Question 1

The market demand for school supplies is more elastic at the beginning of the semester than it is at the start of summer vacation.

Accepted Answer

A) True 
 B)False

Question 2

If demand increases, the increase in price will be smaller if demand and supply are highly inelastic.

Accepted Answer

A) True 
 B)False

Question 3

Figure 4.2
-In Figure 4.2 at quantities larger than Q₁ demand is

Accepted Answer

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

Question 4

Draw the demand curve for a good whose price elasticity of demand is equal to zero. Be sure to label both axes. Explain what the graph represents.

Accepted Answer

@#IMG-DLM& The demand curve in the graph is a vert

Question 5

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

Accepted Answer

A)  The good is a necessity, rather than a luxury. 
B)  The good represents a small fraction of the budget. 
C)  Demand is measured over a longer period of time. 
D)  There are few substitutes for the good. 
A)  The good is a necessity, rather than a luxury. 
B)  The good represents a small fraction of the budget. 
C)  Demand is measured over a longer period of time. 
D)  There are few substitutes for the good.

Question 6

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

Question 7

If a product has several good substitutes, demand for the product is most likely to be

Accepted Answer

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

Question 8

The total revenue of Grandma's Fudge Factory is equal to

Accepted Answer

A)  average cost times quantity sold. 
B)  elasticity of demand divided by percentage change in quantity. 
C)  price of fudge times quantity sold. 
D)  income minus explicit and implicit costs. 
A)  average cost times quantity sold. 
B)  elasticity of demand divided by percentage change in quantity. 
C)  price of fudge times quantity sold. 
D)  income minus explicit and implicit costs.

Question 9

Suppose that the percentage change in supply is 20%, the price elasticity of supply is 2, and the percentage change in the equilibrium price is 4%. What is the price elasticity of demand?

Accepted Answer

A)  0 
B)  1 
C)  2 
D)  3 
A)  0 
B)  1 
C)  2 
D)  3

Question 10

Demand for a particular brand of clothing is likely to be less elastic than demand for all clothing.

Accepted Answer

A) True 
 B)False

Question 11

In the case of perfectly elastic supply, the supply curve is

Accepted Answer

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

Question 12

The quantity of pencils sold is 1000 at the unit price $0.5. Suppose the price elasticity of demand for pencils by the initial value method is 2, and you would like to increase the quantity sold to 1200. Then the new price for pencils must be

Accepted Answer

A)  $0.05. 
B)  $0.25. 
C)  $0.30. 
D)  $0.45. 
A)  $0.05. 
B)  $0.25. 
C)  $0.30. 
D)  $0.45.

Question 13

If a firm facing a linear demand curve experiences an increase in total revenue after lowering the price

Accepted Answer

A)  the initial price was set at a point where the demand is inelastic. 
B)  the initial price was set at a point where the demand is elastic. 
C)  the new price is set where the demand is perfectly elastic. 
D)  the new price is set where the demand is perfectly inelastic. 
A)  the initial price was set at a point where the demand is inelastic. 
B)  the initial price was set at a point where the demand is elastic. 
C)  the new price is set where the demand is perfectly elastic. 
D)  the new price is set where the demand is perfectly inelastic.

Question 14

Hotdogs are very cheap at the grocery store-about $2 for a package of 8, or 25 cents each. At a baseball game they cost $3 each. Use the concept of price elasticity of demand to explain why.

Accepted Answer

At the grocery store there are many subs

Question 15

The quantity supplied of hot dogs is 200 at the unit price of $3.50. Suppose the price elasticity of supply by the initial value method is 2, and you would like to induce sellers to increase the quantity of hot dogs supplied to 220. Then new price must be

Accepted Answer

A)  $1.5. 
B)  $2. 
C)  $2.5. 
D)  $3. 
A)  $1.5. 
B)  $2. 
C)  $2.5. 
D)  $3.

Question 16

Put the following products in order from lowest to highest based on their cross-price elasticity of demand with peanut butter: bread, bologna, floppy disks. Justify your answer.

Accepted Answer

Bread has a negative cross-price elastic

Question 17

Which of the following products has an elastic demand?

