Question 1

Which of the following factors would indicate a less elastic demand?

Accepted Answer

A)  The good represents a large fraction of the budget. 
B)  Demand is measured over a longer period of time. 
C)  There are few substitutes. 
D)  The price of the good is high. 
A)  The good represents a large fraction of the budget. 
B)  Demand is measured over a longer period of time. 
C)  There are few substitutes. 
D)  The price of the good is high. C

Question 2

Table 4.1
-Refer to Table 4.1. A change in the price of hamburgers caused the change in quantity demanded shown in the table. The price elasticity of demand for hamburgers (calculated using the initial value formula) is

Accepted Answer

A)  0.25. 
B)  0.50. 
C)  1. 
D)  1.75. 
A)  0.25. 
B)  0.50. 
C)  1. 
D)  1.75. D

Question 3

Suppose that in a month the price of oranges increases from $.75 to $1. At the same time, the quantity of oranges demanded decreases from 100 to 80. The price elasticity of demand for oranges (calculated using the initial value formula) is

Accepted Answer

A)  0.75. 
B)  0.6. 
C)  0.25. 
D)  20. 
A)  0.75. 
B)  0.6. 
C)  0.25. 
D)  20. B

Question 4

Which of the following factors would indicate a less elastic demand?

Accepted Answer

A)  The good represents a large fraction of the budget. 
B)  Demand is measured over a shorter period of time. 
C)  The price of the good is low. 
D)  New substitutes are created. 
A)  The good represents a large fraction of the budget. 
B)  Demand is measured over a shorter period of time. 
C)  The price of the good is low. 
D)  New substitutes are created.

Question 5

Suppose we observe that a firm's total revenue doesn't change when price and quantity change by the same percentage. Which of the following is a possible value of its price elasticity of demand?

Accepted Answer

A)  0 
B)  0.5 
C)  1 
D)  2 
A)  0 
B)  0.5 
C)  1 
D)  2

Question 6

Recall the Application regarding the elasticity of demand for gasoline varying over time to answer the following question(s).
-According to the Application, the demand for gasoline is

Accepted Answer

A)  less elastic in the long run because consumers have less opportunity to change their behavior. 
B)  more elastic in the long run because consumers have time to respond to changes in price. 
C)  inelastic in the long run and in the short run. 
D)  elastic in the short run. 
A)  less elastic in the long run because consumers have less opportunity to change their behavior. 
B)  more elastic in the long run because consumers have time to respond to changes in price. 
C)  inelastic in the long run and in the short run. 
D)  elastic in the short run.

Question 7

Suppose that in a month the price of movie rentals increases from $2 to $2.20. At the same time, the quantity of movie rentals supplied increases from 100 to 110. The price elasticity of supply for movie rentals (calculated using the initial value formula) is

Accepted Answer

A)  0.02. 
B)  0.2. 
C)  1. 
D)  50. 
A)  0.02. 
B)  0.2. 
C)  1. 
D)  50.

Question 8

Suppose that the elasticity of demand for a product is 0.5. What will happen to total revenue as a firm increases the price?

Accepted Answer

A)  Total revenue will increase. 
B)  Total revenue will decrease. 
C)  Total revenue will stay the same. 
D)  It cannot be determined from the information provided. 
A)  Total revenue will increase. 
B)  Total revenue will decrease. 
C)  Total revenue will stay the same. 
D)  It cannot be determined from the information provided.

Question 9

The price elasticity of demand is calculated by

Accepted Answer

A)  the change in price divided by the change in quantity demanded. 
B)  the change in quantity demanded divided by the change in price. 
C)  the percentage change in price divided by the percentage change in quantity demanded. 
D)  the percentage change in quantity demanded divided by the percentage change in price. 
A)  the change in price divided by the change in quantity demanded. 
B)  the change in quantity demanded divided by the change in price. 
C)  the percentage change in price divided by the percentage change in quantity demanded. 
D)  the percentage change in quantity demanded divided by the percentage change in price.

Question 10

Suppose you observe that as a TV manufacturer increases its price its total revenue decreases. This could be due to

Accepted Answer

A)  demand being price inelastic. 
B)  demand being price elastic. 
C)  demand being unit elastic. 
D)  demand being perfectly price inelastic. 
A)  demand being price inelastic. 
B)  demand being price elastic. 
C)  demand being unit elastic. 
D)  demand being perfectly price inelastic.

Question 11

If we are on the upper portion of the market demand curve and the price increases by 10%, the quantity demanded will decrease by more than 10%.

