Question 1

Assume that when a lamp manufacturer decreases its price its total revenue does not change. What do we know?

Accepted Answer

A)  Demand is price inelastic. 
B)  Demand is price elastic. 
C)  Demand is unit elastic. 
D)  Demand is perfectly price elastic. 
A)  Demand is price inelastic. 
B)  Demand is price elastic. 
C)  Demand is unit elastic. 
D)  Demand is perfectly price elastic.

Question 2

If the quantity supplied is infinitely responsive to any change in price, the supply curve has a price elasticity of supply equal to infinity.

Accepted Answer

A) True 
 B)False

Question 3

Demand for items people do not really need for their survival, such as cars, is generally ________ than demand for items such as water.

Accepted Answer

A)  higher 
B)  lower 
C)  more elastic 
D)  less elastic 
A)  higher 
B)  lower 
C)  more elastic 
D)  less elastic

Question 4

Draw the supply curve for a good whose price elasticity of supply is equal to zero. Be sure to label both axes.

Accepted Answer

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

Question 5

Recall the Application about how changes in supply affect the price of gasoline to answer the following question(s).
-Recall the Application. Suppose the price elasticity of demand for gasoline is 0.20 and the price elasticity of supply for gasoline is 0.55. If supply decreases by 50 percent, the equilibrium price will increase by

Accepted Answer

A)  67 percent. 
B)  70 percent. 
C)  143 percent. 
D)  150 percent. 
A)  67 percent. 
B)  70 percent. 
C)  143 percent. 
D)  150 percent.

Question 6

Suppose that the price elasticity of supply is 0.5 and the price increases by 4%. We would predict

Accepted Answer

A)  an 8% increase in quantity supplied. 
B)  a 2% increase in quantity supplied. 
C)  a 0.8% increase in quantity supplied. 
D)  a 0.2% increase in quantity supplied. 
A)  an 8% increase in quantity supplied. 
B)  a 2% increase in quantity supplied. 
C)  a 0.8% increase in quantity supplied. 
D)  a 0.2% increase in quantity supplied.

Question 7

The price of pens increases from $2 to $2.20. At the same time, the quantity of pens demanded decreases from 100 to 90. Demand for pens is

Accepted Answer

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

Question 8

Table 4.3
-Refer to Table 4.3. A change in the price of computers caused the change in quantity demanded shown in the table. The price elasticity of demand (calculated using the initial value formula) is

Accepted Answer

A)  4. 
B)  1. 
C)  0.25. 
D)  0.125. 
A)  4. 
B)  1. 
C)  0.25. 
D)  0.125.

Question 9

A vertical supply curve is infinitely elastic.

Accepted Answer

A) True 
 B)False

Question 10

Suppose that the percentage change in supply is 20%, the price elasticity of demand is 3, and the price elasticity of supply is 2. What is the percentage change in the equilibrium price?

Accepted Answer

A)  4% 
B)  5% 
C)  15% 
D)  20% 
A)  4% 
B)  5% 
C)  15% 
D)  20%

Question 11

Which of the following goods is likely to have the most inelastic demand?

Accepted Answer

A)  restaurant meals 
B)  air travel 
C)  movies 
D)  cigarettes 
A)  restaurant meals 
B)  air travel 
C)  movies 
D)  cigarettes

Question 12

If demand elasticity of airline tickets is 3, what percentage change in quantity would the airlines expect from a 10% increase in price?

Accepted Answer

a 30% decr

Question 13

If supply is perfectly inelastic, the price elasticity of supply is equal to

Accepted Answer

A)  1. 
B)  0. 
C)  infinity. 
D)  a negative number between 0 and infinity. 
A)  1. 
B)  0. 
C)  infinity. 
D)  a negative number between 0 and infinity.

Question 14

A good is said to be "inferior" if

Accepted Answer

A)  it is of low quality. 
B)  consumers buy less of it at a high price. 
C)  it has a negative income elasticity of demand. 
D)  it has many substitutes. 
A)  it is of low quality. 
B)  consumers buy less of it at a high price. 
C)  it has a negative income elasticity of demand. 
D)  it has many substitutes.

Question 15

A good is said to be "normal" if

Accepted Answer

A)  it is of high quality. 
B)  consumers buy more of it at a high price. 
C)  it has few substitutes. 
D)  it has a positive income elasticity of demand. 
A)  it is of high quality. 
B)  consumers buy more of it at a high price. 
C)  it has few substitutes. 
D)  it has a positive income elasticity of demand.

