Question 1

Of the following, demand is likely to be the least elastic for

Accepted Answer

A)  diamonds. 
B)  insulin for diabetics. 
C)  iceberg lettuce. 
D)  pink grapefruit. 
A)  diamonds. 
B)  insulin for diabetics. 
C)  iceberg lettuce. 
D)  pink grapefruit.

Question 2

The income elasticity of demand is defined as the percentage change in

Accepted Answer

A)  the quantity demanded resulting from a given percentage change in price. 
B)  income divided by the percentage change in quantity demanded. 
C)  the movement along the demand curve resulting from a change in income. 
D)  the quantity demanded divided by the percentage change in income. 
A)  the quantity demanded resulting from a given percentage change in price. 
B)  income divided by the percentage change in quantity demanded. 
C)  the movement along the demand curve resulting from a change in income. 
D)  the quantity demanded divided by the percentage change in income.

Question 3

-The figure above illustrates a linear demand curve. In the range from $8 to $6

Accepted Answer

A)  the demand is price elastic. 
B)  the demand is unit elastic. 
C)  the demand is price inelastic. 
D)  more information is needed to determine if the demand is price elastic, unit elastic, or inelastic. 
A)  the demand is price elastic. 
B)  the demand is unit elastic. 
C)  the demand is price inelastic. 
D)  more information is needed to determine if the demand is price elastic, unit elastic, or inelastic.

Question 4

If a hot dog vendor on a street corner experiences an increase in total revenue after lowering the price of a hot dog, then the demand for the hot dogs must be elastic.

Accepted Answer

A) True 
 B)False

Question 5

Last year the price of corn was $3 per bushel and the quantity of corn demanded was 8 million bushels. This year the price of corn is $4 per bushel and the quantity of corn demanded is 7 million bushels. Assuming that the demand curve has not shifted, what is the price elasticity of demand for corn? (Use the midpoint formula.)

Accepted Answer

A)  1 
B)  0.47 
C)  2.14 
D)  0.29 
A)  1 
B)  0.47 
C)  2.14 
D)  0.29

Question 6

If the price of milk increased by 5 percent because of an increase in the demand for milk, and the quantity of milk supplied increased by 7 percent

Accepted Answer

A)  the supply curve of milk has shifted rightward. 
B)  the price elasticity of supply of milk is greater than one. 
C)  milk is more of a luxury than a necessity. 
D)  milk is more of a necessity than a luxury. 
A)  the supply curve of milk has shifted rightward. 
B)  the price elasticity of supply of milk is greater than one. 
C)  milk is more of a luxury than a necessity. 
D)  milk is more of a necessity than a luxury.

Question 7

The "Economics in Action" in the text mentions that the elasticity of demand for agricultural products is 0.42. If a drought boosts the price of corn 25 percent, then we can calculate the quantity of corn demanded ________.

Accepted Answer

A)  increased by 10.5 percent 
B)  decreased by 10.5 percent 
C)  increased by 8.4 percent 
D)  decreased by 8.4 percent 
A)  increased by 10.5 percent 
B)  decreased by 10.5 percent 
C)  increased by 8.4 percent 
D)  decreased by 8.4 percent

Question 8

If a 5 percent increase in the price results in a 9 percent increase in quantity supplied, the elasticity of supply is

Accepted Answer

A)  0.30. 
B)  0.55. 
C)  1.20. 
D)  1.80. 
A)  0.30. 
B)  0.55. 
C)  1.20. 
D)  1.80.

Question 9

In Brazil, the income elasticity of demand for dairy is 0.7 and for fruit and vegetables it is 0.5. These elasticities mean that if the income of Brazilians decreases, they will purchase ________ dairy and ________ fruits and vegetables.

Accepted Answer

A)  less; less 
B)  more; more 
C)  more; less 
D)  less; more 
A)  less; less 
B)  more; more 
C)  more; less 
D)  less; more

Question 10

If the price elasticity of demand for clothing is 0.64, this implies that

Accepted Answer

A)  a 6.4 percent increase in price the price of clothing leads to a 10 percent decrease in the quantity demanded. 
B)  a 10 percent increase in the price of clothing leads to a 6.4 percent decrease in the quantity demanded. 
C)  if there is an increase in the price of clothing the total expenditures on clothing decreases. 
D)  Both answers A and C are correct. 
A)  a 6.4 percent increase in price the price of clothing leads to a 10 percent decrease in the quantity demanded. 
B)  a 10 percent increase in the price of clothing leads to a 6.4 percent decrease in the quantity demanded. 
C)  if there is an increase in the price of clothing the total expenditures on clothing decreases. 
D)  Both answers A and C are correct.