Accepted Answer

A) True 
 B)False

Question 12

If quantity demanded of a good falls by 2% when income falls by 10%, the good's demand is

Accepted Answer

A)  price sensitive. 
B)  income-inelastic. 
C)  income-elastic. 
D)  price insensitive. 
A)  price sensitive. 
B)  income-inelastic. 
C)  income-elastic. 
D)  price insensitive.

Question 13

Suppose that if poor households have a price elasticity of demand for medical care of 0.50 and rich households have a price elasticity of demand for medical care of 0.25, then a price increase of 10% would lead to the poor households reducing their quantity demanded for medical care by

Accepted Answer

A)  2.5%. 
B)  5%. 
C)  25%. 
D)  50%. 
A)  2.5%. 
B)  5%. 
C)  25%. 
D)  50%.

Question 14

If a product has only a few acceptable substitutes, demand for the product is most likely to be

Accepted Answer

A)  very inelastic. 
B)  inelastic. 
C)  elastic. 
D)  very elastic. 
A)  very inelastic. 
B)  inelastic. 
C)  elastic. 
D)  very elastic.

Question 15

Suppose that in a month the price of a dozen of eggs increases from $1.50 to $2. At the same time, the quantity of dozens of eggs demanded decreases from 200 to 150. The price elasticity of demand for dozens of eggs is

Accepted Answer

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

Question 16

If the price elasticity of supply is 1.3, supply is

Accepted Answer

A)  unaffected by price changes. 
B)  inelastic. 
C)  unit elastic. 
D)  elastic. 
A)  unaffected by price changes. 
B)  inelastic. 
C)  unit elastic. 
D)  elastic.

Question 17

Recall the Application about choosing a price for drones based on a linear demand curve to answer the following question(s).
-Recall the Application. Suppose a firm that produces drones has a linear demand curve for its product, with a vertical intercept of $1,500. If the firm does NOT want the demand for its product to be price-inelastic, the minimum price it should charge is

Accepted Answer

A)  $500. 
B)  $750. 
C)  $1,000. 
D)  $1,500. 
A)  $500. 
B)  $750. 
C)  $1,000. 
D)  $1,500.

Question 18

The cross-price elasticity of demand between bananas and apples is most likely

Accepted Answer

A)  positive. 
B)  negative. 
C)  zero. 
D)  More information is needed to determine. 
A)  positive. 
B)  negative. 
C)  zero. 
D)  More information is needed to determine.

Question 19

If the price elasticity of demand is 2, this means that a ________ increase in price causes a ________ decrease in quantity demanded.

Accepted Answer

A)  15%; 100% 
B)  15%; 10% 
C)  20%; 40% 
D)  30%; 20% 
A)  15%; 100% 
B)  15%; 10% 
C)  20%; 40% 
D)  30%; 20%

Question 20

The quantity supplied of bagels is 100 at the unit price $1. Suppose the price elasticity of supply by the initial value method is 1.5, and you would like to induce sellers to increase the quantity of bagels supplied to 130. Then the new price for bagels must be

Accepted Answer

A)  $11. 
B)  $10.20. 
C)  $1.20. 
D)  $1.10. 
A)  $11. 
B)  $10.20. 
C)  $1.20. 
D)  $1.10.

Which of the following factors would indicate a less elastic demand?

Table 4.1 -Refer to Table 4.1. A change in the price of hamburgers caused the change in quantity demanded shown in the table. The price elasticity of demand for hamburgers (calculated using the initial value formula) is

Suppose that in a month the price of oranges increases from $.75 to $1. At the same time, the quantity of oranges demanded decreases from 100 to 80. The price elasticity of demand for oranges (calculated using the initial value formula) is

Which of the following factors would indicate a less elastic demand?

Suppose we observe that a firm's total revenue doesn't change when price and quantity change by the same percentage. Which of the following is a possible value of its price elasticity of demand?

Recall the Application regarding the elasticity of demand for gasoline varying over time to answer the following question(s). -According to the Application, the demand for gasoline is

Suppose that in a month the price of movie rentals increases from $2 to $2.20. At the same time, the quantity of movie rentals supplied increases from 100 to 110. The price elasticity of supply for movie rentals (calculated using the initial value formula) is

Suppose that the elasticity of demand for a product is 0.5. What will happen to total revenue as a firm increases the price?

The price elasticity of demand is calculated by

Suppose you observe that as a TV manufacturer increases its price its total revenue decreases. This could be due to

If we are on the upper portion of the market demand curve and the price increases by 10%, the quantity demanded will decrease by more than 10%.

