Question 1

If the price elasticity of demand for gasoline equals 0.3, then an increase in the price of a gallon of gasoline from $3.70 to $3.90

Accepted Answer

A) decreases total revenue. 
B) increases total revenue. 
C) leads to no change in total revenue. 
D) makes the demand for gasoline elastic. 
E) Both answers B and D are correct. 
A) decreases total revenue. 
B) increases total revenue. 
C) leads to no change in total revenue. 
D) makes the demand for gasoline elastic. 
E) Both answers B and D are correct.

Question 2

-The figure above shows the supply curve for a good with

Accepted Answer

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

Question 3

-The demand curve shown in the figure above is ________ over the price range from $95 to $105 per trip.

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 4

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 5

The figure above shows the demand curve for Starbucks latte.
-In the figure above, at the point where the price is $4 per cup the price elasticity of demand is

Accepted Answer

A) 2. 
B) 0.5. 
C) 1. 
D) 1.5. 
E) 0. 
A) 2. 
B) 0.5. 
C) 1. 
D) 1.5. 
E) 0.

Question 6

-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 7

If a 5 percent decrease in income leads to a 15 percent decrease in the demand for a good, the income elasticity of demand equals

Accepted Answer

A) -1/3 and the good is an inferior good. 
B) 1/3 and demand for the good is income elastic. 
C) 3 and the good is a normal good. 
D) -3 and the demand for the good is income inelastic. 
E) 3 and the good is an inferior good 
A) -1/3 and the good is an inferior good. 
B) 1/3 and demand for the good is income elastic. 
C) 3 and the good is a normal good. 
D) -3 and the demand for the good is income inelastic. 
E) 3 and the good is an inferior good

Question 8

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 9

Explain the total revenue test.

Accepted Answer

The total revenue test estimates whether

Question 10

What happens to the price elasticity of demand moving down along a downward-sloping, linear demand curve?

Accepted Answer

Moving down along a downward-sloping, li

Question 11

If the percentage change in price is 10 percent and the demand is elastic, then the percentage change in the quantity demanded

Accepted Answer

A) is greater than 0 percent but less than 10 percent. 
B) is larger than 10 percent. 
C) equals 0 percent. 
D) equals 10 percent. 
E) More information is needed to determine the magnitude of the change in the quantity demanded. 
A) is greater than 0 percent but less than 10 percent. 
B) is larger than 10 percent. 
C) equals 0 percent. 
D) equals 10 percent. 
E) More information is needed to determine the magnitude of the change in the quantity demanded.

Question 12

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 13

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 14

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

Accepted Answer

The factors that determine the size of t

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

When the price of a pizza is $10, the quantity of soda demanded is 300 drinks. When the price of a pizza is $15, the quantity soda demanded is 100 drinks. The cross elasticity of demand is equal to

Accepted Answer

A) -0.25. 
B) -0.40. 
C) -2.50. 
D) -25.00. 
E) 4.00. 
A) -0.25. 
B) -0.40. 
C) -2.50. 
D) -25.00. 
E) 4.00.

Question 17

Assume that it is predicted that for the years after you graduate from college, the entire economy will experience a long period of prosperity when incomes grow rapidly. 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 is

Accepted Answer

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

Question 18

In the mid-1970s, Newsweek magazine reported that the city of Atlanta lowered its city bus fares from 40 cents to 15 cents a passenger. The number of bus riders increased by 15 percent after the fare cut. This set of results indicates that the demand for bus rides in Atlanta at that time was

Accepted Answer

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

Question 19

If Pepsi goes on sale and decreases its price by 10 percent, and as a result, the quantity demanded of Coca Cola decreases by 5 percent, then Pepsi and Coke are ________ goods.

Accepted Answer

A) inferior 
B) normal 
C) substitute 
D) complementary 
E) unrelated 
A) inferior 
B) normal 
C) substitute 
D) complementary 
E) unrelated

Question 20

Explain why the number of substitutes influences the price elasticity of demand.

Accepted Answer

The price elasticity of demand is a meas

If the price elasticity of demand for gasoline equals 0.3, then an increase in the price of a gallon of gasoline from $3.70 to $3.90

-The figure above shows the supply curve for a good with

-The demand curve shown in the figure above is ________ over the price range from $95 to $105 per trip.

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

The figure above shows the demand curve for Starbucks latte. -In the figure above, at the point where the price is $4 per cup the price elasticity of demand is

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

If a 5 percent decrease in income leads to a 15 percent decrease in the demand for a good, the income elasticity of demand equals

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

Explain the total revenue test.

What happens to the price elasticity of demand moving down along a downward-sloping, linear demand curve?

If the percentage change in price is 10 percent and the demand is elastic, then the percentage change in the quantity demanded

If the demand for a good is elastic, then

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

What factors determine the size of the 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

When the price of a pizza is $10, the quantity of soda demanded is 300 drinks. When the price of a pizza is $15, the quantity soda demanded is 100 drinks. The cross elasticity of demand is equal to

In the mid-1970s, Newsweek magazine reported that the city of Atlanta lowered its city bus fares from 40 cents to 15 cents a passenger. The number of bus riders increased by 15 percent after the fare cut. This set of results indicates that the demand for bus rides in Atlanta at that time was

If Pepsi goes on sale and decreases its price by 10 percent, and as a result, the quantity demanded of Coca Cola decreases by 5 percent, then Pepsi and Coke are ________ goods.

Explain why the number of substitutes influences the price elasticity of demand.

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 5: Elasticities of Demand and Supply

If the price elasticity of demand for gasoline equals 0.3, then an increase in the price of a gallon of gasoline from $3.70 to $3.90

-The figure above shows the supply curve for a good with

-The demand curve shown in the figure above is ________ over the price range from $95 to $105 per trip.

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

The figure above shows the demand curve for Starbucks latte. -In the figure above, at the point where the price is $4 per cup the price elasticity of demand is

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

If a 5 percent decrease in income leads to a 15 percent decrease in the demand for a good, the income elasticity of demand equals

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

Explain the total revenue test.

What happens to the price elasticity of demand moving down along a downward-sloping, linear demand curve?

If the percentage change in price is 10 percent and the demand is elastic, then the percentage change in the quantity demanded

If the demand for a good is elastic, then

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

What factors determine the size of the 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

When the price of a pizza is $10, the quantity of soda demanded is 300 drinks. When the price of a pizza is $15, the quantity soda demanded is 100 drinks. The cross elasticity of demand is equal to

In the mid-1970s, Newsweek magazine reported that the city of Atlanta lowered its city bus fares from 40 cents to 15 cents a passenger. The number of bus riders increased by 15 percent after the fare cut. This set of results indicates that the demand for bus rides in Atlanta at that time was

If Pepsi goes on sale and decreases its price by 10 percent, and as a result, the quantity demanded of Coca Cola decreases by 5 percent, then Pepsi and Coke are ________ goods.

Explain why the number of substitutes influences the price elasticity of demand.

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters