Question 1

What is an inferior good?

Accepted Answer

A) a product of low quality that we do not want to purchase 
B) a product for which demand increases when income increases, and demand decreases when income decreases 
C) a product for which demand increases when income decreases, and demand decreases when income increases 
D) a product that is complementary 
E) a product that is a substitute for another, better good 
A) a product of low quality that we do not want to purchase 
B) a product for which demand increases when income increases, and demand decreases when income decreases 
C) a product for which demand increases when income decreases, and demand decreases when income increases 
D) a product that is complementary 
E) a product that is a substitute for another, better good

Question 2

-In the figure above, using the midpoint method, what is the price elasticity of demand between points A and B?

Accepted Answer

A) 0.05 
B) 0.13 
C) 0.43 
D) 1.00 
E) 2.33 
A) 0.05 
B) 0.13 
C) 0.43 
D) 1.00 
E) 2.33

Question 3

"The fewer the number of substitutes for a product, the more elastic the demand for that product." Is the previous statement true or false?

Accepted Answer

The statement is false.The greater the n

Question 4

If a good is inferior, then it has an income elasticity of demand that is

Accepted Answer

A) equal to zero. 
B) greater than zero. 
C) less than zero. 
D) greater than one. 
E) undefined. 
A) equal to zero. 
B) greater than zero. 
C) less than zero. 
D) greater than one. 
E) undefined.

Question 5

If a 4 percent change in the price of a good leads to a 3 percent change in quantity demanded, the price elasticity of demand equals

Accepted Answer

A) 1.33. 
B) 0.75. 
C) 4.00. 
D) 3.44. 
E) None of the above answers are correct. 
A) 1.33. 
B) 0.75. 
C) 4.00. 
D) 3.44. 
E) None of the above answers are correct.

Question 6

The price elasticity of demand for an agricultural product is 0.4.This value means that, when the quantity decreases 1 percent, the price

Accepted Answer

A) falls 4 percent. 
B) rises 4 percent. 
C) falls 2.5 percent. 
D) rises 2.5 percent. 
E) rises 0.25 percent. 
A) falls 4 percent. 
B) rises 4 percent. 
C) falls 2.5 percent. 
D) rises 2.5 percent. 
E) rises 0.25 percent.

Question 7

A 10 percent increase in income brings about a 15 percent decrease in the demand for a good.What is the income elasticity of demand and is the good a normal good or an inferior good?

Accepted Answer

The income elasticit

Question 8

-In the figure above, if the price falls from $8 to $7 demand is

Accepted Answer

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

Question 9

A firm raises the price it charges.The firm's total revenue does not change.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 elastic. 
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 elastic. 
E) Not enough information is given to conclude anything about price elasticity of demand.

Question 10

The total revenue test says that if a price decrease leads to

Accepted Answer

A) an increase in total revenue, supply is elastic. 
B) a decrease in total revenue, supply is unit elastic. 
C) a decrease in total revenue, supply is inelastic. 
D) an increase in total revenue, supply is inelastic. 
E) None of the above answers is correct. 
A) an increase in total revenue, supply is elastic. 
B) a decrease in total revenue, supply is unit elastic. 
C) a decrease in total revenue, supply is inelastic. 
D) an increase in total revenue, supply is inelastic. 
E) None of the above answers is correct.

Question 11

What is the price elasticity of supply? List and briefly define three cases of the price elasticity of supply.

Accepted Answer

The price elasticity of supply measures

Question 12

The demand for a good is more elastic if the

Accepted Answer

A) good is a necessity. 
B) good has few substitutes. 
C) good is narrowly defined. 
D) supply of the good is plentiful. 
E) Both answers B and C are correct. 
A) good is a necessity. 
B) good has few substitutes. 
C) good is narrowly defined. 
D) supply of the good is plentiful. 
E) Both answers B and C are correct.

Question 13

If a substitute good is easy to find, then demand for a good is

Accepted Answer

A) elastic. 
B) inelastic. 
C) unit elastic. 
D) perfectly inelastic. 
E) Substitutes don't have any effect on elasticity. 
A) elastic. 
B) inelastic. 
C) unit elastic. 
D) perfectly inelastic. 
E) Substitutes don't have any effect on elasticity.

Question 14

The supply of beachfront property on St.Simon's Island is

Accepted Answer

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

Question 15

If the percentage change in the quantity demanded is not zero but is less than the percentage change in the price, demand is

Accepted Answer

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

Question 16

Pizza Hut lowers the price of its pizza.The price elasticity of demand for Pizza Hut pizza equals 0.3.What happens to the Pizza Hut's total revenue?

