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

When the price of bananas rises 2 percent, the quantity demanded of peanut butter falls 4 percent.
a. What is the cross elasticity of demand between these two goods?
b. How are these goods related?
c. If the price of bananas rises, how will that affect the demand curve for peanut butter?

Accepted Answer

a. The cross elasticity of demand equals

Question 3

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.

Question 4

Explain why the cross elasticity of demand for substitute goods is positive and the cross elasticity of demand for complements is negative.

Accepted Answer

The formula for the cross elasticity of

Question 5

-In the figure above, using the midpoint method, the price elasticity of demand when the price falls from $7 to $6 is equal to

Accepted Answer

A) 2.50. 
B) 1.63. 
C) 0.40. 
D) 0.62. 
E) 1.00. 
A) 2.50. 
B) 1.63. 
C) 0.40. 
D) 0.62. 
E) 1.00.

Question 6

$$\begin{array} { c c c } 
& \begin{array} { c } 
\text { Price } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Quantity supplied } \
\text { (units per week) }
\end{array} \
\hline A & 100 & 120 \
B & 80 & 100 \
C & 60 & 80 \
D & 40 & 60 \
E & 20 & 40 \
\hline
\end{array}$$
-The table above gives the supply schedule for a product. Using the midpoint method, find the price elasticity of supply between points A and B, between B and C, between C and D, and between D and E.

Accepted Answer

Between A and B, the elasticity of suppl

Question 7

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 8

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 9

We calculate the price elasticity of demand as the

Accepted Answer

A) ratio of the percentage change in the quantity demanded to the percentage change in price. 
B) change in quantity divided by the change in price. 
C) ratio of the percentage change in the price to the percentage change in quantity. 
D) percentage change in the quantity demanded divided by the percentage change in income. 
E) equilibrium quantity divided by the equilibrium price. 
A) ratio of the percentage change in the quantity demanded to the percentage change in price. 
B) change in quantity divided by the change in price. 
C) ratio of the percentage change in the price to the percentage change in quantity. 
D) percentage change in the quantity demanded divided by the percentage change in income. 
E) equilibrium quantity divided by the equilibrium price.

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

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 12

Suppose the Oakland Raiders football team increases their season ticket prices and total revenue from ticket sales falls, but not to zero. This fact means that the demand for Raiders tickets is

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 13

Jess owns a sandwich shop. The price of a sandwich recently increased from $5 to $7. Jess responded by increasing the quantity of sandwiches she supplied from 70 to 90 per day. Using the midpoint method, Jess's price elasticity of supply is equal to

Accepted Answer

A) 1.33. 
B) 0.75. 
C) 3.00. 
D) 4.00. 
E) 1.50. 
A) 1.33. 
B) 0.75. 
C) 3.00. 
D) 4.00. 
E) 1.50.

Question 14

The demand for luxury suites at basketball games is more elastic if

Accepted Answer

A) these suites are a necessity. 
B) these suites are a luxury item. 
C) few close substitutes exist for these suites. 
D) basketball fans have little time to look for alternative suites. 
E) poorer fans cannot afford luxury suites. 
A) these suites are a necessity. 
B) these suites are a luxury item. 
C) few close substitutes exist for these suites. 
D) basketball fans have little time to look for alternative suites. 
E) poorer fans cannot afford luxury suites.

Question 15

The price elasticity of supply measures

Accepted Answer

A) the percentage change in supply from a percentage change in demand. 
B) the extent to which the quantity supplied of a good changes when the price of a good changes, other things remaining the same. 
C) the slope of the supply curve. 
D) how the equilibrium price changes in response to a change in the equilibrium quantity supplied. 
E) Both answers B and C are correct. 
A) the percentage change in supply from a percentage change in demand. 
B) the extent to which the quantity supplied of a good changes when the price of a good changes, other things remaining the same. 
C) the slope of the supply curve. 
D) how the equilibrium price changes in response to a change in the equilibrium quantity supplied. 
E) Both answers B and C are correct.

Question 16

The price of a bag of pretzels rises from $2 to $3 and the quantity demanded decreases from 100 to 60. What is the price elasticity of demand?

Accepted Answer

A) 1.0 
B) 1.25 
C) 40.0 
D) 20.0 
E) 0.80 
A) 1.0 
B) 1.25 
C) 40.0 
D) 20.0 
E) 0.80

Question 17

If the cross elasticity of demand between Coke and Pepsi is 2.02, then Coke and Pepsi are

Accepted Answer

A) complements. 
B) substitutes. 
C) normal goods. 
D) inferior goods. 
E) Both answers B and C are correct. 
A) complements. 
B) substitutes. 
C) normal goods. 
D) inferior goods. 
E) Both answers B and C are correct.

