Question 1

If the demand for a good is elastic, then

Accepted Answer

A) people do not change the quantity they demand when the price of the good changes. 
B) a change in price leads to a smaller percentage change in the quantity demanded. 
C) people substantially decrease the quantity of the good they buy if its price increases by a small percentage. 
D) a change in the quantity demanded is smaller than the change in price. 
E) the quantity demanded divided by the price exceeds 1.00. 
A) people do not change the quantity they demand when the price of the good changes. 
B) a change in price leads to a smaller percentage change in the quantity demanded. 
C) people substantially decrease the quantity of the good they buy if its price increases by a small percentage. 
D) a change in the quantity demanded is smaller than the change in price. 
E) the quantity demanded divided by the price exceeds 1.00.

Question 2

Studies have shown that the price elasticity of demand for necessities, such as food, are higher in developing countries and lower in developed countries.What is the reason for this difference in elasticity?

Accepted Answer

One of the determinants of elasticity is

Question 3

If the price elasticity of demand for a good is 2, then a 10 percent increase in the price of that good ________ the quantity demanded by ________ percent.

Accepted Answer

A) increases; 20 
B) decreases; 2 
C) decreases; 10 
D) decreases; 20 
E) increases; 8 
A) increases; 20 
B) decreases; 2 
C) decreases; 10 
D) decreases; 20 
E) increases; 8

Question 4

If the price doubles and the quantity supplied also doubles, the price elasticity of supply for the good is

Accepted Answer

A) -1. 
B) 1. 
C) -2. 
D) 2. 
E) 100 percent. 
A) -1. 
B) 1. 
C) -2. 
D) 2. 
E) 100 percent.

Question 5

-The demand curve shown in the figure above reflects demand that is

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

If the supply curve is ________, the elasticity of supply is ________.

Accepted Answer

A) vertical; infinite 
B) vertical; 0 
C) horizontal; 1 
D) horizontal; 0 
E) a straight, upward sloping line through the origin; 0 
A) vertical; infinite 
B) vertical; 0 
C) horizontal; 1 
D) horizontal; 0 
E) a straight, upward sloping line through the origin; 0

Question 7

Using the midpoint method, if the price of an airline ticket from Orlando to Pittsburgh falls from $275 to $238, the percentage change in price is

Accepted Answer

A) 1442 percent. 
B) 14.42 percent. 
C) 15.54 percent. 
D) 13.45 percent. 
E) 68.00 percent. 
A) 1442 percent. 
B) 14.42 percent. 
C) 15.54 percent. 
D) 13.45 percent. 
E) 68.00 percent.

Question 8

When a firm raises the price of its product, what happens to its total revenue?

Accepted Answer

A) If demand is elastic, total revenue decreases. 
B) If demand is unit elastic, total revenue increases. 
C) If demand is inelastic, total revenue decreases. 
D) If demand is elastic, total revenue increases. 
E) If demand is unit elastic, total revenue decreases. 
A) If demand is elastic, total revenue decreases. 
B) If demand is unit elastic, total revenue increases. 
C) If demand is inelastic, total revenue decreases. 
D) If demand is elastic, total revenue increases. 
E) If demand is unit elastic, total revenue decreases.

Question 9

The price elasticity of supply equals 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) supply divided by the percentage change in the demand. 
E) quantity supplied divided by the percentage change in the quantity demanded. 
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) supply divided by the percentage change in the demand. 
E) quantity supplied divided by the percentage change in the quantity demanded.

Question 10

When the percentage change in the quantity demanded is less than the percentage change in price, then demand is

Accepted Answer

A) inelastic. 
B) unit elastic. 
C) elastic. 
D) irrelevant. 
E) undefined. 
A) inelastic. 
B) unit elastic. 
C) elastic. 
D) irrelevant. 
E) undefined.

Question 11

When supply is perfectly inelastic, the supply curve is

Accepted Answer

A) upward sloping but not a straight line. 
B) vertical. 
C) downward sloping. 
D) horizontal. 
E) a straight line with a 45 degree slope that goes through the origin. 
A) upward sloping but not a straight line. 
B) vertical. 
C) downward sloping. 
D) horizontal. 
E) a straight line with a 45 degree slope that goes through the origin.

Question 12

The cross elasticity of demand for butter and margarine is likely to be

Accepted Answer

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

Question 13

If a product is narrowly defined, it is likely to

Accepted Answer

A) have many substitutes and therefore its demand is elastic. 
B) have few substitutes, and therefore its demand is less elastic. 
C) be unique, and therefore its demand is inelastic. 
D) be unique and have many substitutes. 
E) have a larger proportion of income spent on it. 
A) have many substitutes and therefore its demand is elastic. 
B) have few substitutes, and therefore its demand is less elastic. 
C) be unique, and therefore its demand is inelastic. 
D) be unique and have many substitutes. 
E) have a larger proportion of income spent on it.

Question 14

If the price of a movie rises 3 percent and, as a result, the quantity demanded of video rentals increases 6 percent, then the cross elasticity of demand is

Accepted Answer

A) 2. 
B) 1/2. 
C) -1/2. 
D) -2. 
E) 9. 
A) 2. 
B) 1/2. 
C) -1/2. 
D) -2. 
E) 9.

