Question 1

If a 5 percent increase in income brings about a 10 percent decrease in the demand for a good, then the

Accepted Answer

A) good is a normal good. 
B) good is an inferior good. 
C) income elasticity of demand is 0.5. 
D) income elasticity of demand is 2.0. 
E) income elasticity of demand is 5.0. 
A) good is a normal good. 
B) good is an inferior good. 
C) income elasticity of demand is 0.5. 
D) income elasticity of demand is 2.0. 
E) income elasticity of demand is 5.0.

Question 2

If the price elasticity of supply for a good is 0.75, then

Accepted Answer

A) the percentage change in the quantity supplied is less than the percentage change in price. 
B) the supply is elastic. 
C) an increase in the price boosts the quantity supplied by a larger percentage. 
D) the supply is inelastic so the demand must also be inelastic. 
E) None of the above answers is correct. 
A) the percentage change in the quantity supplied is less than the percentage change in price. 
B) the supply is elastic. 
C) an increase in the price boosts the quantity supplied by a larger percentage. 
D) the supply is inelastic so the demand must also be inelastic. 
E) None of the above answers is correct.

Question 3

If a 10 percent increase in income leads to a 5 percent decrease in the demand for a good, the income elasticity of demand equals ________ and the good is ________ good.

Accepted Answer

A) 1/2; a normal 
B) -1/2; an inferior 
C) 2; a normal 
D) -2; a normal 
E) -5; an inferior 
A) 1/2; a normal 
B) -1/2; an inferior 
C) 2; a normal 
D) -2; a normal 
E) -5; an inferior

Question 4

If the price increases by 20 percent and the quantity supplied increases by 40 percent, what does the elasticity of supply equal?

Accepted Answer

The price elasticity of supply

Question 5

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 6

The income elasticity of demand is the percentage change in the ________ divided by the percentage change in ________.

Accepted Answer

A) quantity demanded; the price of a substitute or complement 
B) quantity supplied; price 
C) quantity demanded; price 
D) quantity demanded; income 
E) quantity demanded when income changes; the quantity supplied 
A) quantity demanded; the price of a substitute or complement 
B) quantity supplied; price 
C) quantity demanded; price 
D) quantity demanded; income 
E) quantity demanded when income changes; the quantity supplied

Question 7

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 8

Natural gas is difficult to store. What implication does this fact have for the elasticity of supply of natural gas?

Accepted Answer

Because natural gas is difficult to stor

Question 9

A firm lowers 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 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

If the price of corn increases by 20 percent and the quantity supplied of corn increases by 30 percent, then supply is

Accepted Answer

A) elastic and the elasticity of supply equals 1.5. 
B) inelastic and the elasticity of supply equals 1.5. 
C) elastic and the elasticity of supply equals 0.66. 
D) inelastic and the elasticity of supply equals 0.66. 
E) either elastic or inelastic but more information about the elasticity of demand is needed to determine which. 
A) elastic and the elasticity of supply equals 1.5. 
B) inelastic and the elasticity of supply equals 1.5. 
C) elastic and the elasticity of supply equals 0.66. 
D) inelastic and the elasticity of supply equals 0.66. 
E) either elastic or inelastic but more information about the elasticity of demand is needed to determine which.

Question 11

The figure above shows the demand curve for Starbucks latte.
-In in the figure above, when the price rises from $3 to $4, the price elasticity of demand is

Accepted Answer

A) 1.4. 
B) 2. 
C) 0.71 
D) 0.4. 
E) 1. 
A) 1.4. 
B) 2. 
C) 0.71 
D) 0.4. 
E) 1.

Question 12

The extent to which the demand for a good changes when the price of a substitute or complement changes, other things remaining the same, is measured as the

Accepted Answer

A) income elasticity of demand. 
B) cross elasticity of demand. 
C) price elasticity of demand. 
D) price elasticity of supply. 
E) cross income elasticity of demand. 
A) income elasticity of demand. 
B) cross elasticity of demand. 
C) price elasticity of demand. 
D) price elasticity of supply. 
E) cross income elasticity of demand.

Question 13

If the price of a six-pack of Pepsi falls from $4 to $3 and the quantity purchased increases 80 percent, then demand is

Accepted Answer

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

Question 14

If a Pizza Hut raises the price of a slice of pizza from $3.00 to $3.25, the quantity demanded decreases from 1,500 slices per week to 1,300 slices per week. The demand for slices of pizza is ________ and the total revenue received by this Pizza Hut ________.

Accepted Answer

A) elastic; decreases 
B) inelastic; decreases 
C) elastic; increases 
D) inelastic; increases 
E) unit elastic; does not change 
A) elastic; decreases 
B) inelastic; decreases 
C) elastic; increases 
D) inelastic; increases 
E) unit elastic; does not change

Question 15

The price elasticity of demand measures the extent to which the quantity demanded changes when

Accepted Answer

A) the price of the good changes. 
B) the price of a related good changes. 
C) the expected future price of a good changes. 
D) consumer preferences change. 
E) both the demand and supply of the good change. 
A) the price of the good changes. 
B) the price of a related good changes. 
C) the expected future price of a good changes. 
D) consumer preferences change. 
E) both the demand and supply of the good change.

