Question 1

Perfectly inelastic demand means that consumers

Accepted Answer

A) are willing to buy any quantity of the good at a given price, but none at higher prices. 
B) decrease their consumption as price rises. 
C) increase their consumption as price rises. 
D) will buy a certain quantity, regardless of price. 
E) will buy a huge, almost infinite amount more, if the price falls just a little. 
A) are willing to buy any quantity of the good at a given price, but none at higher prices. 
B) decrease their consumption as price rises. 
C) increase their consumption as price rises. 
D) will buy a certain quantity, regardless of price. 
E) will buy a huge, almost infinite amount more, if the price falls just a little.

Question 2

A Minnesota snowmobile dealer lowers its prices in February by 16 percent and the quantity demanded increases by 2 percent. Thus the demand for snowmobiles from this dealer is ________ and the dealer's total revenue will ________.

Accepted Answer

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

Question 3

If we ignore the negative or positive sign, the midpoint method of calculating a percentage change in price between two points on a demand curve results in

Accepted Answer

A) a smaller percentage change if the price rises than if it falls. 
B) the same percentage, regardless of whether the price increases or decreases. 
C) the price elasticity of demand. 
D) the price elasticity of supply. 
E) a higher percentage change if the price rises than if it falls. 
A) a smaller percentage change if the price rises than if it falls. 
B) the same percentage, regardless of whether the price increases or decreases. 
C) the price elasticity of demand. 
D) the price elasticity of supply. 
E) a higher percentage change if the price rises than if it falls.

Question 4

If the price of a magazine increases from $5 to $7 and the quantity demanded of the magazines decreases from 10 million per month to 8 million per month, using the midpoint method, what is the price elasticity of demand?
 Show your work. Is the demand elastic, inelastic, or unit elastic?

Accepted Answer

The price elasticity of demand = (percen

Question 5

If income increases from $50,000 to $60,000 while the demand for a good increases from 100 units to 125 units, what is the income elasticity of demand?
 Is the good a normal good or an inferior good?

Accepted Answer

The income elasticity equals 1

Question 6

If the price of suntan lotion increases from $6 to $8 per bottle and quantity demanded decreases from 900,000 bottles to 845,000 bottles, using the midpoint method, what is the price elasticity of demand for suntan lotion?

Accepted Answer

The price elasticity of demand = (percen

Question 7

If a good has many close substitutes, then its demand is most likely

Accepted Answer

A) elastic. 
B) inelastic. 
C) unit elastic. 
D) perfectly inelastic. 
E) elastic or inelastic depending on whether the price of the good is increasing or decreasing. 
A) elastic. 
B) inelastic. 
C) unit elastic. 
D) perfectly inelastic. 
E) elastic or inelastic depending on whether the price of the good is increasing or decreasing.

Question 8

If an Atlanta bakery raises the price of their rye bread by 11 percent and the quantity demanded decreases by 11 percent, then the demand for the rye bread is ________ and the bakery's total revenue ________.

Accepted Answer

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

Question 9

The price elasticity of demand measures the ________ that results from a ________.

Accepted Answer

A) change in quantity demanded; change in price 
B) change in price; change in the quantity demanded 
C) percentage change in price; percentage change in the quantity demanded 
D) percentage change in the quantity demanded; percentage change in price 
E) percentage change in the quantity demanded; change in price 
A) change in quantity demanded; change in price 
B) change in price; change in the quantity demanded 
C) percentage change in price; percentage change in the quantity demanded 
D) percentage change in the quantity demanded; percentage change in price 
E) percentage change in the quantity demanded; change in price

Question 10

The opportunity cost of producing a good rises only slightly as the quantity produced increases. This good has

Accepted Answer

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

Question 11

Which is larger: The price elasticity of demand for food or the price elasticity of demand for oranges?
 Why?

Accepted Answer

The price elasticity of demand for orang

Question 12

What is the formula for the price elasticity of demand? The percentage change in the

Accepted Answer

A) quantity demanded divided by the percentage change in the price of a substitute or complement. 
B) quantity supplied divided by the percentage change in price. 
C) quantity demanded divided by the percentage change in price. 
D) quantity demanded divided by the percentage change in income. 
E) equilibrium quantity demanded divided by the equilibrium price. 
A) quantity demanded divided by the percentage change in the price of a substitute or complement. 
B) quantity supplied divided by the percentage change in price. 
C) quantity demanded divided by the percentage change in price. 
D) quantity demanded divided by the percentage change in income. 
E) equilibrium quantity demanded divided by the equilibrium price.

