Question 1

-In in the figure above, when the price falls from $5 to $4, the price elasticity of demand is

Accepted Answer

A) 2. 
B) 3. 
C) 0.75. 
D) 1.5. 
E) 0.33. 
A) 2. 
B) 3. 
C) 0.75. 
D) 1.5. 
E) 0.33.

Question 2

If the price of a product increases by 5 percent and the quantity demanded decreases by 5 percent, then the elasticity of demand is

Accepted Answer

A) 0. 
B) 1. 
C) indeterminate. 
D) 5. 
E) 25. 
A) 0. 
B) 1. 
C) indeterminate. 
D) 5. 
E) 25.

Question 3

When the price of Ford pickup trucks rises from $18,000 to $19,000, the quantity of Chevy trucks demanded increases from 112,000 to 144,000.What does the cross elasticity of demand between Ford and Chevy trucks equal?

Accepted Answer

In this case, the cross elasticity of de

Question 4

Suppose a local photographer increases his prices by 8 percent and quantity demanded decreases by the same percentage.This set of facts indicates that the demand for his services 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 5

Refer to the figure above.Suppose Starbucks charges $3.50 per cup for its latte.Which of the following is true?
I∙At this price, the demand for Starbucks latte is inelastic.
Ii∙If Starbucks raises the price of its latte, its revenue will increase.
Iii∙If Starbucks lowers the price of its latte, it will increase its revenue.

Accepted Answer

A) Only iii 
B) Only i 
C) Only ii 
D) i and ii 
E) i and iii 
A) Only iii 
B) Only i 
C) Only ii 
D) i and ii 
E) i and iii

Question 6

Joe receives a 20 percent increase in his income from his part time job and as a consequence decreases his consumption of Ramen noodles by 10 percent.Hence to Joe, Ramen noodles are

Accepted Answer

A) a normal good with a price elasticity of demand of 0.5. 
B) a substitute good with a cross elasticity of 0.5. 
C) a good with a price elasticity of supply of -0.5. 
D) an inferior good with an income elasticity of -0.5. 
E) an inferior good with an income elasticity of -2.0. 
A) a normal good with a price elasticity of demand of 0.5. 
B) a substitute good with a cross elasticity of 0.5. 
C) a good with a price elasticity of supply of -0.5. 
D) an inferior good with an income elasticity of -0.5. 
E) an inferior good with an income elasticity of -2.0.

Question 7

If the price elasticity of demand for a product is 2.5, then a price increase of 1.5 percent decreases the quantity demanded by

Accepted Answer

A) 1.55 percent. 
B) 3.50 percent. 
C) 5.00 percent. 
D) 3.75 percent. 
E) 1.00 percent. 
A) 1.55 percent. 
B) 3.50 percent. 
C) 5.00 percent. 
D) 3.75 percent. 
E) 1.00 percent.

Question 8

People take fewer trips by airplane when their incomes fall because of a recession.Trips by airplane must be

Accepted Answer

A) a normal good. 
B) an inferior good. 
C) a substitute for other goods. 
D) a complement to other goods. 
E) an inelastic good. 
A) a normal good. 
B) an inferior good. 
C) a substitute for other goods. 
D) a complement to other goods. 
E) an inelastic good.

Question 9

-In the figure above, when the price falls from $8 to $7, total revenue

Accepted Answer

A) increases from $120 to $210 so demand is elastic. 
B) decreases from $210 to $120 so demand is inelastic. 
C) increases from $120 to $210 so demand is inelastic. 
D) decreases from $210 to $120 so demand is elastic. 
E) increases from $120 to $210 but more information is needed to determine whether demand is elastic, inelastic, or unit elastic. 
A) increases from $120 to $210 so demand is elastic. 
B) decreases from $210 to $120 so demand is inelastic. 
C) increases from $120 to $210 so demand is inelastic. 
D) decreases from $210 to $120 so demand is elastic. 
E) increases from $120 to $210 but more information is needed to determine whether demand is elastic, inelastic, or unit elastic.

