What can we conclude about the price elasticity of demand?

The total revenue test says i. Demand is elastic if a decrease in price results in an increase in total revenue. ii. Total revenue is maximized when demand is elastic. iii. Total revenue is minimized when demand is unit elastic.

The greater the amount of time that passes after a price change, the

If the price of a magazine increases from $5 to $7 and the quantity demanded of the magazines decreases from 10 million per month to 8 million per month, using the midpoint method, what is the price elasticity of demand? Show your work.Is the demand elastic, inelastic, or unit elastic?

If the price elasticity of supply of corn is 3.12, then is the supply of corn elastic or inelastic?

To determine the price elasticity of demand, we

The income elasticity of demand is a measure of

Which of the following statements is correct?

If an Atlanta bakery raises the price of their rye bread by 11 percent and the quantity demanded decreases by 11 percent, then the demand for the rye bread is and the bakery's total revenue .

If a 10 percent price increase generates a 10 percent decrease in quantity demanded, then demand is

When the price of a cup of coffee falls from $3.00 to $2.50, the quantity demanded increases from 1,000 per month to 1,150 per month.Using the midpoint method, the price elasticity of demand is

Alan purchases 10 percent fewer bags of chips when his income decreases by 5 percent.Based on only this information, we know that for Alan

If a 30 percent price increase generates a 20 percent decrease in quantity demanded, then demand is

The price elasticity of demand for Red Delicious apples, a certain type of apple, is likely

Moving downward along a linear (straight-line)downward-sloping demand curve, the

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

The cross elasticity between computers and software is

If a lower price for good X increases the demand for good Y, the cross elasticity value for the two goods is

Which of the following explains why supply is more elastic as more time passes?

As more time passes, the price elasticity of gasoline

If the cross elasticity of demand between Coke and Pepsi is 2.02, then Coke and Pepsi are

A firm raises the price it charges.The firm's total revenue decreases.What can we conclude about the price elasticity of demand?

The total revenue test says i. Demand is elastic if a decrease in price results in an increase in total revenue. ii. Total revenue is maximized when demand is elastic. iii. Total revenue is minimized when demand is unit elastic.

The greater the amount of time that passes after a price change, the

If the price of a magazine increases from $5 to $7 and the quantity demanded of the magazines decreases from 10 million per month to 8 million per month, using the midpoint method, what is the price elasticity of demand? Show your work.Is the demand elastic, inelastic, or unit elastic?

If the price elasticity of supply of corn is 3.12, then is the supply of corn elastic or inelastic?

To determine the price elasticity of demand, we

The income elasticity of demand is a measure of

Which of the following statements is correct?

If an Atlanta bakery raises the price of their rye bread by 11 percent and the quantity demanded decreases by 11 percent, then the demand for the rye bread is ________ and the bakery's total revenue ________.

If a 10 percent price increase generates a 10 percent decrease in quantity demanded, then demand is

When the price of a cup of coffee falls from $3.00 to $2.50, the quantity demanded increases from 1,000 per month to 1,150 per month.Using the midpoint method, the price elasticity of demand is

Alan purchases 10 percent fewer bags of chips when his income decreases by 5 percent.Based on only this information, we know that for Alan

If a 30 percent price increase generates a 20 percent decrease in quantity demanded, then demand is

The price elasticity of demand for Red Delicious apples, a certain type of apple, is likely

Moving downward along a linear (straight-line)downward-sloping demand curve, the

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

If an Atlanta bakery raises the price of their rye bread by 11 percent and the quantity demanded decreases by 11 percent, then the demand for the rye bread is and the bakery's total revenue .