Question 15

Assume that it is predicted that for the years after you graduate from college, the entire economy will experience a long period of recession during which people's incomes decrease.What type of industry would be the best for you to find employment if this prediction is correct? An industry that produces a product that

Accepted Answer

A) is income elastic. 
B) is income inelastic. 
C) is inferior. 
D) is a complement. 
E) none of these industries 
A) is income elastic. 
B) is income inelastic. 
C) is inferior. 
D) is a complement. 
E) none of these industries

Question 16

During the winter of 2011-2012, the price of fuel oil increased enormously but the quantity demanded decreased only a little.This response indicates that the demand for fuel oil was

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 17

If Microsoft wanted to prove to the Justice Department that its Windows software has many substitutes that personal computer owners can use, Microsoft hopes to find

Accepted Answer

A) that the demand for Windows' is inelastic. 
B) that the demand for Windows is elastic. 
C) a large positive value for the cross elasticity of Windows and other software. 
D) a negative income elasticity for Windows. 
E) a positive income elasticity for Windows. 
A) that the demand for Windows' is inelastic. 
B) that the demand for Windows is elastic. 
C) a large positive value for the cross elasticity of Windows and other software. 
D) a negative income elasticity for Windows. 
E) a positive income elasticity for Windows.

Question 18

Suppose the demand for rescue services in our national parks is perfectly inelastic.This fact would mean that a 31 percent increase in rescue fees leads to

Accepted Answer

A) a 31 percent decrease in the quantity demanded. 
B) a 31 percent increase in demand. 
C) a 31 percent decrease in demand. 
D) no change in the quantity demanded. 
E) a decrease in the quantity demanded to 0 rescues. 
A) a 31 percent decrease in the quantity demanded. 
B) a 31 percent increase in demand. 
C) a 31 percent decrease in demand. 
D) no change in the quantity demanded. 
E) a decrease in the quantity demanded to 0 rescues.

Question 19

-In the figure above, the demand is elastic in the range of prices between

Accepted Answer

A) $3.50 and $4.50 per cup. 
B) $2.50 and $3.50 per cup. 
C) $1.00 and $2.00 per cup. 
D) $2.00 and $4.00 per cup. 
E) $1.75 and $2.75 per cup. 
A) $3.50 and $4.50 per cup. 
B) $2.50 and $3.50 per cup. 
C) $1.00 and $2.00 per cup. 
D) $2.00 and $4.00 per cup. 
E) $1.75 and $2.75 per cup.

Question 20

What is the formula for the price 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 price. 
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 price.

If the demand for a good is elastic, then

Studies have shown that the price elasticity of demand for necessities, such as food, are higher in developing countries and lower in developed countries.What is the reason for this difference in elasticity?

If the price elasticity of demand for a good is 2, then a 10 percent increase in the price of that good the quantity demanded by percent.

If the price doubles and the quantity supplied also doubles, the price elasticity of supply for the good is

-The demand curve shown in the figure above reflects demand that is

If the supply curve is , the elasticity of supply is .

Using the midpoint method, if the price of an airline ticket from Orlando to Pittsburgh falls from $275 to $238, the percentage change in price is

When a firm raises the price of its product, what happens to its total revenue?

The price elasticity of supply equals the percentage change in the

When the percentage change in the quantity demanded is less than the percentage change in price, then demand is

When supply is perfectly inelastic, the supply curve is

The cross elasticity of demand for butter and margarine is likely to be

If a product is narrowly defined, it is likely to

If the price of a movie rises 3 percent and, as a result, the quantity demanded of video rentals increases 6 percent, then the cross elasticity of demand is

During the winter of 2011-2012, the price of fuel oil increased enormously but the quantity demanded decreased only a little.This response indicates that the demand for fuel oil was

If Microsoft wanted to prove to the Justice Department that its Windows software has many substitutes that personal computer owners can use, Microsoft hopes to find

Suppose the demand for rescue services in our national parks is perfectly inelastic.This fact would mean that a 31 percent increase in rescue fees leads to

-In the figure above, the demand is elastic in the range of prices between

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

If the demand for a good is elastic, then

Studies have shown that the price elasticity of demand for necessities, such as food, are higher in developing countries and lower in developed countries.What is the reason for this difference in elasticity?

If the price elasticity of demand for a good is 2, then a 10 percent increase in the price of that good ________ the quantity demanded by ________ percent.

If the price doubles and the quantity supplied also doubles, the price elasticity of supply for the good is

-The demand curve shown in the figure above reflects demand that is

If the supply curve is ________, the elasticity of supply is ________.

Using the midpoint method, if the price of an airline ticket from Orlando to Pittsburgh falls from $275 to $238, the percentage change in price is

When a firm raises the price of its product, what happens to its total revenue?

The price elasticity of supply equals the percentage change in the

When the percentage change in the quantity demanded is less than the percentage change in price, then demand is

When supply is perfectly inelastic, the supply curve is

The cross elasticity of demand for butter and margarine is likely to be

If a product is narrowly defined, it is likely to

If the price of a movie rises 3 percent and, as a result, the quantity demanded of video rentals increases 6 percent, then the cross elasticity of demand is

During the winter of 2011-2012, the price of fuel oil increased enormously but the quantity demanded decreased only a little.This response indicates that the demand for fuel oil was

If Microsoft wanted to prove to the Justice Department that its Windows software has many substitutes that personal computer owners can use, Microsoft hopes to find

Suppose the demand for rescue services in our national parks is perfectly inelastic.This fact would mean that a 31 percent increase in rescue fees leads to

-In the figure above, the demand is elastic in the range of prices between

What is the formula for the price elasticity of demand? The percentage change in 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 the price elasticity of demand for a good is 2, then a 10 percent increase in the price of that good the quantity demanded by percent.

If the supply curve is , the elasticity of supply is .