Question 1

Which of the following individuals is likely to have the most inelastic demand for air travel?

Accepted Answer

A)  a person who is afraid to fly 
B)  a person who enjoys flying 
C)  a business traveler 
D)  a retired person 
A)  a person who is afraid to fly 
B)  a person who enjoys flying 
C)  a business traveler 
D)  a retired person C

Question 2

-Refer to Figure 5.2.Using the initial-value method,the value of the price elasticity of demand from Point E to Point F can be described as

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  unit elastic. 
D)  zero. 
A)  elastic. 
B)  inelastic. 
C)  unit elastic. 
D)  zero. B

Question 3

The more substitutes there are for a product,

Accepted Answer

A)  the less price elastic the demand for the product is. 
B)  the more price elastic the demand for the product is. 
C)  the greater the income elasticity for the product. 
D)  the smaller the income elasticity for the product. 
A)  the less price elastic the demand for the product is. 
B)  the more price elastic the demand for the product is. 
C)  the greater the income elasticity for the product. 
D)  the smaller the income elasticity for the product. B

Question 4

What does it mean for a good to have a perfectly inelastic demand? Draw a demand curve of this type.Explain why it has the shape that it does.

Accepted Answer

If a product has a perfectly inelastic d

Question 5

Price and total revenue are inversely related when demand is

Accepted Answer

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

Question 6

Recall the Application about finding estimates of elasticities of demand to answer the following question(s).
-According to the Application,the U.S.Department of Agriculture has a Web site that provides estimates of demand elasticities for

Accepted Answer

A)  hundreds of food products for dozens of countries. 
B)  millions of food products, but only for the United States. 
C)  thousands of food products for every country in the world. 
D)  all food products in all countries. 
A)  hundreds of food products for dozens of countries. 
B)  millions of food products, but only for the United States. 
C)  thousands of food products for every country in the world. 
D)  all food products in all countries.

Question 7

If the price elasticity of supply is 0.5,then a 10% decrease in price will result in a 5% increase in quantity supplied.

Accepted Answer

A) True 
 B)False

Question 8

Suppose that the price of a pound of potatoes increases from $0.75 to $0.90 and quantity demanded falls from 10,000 pounds to 8,000 pounds.Use the initial-value method to calculate the price elasticity of demand.

Accepted Answer

% change in quantity demanded

Question 9

The cross-price elasticity between natural gas and heating oil is estimated to be 2.3.The cross-price elasticity between natural gas and electricity is estimated to be -0.8.What is the relationship between natural gas and heating oil? What is the relationship between natural gas and electricity? Explain.

Accepted Answer

Because the cross-price elasticity is po

Question 10

When the price of a pair of shoes is $80,10 pairs are demanded.When the price of the pair of shoes is $60,20 pairs are demanded.Using the initial value,the price elasticity of demand is ________ starting at a price of $80 and ________ starting at a price of $60.

Accepted Answer

A)  2; 3 
B)  3/2; 4 
C)  3; 2 
D)  4; 3/2 
A)  2; 3 
B)  3/2; 4 
C)  3; 2 
D)  4; 3/2

Question 11

Is supply more elastic in the short run or the long run? Why?

Accepted Answer

Supply is more elastic in the

Question 12

A game shop estimates that the price elasticity of demand on its newly released games is 2.0.In an effort to raise total revenue,the store should

Accepted Answer

A)  increase the price on its newly released games. 
B)  decrease the price on its newly released games. 
C)  increase the price on direct substitutes such as one-year-old games. 
D)  decrease the price on direct substitutes such as one-year-old games. 
A)  increase the price on its newly released games. 
B)  decrease the price on its newly released games. 
C)  increase the price on direct substitutes such as one-year-old games. 
D)  decrease the price on direct substitutes such as one-year-old games.

Question 13

A perfectly elastic supply curve is a horizontal line.

Accepted Answer

A) True 
 B)False

Question 14

A perfectly inelastic supply is represented by a(n)________ supply curve.

Accepted Answer

A)  vertical 
B)  downward-sloping 
C)  horizontal 
D)  upward-sloping 
A)  vertical 
B)  downward-sloping 
C)  horizontal 
D)  upward-sloping

Question 15

-Refer to Figure 5.5.Using the midpoint method,if the price of a gardenburger is increased from $6 to $7,the price elasticity of demand equals

Accepted Answer

A)  0.13. 
B)  0.33. 
C)  1.44. 
D)  13.0. 
A)  0.13. 
B)  0.33. 
C)  1.44. 
D)  13.0.

Question 16

If the price elasticity of supply is 0.5,then a 10% increase in price will result in how much of a percentage change in quantity supplied? Will quantity supplied increase or decrease?

Accepted Answer

[percentage change i

Question 17

The price elasticity of supply is generally

Accepted Answer

A)  negative. 
B)  zero. 
C)  positive. 
D)  decreasing at an increasing rate. 
A)  negative. 
B)  zero. 
C)  positive. 
D)  decreasing at an increasing rate.

Question 18

Recall the Application about the short-run and long-run elasticity of supply of coffee to answer the following question(s).
-Recall the Application.In the short run,the supply curve for coffee is ________ and the elasticity of supply is ________ than in the long run.

Accepted Answer

A)  steeper; larger 
B)  steeper; smaller 
C)  flatter; larger 
D)  flatter; smaller 
A)  steeper; larger 
B)  steeper; smaller 
C)  flatter; larger 
D)  flatter; smaller

Question 19

If the price elasticity of demand is 0.5 and the price elasticity of supply is 1.0,then a 9% increase in the demand for the product can be expected to increase the price by 6%.

