Question 1

If the demand for corn is elastic,then:

Accepted Answer

A) there are not many substitutes in the consumption of corn. 
B) the price elasticity of demand for corn is greater than 1. 
C) a decrease in price will reduce total revenue for corn producers. 
D) a decrease in price will increase total revenue for corn producers. 
E) consumers will continue buying the same quantity even if price increases. 
A) there are not many substitutes in the consumption of corn. 
B) the price elasticity of demand for corn is greater than 1. 
C) a decrease in price will reduce total revenue for corn producers. 
D) a decrease in price will increase total revenue for corn producers. 
E) consumers will continue buying the same quantity even if price increases.

Question 2

Which of the following is an example of inelastic demand?

Accepted Answer

A) A 10 percent increase in the price of milk leads to a 20 percent decrease in the quantity demanded of milk. 
B) A 10 percent increase in the price of milk leads to a 10 percent decrease in the quantity demanded of milk. 
C) A 10 percent increase in the price of milk leads to a 5 percent decrease in the quantity demanded of milk. 
D) A 10 percent increase in the price of milk leads to no change in the quantity demanded of milk. 
E) A 10 percent increase in the price of milk leads to a 5 percent increase in the quantity demanded of milk. 
A) A 10 percent increase in the price of milk leads to a 20 percent decrease in the quantity demanded of milk. 
B) A 10 percent increase in the price of milk leads to a 10 percent decrease in the quantity demanded of milk. 
C) A 10 percent increase in the price of milk leads to a 5 percent decrease in the quantity demanded of milk. 
D) A 10 percent increase in the price of milk leads to no change in the quantity demanded of milk. 
E) A 10 percent increase in the price of milk leads to a 5 percent increase in the quantity demanded of milk.

Question 3

The social security tax,like any other tax,is shared by employers and employees based on elasticities of demand and supply.If the wage elasticity of demand for labor is zero and the wage elasticity of supply for labor is positive:

Accepted Answer

A) most of the tax will be paid by the employer. 
B) most of the tax will be paid by the employee. 
C) all of the tax will be paid by the employer. 
D) all of the tax will be paid by the employee. 
E) the tax is split evenly between the employer and employee. 
A) most of the tax will be paid by the employer. 
B) most of the tax will be paid by the employee. 
C) all of the tax will be paid by the employer. 
D) all of the tax will be paid by the employee. 
E) the tax is split evenly between the employer and employee.

Question 4

When economists speak of the short run,they are referring to _____.

Accepted Answer

A) a specific period of time,usually less than one year 
B) a specific period of time,more than one year,but less than two years 
C) a specific period of time just long enough that the quantities of all resources can be varied 
D) a period of time short enough that the quantities of at least one of the resources cannot be varied 
E) a period of time short enough that none of the quantities of the resources can be varied 
A) a specific period of time,usually less than one year 
B) a specific period of time,more than one year,but less than two years 
C) a specific period of time just long enough that the quantities of all resources can be varied 
D) a period of time short enough that the quantities of at least one of the resources cannot be varied 
E) a period of time short enough that none of the quantities of the resources can be varied

Question 5

If the price of chocolate increases by 15 percent and the quantity demanded of chocolate declines by 5 percent,the price elasticity of demand (   ) is 3.

Accepted Answer

A) True 
 B)False

Question 6

If demand is relatively elastic and supply is relatively inelastic,then the incidence of a tax will fall mainly on consumers.

Accepted Answer

A) True 
 B)False

Question 7

When the manager of a local movie theater raises the price of movie tickets from $7.50 to $8.50 total revenue falls.This means that:

Accepted Answer

A) the demand for movie tickets is highly elastic. 
B) the supply of movie ticket is perfectly elastic. 
C) the supply of movie tickets is elastic. 
D) the demand for movie tickets is inelastic. 
E) the supply of movie tickets is inelastic. 
A) the demand for movie tickets is highly elastic. 
B) the supply of movie ticket is perfectly elastic. 
C) the supply of movie tickets is elastic. 
D) the demand for movie tickets is inelastic. 
E) the supply of movie tickets is inelastic.

