Question 1

If a good is a necessity, it has ________ substitutes and its demand is ________.

Accepted Answer

A) poor; elastic 
B) poor; inelastic 
C) many; elastic 
D) many; inelastic 
E) many; precisely unit elastic 
A) poor; elastic 
B) poor; inelastic 
C) many; elastic 
D) many; inelastic 
E) many; precisely unit elastic

Question 2

Which of the following statements is correct?

Accepted Answer

A) The income elasticity of demand for inferior goods is positive. 
B) The cross elasticity of demand for substitutes is negative. 
C) The income elasticity of demand for normal goods is positive. 
D) The cross elasticity of demand for complements is positive. 
E) The income elasticity of demand for inferior goods is zero. 
A) The income elasticity of demand for inferior goods is positive. 
B) The cross elasticity of demand for substitutes is negative. 
C) The income elasticity of demand for normal goods is positive. 
D) The cross elasticity of demand for complements is positive. 
E) The income elasticity of demand for inferior goods is zero.

Question 3

For a product with a rapidly increasing opportunity cost of producing additional units,

Accepted Answer

A) demand is price elastic. 
B) supply is price elastic. 
C) demand is price inelastic. 
D) supply is price inelastic. 
E) the demand curve is vertical. 
A) demand is price elastic. 
B) supply is price elastic. 
C) demand is price inelastic. 
D) supply is price inelastic. 
E) the demand curve is vertical.

Question 4

The demand for a necessity generally is

Accepted Answer

A) very elastic. 
B) infinitely elastic. 
C) unaffected by income. 
D) inelastic. 
E) unit elastic. 
A) very elastic. 
B) infinitely elastic. 
C) unaffected by income. 
D) inelastic. 
E) unit elastic.

Question 5

If demand is inelastic and the price falls, the total revenue

Accepted Answer

A) rises. 
B) falls. 
C) remains constant. 
D) might rise, fall, or remain constant. 
E) becomes negative. 
A) rises. 
B) falls. 
C) remains constant. 
D) might rise, fall, or remain constant. 
E) becomes negative.

Question 6

The income elasticity of demand for used cars is less than zero. So, used cars are

Accepted Answer

A) an inferior good. 
B) a normal good. 
C) an inelastic good. 
D) a perfectly inelastic good. 
E) a substitute good. 
A) an inferior good. 
B) a normal good. 
C) an inelastic good. 
D) a perfectly inelastic good. 
E) a substitute good.

Question 7

One reason why the price elasticity of supply for DVD players is greater than one is that

Accepted Answer

A) the cost of producing DVD players is small. 
B) the storage of DVD players is not possible. 
C) DVD players can be easily stored. 
D) the demand for DVD players is fairly large. 
E) DVD players require relatively advanced technology for their production. 
A) the cost of producing DVD players is small. 
B) the storage of DVD players is not possible. 
C) DVD players can be easily stored. 
D) the demand for DVD players is fairly large. 
E) DVD players require relatively advanced technology for their production.

Question 8

Suppose the Chicago Bears football team raises ticket prices by 13 percent and as a result the quantity of tickets demanded decreases by 21 percent. This response means that the demand for Bears tickets 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 9

People take fewer trips by airplane when their incomes fall because of a recession. Trips by airplane must be

Accepted Answer

A) a normal good. 
B) an inferior good. 
C) a substitute for other goods. 
D) a complement to other goods. 
E) an inelastic good. 
A) a normal good. 
B) an inferior good. 
C) a substitute for other goods. 
D) a complement to other goods. 
E) an inelastic good.

Question 10

If demand is price inelastic and the price is lowered, which of the following occurs?

Accepted Answer

A) The quantity sold decreases. 
B) The total expenditure increases and the total revenue decreases. 
C) The total revenue of the firms selling the product is unchanged. 
D) The total revenue of the firms selling the product decreases. 
E) The total expenditure decreases and the total revenue increases. 
A) The quantity sold decreases. 
B) The total expenditure increases and the total revenue decreases. 
C) The total revenue of the firms selling the product is unchanged. 
D) The total revenue of the firms selling the product decreases. 
E) The total expenditure decreases and the total revenue increases.

