Question 1

The price elasticity of supply is a measure of the extent to which the quantity supplied of a good changes when the

Accepted Answer

A) cost of producing the product increases. 
B) quantity of the good demanded increases. 
C) supply increases. 
D) price changes. 
E) number of firms supplying the good changes. 
A) cost of producing the product increases. 
B) quantity of the good demanded increases. 
C) supply increases. 
D) price changes. 
E) number of firms supplying the good changes.

Question 2

What does a horizontal demand curve indicate about the price elasticity of demand?

Accepted Answer

If the demand curve for a good

Question 3

A product that has a negative income elasticity of demand is ________ good.

Accepted Answer

A) a complementary 
B) a substitute 
C) a normal 
D) an inferior 
E) a negative 
A) a complementary 
B) a substitute 
C) a normal 
D) an inferior 
E) a negative

Question 4

Taco Bell firm raises the price of its tacos. The price elasticity of demand for Taco Bell tacos equals 5.0. What happens to the Taco Bell's total revenue?

Accepted Answer

A) nothing 
B) It increases. 
C) It decreases. 
D) It becomes negative. 
E) It might change, but more information is needed to determine if it increases, decreases, or does not change. 
A) nothing 
B) It increases. 
C) It decreases. 
D) It becomes negative. 
E) It might change, but more information is needed to determine if it increases, decreases, or does not change.

Question 5

The price elasticity of demand is a measure of the extent to which the quantity demanded of a good changes when ________ changes and all other influences on buyers' plans remain the same.

Accepted Answer

A) income 
B) the price of a related good 
C) the price of the good 
D) the demand alone 
E) both the demand and the supply simultaneously 
A) income 
B) the price of a related good 
C) the price of the good 
D) the demand alone 
E) both the demand and the supply simultaneously

Question 6

The long-run price elasticity of demand for electricity is ________ the short-run price elasticity of demand for electricity.

Accepted Answer

A) greater than 
B) less than 
C) equal to 
D) not comparable to 
E) unrelated to 
A) greater than 
B) less than 
C) equal to 
D) not comparable to 
E) unrelated to

Question 7

If the price of a one good increases and the quantity demanded of a different good decreases, then these two goods are

Accepted Answer

A) substitutes. 
B) normal goods. 
C) inferior goods. 
D) inelastic goods. 
E) complements. 
A) substitutes. 
B) normal goods. 
C) inferior goods. 
D) inelastic goods. 
E) complements.

Question 8

Suppose the price of a DVD rose from $15 to $17 and the quantity demanded decreased from 1,000 per month to 900 per month. Using the midpoint formula, the ________ percent change in price lead to a ________ percent change in the quantity demanded.

Accepted Answer

A) 12.5; 10.5 
B) 13.3; 10.0 
C) 11.8; 11.1 
D) 8.0; 9.5 
E) None of the above answers is correct. 
A) 12.5; 10.5 
B) 13.3; 10.0 
C) 11.8; 11.1 
D) 8.0; 9.5 
E) None of the above answers is correct.

Question 9

5.4 Chapter Figures
  
-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

If the price of a DVD falls from $20 to $12 and the quantity of DVDs supplied decreases from 118,000 per hour to 100,000 per hour, using the midpoint formula the elasticity of supply equals

Accepted Answer

A) 0.33. 
B) 2.94. 
C) 3.08. 
D) 0.23. 
E) -3.08. 
A) 0.33. 
B) 2.94. 
C) 3.08. 
D) 0.23. 
E) -3.08.

Question 11

For a product with a constant or gently increasing opportunity cost of producing additional units, as more is produced, we expect that

Accepted Answer

A) demand is price elastic. 
B) supply is price elastic. 
C) demand is price inelastic. 
D) supply is price inelastic. 
E) demand is unit elastic. 
A) demand is price elastic. 
B) supply is price elastic. 
C) demand is price inelastic. 
D) supply is price inelastic. 
E) demand is unit elastic.

Question 12

The price elasticity of demand for Red Delicious apples, a certain type of apple, is likely

Accepted Answer

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

Question 13

-In the figure above, using the midpoint method, what is the price elasticity of demand when the price falls from $8 to $7?

Accepted Answer

A) 4.0 
B) 5.0 
C) 0.5 
D) 0.4 
E) 0.25 
A) 4.0 
B) 5.0 
C) 0.5 
D) 0.4 
E) 0.25

Question 14

Suppose the local university charges $85 per credit hour. If tuition increases from $85 to $93 per credit hour, using the midpoint method, what is the percentage change in price?

Accepted Answer

A) 8.99 percent 
B) 8.00 percent 
C) 9.41 percent 
D) 8.62 percent 
E) 9.12 percent 
A) 8.99 percent 
B) 8.00 percent 
C) 9.41 percent 
D) 8.62 percent 
E) 9.12 percent

Question 15

Which of the following is true?
I. The supply of a good is inelastic if when its price changes, the percentage change in the quantity supplied exceeds the percentage change in price.
Ii. Price elasticity of supply equals the percentage change in the quantity supplied divided by the percentage change in price.
Iii. If demand is price elastic, a rise in price leads to a decrease in total revenue.

Accepted Answer

A) Only i 
B) Only ii 
C) Only iii 
D) i and ii 
E) ii and iii 
A) Only i 
B) Only ii 
C) Only iii 
D) i and ii 
E) ii and iii

Question 16

$$\begin{array} { c c } 
\text { Price } & \begin{array} { c } 
\text { Quality demanded } \
\text { (thousands of } \
\text { (dollars per admission) }
\end{array} \
\hline 10 & 100 \
8 & 200 \
6 & 300 \
4 & 400 \
2 & 200
\end{array}$$
-The table above gives the demand schedule for museum visits.
a. You, as the resident economist, have been given the task of maximizing the museum's total revenue. What admission price should you charge?
b. What is the elasticity of demand between $6 and $4?
c. Moving along the demand schedule from $10 to $8 to $6 and ultimately to $4, how does the price elasticity of demand change in size?

Accepted Answer

a. The admission price you should charge

Question 17

If substitutes for a good are readily available, the demand for that good

Accepted Answer

A) does not change substantially if the price rises. 
B) does not change substantially if the price falls. 
C) is inelastic. 
D) is elastic. 
E) Both answers A and B are correct. 
A) does not change substantially if the price rises. 
B) does not change substantially if the price falls. 
C) is inelastic. 
D) is elastic. 
E) Both answers A and B are correct.

Question 18

The figure above shows the demand curve for Starbucks latte.
-Suppose Starbucks currently charges $2.50 per cup for its latte. If Starbucks raises the price to $3.00 per cup, based on the demand curve in the figure above its total revenue will ________ because the demand for Starbucks latte is ________ over this price range.

Accepted Answer

A) increase; elastic 
B) decrease; elastic 
C) increase; inelastic 
D) increase; unit elastic 
E) not change; unit elastic 
A) increase; elastic 
B) decrease; elastic 
C) increase; inelastic 
D) increase; unit elastic 
E) not change; unit elastic

Question 19

Suppose the demand for peaches sold from one roadside stand in Georgia is perfectly elastic. As a result, a 7 percent increase in the price charged by the owner of this stand leads to

Accepted Answer

A) zero peaches sold by this stand. 
B) no change in the quantity demanded at this stand. 
C) a 7 percent decrease in the quantity demanded at this stand. 
D) a 7 percent decrease in demand at this stand. 
E) a virtually infinite increase in the quantity demanded at this stand. 
A) zero peaches sold by this stand. 
B) no change in the quantity demanded at this stand. 
C) a 7 percent decrease in the quantity demanded at this stand. 
D) a 7 percent decrease in demand at this stand. 
E) a virtually infinite increase in the quantity demanded at this stand.

