Question 1

You are the brand manager of Crest toothpaste and you observe that when you increase the price of Crest, your total revenue increases.How is that possible?

Accepted Answer

The demand for Crest toothpast

Question 2

Suppose the price of a box of cereal rises from $4 to $6.Using the midpoint method, what is the percentage change in price?

Accepted Answer

A) 50 percent 
B) 40 percent 
C) 33 percent 
D) 67 percent 
E) None of the above answers is correct. 
A) 50 percent 
B) 40 percent 
C) 33 percent 
D) 67 percent 
E) None of the above answers is correct.

Question 3

Which of the following is true?
I∙The supply of a good is inelastic if when its price changes, the percentage change in the quantity supplied exceeds the percentage change in price.
II∙Price elasticity of supply equals the percentage change in the quantity supplied divided by the percentage change in price.
III∙If demand is price elastic, a rise in price leads to a decrease in total revenue.

Accepted Answer

A) Only I 
B) Only II 
C) Only III 
D) I and II 
E) II and III 
A) Only I 
B) Only II 
C) Only III 
D) I and II 
E) II and III

Question 4

If the demand for insulin is inelastic, an increase in insulin prices leads to

Accepted Answer

A) less total revenue for insulin makers. 
B) more total revenue for insulin makers. 
C) no change in total revenue for insulin makers. 
D) first a decrease, then an increase in total revenue for insulin makers. 
E) total revenue probably changes but we need more information about the change in total expenditures on insulin to determine if the total revenue rises, falls, or stays the same. 
A) less total revenue for insulin makers. 
B) more total revenue for insulin makers. 
C) no change in total revenue for insulin makers. 
D) first a decrease, then an increase in total revenue for insulin makers. 
E) total revenue probably changes but we need more information about the change in total expenditures on insulin to determine if the total revenue rises, falls, or stays the same.

Question 5

If the price of a DVD falls from $20 to $12 and the quantity of DVDs supplied decreases from 118,000 per hour to 100,000 per hour, using the midpoint formula the elasticity of supply equals

Accepted Answer

A) 0.33. 
B) 2.94. 
C) 3.08. 
D) 0.23. 
E) -3.08. 
A) 0.33. 
B) 2.94. 
C) 3.08. 
D) 0.23. 
E) -3.08.

Question 6

Which of the following is true?
I∙The easier it is to find substitutes for a good, the more price elastic the demand for the good is.
II∙The demand for a good is more price elastic the smaller the proportion of income spent on it.
III∙If demand is price elastic, lowering the price leads to a decrease in total revenue.

Accepted Answer

A) Only I 
B) Only II 
C) Only III 
D) I and II 
E) I and III 
A) Only I 
B) Only II 
C) Only III 
D) I and II 
E) I and III

Question 7

Of the following, which good has the most elastic demand?

Accepted Answer

A) food 
B) breakfast food 
C) cereal 
D) Post Raisin Bran 
E) Post Raisin Brand purchased at a Safeway grocery store 
A) food 
B) breakfast food 
C) cereal 
D) Post Raisin Bran 
E) Post Raisin Brand purchased at a Safeway grocery store

Question 8

For a product with a rapidly increasing opportunity cost of producing additional units,

Accepted Answer

A) demand is price elastic. 
B) supply is price elastic. 
C) demand is price inelastic. 
D) supply is price inelastic. 
E) the demand curve is vertical. 
A) demand is price elastic. 
B) supply is price elastic. 
C) demand is price inelastic. 
D) supply is price inelastic. 
E) the demand curve is vertical.

Question 9

Suppose the price elasticity of demand for bouquets of flowers is 4.0.You are charging $8 per bouquet.If you want to increase the quantity of bouquets you sell by 20 percent, what price should you charge?

Accepted Answer

The price elasticity of demand = (percen

Question 10

If a lower price for a Pepsi decreases the demand for a Coke, the cross elasticity value for Pepsi and Coke is

Accepted Answer

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

Question 11

Is supply more elastic or less elastic as more time passes after a price change? Explain your answer.

Accepted Answer

Supply becomes elastic as more time pass

Question 12

When income increases from $20,000 to $30,000 the number of home delivered pizzas per year increases from 22 to 40.The income elasticity of demand for home delivered pizza equals

Accepted Answer

A) 1.45. 
B) 0.69. 
C) 0.58. 
D) 0.40. 
E) 2.86. 
A) 1.45. 
B) 0.69. 
C) 0.58. 
D) 0.40. 
E) 2.86.

Question 13

At the midpoint of a linear, downward-sloping demand curve, the price elasticity of demand is

Accepted Answer

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

Question 14

-The figure above shows the demand curve for pizza.Using the midpoint method and moving from point A to point B, calculate the
a∙percentage change in price.
b∙percentage change in quantity demanded.
c∙price elasticity of demand.

Accepted Answer

a∙Between points A and B, the

Question 15

If a 1 percent increase in the price of X increases the quantity demanded of Y by 2 percent, then X and Y are

Accepted Answer

A) complements and the cross elasticity of demand equals 2. 
B) substitutes and the cross elasticity of demand equals 1/2. 
C) substitutes and the cross elasticity of demand equals 2. 
D) complements and the income elasticity of demand equals 2. 
E) normal goods and the income elasticity of demand of each equals 2. 
A) complements and the cross elasticity of demand equals 2. 
B) substitutes and the cross elasticity of demand equals 1/2. 
C) substitutes and the cross elasticity of demand equals 2. 
D) complements and the income elasticity of demand equals 2. 
E) normal goods and the income elasticity of demand of each equals 2.