Question 11

-The figure above illustrates a linear demand curve. If the price falls from $8 to $6

Accepted Answer

A)  total revenue increases. 
B)  total revenue decreases. 
C)  total revenue remains unchanged. 
D)  the quantity demanded increases by less than 20 percent. 
A)  total revenue increases. 
B)  total revenue decreases. 
C)  total revenue remains unchanged. 
D)  the quantity demanded increases by less than 20 percent.

Question 12

If a 5 percent change in the price of a good leads to a 10 percent change in the quantity supplied, then the supply of the good is ________ and the elasticity of supply is ________.

Accepted Answer

A)  inelastic; 0.5 
B)  inelastic; 2.0 
C)  elastic; 0.5 
D)  elastic; 2.0 
A)  inelastic; 0.5 
B)  inelastic; 2.0 
C)  elastic; 0.5 
D)  elastic; 2.0

Question 13

Of the following, demand is likely to be the most elastic for

Accepted Answer

A)  food. 
B)  cars. 
C)  Sony Blu-ray players. 
D)  personal computers. 
A)  food. 
B)  cars. 
C)  Sony Blu-ray players. 
D)  personal computers.

Question 14

If the cross elasticity of demand between Jeep Cherokees and Chevy Lumina Vans is 1.55, then the two vehicles are not substitutes in the eyes of car buyers.

Accepted Answer

A) True 
 B)False

Question 15

Based on the following pieces of information, which fast food product do consumers see as the closest substitute for Wendy's Hamburgers?

Accepted Answer

A)  Kentucky Fried Chicken, which has a cross elasticity of 1.70 with Wendy's 
B)  McDonald's hamburgers, which have a cross elasticity of 1.01 with Wendy's 
C)  Pizza Hut pizza, which has a cross elasticity of zero with Wendy's 
D)  Taco Bell tacos, which have a cross elasticity of -1.25 with Wendy's 
A)  Kentucky Fried Chicken, which has a cross elasticity of 1.70 with Wendy's 
B)  McDonald's hamburgers, which have a cross elasticity of 1.01 with Wendy's 
C)  Pizza Hut pizza, which has a cross elasticity of zero with Wendy's 
D)  Taco Bell tacos, which have a cross elasticity of -1.25 with Wendy's

Question 16

The price elasticity of demand for a specific model of a luxury car is likely to be

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  0. 
D)  infinite. 
A)  elastic. 
B)  inelastic. 
C)  0. 
D)  infinite.

Question 17

When the price of a hot dog rises 10 percent, your expenditure on hot dogs increases. Hence, it is certain that

Accepted Answer

A)  hot dogs are a normal good for you. 
B)  hot dogs are an inferior good for you. 
C)  your demand for hot dogs is elastic. 
D)  your demand for hot dogs is inelastic. 
A)  hot dogs are a normal good for you. 
B)  hot dogs are an inferior good for you. 
C)  your demand for hot dogs is elastic. 
D)  your demand for hot dogs is inelastic.

Question 18

If your demand for a good is ________, then a 1 percent fall in its price will lead you to ________ your expenditures on the good.

Accepted Answer

A)  inelastic; increase 
B)  inelastic; decrease 
C)  elastic; increase 
D)  elastic; decrease 
A)  inelastic; increase 
B)  inelastic; decrease 
C)  elastic; increase 
D)  elastic; decrease

Question 19

If goods A and B are complements, then

Accepted Answer

A)  the cross elasticity of demand between A and B is negative. 
B)  the cross elasticity of demand between A and B is positive. 
C)  their income elasticities of demand are both greater than 1. 
D)  their income elasticities of demand are both less than 1. 
A)  the cross elasticity of demand between A and B is negative. 
B)  the cross elasticity of demand between A and B is positive. 
C)  their income elasticities of demand are both greater than 1. 
D)  their income elasticities of demand are both less than 1.

Question 20

If the income elasticity of demand for spaghetti is -1.3, then spaghetti

Accepted Answer

A)  is a normal good. 
B)  is an inferior good. 
C)  has an elastic demand. 
D)  is income elastic. 
A)  is a normal good. 
B)  is an inferior good. 
C)  has an elastic demand. 
D)  is income elastic.