Question 10

If two goods are ________, then an increase in the price of one leads to ________ in the quantity demanded of the other.

Accepted Answer

A) complements; a decrease 
B) complements; no change 
C) substitutes; a decrease 
D) substitutes; no change 
E) normal; an increase 
A) complements; a decrease 
B) complements; no change 
C) substitutes; a decrease 
D) substitutes; no change 
E) normal; an increase

Question 11

Goods are ________ when the income elasticity of demand is positive.

Accepted Answer

A) complements 
B) elastic 
C) inferior 
D) substitutes 
E) normal 
A) complements 
B) elastic 
C) inferior 
D) substitutes 
E) normal

Question 12

Suppose a decrease in demand causes the price to decrease from $4 to $3 and the quantity to decrease from 1,000 to 700.Using the midpoint method, the elasticity of supply equals

Accepted Answer

A) 0.81. 
B) 1.24. 
C) 2.83. 
D) 0.18. 
E) None of the above answers is correct. 
A) 0.81. 
B) 1.24. 
C) 2.83. 
D) 0.18. 
E) None of the above answers is correct.

Question 13

If, when the price falls, total revenue increases, demand is

Accepted Answer

A) elastic. 
B) inelastic. 
C) unit elastic. 
D) perfectly inelastic. 
E) None of the above answers is correct because total revenue always decreases when the price of the good falls. 
A) elastic. 
B) inelastic. 
C) unit elastic. 
D) perfectly inelastic. 
E) None of the above answers is correct because total revenue always decreases when the price of the good falls.

Question 14

The demand for luxury suites at basketball games is more elastic if

Accepted Answer

A) these suites are a necessity. 
B) these suites are a luxury item. 
C) few close substitutes exist for these suites. 
D) basketball fans have little time to look for alternative suites. 
E) poorer fans cannot afford luxury suites. 
A) these suites are a necessity. 
B) these suites are a luxury item. 
C) few close substitutes exist for these suites. 
D) basketball fans have little time to look for alternative suites. 
E) poorer fans cannot afford luxury suites.

Question 15

The income elasticity of demand is

Accepted Answer

A) positive for a normal good. 
B) zero for an inferior good. 
C) less than one for an income elastic normal good. 
D)  Only answers A and B are correct. 
E) Answers A, B, and C are correct. 
A) positive for a normal good. 
B) zero for an inferior good. 
C) less than one for an income elastic normal good. 
D)  Only answers A and B are correct. 
E) Answers A, B, and C are correct.

Question 16

-June makes holiday wreaths and sells them during the holiday season.The figure above shows her supply curve of wreaths per week.Use the midpoint method in this problem.
a∙Calculate the percentage change in quantity between points A and B.
b∙Calculate the percentage change in price between points A and B.
c∙Calculate the price elasticity of supply between points A and B.

Accepted Answer

a∙The percentage change in qua

Question 17

The demand for necessities generally is ________ the demand for luxury goods.

Accepted Answer

A) as elastic as 
B) more elastic than 
C) less elastic than 
D) flatter than 
E) not comparable to 
A) as elastic as 
B) more elastic than 
C) less elastic than 
D) flatter than 
E) not comparable to

Question 18

If income increases from $50,000 to $60,000 while the demand for a good increases from 100 units to 125 units, what is the income elasticity of demand? Is the good a normal good or an inferior good?

Accepted Answer

The income elasticity equals 1

Question 19

-The table above gives the supply schedule for a product.Using the midpoint method, find the price elasticity of supply between points A and B, between B and C, between C and D, and between D and E.

Accepted Answer

Between A and B, the elasticity of suppl

Question 20

If the price of a good rises, then moving along a demand curve the percentage change in the quantity demanded will be

Accepted Answer

A) positive. 
B) negative. 
C) zero. 
D) either positive, negative, or zero depending on how the demand curve shifted. 
E) undefined. 
A) positive. 
B) negative. 
C) zero. 
D) either positive, negative, or zero depending on how the demand curve shifted. 
E) undefined.