Accepted Answer

A) True 
 B)False

Question 20

Define price elasticity of demand.What does it measure?

Accepted Answer

Price elasticity of demand is a measure

Which of the following individuals is likely to have the most inelastic demand for air travel?

-Refer to Figure 5.2.Using the initial-value method,the value of the price elasticity of demand from Point E to Point F can be described as

The more substitutes there are for a product,

What does it mean for a good to have a perfectly inelastic demand? Draw a demand curve of this type.Explain why it has the shape that it does.

Price and total revenue are inversely related when demand is

Recall the Application about finding estimates of elasticities of demand to answer the following question(s). -According to the Application,the U.S.Department of Agriculture has a Web site that provides estimates of demand elasticities for

If the price elasticity of supply is 0.5,then a 10% decrease in price will result in a 5% increase in quantity supplied.

Suppose that the price of a pound of potatoes increases from $0.75 to $0.90 and quantity demanded falls from 10,000 pounds to 8,000 pounds.Use the initial-value method to calculate the price elasticity of demand.

When the price of a pair of shoes is $80,10 pairs are demanded.When the price of the pair of shoes is $60,20 pairs are demanded.Using the initial value,the price elasticity of demand is starting at a price of $80 and starting at a price of $60.

Is supply more elastic in the short run or the long run? Why?

A game shop estimates that the price elasticity of demand on its newly released games is 2.0.In an effort to raise total revenue,the store should

A perfectly elastic supply curve is a horizontal line.

A perfectly inelastic supply is represented by a(n)________ supply curve.

-Refer to Figure 5.5.Using the midpoint method,if the price of a gardenburger is increased from $6 to $7,the price elasticity of demand equals

If the price elasticity of supply is 0.5,then a 10% increase in price will result in how much of a percentage change in quantity supplied? Will quantity supplied increase or decrease?

The price elasticity of supply is generally

Recall the Application about the short-run and long-run elasticity of supply of coffee to answer the following question(s). -Recall the Application.In the short run,the supply curve for coffee is and the elasticity of supply is than in the long run.

If the price elasticity of demand is 0.5 and the price elasticity of supply is 1.0,then a 9% increase in the demand for the product can be expected to increase the price by 6%.

Define price elasticity of demand.What does it measure?

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

Exam 5: Elasticity: a Measure of Responsiveness

Which of the following individuals is likely to have the most inelastic demand for air travel?

-Refer to Figure 5.2.Using the initial-value method,the value of the price elasticity of demand from Point E to Point F can be described as

The more substitutes there are for a product,

What does it mean for a good to have a perfectly inelastic demand? Draw a demand curve of this type.Explain why it has the shape that it does.

Price and total revenue are inversely related when demand is

Recall the Application about finding estimates of elasticities of demand to answer the following question(s). -According to the Application,the U.S.Department of Agriculture has a Web site that provides estimates of demand elasticities for

If the price elasticity of supply is 0.5,then a 10% decrease in price will result in a 5% increase in quantity supplied.

Suppose that the price of a pound of potatoes increases from $0.75 to $0.90 and quantity demanded falls from 10,000 pounds to 8,000 pounds.Use the initial-value method to calculate the price elasticity of demand.

When the price of a pair of shoes is $80,10 pairs are demanded.When the price of the pair of shoes is $60,20 pairs are demanded.Using the initial value,the price elasticity of demand is ________ starting at a price of $80 and ________ starting at a price of $60.

Is supply more elastic in the short run or the long run? Why?

A game shop estimates that the price elasticity of demand on its newly released games is 2.0.In an effort to raise total revenue,the store should

A perfectly elastic supply curve is a horizontal line.

A perfectly inelastic supply is represented by a(n)________ supply curve.

-Refer to Figure 5.5.Using the midpoint method,if the price of a gardenburger is increased from $6 to $7,the price elasticity of demand equals

If the price elasticity of supply is 0.5,then a 10% increase in price will result in how much of a percentage change in quantity supplied? Will quantity supplied increase or decrease?

The price elasticity of supply is generally

Recall the Application about the short-run and long-run elasticity of supply of coffee to answer the following question(s). -Recall the Application.In the short run,the supply curve for coffee is ________ and the elasticity of supply is ________ than in the long run.

If the price elasticity of demand is 0.5 and the price elasticity of supply is 1.0,then a 9% increase in the demand for the product can be expected to increase the price by 6%.

Define price elasticity of demand.What does it measure?

Introduction: What Is Economics

The Key Principles of Economics

Exchange and Markets

Demand,supply,and Market Equilibrium

Market Efficiency and Government Intervention

Consumer Choice: Utility Theory and Insights From Neuroscience

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry and Monopolistic Competition

Oligopoly and Strategic Behavior

Controlling Market Power: Antitrust and Regulation

Imperfect Information: Adverse Selection and Moral Hazard

Public Goods and Public Choice

External Costs and Environmental Policy

The Labor Market and the Distribution of Income

International Trade and Public Policy

Filters

When the price of a pair of shoes is $80,10 pairs are demanded.When the price of the pair of shoes is $60,20 pairs are demanded.Using the initial value,the price elasticity of demand is starting at a price of $80 and starting at a price of $60.

Recall the Application about the short-run and long-run elasticity of supply of coffee to answer the following question(s). -Recall the Application.In the short run,the supply curve for coffee is and the elasticity of supply is than in the long run.