Question 11

If beef and pork are substitutes for consumers, the cross elasticity of demand between the two products must be

Accepted Answer

A) negative. 
B) positive. 
C) indeterminate. 
D) elastic. 
E) greater than 1. 
A) negative. 
B) positive. 
C) indeterminate. 
D) elastic. 
E) greater than 1.

Question 12

Products X, Y, and Z have price elasticities of 3.0, 0.80, and 1.0 respectively. Total revenue decreases if the price of

Accepted Answer

A) product X falls. 
B) product Y falls. 
C) product Z falls. 
D) product X or product Z fall. 
E) product Y or product Z fall. 
A) product X falls. 
B) product Y falls. 
C) product Z falls. 
D) product X or product Z fall. 
E) product Y or product Z fall.

Question 13

When income increases from $20,000 to $30,000 the quantity of inter-city bus trips taken per year decreases from 10 to 8. Hence

Accepted Answer

A) inter-city bus trips are a normal good. 
B) the income elasticity of demand for inter-city bus trips is -1.8. 
C) the income elasticity of demand for inter-city bus trips is -0.56. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct. 
A) inter-city bus trips are a normal good. 
B) the income elasticity of demand for inter-city bus trips is -1.8. 
C) the income elasticity of demand for inter-city bus trips is -0.56. 
D) Both answers A and B are correct. 
E) Both answers A and C are correct.

Question 14

One reason why the demand for gasoline is inelastic is because

Accepted Answer

A) substitutes for gas abound. 
B) substitutes for gas are hard to find. 
C) gasoline is a luxury item. 
D) people have a long time to shop around for automobiles that use less gas. 
E) buses run on diesel fuel rather than gasoline. 
A) substitutes for gas abound. 
B) substitutes for gas are hard to find. 
C) gasoline is a luxury item. 
D) people have a long time to shop around for automobiles that use less gas. 
E) buses run on diesel fuel rather than gasoline.

Question 15

The cross elasticity of demand for blank DVDs and DVD burners is likely to be

Accepted Answer

A) positive because they are substitutes. 
B) positive because they are complements. 
C) negative because they are substitutes. 
D) negative because they are complements. 
E) negative because with the advent of digital cameras, film and film cameras are inferior goods. 
A) positive because they are substitutes. 
B) positive because they are complements. 
C) negative because they are substitutes. 
D) negative because they are complements. 
E) negative because with the advent of digital cameras, film and film cameras are inferior goods.

Question 16

$$\begin{array} { c c } 
\begin{array} { c } 
\text { Price } \
\text { (dollars) }
\end{array} & \begin{array} { c } 
\text { Total revenue } \
\text { (dollars) }
\end{array} \
\hline 1.00 & 110 \
1.25 & 125 \
1.50 & 125 \
1.75 & 100
\end{array}$$
-Steve sells hotdogs from a vending cart downtown. The table above shows his daily total revenues at four different prices. Between which two prices is the demand for hotdogs
a. elastic?
b. unit elastic?
c. inelastic?

Accepted Answer

a. Steve's demand is elastic between $1.

Question 17

If the demand for insulin is inelastic, an increase in insulin prices leads to

Accepted Answer

A) less total revenue for insulin makers. 
B) more total revenue for insulin makers. 
C) no change in total revenue for insulin makers. 
D) first a decrease, then an increase in total revenue for insulin makers. 
E) Total revenue probably changes but we need more information about the change in total expenditures on insulin to determine if the total revenue rises, falls, or stays the same. 
A) less total revenue for insulin makers. 
B) more total revenue for insulin makers. 
C) no change in total revenue for insulin makers. 
D) first a decrease, then an increase in total revenue for insulin makers. 
E) Total revenue probably changes but we need more information about the change in total expenditures on insulin to determine if the total revenue rises, falls, or stays the same.

Question 18

When the price of a textbook is $95, the quantity of textbooks supplied is 90 million a year and when the price rises to $105, the quantity of textbooks supplied is 110 million a year. The supply of textbooks is

Accepted Answer

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

Question 19

The longer the time that has elapsed since the price of a good changed, the

Accepted Answer

A) more elastic the demand for that good. 
B) steeper the demand curve. 
C) less elastic the demand for that good. 
D) smaller the amount of that good bought. 
E) fewer substitutes available for the good. 
A) more elastic the demand for that good. 
B) steeper the demand curve. 
C) less elastic the demand for that good. 
D) smaller the amount of that good bought. 
E) fewer substitutes available for the good.