If quantity demanded of a good falls by 2% when income falls by 10%, the good's demand is

Suppose that if poor households have a price elasticity of demand for medical care of 0.50 and rich households have a price elasticity of demand for medical care of 0.25, then a price increase of 10% would lead to the poor households reducing their quantity demanded for medical care by

If a product has only a few acceptable substitutes, demand for the product is most likely to be

Suppose that in a month the price of a dozen of eggs increases from $1.50 to $2. At the same time, the quantity of dozens of eggs demanded decreases from 200 to 150. The price elasticity of demand for dozens of eggs is

If the price elasticity of supply is 1.3, supply is

The cross-price elasticity of demand between bananas and apples is most likely

If the price elasticity of demand is 2, this means that a increase in price causes a decrease in quantity demanded.

The quantity supplied of bagels is 100 at the unit price $1. Suppose the price elasticity of supply by the initial value method is 1.5, and you would like to induce sellers to increase the quantity of bagels supplied to 130. Then the new price for bagels must be

Introduction: What Is Economics

The Key Principles of Economics

Demand, Supply, and Market Equilibrium

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry, Monopolistic Competition, and Oligopoly

Imperfect Information, External Benefits, and External Costs

The Labor Market and the Distribution of Income

Measuring a Nations Production and Income

Unemployment and Inflation

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and the Banking System

Monetary Policy and Inflation

International Trade and Finance

Filters

Exam 4: Elasticity: A Measure of Responsiveness

Which of the following factors would indicate a less elastic demand?

Table 4.1 -Refer to Table 4.1. A change in the price of hamburgers caused the change in quantity demanded shown in the table. The price elasticity of demand for hamburgers (calculated using the initial value formula) is

Suppose that in a month the price of oranges increases from $.75 to $1. At the same time, the quantity of oranges demanded decreases from 100 to 80. The price elasticity of demand for oranges (calculated using the initial value formula) is

Which of the following factors would indicate a less elastic demand?

Suppose we observe that a firm's total revenue doesn't change when price and quantity change by the same percentage. Which of the following is a possible value of its price elasticity of demand?

Recall the Application regarding the elasticity of demand for gasoline varying over time to answer the following question(s). -According to the Application, the demand for gasoline is

Suppose that in a month the price of movie rentals increases from $2 to $2.20. At the same time, the quantity of movie rentals supplied increases from 100 to 110. The price elasticity of supply for movie rentals (calculated using the initial value formula) is

Suppose that the elasticity of demand for a product is 0.5. What will happen to total revenue as a firm increases the price?

The price elasticity of demand is calculated by

Suppose you observe that as a TV manufacturer increases its price its total revenue decreases. This could be due to

If we are on the upper portion of the market demand curve and the price increases by 10%, the quantity demanded will decrease by more than 10%.

If quantity demanded of a good falls by 2% when income falls by 10%, the good's demand is

Suppose that if poor households have a price elasticity of demand for medical care of 0.50 and rich households have a price elasticity of demand for medical care of 0.25, then a price increase of 10% would lead to the poor households reducing their quantity demanded for medical care by

If a product has only a few acceptable substitutes, demand for the product is most likely to be

Suppose that in a month the price of a dozen of eggs increases from $1.50 to $2. At the same time, the quantity of dozens of eggs demanded decreases from 200 to 150. The price elasticity of demand for dozens of eggs is

If the price elasticity of supply is 1.3, supply is

The cross-price elasticity of demand between bananas and apples is most likely

If the price elasticity of demand is 2, this means that a ________ increase in price causes a ________ decrease in quantity demanded.

The quantity supplied of bagels is 100 at the unit price $1. Suppose the price elasticity of supply by the initial value method is 1.5, and you would like to induce sellers to increase the quantity of bagels supplied to 130. Then the new price for bagels must be

Introduction: What Is Economics

The Key Principles of Economics

Demand, Supply, and Market Equilibrium

Production Technology and Cost

Perfect Competition

Monopoly and Price Discrimination

Market Entry, Monopolistic Competition, and Oligopoly

Imperfect Information, External Benefits, and External Costs

The Labor Market and the Distribution of Income

Measuring a Nations Production and Income

Unemployment and Inflation

Why Do Economies Grow

Aggregate Demand and Aggregate Supply

Fiscal Policy

Money and the Banking System

Monetary Policy and Inflation

International Trade and Finance

Filters

If the price elasticity of demand is 2, this means that a increase in price causes a decrease in quantity demanded.