Accepted Answer

A) nothing 
B) It increases. 
C) It decreases. 
D) It becomes negative. 
E) It might change, but more information is needed to determine if it increases, decreases, or does not change. 
A) nothing 
B) It increases. 
C) It decreases. 
D) It becomes negative. 
E) It might change, but more information is needed to determine if it increases, decreases, or does not change.

Question 17

Which of the following is correct?

Accepted Answer

A) The cross elasticity of demand for substitute goods is positive. 
B) The cross elasticity of demand for substitute goods is negative. 
C) The cross elasticity of demand equals the percentage change in demand divided by the percentage change in income. 
D) The income elasticity of demand for a normal good is negative. 
E) The cross elasticity of demand for normal goods is positive. 
A) The cross elasticity of demand for substitute goods is positive. 
B) The cross elasticity of demand for substitute goods is negative. 
C) The cross elasticity of demand equals the percentage change in demand divided by the percentage change in income. 
D) The income elasticity of demand for a normal good is negative. 
E) The cross elasticity of demand for normal goods is positive.

Question 18

Goods that can be produced at a constant or very gently rising opportunity cost have

Accepted Answer

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

Question 19

If the income elasticity of demand for a Miami Dolphin season ticket is 2.34, then are Dolphin season tickets a normal or an inferior good?

Accepted Answer

Because the income e

Question 20

As you move up along a straight-line demand curve,

Accepted Answer

A) the price elasticity of demand decreases in size. 
B) the price elasticity of demand increases in size. 
C) total revenue always decreases. 
D) total revenue always increases. 
E) total revenue never changes. 
A) the price elasticity of demand decreases in size. 
B) the price elasticity of demand increases in size. 
C) total revenue always decreases. 
D) total revenue always increases. 
E) total revenue never changes.

What is an inferior good?

-In the figure above, using the midpoint method, what is the price elasticity of demand between points A and B?

"The fewer the number of substitutes for a product, the more elastic the demand for that product." Is the previous statement true or false?

If a good is inferior, then it has an income elasticity of demand that is

If a 4 percent change in the price of a good leads to a 3 percent change in quantity demanded, the price elasticity of demand equals

The price elasticity of demand for an agricultural product is 0.4.This value means that, when the quantity decreases 1 percent, the price

A 10 percent increase in income brings about a 15 percent decrease in the demand for a good.What is the income elasticity of demand and is the good a normal good or an inferior good?

-In the figure above, if the price falls from $8 to $7 demand is

A firm raises the price it charges.The firm's total revenue does not change.What can we conclude about the price elasticity of demand?

The total revenue test says that if a price decrease leads to

What is the price elasticity of supply? List and briefly define three cases of the price elasticity of supply.

The demand for a good is more elastic if the

If a substitute good is easy to find, then demand for a good is

The supply of beachfront property on St.Simon's Island is

If the percentage change in the quantity demanded is not zero but is less than the percentage change in the price, demand is

Pizza Hut lowers the price of its pizza.The price elasticity of demand for Pizza Hut pizza equals 0.3.What happens to the Pizza Hut's total revenue?

Which of the following is correct?

Goods that can be produced at a constant or very gently rising opportunity cost have

If the income elasticity of demand for a Miami Dolphin season ticket is 2.34, then are Dolphin season tickets a normal or an inferior good?

As you move up along a straight-line demand curve,

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 an inferior good?

-In the figure above, using the midpoint method, what is the price elasticity of demand between points A and B?

"The fewer the number of substitutes for a product, the more elastic the demand for that product." Is the previous statement true or false?

If a good is inferior, then it has an income elasticity of demand that is

If a 4 percent change in the price of a good leads to a 3 percent change in quantity demanded, the price elasticity of demand equals

The price elasticity of demand for an agricultural product is 0.4.This value means that, when the quantity decreases 1 percent, the price

A 10 percent increase in income brings about a 15 percent decrease in the demand for a good.What is the income elasticity of demand and is the good a normal good or an inferior good?

-In the figure above, if the price falls from $8 to $7 demand is

A firm raises the price it charges.The firm's total revenue does not change.What can we conclude about the price elasticity of demand?

The total revenue test says that if a price decrease leads to

What is the price elasticity of supply? List and briefly define three cases of the price elasticity of supply.

The demand for a good is more elastic if the

If a substitute good is easy to find, then demand for a good is

The supply of beachfront property on St.Simon's Island is

If the percentage change in the quantity demanded is not zero but is less than the percentage change in the price, demand is

Pizza Hut lowers the price of its pizza.The price elasticity of demand for Pizza Hut pizza equals 0.3.What happens to the Pizza Hut's total revenue?

Which of the following is correct?

Goods that can be produced at a constant or very gently rising opportunity cost have

If the income elasticity of demand for a Miami Dolphin season ticket is 2.34, then are Dolphin season tickets a normal or an inferior good?

As you move up along a straight-line demand curve,

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