Of the following, demand is likely to be the least elastic for

The income elasticity of demand is defined as the percentage change in

-The figure above illustrates a linear demand curve. In the range from $8 to $6

If a hot dog vendor on a street corner experiences an increase in total revenue after lowering the price of a hot dog, then the demand for the hot dogs must be elastic.

If the price of milk increased by 5 percent because of an increase in the demand for milk, and the quantity of milk supplied increased by 7 percent

The "Economics in Action" in the text mentions that the elasticity of demand for agricultural products is 0.42. If a drought boosts the price of corn 25 percent, then we can calculate the quantity of corn demanded ________.

If a 5 percent increase in the price results in a 9 percent increase in quantity supplied, the elasticity of supply is

In Brazil, the income elasticity of demand for dairy is 0.7 and for fruit and vegetables it is 0.5. These elasticities mean that if the income of Brazilians decreases, they will purchase dairy and fruits and vegetables.

If the price elasticity of demand for clothing is 0.64, this implies that

-The figure above illustrates a linear demand curve. If the price falls from $8 to $6

If a 5 percent change in the price of a good leads to a 10 percent change in the quantity supplied, then the supply of the good is and the elasticity of supply is .

Of the following, demand is likely to be the most elastic for

If the cross elasticity of demand between Jeep Cherokees and Chevy Lumina Vans is 1.55, then the two vehicles are not substitutes in the eyes of car buyers.

Based on the following pieces of information, which fast food product do consumers see as the closest substitute for Wendy's Hamburgers?

The price elasticity of demand for a specific model of a luxury car is likely to be

When the price of a hot dog rises 10 percent, your expenditure on hot dogs increases. Hence, it is certain that

If your demand for a good is , then a 1 percent fall in its price will lead you to your expenditures on the good.

If goods A and B are complements, then

If the income elasticity of demand for spaghetti is -1.3, then spaghetti

What Is Economics

The Economic Problem

Demand and Supply

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 4: Elasticity

Of the following, demand is likely to be the least elastic for

The income elasticity of demand is defined as the percentage change in

-The figure above illustrates a linear demand curve. In the range from $8 to $6

If a hot dog vendor on a street corner experiences an increase in total revenue after lowering the price of a hot dog, then the demand for the hot dogs must be elastic.

If the price of milk increased by 5 percent because of an increase in the demand for milk, and the quantity of milk supplied increased by 7 percent

The "Economics in Action" in the text mentions that the elasticity of demand for agricultural products is 0.42. If a drought boosts the price of corn 25 percent, then we can calculate the quantity of corn demanded ________.

If a 5 percent increase in the price results in a 9 percent increase in quantity supplied, the elasticity of supply is

In Brazil, the income elasticity of demand for dairy is 0.7 and for fruit and vegetables it is 0.5. These elasticities mean that if the income of Brazilians decreases, they will purchase ________ dairy and ________ fruits and vegetables.

If the price elasticity of demand for clothing is 0.64, this implies that

-The figure above illustrates a linear demand curve. If the price falls from $8 to $6

If a 5 percent change in the price of a good leads to a 10 percent change in the quantity supplied, then the supply of the good is ________ and the elasticity of supply is ________.

Of the following, demand is likely to be the most elastic for

If the cross elasticity of demand between Jeep Cherokees and Chevy Lumina Vans is 1.55, then the two vehicles are not substitutes in the eyes of car buyers.

Based on the following pieces of information, which fast food product do consumers see as the closest substitute for Wendy's Hamburgers?

The price elasticity of demand for a specific model of a luxury car is likely to be

When the price of a hot dog rises 10 percent, your expenditure on hot dogs increases. Hence, it is certain that

If your demand for a good is ________, then a 1 percent fall in its price will lead you to ________ your expenditures on the good.

If goods A and B are complements, then

If the income elasticity of demand for spaghetti is -1.3, then spaghetti

What Is Economics

The Economic Problem

Demand and Supply

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

In Brazil, the income elasticity of demand for dairy is 0.7 and for fruit and vegetables it is 0.5. These elasticities mean that if the income of Brazilians decreases, they will purchase dairy and fruits and vegetables.

If a 5 percent change in the price of a good leads to a 10 percent change in the quantity supplied, then the supply of the good is and the elasticity of supply is .

If your demand for a good is , then a 1 percent fall in its price will lead you to your expenditures on the good.