Question 20

If the percentage change in the quantity demanded is not zero but is less than the percentage change in the price, demand is

Accepted Answer

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

If a good is a necessity, it has substitutes and its demand is .

Which of the following statements is correct?

For a product with a rapidly increasing opportunity cost of producing additional units,

The demand for a necessity generally is

If demand is inelastic and the price falls, the total revenue

The income elasticity of demand for used cars is less than zero. So, used cars are

One reason why the price elasticity of supply for DVD players is greater than one is that

Suppose the Chicago Bears football team raises ticket prices by 13 percent and as a result the quantity of tickets demanded decreases by 21 percent. This response means that the demand for Bears tickets is

People take fewer trips by airplane when their incomes fall because of a recession. Trips by airplane must be

If demand is price inelastic and the price is lowered, which of the following occurs?

If beef and pork are substitutes for consumers, the cross elasticity of demand between the two products must be

Products X, Y, and Z have price elasticities of 3.0, 0.80, and 1.0 respectively. Total revenue decreases if the price of

When income increases from $20,000 to $30,000 the quantity of inter-city bus trips taken per year decreases from 10 to 8. Hence

One reason why the demand for gasoline is inelastic is because

The cross elasticity of demand for blank DVDs and DVD burners is likely to be

Price (dollars) Total revenue (dollars) 1.00 110 1.25 125 1.50 125 1.75 100 -Steve sells hotdogs from a vending cart downtown. The table above shows his daily total revenues at four different prices. Between which two prices is the demand for hotdogs a. elastic? b. unit elastic? c. inelastic?

If the demand for insulin is inelastic, an increase in insulin prices leads to

When the price of a textbook is $95, the quantity of textbooks supplied is 90 million a year and when the price rises to $105, the quantity of textbooks supplied is 110 million a year. The supply of textbooks is

The longer the time that has elapsed since the price of a good changed, the

If the percentage change in the quantity demanded is not zero but is less than the percentage change in the price, 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 a good is a necessity, it has ________ substitutes and its demand is ________.

Which of the following statements is correct?

For a product with a rapidly increasing opportunity cost of producing additional units,

The demand for a necessity generally is

If demand is inelastic and the price falls, the total revenue

The income elasticity of demand for used cars is less than zero. So, used cars are

One reason why the price elasticity of supply for DVD players is greater than one is that

Suppose the Chicago Bears football team raises ticket prices by 13 percent and as a result the quantity of tickets demanded decreases by 21 percent. This response means that the demand for Bears tickets is

People take fewer trips by airplane when their incomes fall because of a recession. Trips by airplane must be

If demand is price inelastic and the price is lowered, which of the following occurs?

If beef and pork are substitutes for consumers, the cross elasticity of demand between the two products must be

Products X, Y, and Z have price elasticities of 3.0, 0.80, and 1.0 respectively. Total revenue decreases if the price of

When income increases from $20,000 to $30,000 the quantity of inter-city bus trips taken per year decreases from 10 to 8. Hence

One reason why the demand for gasoline is inelastic is because

The cross elasticity of demand for blank DVDs and DVD burners is likely to be

Price (dollars) Total revenue (dollars) 1.00 110 1.25 125 1.50 125 1.75 100 -Steve sells hotdogs from a vending cart downtown. The table above shows his daily total revenues at four different prices. Between which two prices is the demand for hotdogs a. elastic? b. unit elastic? c. inelastic?

If the demand for insulin is inelastic, an increase in insulin prices leads to

When the price of a textbook is $95, the quantity of textbooks supplied is 90 million a year and when the price rises to $105, the quantity of textbooks supplied is 110 million a year. The supply of textbooks is

The longer the time that has elapsed since the price of a good changed, the

If the percentage change in the quantity demanded is not zero but is less than the percentage change in the price, 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 a good is a necessity, it has substitutes and its demand is .