-In in the figure above, when the price falls from $5 to $4, the price elasticity of demand is

If the price of a product increases by 5 percent and the quantity demanded decreases by 5 percent, then the elasticity of demand is

When the price of Ford pickup trucks rises from $18,000 to $19,000, the quantity of Chevy trucks demanded increases from 112,000 to 144,000.What does the cross elasticity of demand between Ford and Chevy trucks equal?

Suppose a local photographer increases his prices by 8 percent and quantity demanded decreases by the same percentage.This set of facts indicates that the demand for his services is

Joe receives a 20 percent increase in his income from his part time job and as a consequence decreases his consumption of Ramen noodles by 10 percent.Hence to Joe, Ramen noodles are

If the price elasticity of demand for a product is 2.5, then a price increase of 1.5 percent decreases the quantity demanded by

People take fewer trips by airplane when their incomes fall because of a recession.Trips by airplane must be

-In the figure above, when the price falls from $8 to $7, total revenue

If two goods are , then an increase in the price of one leads to in the quantity demanded of the other.

Goods are ________ when the income elasticity of demand is positive.

Suppose a decrease in demand causes the price to decrease from $4 to $3 and the quantity to decrease from 1,000 to 700.Using the midpoint method, the elasticity of supply equals

If, when the price falls, total revenue increases, demand is

The demand for luxury suites at basketball games is more elastic if

The income elasticity of demand is

The demand for necessities generally is ________ the demand for luxury goods.

If income increases from $50,000 to $60,000 while the demand for a good increases from 100 units to 125 units, what is the income elasticity of demand? Is the good a normal good or an inferior good?

-The table above gives the supply schedule for a product.Using the midpoint method, find the price elasticity of supply between points A and B, between B and C, between C and D, and between D and E.

If the price of a good rises, then moving along a demand curve the percentage change in the quantity demanded will be

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

-In in the figure above, when the price falls from $5 to $4, the price elasticity of demand is

If the price of a product increases by 5 percent and the quantity demanded decreases by 5 percent, then the elasticity of demand is

When the price of Ford pickup trucks rises from $18,000 to $19,000, the quantity of Chevy trucks demanded increases from 112,000 to 144,000.What does the cross elasticity of demand between Ford and Chevy trucks equal?

Suppose a local photographer increases his prices by 8 percent and quantity demanded decreases by the same percentage.This set of facts indicates that the demand for his services is

Joe receives a 20 percent increase in his income from his part time job and as a consequence decreases his consumption of Ramen noodles by 10 percent.Hence to Joe, Ramen noodles are

If the price elasticity of demand for a product is 2.5, then a price increase of 1.5 percent decreases the quantity demanded by

People take fewer trips by airplane when their incomes fall because of a recession.Trips by airplane must be

-In the figure above, when the price falls from $8 to $7, total revenue

If two goods are ________, then an increase in the price of one leads to ________ in the quantity demanded of the other.

Goods are ________ when the income elasticity of demand is positive.

Suppose a decrease in demand causes the price to decrease from $4 to $3 and the quantity to decrease from 1,000 to 700.Using the midpoint method, the elasticity of supply equals

If, when the price falls, total revenue increases, demand is

The demand for luxury suites at basketball games is more elastic if

The income elasticity of demand is

The demand for necessities generally is ________ the demand for luxury goods.

If income increases from $50,000 to $60,000 while the demand for a good increases from 100 units to 125 units, what is the income elasticity of demand? Is the good a normal good or an inferior good?

-The table above gives the supply schedule for a product.Using the midpoint method, find the price elasticity of supply between points A and B, between B and C, between C and D, and between D and E.

If the price of a good rises, then moving along a demand curve the percentage change in the quantity demanded will be

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 two goods are , then an increase in the price of one leads to in the quantity demanded of the other.