Question 20

Suppose a good can be produced using commonly available resources. The elasticity of supply is

Accepted Answer

A) negative. 
B) greater than zero but less than 1. 
C) greater than 1. 
D) zero. 
E) More information is needed to make a determination about the size of the elasticity of supply. 
A) negative. 
B) greater than zero but less than 1. 
C) greater than 1. 
D) zero. 
E) More information is needed to make a determination about the size of the elasticity of supply.

The price elasticity of supply is a measure of the extent to which the quantity supplied of a good changes when the

What does a horizontal demand curve indicate about the price elasticity of demand?

A product that has a negative income elasticity of demand is ________ good.

Taco Bell firm raises the price of its tacos. The price elasticity of demand for Taco Bell tacos equals 5.0. What happens to the Taco Bell's total revenue?

The price elasticity of demand is a measure of the extent to which the quantity demanded of a good changes when ________ changes and all other influences on buyers' plans remain the same.

The long-run price elasticity of demand for electricity is ________ the short-run price elasticity of demand for electricity.

If the price of a one good increases and the quantity demanded of a different good decreases, then these two goods are

Suppose the price of a DVD rose from $15 to $17 and the quantity demanded decreased from 1,000 per month to 900 per month. Using the midpoint formula, the percent change in price lead to a percent change in the quantity demanded.

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

If the price of a DVD falls from $20 to $12 and the quantity of DVDs supplied decreases from 118,000 per hour to 100,000 per hour, using the midpoint formula the elasticity of supply equals

For a product with a constant or gently increasing opportunity cost of producing additional units, as more is produced, we expect that

The price elasticity of demand for Red Delicious apples, a certain type of apple, is likely

-In the figure above, using the midpoint method, what is the price elasticity of demand when the price falls from $8 to $7?

Suppose the local university charges $85 per credit hour. If tuition increases from $85 to $93 per credit hour, using the midpoint method, what is the percentage change in price?

If substitutes for a good are readily available, the demand for that good

Suppose the demand for peaches sold from one roadside stand in Georgia is perfectly elastic. As a result, a 7 percent increase in the price charged by the owner of this stand leads to

Suppose a good can be produced using commonly available resources. The elasticity of supply 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

The price elasticity of supply is a measure of the extent to which the quantity supplied of a good changes when the

What does a horizontal demand curve indicate about the price elasticity of demand?

A product that has a negative income elasticity of demand is ________ good.

Taco Bell firm raises the price of its tacos. The price elasticity of demand for Taco Bell tacos equals 5.0. What happens to the Taco Bell's total revenue?

The price elasticity of demand is a measure of the extent to which the quantity demanded of a good changes when ________ changes and all other influences on buyers' plans remain the same.

The long-run price elasticity of demand for electricity is ________ the short-run price elasticity of demand for electricity.

If the price of a one good increases and the quantity demanded of a different good decreases, then these two goods are

Suppose the price of a DVD rose from $15 to $17 and the quantity demanded decreased from 1,000 per month to 900 per month. Using the midpoint formula, the ________ percent change in price lead to a ________ percent change in the quantity demanded.

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

If the price of a DVD falls from $20 to $12 and the quantity of DVDs supplied decreases from 118,000 per hour to 100,000 per hour, using the midpoint formula the elasticity of supply equals

For a product with a constant or gently increasing opportunity cost of producing additional units, as more is produced, we expect that

The price elasticity of demand for Red Delicious apples, a certain type of apple, is likely

-In the figure above, using the midpoint method, what is the price elasticity of demand when the price falls from $8 to $7?

Suppose the local university charges $85 per credit hour. If tuition increases from $85 to $93 per credit hour, using the midpoint method, what is the percentage change in price?

If substitutes for a good are readily available, the demand for that good

Suppose the demand for peaches sold from one roadside stand in Georgia is perfectly elastic. As a result, a 7 percent increase in the price charged by the owner of this stand leads to

Suppose a good can be produced using commonly available resources. The elasticity of supply 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

Suppose the price of a DVD rose from $15 to $17 and the quantity demanded decreased from 1,000 per month to 900 per month. Using the midpoint formula, the percent change in price lead to a percent change in the quantity demanded.