Accepted Answer

A)  water 
B)  coffee 
C)  cars 
D)  all ice cream 
A)  water 
B)  coffee 
C)  cars 
D)  all ice cream

Question 18

The demand for a particular good depends on variables such as

Accepted Answer

A)  consumer income. 
B)  price of substitutes. 
C)  price of complements. 
D)  all of the above. 
A)  consumer income. 
B)  price of substitutes. 
C)  price of complements. 
D)  all of the above.

Question 19

Figure 4.2
-In Figure 4.2 at quantities smaller than Q₁ demand is

Accepted Answer

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

Question 20

Can you think of an example of a good whose demand could be perfectly inelastic?

Accepted Answer

For a good to have a perfectly inelastic

The market demand for school supplies is more elastic at the beginning of the semester than it is at the start of summer vacation.

If demand increases, the increase in price will be smaller if demand and supply are highly inelastic.

Figure 4.2 -In Figure 4.2 at quantities larger than Q₁ demand is

Draw the demand curve for a good whose price elasticity of demand is equal to zero. Be sure to label both axes. Explain what the graph represents.

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

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

If a product has several good substitutes, demand for the product is most likely to be

The total revenue of Grandma's Fudge Factory is equal to

Suppose that the percentage change in supply is 20%, the price elasticity of supply is 2, and the percentage change in the equilibrium price is 4%. What is the price elasticity of demand?

Demand for a particular brand of clothing is likely to be less elastic than demand for all clothing.

In the case of perfectly elastic supply, the supply curve is

The quantity of pencils sold is 1000 at the unit price $0.5. Suppose the price elasticity of demand for pencils by the initial value method is 2, and you would like to increase the quantity sold to 1200. Then the new price for pencils must be

If a firm facing a linear demand curve experiences an increase in total revenue after lowering the price

Hotdogs are very cheap at the grocery store-about $2 for a package of 8, or 25 cents each. At a baseball game they cost $3 each. Use the concept of price elasticity of demand to explain why.

The quantity supplied of hot dogs is 200 at the unit price of $3.50. Suppose the price elasticity of supply by the initial value method is 2, and you would like to induce sellers to increase the quantity of hot dogs supplied to 220. Then new price must be

Put the following products in order from lowest to highest based on their cross-price elasticity of demand with peanut butter: bread, bologna, floppy disks. Justify your answer.

Which of the following products has an elastic demand?

The demand for a particular good depends on variables such as

Figure 4.2 -In Figure 4.2 at quantities smaller than Q₁ demand is

Can you think of an example of a good whose demand could be perfectly inelastic?

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

The market demand for school supplies is more elastic at the beginning of the semester than it is at the start of summer vacation.

If demand increases, the increase in price will be smaller if demand and supply are highly inelastic.

Figure 4.2 -In Figure 4.2 at quantities larger than Q₁ demand is

Draw the demand curve for a good whose price elasticity of demand is equal to zero. Be sure to label both axes. Explain what the graph represents.

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

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

If a product has several good substitutes, demand for the product is most likely to be

The total revenue of Grandma's Fudge Factory is equal to

Suppose that the percentage change in supply is 20%, the price elasticity of supply is 2, and the percentage change in the equilibrium price is 4%. What is the price elasticity of demand?

Demand for a particular brand of clothing is likely to be less elastic than demand for all clothing.

In the case of perfectly elastic supply, the supply curve is

The quantity of pencils sold is 1000 at the unit price $0.5. Suppose the price elasticity of demand for pencils by the initial value method is 2, and you would like to increase the quantity sold to 1200. Then the new price for pencils must be

If a firm facing a linear demand curve experiences an increase in total revenue after lowering the price

Hotdogs are very cheap at the grocery store-about $2 for a package of 8, or 25 cents each. At a baseball game they cost $3 each. Use the concept of price elasticity of demand to explain why.

The quantity supplied of hot dogs is 200 at the unit price of $3.50. Suppose the price elasticity of supply by the initial value method is 2, and you would like to induce sellers to increase the quantity of hot dogs supplied to 220. Then new price must be

Put the following products in order from lowest to highest based on their cross-price elasticity of demand with peanut butter: bread, bologna, floppy disks. Justify your answer.

Which of the following products has an elastic demand?

The demand for a particular good depends on variables such as

Figure 4.2 -In Figure 4.2 at quantities smaller than Q₁ demand is

Can you think of an example of a good whose demand could be perfectly inelastic?

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