Question 1

If demand is ________, a price cut ________ the total revenue.

Accepted Answer

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

Question 2

When the price of a product increases from $35 to $45, the quantity supplied increases from 30 units to 40 units per week. Using the midpoint method, the price elasticity of supply is

Accepted Answer

A) 0.00. 
B) -1.1. 
C) 1.14. 
D) 1.35. 
E) 0.88. 
A) 0.00. 
B) -1.1. 
C) 1.14. 
D) 1.35. 
E) 0.88.

Question 3

If the income elasticity of demand for a good is 2, then when income rises 10 percent, the quantity demanded

Accepted Answer

A) increases 2 percent. 
B) increases 20 percent. 
C) decreases 2 percent. 
D) decreases 20 percent. 
E) increases 12 percent. 
A) increases 2 percent. 
B) increases 20 percent. 
C) decreases 2 percent. 
D) decreases 20 percent. 
E) increases 12 percent.

Question 4

-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 5

The cross elasticity between computers and software is

Accepted Answer

A) negative because they are substitutes. 
B) positive because they are substitutes. 
C) negative because they are complements. 
D) positive because they are complements. 
E) positive because they are normal goods. 
A) negative because they are substitutes. 
B) positive because they are substitutes. 
C) negative because they are complements. 
D) positive because they are complements. 
E) positive because they are normal goods.

Question 6

The measure used to determine whether two products are complements or substitutes is called the

Accepted Answer

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

Question 7

Joe receives a 20 percent increase in his income from his part time job and as a consequence decreases his consumption of Ramen noodles by 10 percent. Hence to Joe, Ramen noodles are

Accepted Answer

A) a normal good with a price elasticity of demand of 0.5. 
B) a substitute good with a cross elasticity of 0.5. 
C) a good with a price elasticity of supply of -0.5. 
D) an inferior good with an income elasticity of -0.5. 
E) an inferior good with an income elasticity of -2.0. 
A) a normal good with a price elasticity of demand of 0.5. 
B) a substitute good with a cross elasticity of 0.5. 
C) a good with a price elasticity of supply of -0.5. 
D) an inferior good with an income elasticity of -0.5. 
E) an inferior good with an income elasticity of -2.0.

Question 8

If the price elasticity of demand for a good is 2, then a 10 percent increase in the price of that good ________ the quantity demanded by ________ percent.

Accepted Answer

A) increases; 20 
B) decreases; 2 
C) decreases; 10 
D) decreases; 20 
E) increases; 8 
A) increases; 20 
B) decreases; 2 
C) decreases; 10 
D) decreases; 20 
E) increases; 8

Question 9

-The demand curve shown in the figure above reflects demand that is

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 10

The greater the amount of time that passes after a price change, the

Accepted Answer

A) less elastic supply becomes. 
B) more elastic supply becomes. 
C) more negative supply becomes. 
D) steeper the supply curve becomes. 
E) None of the above answers is correct. 
A) less elastic supply becomes. 
B) more elastic supply becomes. 
C) more negative supply becomes. 
D) steeper the supply curve becomes. 
E) None of the above answers is correct.

Question 11

If the cross elasticity of demand is negative, that means the goods

Accepted Answer

A) have elastic demands. 
B) have inelastic demands. 
C) are complements. 
D) are substitutes. 
E) are inferior. 
A) have elastic demands. 
B) have inelastic demands. 
C) are complements. 
D) are substitutes. 
E) are inferior.

Question 12

When the price of a cup of coffee falls from $3.00 to $2.50, the quantity demanded increases from 1,000 per month to 1,150 per month. Using the midpoint method, the price elasticity of demand is

Accepted Answer

A) 0.77. 
B) 1.30. 
C) 0.07. 
D) 3.00. 
E) 2.50. 
A) 0.77. 
B) 1.30. 
C) 0.07. 
D) 3.00. 
E) 2.50.

Question 13

-June makes holiday wreaths and sells them during the holiday season. The figure above shows her supply curve of wreaths per week. Use the midpoint method in this problem.
a. Calculate the percentage change in quantity between points A and B.
b. Calculate the percentage change in price between points A and B.
c. Calculate the price elasticity of supply between points A and B.

Accepted Answer

a. The percentage change in qu

Question 14

Demand for a product tends to be more elastic the longer the time period considered because

Accepted Answer

A) sellers have more time to expand production. 
B) buyers have more time to search for substitutes. 
C) price increases over time make the price larger relative to buyers' incomes. 
D) the inverse relationship between the price and the quantity demanded weakens over time. 
E) buyers get used to the new price. 
A) sellers have more time to expand production. 
B) buyers have more time to search for substitutes. 
C) price increases over time make the price larger relative to buyers' incomes. 
D) the inverse relationship between the price and the quantity demanded weakens over time. 
E) buyers get used to the new price.

Question 15

When the percentage change in the quantity demanded equals the percentage change in price, then demand is

Accepted Answer

A) inelastic. 
B) unit elastic. 
C) elastic. 
D) irrelevant. 
E) undefined. 
A) inelastic. 
B) unit elastic. 
C) elastic. 
D) irrelevant. 
E) undefined.

If demand is , a price cut the total revenue.

When the price of a product increases from $35 to $45, the quantity supplied increases from 30 units to 40 units per week. Using the midpoint method, the price elasticity of supply is

If the income elasticity of demand for a good is 2, then when income rises 10 percent, the quantity demanded

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

The cross elasticity between computers and software is

The measure used to determine whether two products are complements or substitutes is called the

Joe receives a 20 percent increase in his income from his part time job and as a consequence decreases his consumption of Ramen noodles by 10 percent. Hence to Joe, Ramen noodles are

If the price elasticity of demand for a good is 2, then a 10 percent increase in the price of that good the quantity demanded by percent.

-The demand curve shown in the figure above reflects demand that is

The greater the amount of time that passes after a price change, the

If the cross elasticity of demand is negative, that means the goods

When the price of a cup of coffee falls from $3.00 to $2.50, the quantity demanded increases from 1,000 per month to 1,150 per month. Using the midpoint method, the price elasticity of demand is

Demand for a product tends to be more elastic the longer the time period considered because

When the percentage change in the quantity demanded equals the percentage change in price, then demand is

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 demand is ________, a price cut ________ the total revenue.

When the price of a product increases from $35 to $45, the quantity supplied increases from 30 units to 40 units per week. Using the midpoint method, the price elasticity of supply is

If the income elasticity of demand for a good is 2, then when income rises 10 percent, the quantity demanded

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

The cross elasticity between computers and software is

The measure used to determine whether two products are complements or substitutes is called the

Joe receives a 20 percent increase in his income from his part time job and as a consequence decreases his consumption of Ramen noodles by 10 percent. Hence to Joe, Ramen noodles are

If the price elasticity of demand for a good is 2, then a 10 percent increase in the price of that good ________ the quantity demanded by ________ percent.

-The demand curve shown in the figure above reflects demand that is

The greater the amount of time that passes after a price change, the

If the cross elasticity of demand is negative, that means the goods

When the price of a cup of coffee falls from $3.00 to $2.50, the quantity demanded increases from 1,000 per month to 1,150 per month. Using the midpoint method, the price elasticity of demand is

Demand for a product tends to be more elastic the longer the time period considered because

When the percentage change in the quantity demanded equals the percentage change in price, then demand is

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 demand is , a price cut the total revenue.

If the price elasticity of demand for a good is 2, then a 10 percent increase in the price of that good the quantity demanded by percent.