Question 13

The price of one bedroom apartments in Cheyenne increased from $55,000 to $65,000 and the quantity of apartment for sale increased from 25 to 30. Using the midpoint method, the price elasticity of supply for apartments in Cheyenne is equal to

Accepted Answer

A) 0.916. 
B) 0.75. 
C) 1.09. 
D) 2.18. 
E) 0.08. 
A) 0.916. 
B) 0.75. 
C) 1.09. 
D) 2.18. 
E) 0.08.

Question 14

The income elasticity of demand for movies in the United States is 3.41. If people's incomes decrease by 1 percent, what is the decrease in the quantity of movies demanded?

Accepted Answer

The income elasticity of demand = (perce

Question 15

The price of lumber increased by 10 percent and the quantity supplied increased by 20 percent. The supply of lumber is

Accepted Answer

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

Question 16

Demand is elastic if

Accepted Answer

A) consumers respond strongly to changes in the product's price. 
B) a large percentage change in price brings about a small percentage change in quantity demanded. 
C) a small percentage change in price brings about a small percentage change in quantity demanded. 
D) the quantity demanded is not responsive to price changes. 
E) the demand curve is vertical. 
A) consumers respond strongly to changes in the product's price. 
B) a large percentage change in price brings about a small percentage change in quantity demanded. 
C) a small percentage change in price brings about a small percentage change in quantity demanded. 
D) the quantity demanded is not responsive to price changes. 
E) the demand curve is vertical.

Question 17

Suppose the University of Oklahoma increases the price of student football tickets for the 2012 season by 30 percent. If the price elasticity of demand for student tickets is 1.22, the price increase leads to

Accepted Answer

A) a 36.6 percent decrease in the quantity demanded. 
B) a 30 percent decrease in the quantity demanded. 
C) a 1.22 percent decrease in the quantity demanded. 
D) a 28.78 percent decrease in the quantity demanded. 
E) no change in the quantity demanded. 
A) a 36.6 percent decrease in the quantity demanded. 
B) a 30 percent decrease in the quantity demanded. 
C) a 1.22 percent decrease in the quantity demanded. 
D) a 28.78 percent decrease in the quantity demanded. 
E) no change in the quantity demanded.

Question 18

Moving downward along a linear (straight-line)downward sloping demand curve, the

Accepted Answer

A) slope is constant. 
B) price is constant. 
C) quantity is constant. 
D) elasticity is constant. 
E) None of the above answers is correct. 
A) slope is constant. 
B) price is constant. 
C) quantity is constant. 
D) elasticity is constant. 
E) None of the above answers is correct.

Question 19

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 20

Patrick lives near two gas stations, Exxon and Shell. If Exxon decreases the price of gas, we predict that the quantity of gasoline demanded at Shell will

Accepted Answer

A) decrease because Exxon and Shell gas are complements. 
B) decrease because Exxon and Shell gas are substitutes. 
C) increase because Exxon and Shell gas are substitutes. 
D) increase because Exxon and Shell gas are complements. 
E) not change Exxon and Shell are different brands of gasoline. 
A) decrease because Exxon and Shell gas are complements. 
B) decrease because Exxon and Shell gas are substitutes. 
C) increase because Exxon and Shell gas are substitutes. 
D) increase because Exxon and Shell gas are complements. 
E) not change Exxon and Shell are different brands of gasoline.

Perfectly inelastic demand means that consumers

A Minnesota snowmobile dealer lowers its prices in February by 16 percent and the quantity demanded increases by 2 percent. Thus the demand for snowmobiles from this dealer is and the dealer's total revenue will .

If we ignore the negative or positive sign, the midpoint method of calculating a percentage change in price between two points on a demand curve results in

If the price of a magazine increases from $5 to $7 and the quantity demanded of the magazines decreases from 10 million per month to 8 million per month, using the midpoint method, what is the price elasticity of demand? Show your work. Is the demand elastic, inelastic, or unit elastic?

If income increases from $50,000 to $60,000 while the demand for a good increases from 100 units to 125 units, what is the income elasticity of demand? Is the good a normal good or an inferior good?