Question 8

An inferior good or service is any good or service for which an increase in income causes a decrease in demand.

Accepted Answer

A) True 
 B)False

Question 9

The less responsive consumers are to a change in the price of a product:

Accepted Answer

A) the more price-elastic is the supply curve. 
B) the more income-elastic is the demand curve. 
C) the more price-inelastic is the demand curve. 
D) the more income-elastic is the supply curve. 
E) the more price-elastic is the demand curve. 
A) the more price-elastic is the supply curve. 
B) the more income-elastic is the demand curve. 
C) the more price-inelastic is the demand curve. 
D) the more income-elastic is the supply curve. 
E) the more price-elastic is the demand curve.

Question 10

The cross-price elasticity between baseballs and tennis balls is likely to be a large positive number.

Accepted Answer

A) True 
 B)False

Question 11

The demand for mansions is elastic because a small percentage change in price results in a large change in quantity demanded.

Accepted Answer

A) True 
 B)False

Question 12

Price elasticity of demand is a measure of the:

Accepted Answer

A) extent of competition in the market. 
B) change in the purchase of a product relative to a change in income. 
C) change in the quantity demanded due to factors other than price. 
D) degree of consumer responsiveness to changes in price. 
E) percentage change in the prices of two related products. 
A) extent of competition in the market. 
B) change in the purchase of a product relative to a change in income. 
C) change in the quantity demanded due to factors other than price. 
D) degree of consumer responsiveness to changes in price. 
E) percentage change in the prices of two related products.

Question 13

When the cross-price elasticity of demand is a large positive number,one can correctly conclude that:

Accepted Answer

A) the goods are normal goods. 
B) the goods are inferior goods. 
C) the goods are substitutes. 
D) the goods are complements. 
E) total revenue will increase when the price increases. 
A) the goods are normal goods. 
B) the goods are inferior goods. 
C) the goods are substitutes. 
D) the goods are complements. 
E) total revenue will increase when the price increases.

Question 14

Assume that the price elasticity of demand for a commodity is 0.20.A 10 percent increase in price will be followed by a:

Accepted Answer

A) 20 percent increase in the quantity demanded. 
B) 2 percent decrease in the quantity demanded. 
C) 20 percent decrease in the quantity demanded. 
D) 0.2 percent decrease in the quantity demanded. 
E) 2 percent increase in the quantity demanded. 
A) 20 percent increase in the quantity demanded. 
B) 2 percent decrease in the quantity demanded. 
C) 20 percent decrease in the quantity demanded. 
D) 0.2 percent decrease in the quantity demanded. 
E) 2 percent increase in the quantity demanded.

Question 15

Suppose that the absolute value of the price elasticity of demand for firms A,B,C,and D is 0,0.8,1,and 1.5 respectively.An increase in the price would reduce quantity demanded for:

Accepted Answer

A) firms A,B,C,and D. 
B) firms B,C,and D only. 
C) only firm A. 
D) firms C and D only. 
E) only firm D. 
A) firms A,B,C,and D. 
B) firms B,C,and D only. 
C) only firm A. 
D) firms C and D only. 
E) only firm D.

Question 16

There are some special types of goods for which supply cannot change irrespective of the length of time allowed for change,such as Beethoven symphonies.The price elasticity of supply for these goods is _____.

Accepted Answer

A) infinite 
B) nonexistent 
C) negative 
D) zero 
E) unity 
A) infinite 
B) nonexistent 
C) negative 
D) zero 
E) unity

Question 17

When the elasticity of demand for a particular good is less than 1:

Accepted Answer

A) demand is elastic. 
B) demand is inelastic. 
C) the elasticity of demand is unit-elastic. 
D) the good is a substitute. 
E) the good is a normal good. 
A) demand is elastic. 
B) demand is inelastic. 
C) the elasticity of demand is unit-elastic. 
D) the good is a substitute. 
E) the good is a normal good.