Question 16

If the price of a Brita water filtration system increases and the quantity demanded of bottled water increases, then these two goods are

Accepted Answer

A) substitutes. 
B) complements. 
C) normal goods. 
D) inferior goods. 
E) inelastic goods. 
A) substitutes. 
B) complements. 
C) normal goods. 
D) inferior goods. 
E) inelastic goods.

Question 17

The price elasticity of supply is always a positive value because
I∙there is a direct relationship between the price and the quantity supplied.
Ii∙as the equilibrium price increases, the equilibrium quantity also always increases.
Iii∙buyers are willing to pay a higher price for larger quantities.

Accepted Answer

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

Question 18

The lower the level of income in a country, the

Accepted Answer

A) less income elastic is the demand for food. 
B) more income elastic is the demand for food. 
C) more negative the income elasticity of the demand for food. 
D) Both answers A and C are correct. 
E) Both answers A and B are correct. 
A) less income elastic is the demand for food. 
B) more income elastic is the demand for food. 
C) more negative the income elasticity of the demand for food. 
D) Both answers A and C are correct. 
E) Both answers A and B are correct.

Question 19

What factors determine the size of the price elasticity of demand?

Accepted Answer

The factors that determine the size of t

Question 20

The cross elasticity of demand for strawberry jelly and grape jelly 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) negative because they are inferior 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) negative because they are inferior goods.

You are the brand manager of Crest toothpaste and you observe that when you increase the price of Crest, your total revenue increases.How is that possible?

Suppose the price of a box of cereal rises from $4 to $6.Using the midpoint method, what is the percentage change in price?

If the demand for insulin is inelastic, an increase in insulin prices leads to

If the price of a DVD falls from $20 to $12 and the quantity of DVDs supplied decreases from 118,000 per hour to 100,000 per hour, using the midpoint formula the elasticity of supply equals

Of the following, which good has the most elastic demand?

For a product with a rapidly increasing opportunity cost of producing additional units,

Suppose the price elasticity of demand for bouquets of flowers is 4.0.You are charging $8 per bouquet.If you want to increase the quantity of bouquets you sell by 20 percent, what price should you charge?

If a lower price for a Pepsi decreases the demand for a Coke, the cross elasticity value for Pepsi and Coke is

Is supply more elastic or less elastic as more time passes after a price change? Explain your answer.

When income increases from $20,000 to $30,000 the number of home delivered pizzas per year increases from 22 to 40.The income elasticity of demand for home delivered pizza equals

At the midpoint of a linear, downward-sloping demand curve, the price elasticity of demand is

-The figure above shows the demand curve for pizza.Using the midpoint method and moving from point A to point B, calculate the a∙percentage change in price. b∙percentage change in quantity demanded. c∙price elasticity of demand.

If a 1 percent increase in the price of X increases the quantity demanded of Y by 2 percent, then X and Y are

If the price of a Brita water filtration system increases and the quantity demanded of bottled water increases, then these two goods are

The lower the level of income in a country, the

What factors determine the size of the price elasticity of demand?

The cross elasticity of demand for strawberry jelly and grape jelly is likely to 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

You are the brand manager of Crest toothpaste and you observe that when you increase the price of Crest, your total revenue increases.How is that possible?

Suppose the price of a box of cereal rises from $4 to $6.Using the midpoint method, what is the percentage change in price?

If the demand for insulin is inelastic, an increase in insulin prices leads to

If the price of a DVD falls from $20 to $12 and the quantity of DVDs supplied decreases from 118,000 per hour to 100,000 per hour, using the midpoint formula the elasticity of supply equals

Of the following, which good has the most elastic demand?

For a product with a rapidly increasing opportunity cost of producing additional units,

Suppose the price elasticity of demand for bouquets of flowers is 4.0.You are charging $8 per bouquet.If you want to increase the quantity of bouquets you sell by 20 percent, what price should you charge?

If a lower price for a Pepsi decreases the demand for a Coke, the cross elasticity value for Pepsi and Coke is

Is supply more elastic or less elastic as more time passes after a price change? Explain your answer.

When income increases from $20,000 to $30,000 the number of home delivered pizzas per year increases from 22 to 40.The income elasticity of demand for home delivered pizza equals

At the midpoint of a linear, downward-sloping demand curve, the price elasticity of demand is

-The figure above shows the demand curve for pizza.Using the midpoint method and moving from point A to point B, calculate the a∙percentage change in price. b∙percentage change in quantity demanded. c∙price elasticity of demand.

If a 1 percent increase in the price of X increases the quantity demanded of Y by 2 percent, then X and Y are

If the price of a Brita water filtration system increases and the quantity demanded of bottled water increases, then these two goods are

The lower the level of income in a country, the

What factors determine the size of the price elasticity of demand?

The cross elasticity of demand for strawberry jelly and grape jelly is likely to 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