Question 18

The cross elasticity of demand is a measure of how

Accepted Answer

A) responsive consumers are to changes in the price of a product. 
B) responsive suppliers are to changes in the price of a product. 
C) demand for a product changes when the price of a substitute or complement changes. 
D) total revenue changes when the price of a product changes. 
E) demand for a product changes when income changes. 
A) responsive consumers are to changes in the price of a product. 
B) responsive suppliers are to changes in the price of a product. 
C) demand for a product changes when the price of a substitute or complement changes. 
D) total revenue changes when the price of a product changes. 
E) demand for a product changes when income changes.

Question 19

The income elasticity of demand is ________ if the good is ________ good.

Accepted Answer

A) positive; a normal 
B) positive; an inferior 
C) negative; a normal 
D) less than one; an inferior 
E) positive; a substitute 
A) positive; a normal 
B) positive; an inferior 
C) negative; a normal 
D) less than one; an inferior 
E) positive; a substitute

Question 20

Alan purchases 10 percent fewer bags of chips when his income decreases by 5 percent. Based on only this information, we know that for Alan

Accepted Answer

A) chips are a normal good. 
B) chips are a complement to salsa. 
C) chips are a substitute to pretzels. 
D) chips are an inferior good. 
E) the price of chips fell. 
A) chips are a normal good. 
B) chips are a complement to salsa. 
C) chips are a substitute to pretzels. 
D) chips are an inferior good. 
E) the price of chips fell.

What is an inferior good?

When the price of bananas rises 2 percent, the quantity demanded of peanut butter falls 4 percent. a. What is the cross elasticity of demand between these two goods? b. How are these goods related? c. If the price of bananas rises, how will that affect the demand curve for peanut butter?

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

Explain why the cross elasticity of demand for substitute goods is positive and the cross elasticity of demand for complements is negative.

-In the figure above, using the midpoint method, the price elasticity of demand when the price falls from $7 to $6 is equal to

Price (dollars) Quantity supplied (units per week) A 100 120 B 80 100 C 60 80 D 40 60 E 20 40 -The table above gives the supply schedule for a product. Using the midpoint method, find the price elasticity of supply between points A and B, between B and C, between C and D, and between D and E.

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

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

We calculate the price elasticity of demand as the

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

Suppose the Oakland Raiders football team increases their season ticket prices and total revenue from ticket sales falls, but not to zero. This fact means that the demand for Raiders tickets is

Jess owns a sandwich shop. The price of a sandwich recently increased from $5 to $7. Jess responded by increasing the quantity of sandwiches she supplied from 70 to 90 per day. Using the midpoint method, Jess's price elasticity of supply is equal to

The demand for luxury suites at basketball games is more elastic if

The price elasticity of supply measures

The price of a bag of pretzels rises from $2 to $3 and the quantity demanded decreases from 100 to 60. What is the price elasticity of demand?

If the cross elasticity of demand between Coke and Pepsi is 2.02, then Coke and Pepsi are

The cross elasticity of demand is a measure of how

The income elasticity of demand is if the good is good.

Alan purchases 10 percent fewer bags of chips when his income decreases by 5 percent. Based on only this information, we know that for Alan

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

What is an inferior good?

When the price of bananas rises 2 percent, the quantity demanded of peanut butter falls 4 percent. a. What is the cross elasticity of demand between these two goods? b. How are these goods related? c. If the price of bananas rises, how will that affect the demand curve for peanut butter?

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

Explain why the cross elasticity of demand for substitute goods is positive and the cross elasticity of demand for complements is negative.

-In the figure above, using the midpoint method, the price elasticity of demand when the price falls from $7 to $6 is equal to

Price (dollars) Quantity supplied (units per week) A 100 120 B 80 100 C 60 80 D 40 60 E 20 40 -The table above gives the supply schedule for a product. Using the midpoint method, find the price elasticity of supply between points A and B, between B and C, between C and D, and between D and E.

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

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

We calculate the price elasticity of demand as the

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

Suppose the Oakland Raiders football team increases their season ticket prices and total revenue from ticket sales falls, but not to zero. This fact means that the demand for Raiders tickets is

Jess owns a sandwich shop. The price of a sandwich recently increased from $5 to $7. Jess responded by increasing the quantity of sandwiches she supplied from 70 to 90 per day. Using the midpoint method, Jess's price elasticity of supply is equal to

The demand for luxury suites at basketball games is more elastic if

The price elasticity of supply measures

The price of a bag of pretzels rises from $2 to $3 and the quantity demanded decreases from 100 to 60. What is the price elasticity of demand?

If the cross elasticity of demand between Coke and Pepsi is 2.02, then Coke and Pepsi are

The cross elasticity of demand is a measure of how

The income elasticity of demand is ________ if the good is ________ good.

Alan purchases 10 percent fewer bags of chips when his income decreases by 5 percent. Based on only this information, we know that for Alan

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

The income elasticity of demand is if the good is good.