If the price of suntan lotion increases from $6 to $8 per bottle and quantity demanded decreases from 900,000 bottles to 845,000 bottles, using the midpoint method, what is the price elasticity of demand for suntan lotion?

If a good has many close substitutes, then its demand is most likely

If an Atlanta bakery raises the price of their rye bread by 11 percent and the quantity demanded decreases by 11 percent, then the demand for the rye bread is and the bakery's total revenue .

The price elasticity of demand measures the that results from a .

The opportunity cost of producing a good rises only slightly as the quantity produced increases. This good has

Which is larger: The price elasticity of demand for food or the price elasticity of demand for oranges? Why?

What is the formula for the price elasticity of demand? The percentage change in the

The price of one bedroom apartments in Cheyenne increased from $55,000 to $65,000 and the quantity of apartment for sale increased from 25 to 30. Using the midpoint method, the price elasticity of supply for apartments in Cheyenne is equal to

The income elasticity of demand for movies in the United States is 3.41. If people's incomes decrease by 1 percent, what is the decrease in the quantity of movies demanded?

The price of lumber increased by 10 percent and the quantity supplied increased by 20 percent. The supply of lumber is

Demand is elastic if

Suppose the University of Oklahoma increases the price of student football tickets for the 2012 season by 30 percent. If the price elasticity of demand for student tickets is 1.22, the price increase leads to

Moving downward along a linear (straight-line)downward sloping demand curve, the

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

Patrick lives near two gas stations, Exxon and Shell. If Exxon decreases the price of gas, we predict that the quantity of gasoline demanded at Shell will

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

Perfectly inelastic demand means that consumers

A Minnesota snowmobile dealer lowers its prices in February by 16 percent and the quantity demanded increases by 2 percent. Thus the demand for snowmobiles from this dealer is ________ and the dealer's total revenue will ________.

If we ignore the negative or positive sign, the midpoint method of calculating a percentage change in price between two points on a demand curve results in

If the price of a magazine increases from $5 to $7 and the quantity demanded of the magazines decreases from 10 million per month to 8 million per month, using the midpoint method, what is the price elasticity of demand? Show your work. Is the demand elastic, inelastic, or unit elastic?

If income increases from $50,000 to $60,000 while the demand for a good increases from 100 units to 125 units, what is the income elasticity of demand? Is the good a normal good or an inferior good?

If the price of suntan lotion increases from $6 to $8 per bottle and quantity demanded decreases from 900,000 bottles to 845,000 bottles, using the midpoint method, what is the price elasticity of demand for suntan lotion?

If a good has many close substitutes, then its demand is most likely

If an Atlanta bakery raises the price of their rye bread by 11 percent and the quantity demanded decreases by 11 percent, then the demand for the rye bread is ________ and the bakery's total revenue ________.

The price elasticity of demand measures the ________ that results from a ________.

The opportunity cost of producing a good rises only slightly as the quantity produced increases. This good has

Which is larger: The price elasticity of demand for food or the price elasticity of demand for oranges? Why?

What is the formula for the price elasticity of demand? The percentage change in the

The price of one bedroom apartments in Cheyenne increased from $55,000 to $65,000 and the quantity of apartment for sale increased from 25 to 30. Using the midpoint method, the price elasticity of supply for apartments in Cheyenne is equal to

The income elasticity of demand for movies in the United States is 3.41. If people's incomes decrease by 1 percent, what is the decrease in the quantity of movies demanded?

The price of lumber increased by 10 percent and the quantity supplied increased by 20 percent. The supply of lumber is

Demand is elastic if

Suppose the University of Oklahoma increases the price of student football tickets for the 2012 season by 30 percent. If the price elasticity of demand for student tickets is 1.22, the price increase leads to

Moving downward along a linear (straight-line)downward sloping demand curve, the

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

Patrick lives near two gas stations, Exxon and Shell. If Exxon decreases the price of gas, we predict that the quantity of gasoline demanded at Shell will

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

A Minnesota snowmobile dealer lowers its prices in February by 16 percent and the quantity demanded increases by 2 percent. Thus the demand for snowmobiles from this dealer is and the dealer's total revenue will .

If an Atlanta bakery raises the price of their rye bread by 11 percent and the quantity demanded decreases by 11 percent, then the demand for the rye bread is and the bakery's total revenue .

The price elasticity of demand measures the that results from a .