Question 18

Which of the following goods is likely to have an income elasticity of demand that is less than zero?

Accepted Answer

A) A luxury yacht 
B) A beach house 
C) A state-of-the-art cellular phone 
D) A box of generic macaroni and cheese dinner 
E) A dinner at a French restaurant 
A) A luxury yacht 
B) A beach house 
C) A state-of-the-art cellular phone 
D) A box of generic macaroni and cheese dinner 
E) A dinner at a French restaurant

Question 19

Last year,Alice bought 40 CDs when her income was $20,000.This year,her income increased to $25,000,and she purchased 48 CDs.We can conclude that:

Accepted Answer

A) Alice's price elasticity of demand for CDs is equal to 1. 
B) Alice's demand for CDs is price-inelastic. 
C) Alice's demand for CDs is price-elastic. 
D) the income elasticity of demand for CDs is negative. 
E) CDs are a normal good. 
A) Alice's price elasticity of demand for CDs is equal to 1. 
B) Alice's demand for CDs is price-inelastic. 
C) Alice's demand for CDs is price-elastic. 
D) the income elasticity of demand for CDs is negative. 
E) CDs are a normal good.

Question 20

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2PS1U1B1xS1U1B0.Assume that P = $8,I = 200,and PS1U1B1x S1U1B0= $10.
-Given the above equation,the quantity of noodles demanded at a price of $8 is _____.

Accepted Answer

A) 8 
B) 10 
C) 12 
D) 4 
E) 20 
A) 8 
B) 10 
C) 12 
D) 4 
E) 20

Exam 5: Elasticity: Demand and Supply

If the demand for corn is elastic,then:

Which of the following is an example of inelastic demand?

The social security tax,like any other tax,is shared by employers and employees based on elasticities of demand and supply.If the wage elasticity of demand for labor is zero and the wage elasticity of supply for labor is positive:

When economists speak of the short run,they are referring to _____.

If the price of chocolate increases by 15 percent and the quantity demanded of chocolate declines by 5 percent,the price elasticity of demand ( ) is 3.

If demand is relatively elastic and supply is relatively inelastic,then the incidence of a tax will fall mainly on consumers.

When the manager of a local movie theater raises the price of movie tickets from $7.50 to $8.50 total revenue falls.This means that:

An inferior good or service is any good or service for which an increase in income causes a decrease in demand.

The less responsive consumers are to a change in the price of a product:

The cross-price elasticity between baseballs and tennis balls is likely to be a large positive number.

The demand for mansions is elastic because a small percentage change in price results in a large change in quantity demanded.

Price elasticity of demand is a measure of the:

When the cross-price elasticity of demand is a large positive number,one can correctly conclude that:

Assume that the price elasticity of demand for a commodity is 0.20.A 10 percent increase in price will be followed by a:

Suppose that the absolute value of the price elasticity of demand for firms A,B,C,and D is 0,0.8,1,and 1.5 respectively.An increase in the price would reduce quantity demanded for:

There are some special types of goods for which supply cannot change irrespective of the length of time allowed for change,such as Beethoven symphonies.The price elasticity of supply for these goods is _____.

When the elasticity of demand for a particular good is less than 1:

Which of the following goods is likely to have an income elasticity of demand that is less than zero?

Last year,Alice bought 40 CDs when her income was $20,000.This year,her income increased to $25,000,and she purchased 48 CDs.We can conclude that:

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2Px.Assume that P = $8,I = 200,and Px = $10. -Given the above equation,the quantity of noodles demanded at a price of $8 is _____.

Economics: The World Around You

Choice, opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Consumer Choice

Supply: The Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution,Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x.Assume that P = $8,I = 200,and P_x= $10. -Given the above equation,the quantity of noodles demanded at a price of $8 is _____.