Question 16

If a good has only a few, poor substitutes, is its demand elastic or inelastic?

Accepted Answer

The demand is inelastic. The f

Question 17

You own a small store. Your cashier thinks you should raise prices to increase your total revenue and your customer thinks you should lower prices to increase your total revenue. The cashier thinks the price elasticity of demand is ________ and the customer believes the price elasticity of demand is ________.

Accepted Answer

A) inelastic; elastic 
B) elastic; inelastic 
C) elastic; elastic 
D) inelastic; inelastic 
E) unit elastic; elastic 
A) inelastic; elastic 
B) elastic; inelastic 
C) elastic; elastic 
D) inelastic; inelastic 
E) unit elastic; elastic

Question 18

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 19

Many manufactured goods have an ________ supply if production plans have only a short period to change and as time passes and all production adjustments are made, the supply of the good ________ from the initial response.

Accepted Answer

A) inelastic; increases 
B) elastic; decreases 
C) elastic; increases 
D) inelastic; decreases 
E) inelastic; does not change 
A) inelastic; increases 
B) elastic; decreases 
C) elastic; increases 
D) inelastic; decreases 
E) inelastic; does not change

Question 20

What is the price elasticity of demand?
 In terms of percentage changes, what is its formula?

Accepted Answer

The price elasticity of demand is a meas

If a 5 percent increase in income brings about a 10 percent decrease in the demand for a good, then the

If the price elasticity of supply for a good is 0.75, then

If a 10 percent increase in income leads to a 5 percent decrease in the demand for a good, the income elasticity of demand equals and the good is good.

If the price increases by 20 percent and the quantity supplied increases by 40 percent, what does the elasticity of supply equal?

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

The income elasticity of demand is the percentage change in the divided by the percentage change in .

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

Natural gas is difficult to store. What implication does this fact have for the elasticity of supply of natural gas?

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

If the price of corn increases by 20 percent and the quantity supplied of corn increases by 30 percent, then supply is

The figure above shows the demand curve for Starbucks latte. -In in the figure above, when the price rises from $3 to $4, the price elasticity of demand is

The extent to which the demand for a good changes when the price of a substitute or complement changes, other things remaining the same, is measured as the

If the price of a six-pack of Pepsi falls from $4 to $3 and the quantity purchased increases 80 percent, then demand is

If a Pizza Hut raises the price of a slice of pizza from $3.00 to $3.25, the quantity demanded decreases from 1,500 slices per week to 1,300 slices per week. The demand for slices of pizza is and the total revenue received by this Pizza Hut .

The price elasticity of demand measures the extent to which the quantity demanded changes when

If a good has only a few, poor substitutes, is its demand elastic or inelastic?

You own a small store. Your cashier thinks you should raise prices to increase your total revenue and your customer thinks you should lower prices to increase your total revenue. The cashier thinks the price elasticity of demand is and the customer believes the price elasticity of demand 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

Many manufactured goods have an supply if production plans have only a short period to change and as time passes and all production adjustments are made, the supply of the good from the initial response.

What is the price elasticity of demand? In terms of percentage changes, what is its formula?

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 a 5 percent increase in income brings about a 10 percent decrease in the demand for a good, then the

If the price elasticity of supply for a good is 0.75, then

If a 10 percent increase in income leads to a 5 percent decrease in the demand for a good, the income elasticity of demand equals ________ and the good is ________ good.

If the price increases by 20 percent and the quantity supplied increases by 40 percent, what does the elasticity of supply equal?

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

The income elasticity of demand is the percentage change in the ________ divided by the percentage change in ________.

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

Natural gas is difficult to store. What implication does this fact have for the elasticity of supply of natural gas?

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

If the price of corn increases by 20 percent and the quantity supplied of corn increases by 30 percent, then supply is

The figure above shows the demand curve for Starbucks latte. -In in the figure above, when the price rises from $3 to $4, the price elasticity of demand is

The extent to which the demand for a good changes when the price of a substitute or complement changes, other things remaining the same, is measured as the

If the price of a six-pack of Pepsi falls from $4 to $3 and the quantity purchased increases 80 percent, then demand is

If a Pizza Hut raises the price of a slice of pizza from $3.00 to $3.25, the quantity demanded decreases from 1,500 slices per week to 1,300 slices per week. The demand for slices of pizza is ________ and the total revenue received by this Pizza Hut ________.

The price elasticity of demand measures the extent to which the quantity demanded changes when

If a good has only a few, poor substitutes, is its demand elastic or inelastic?

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

Many manufactured goods have an ________ supply if production plans have only a short period to change and as time passes and all production adjustments are made, the supply of the good ________ from the initial response.

What is the price elasticity of demand? In terms of percentage changes, what is its formula?

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

If a 10 percent increase in income leads to a 5 percent decrease in the demand for a good, the income elasticity of demand equals and the good is good.

The income elasticity of demand is the percentage change in the divided by the percentage change in .

If a Pizza Hut raises the price of a slice of pizza from $3.00 to $3.25, the quantity demanded decreases from 1,500 slices per week to 1,300 slices per week. The demand for slices of pizza is and the total revenue received by this Pizza Hut .

Many manufactured goods have an supply if production plans have only a short period to change and as time passes and all production adjustments are made, the supply of the good from the initial response.