Question 16

An increase in demand will cause a relatively small increase in price when

Accepted Answer

A)  the increase in demand is large. 
B)  demand is highly inelastic. 
C)  supply is highly elastic. 
D)  all of the above 
A)  the increase in demand is large. 
B)  demand is highly inelastic. 
C)  supply is highly elastic. 
D)  all of the above

Question 17

Assume that as a firm decreases its price its total revenue decreases. Which of the following is a possible value of its price elasticity of demand?

Accepted Answer

A)  0.4 
B)  1 
C)  1.4 
D)  4 
A)  0.4 
B)  1 
C)  1.4 
D)  4

Question 18

Which of the following are characteristics of a linear demand curve?

Accepted Answer

A)  It has a constant slope. 
B)  It has a constant elasticity of demand. 
C)  The upper half of the liner demand curve is inelastic. 
D)  all of the above 
A)  It has a constant slope. 
B)  It has a constant elasticity of demand. 
C)  The upper half of the liner demand curve is inelastic. 
D)  all of the above

Question 19

Suppose that the elasticity of demand for a product is 2.0. 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 20

The cross-price elasticity of demand between telephones and ramen noodles is most likely

Accepted Answer

A)  positive. 
B)  negative. 
C)  zero. 
D)  greater than one. 
A)  positive. 
B)  negative. 
C)  zero. 
D)  greater than one.

Assume that when a lamp manufacturer decreases its price its total revenue does not change. What do we know?

If the quantity supplied is infinitely responsive to any change in price, the supply curve has a price elasticity of supply equal to infinity.

Demand for items people do not really need for their survival, such as cars, is generally ________ than demand for items such as water.

Draw the supply curve for a good whose price elasticity of supply is equal to zero. Be sure to label both axes.

Suppose that the price elasticity of supply is 0.5 and the price increases by 4%. We would predict

The price of pens increases from $2 to $2.20. At the same time, the quantity of pens demanded decreases from 100 to 90. Demand for pens is

Table 4.3 -Refer to Table 4.3. A change in the price of computers caused the change in quantity demanded shown in the table. The price elasticity of demand (calculated using the initial value formula) is

A vertical supply curve is infinitely elastic.

Suppose that the percentage change in supply is 20%, the price elasticity of demand is 3, and the price elasticity of supply is 2. What is the percentage change in the equilibrium price?

Which of the following goods is likely to have the most inelastic demand?

If demand elasticity of airline tickets is 3, what percentage change in quantity would the airlines expect from a 10% increase in price?

If supply is perfectly inelastic, the price elasticity of supply is equal to

A good is said to be "inferior" if

A good is said to be "normal" if

An increase in demand will cause a relatively small increase in price when

Assume that as a firm decreases its price its total revenue decreases. Which of the following is a possible value of its price elasticity of demand?

Which of the following are characteristics of a linear demand curve?

Suppose that the elasticity of demand for a product is 2.0. What will happen to total revenue as a firm increases the price?

The cross-price elasticity of demand between telephones and ramen noodles is most likely

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

Assume that when a lamp manufacturer decreases its price its total revenue does not change. What do we know?

If the quantity supplied is infinitely responsive to any change in price, the supply curve has a price elasticity of supply equal to infinity.

Demand for items people do not really need for their survival, such as cars, is generally ________ than demand for items such as water.

Draw the supply curve for a good whose price elasticity of supply is equal to zero. Be sure to label both axes.

Suppose that the price elasticity of supply is 0.5 and the price increases by 4%. We would predict

The price of pens increases from $2 to $2.20. At the same time, the quantity of pens demanded decreases from 100 to 90. Demand for pens is

Table 4.3 -Refer to Table 4.3. A change in the price of computers caused the change in quantity demanded shown in the table. The price elasticity of demand (calculated using the initial value formula) is

A vertical supply curve is infinitely elastic.

Suppose that the percentage change in supply is 20%, the price elasticity of demand is 3, and the price elasticity of supply is 2. What is the percentage change in the equilibrium price?

Which of the following goods is likely to have the most inelastic demand?

If demand elasticity of airline tickets is 3, what percentage change in quantity would the airlines expect from a 10% increase in price?

If supply is perfectly inelastic, the price elasticity of supply is equal to

A good is said to be "inferior" if

A good is said to be "normal" if

An increase in demand will cause a relatively small increase in price when

Assume that as a firm decreases its price its total revenue decreases. Which of the following is a possible value of its price elasticity of demand?

Which of the following are characteristics of a linear demand curve?

Suppose that the elasticity of demand for a product is 2.0. What will happen to total revenue as a firm increases the price?

The cross-price elasticity of demand between telephones and ramen noodles is most likely

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