Question 1

Figure 4.2
-In Figure 4.2 at quantities smaller than Q₁

Accepted Answer

A)  total revenue is falling. 
B)  price elasticity is greater than 1. 
C)  price and total revenue are directly related. 
D)  all of the above 
A)  total revenue is falling. 
B)  price elasticity is greater than 1. 
C)  price and total revenue are directly related. 
D)  all of the above

Question 2

If the elasticity of demand for cheddar cheese is 1.5, then a 20% change in price will lead to a 10% change in quantity demanded.

Accepted Answer

A) True 
 B)False

Question 3

Recall the Application about the price of vanity license plates in Virginia to answer the following question(s).
-In 1987, the price elasticity of demand for vanity plates in Ohio was 2.60. If the state's objective was to maximize its revenue from vanity plates, it should increase its price.

Accepted Answer

A) True 
 B)False

Question 4

Your boss, the mayor of a city, thought that she'd come up with a great way to raise city revenue: increase the tax on gasoline in the city! However, she discovered that the city was actually receiving less tax revenue after the gas tax increase than before. Incensed, she declared that the economic policy prescription of taxing goods with inelastic demand must be flawed. Comment on her conclusion.

Accepted Answer

Your boss is right that the demand for g

Question 5

On a linear demand curve, demand is ________ at large quantities than it is at the middle of the demand curve.

Accepted Answer

A)  more elastic 
B)  less elastic 
C)  equally elastic 
D)  impossible to tell 
A)  more elastic 
B)  less elastic 
C)  equally elastic 
D)  impossible to tell

Question 6

The price elasticity of demand for higher education is about 1.4. A 5% increase in tuition would lead to

Accepted Answer

A)  a decrease in enrollment by 7%. 
B)  a decrease in enrollment by 6.4%. 
C)  a decrease in enrollment by 3.6%. 
D)  a decrease in enrollment by 2.8%. 
A)  a decrease in enrollment by 7%. 
B)  a decrease in enrollment by 6.4%. 
C)  a decrease in enrollment by 3.6%. 
D)  a decrease in enrollment by 2.8%.

Question 7

Suppose that the percentage change in supply is 20%, the price elasticity of demand is 3, and the percentage change in the equilibrium price is 4%. What is the price elasticity of supply?

Accepted Answer

A)  0 
B)  2 
C)  4 
D)  5 
A)  0 
B)  2 
C)  4 
D)  5

Question 8

When the price of tacos went from $2 to $3 dollars each, the quantity demanded of burritos changed from 100 to 120 a day. The cross-price elasticity of demand for burritos calculated using the initial value method is

Accepted Answer

A)  1.33. 
B)  0.75. 
C)  0.4. 
D)  -0.75. 
A)  1.33. 
B)  0.75. 
C)  0.4. 
D)  -0.75.

Question 9

If the price elasticity of supply is elastic, which of the following could be a possible value of the elasticity?

Accepted Answer

A)  3 
B)  1 
C)  0.3 
D)  0 
A)  3 
B)  1 
C)  0.3 
D)  0

Question 10

If the demand for illegal drugs is inelastic, then a government policy to cause their price to increase would cause total revenue from drug sales to

Accepted Answer

A)  rise. 
B)  fall. 
C)  stay the same. 
D)  drop to zero. 
A)  rise. 
B)  fall. 
C)  stay the same. 
D)  drop to zero.

Question 11

In wealthy countries such as the United States, the price elasticity of the demand for food is ________ it is in poorer countries.

Accepted Answer

A)  greater than 
B)  less than 
C)  the same as 
D)  None of the above; it is not possible to make international comparisons of price elasticity. 
A)  greater than 
B)  less than 
C)  the same as 
D)  None of the above; it is not possible to make international comparisons of price elasticity.

Question 12

What is the total revenue of a shoe company equal to?

Accepted Answer

A)  income minus explicit and implicit costs 
B)  the change in quantity sold divided by the change in price 
C)  price of shoes times quantity sold 
D)  elasticity of demand divided by percentage change in quantity 
A)  income minus explicit and implicit costs 
B)  the change in quantity sold divided by the change in price 
C)  price of shoes times quantity sold 
D)  elasticity of demand divided by percentage change in quantity

Question 13

If the price elasticity of demand is 0.5, this means that a ________ increase in price causes a ________ decrease in quantity demanded.

Accepted Answer

A)  20%; 100% 
B)  30%; 15% 
C)  20%; 1% 
D)  5%; 1% 
A)  20%; 100% 
B)  30%; 15% 
C)  20%; 1% 
D)  5%; 1%

Question 14

The price elasticity of demand for color printers is 1.6 and you would like to see the quantity demanded for color printers to increase by 32%. Then the percentage change in price should be

Accepted Answer

A)  10%. 
B)  15%. 
C)  20%. 
D)  25%. 
A)  10%. 
B)  15%. 
C)  20%. 
D)  25%.

Question 15

The demand for a product tends to be less elastic as the product accounts for a larger fraction of a consumer's budget.

Accepted Answer

A) True 
 B)False

Question 16

Why would a bumper crop be bad news for farmers?

Accepted Answer

A)  Their crop has an inelastic demand and the resulting drop in price reduces their total revenue. 
B)  Their crop has an elastic demand and the resulting drop in price reduces their total revenue. 
C)  Their crop has an inelastic demand and the resulting drop in price raises their total revenue. 
D)  Their crop has an elastic demand and the resulting drop in price raises their total revenue. 
A)  Their crop has an inelastic demand and the resulting drop in price reduces their total revenue. 
B)  Their crop has an elastic demand and the resulting drop in price reduces their total revenue. 
C)  Their crop has an inelastic demand and the resulting drop in price raises their total revenue. 
D)  Their crop has an elastic demand and the resulting drop in price raises their total revenue.

Question 17

The price of apples increases from $1 to $1.10. At the same time, the quantity of apples demanded decreases from 100 to 90. The price elasticity of demand for apples (calculated using the initial value formula) is

Accepted Answer

A)  0.02. 
B)  0.9. 
C)  1. 
D)  1.1. 
A)  0.02. 
B)  0.9. 
C)  1. 
D)  1.1.

Question 18

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

Accepted Answer

A)  movie 
B)  cigarettes 
C)  electricity 
D)  gasoline 
A)  movie 
B)  cigarettes 
C)  electricity 
D)  gasoline

Question 19

If total revenue is unrelated to price, then demand is unitary elastic.

Accepted Answer

A) True 
 B)False

Question 20

Demand for low budget items, such as candy, is generally ________ than demand for large budget items, such as automobiles.

Accepted Answer

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

Figure 4.2 -In Figure 4.2 at quantities smaller than Q₁

If the elasticity of demand for cheddar cheese is 1.5, then a 20% change in price will lead to a 10% change in quantity demanded.

Recall the Application about the price of vanity license plates in Virginia to answer the following question(s). -In 1987, the price elasticity of demand for vanity plates in Ohio was 2.60. If the state's objective was to maximize its revenue from vanity plates, it should increase its price.

On a linear demand curve, demand is ________ at large quantities than it is at the middle of the demand curve.

The price elasticity of demand for higher education is about 1.4. A 5% increase in tuition would lead to

Suppose that the percentage change in supply is 20%, the price elasticity of demand is 3, and the percentage change in the equilibrium price is 4%. What is the price elasticity of supply?

When the price of tacos went from $2 to $3 dollars each, the quantity demanded of burritos changed from 100 to 120 a day. The cross-price elasticity of demand for burritos calculated using the initial value method is

If the price elasticity of supply is elastic, which of the following could be a possible value of the elasticity?

If the demand for illegal drugs is inelastic, then a government policy to cause their price to increase would cause total revenue from drug sales to

In wealthy countries such as the United States, the price elasticity of the demand for food is ________ it is in poorer countries.

What is the total revenue of a shoe company equal to?

If the price elasticity of demand is 0.5, this means that a increase in price causes a decrease in quantity demanded.

The price elasticity of demand for color printers is 1.6 and you would like to see the quantity demanded for color printers to increase by 32%. Then the percentage change in price should be

The demand for a product tends to be less elastic as the product accounts for a larger fraction of a consumer's budget.

Why would a bumper crop be bad news for farmers?

The price of apples increases from $1 to $1.10. At the same time, the quantity of apples demanded decreases from 100 to 90. The price elasticity of demand for apples (calculated using the initial value formula) is

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

If total revenue is unrelated to price, then demand is unitary elastic.

Demand for low budget items, such as candy, is generally ________ than demand for large budget items, such as automobiles.

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

Figure 4.2 -In Figure 4.2 at quantities smaller than Q₁

If the elasticity of demand for cheddar cheese is 1.5, then a 20% change in price will lead to a 10% change in quantity demanded.

Recall the Application about the price of vanity license plates in Virginia to answer the following question(s). -In 1987, the price elasticity of demand for vanity plates in Ohio was 2.60. If the state's objective was to maximize its revenue from vanity plates, it should increase its price.

On a linear demand curve, demand is ________ at large quantities than it is at the middle of the demand curve.

The price elasticity of demand for higher education is about 1.4. A 5% increase in tuition would lead to

Suppose that the percentage change in supply is 20%, the price elasticity of demand is 3, and the percentage change in the equilibrium price is 4%. What is the price elasticity of supply?

When the price of tacos went from $2 to $3 dollars each, the quantity demanded of burritos changed from 100 to 120 a day. The cross-price elasticity of demand for burritos calculated using the initial value method is

If the price elasticity of supply is elastic, which of the following could be a possible value of the elasticity?

If the demand for illegal drugs is inelastic, then a government policy to cause their price to increase would cause total revenue from drug sales to

In wealthy countries such as the United States, the price elasticity of the demand for food is ________ it is in poorer countries.

What is the total revenue of a shoe company equal to?

If the price elasticity of demand is 0.5, this means that a ________ increase in price causes a ________ decrease in quantity demanded.

The price elasticity of demand for color printers is 1.6 and you would like to see the quantity demanded for color printers to increase by 32%. Then the percentage change in price should be

The demand for a product tends to be less elastic as the product accounts for a larger fraction of a consumer's budget.

Why would a bumper crop be bad news for farmers?

The price of apples increases from $1 to $1.10. At the same time, the quantity of apples demanded decreases from 100 to 90. The price elasticity of demand for apples (calculated using the initial value formula) is

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

If total revenue is unrelated to price, then demand is unitary elastic.

Demand for low budget items, such as candy, is generally ________ than demand for large budget items, such as automobiles.

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 0.5, this means that a increase in price causes a decrease in quantity demanded.