Question 1

The demand curve for microwave popcorn is linear. Which of the following definitely makes the demand for microwave popcorn more inelastic?

Accepted Answer

A)  a decrease in the price of microwave popcorn 
B)  an increase in the price of microwave popcorn 
C)  an increase in income 
D)  a decrease in income 
A)  a decrease in the price of microwave popcorn 
B)  an increase in the price of microwave popcorn 
C)  an increase in income 
D)  a decrease in income

Question 2

If the demand for a good is perfectly elastic, the price elasticity of demand is ________ and the demand curve is ________.

Accepted Answer

A)  infinite; vertical 
B)  zero; vertical 
C)  zero; horizontal 
D)  infinite; horizontal 
A)  infinite; vertical 
B)  zero; vertical 
C)  zero; horizontal 
D)  infinite; horizontal

Question 3

The cross elasticity of demand for substitutes is always positive.

Accepted Answer

A) True 
 B)False

Question 4

Dell lowers the price of their PCs by 10 percent. As a result, the quantity of Gateway computers demanded at the current price decreases by 12 percent. What is the cross elasticity of demand for Gateway computers with respect to the price of Dell computers?

Accepted Answer

A)  -1.20 
B)  -0.83 
C)  1.20 
D)  0.83 
A)  -1.20 
B)  -0.83 
C)  1.20 
D)  0.83

Question 5

The elasticity of supply does NOT depend on

Accepted Answer

A)  resource substitution possibilities. 
B)  the fraction of income spent on the product. 
C)  the time elapsed since the price change. 
D)  none of the above because all of the factors listed affect the elasticity of supply. 
A)  resource substitution possibilities. 
B)  the fraction of income spent on the product. 
C)  the time elapsed since the price change. 
D)  none of the above because all of the factors listed affect the elasticity of supply.

Question 6

If a 1 percent decrease in the price of a pound of squash results in a larger percentage decrease in the quantity supplied

Accepted Answer

A)  demand is elastic. 
B)  demand is inelastic. 
C)  supply is elastic. 
D)  supply is inelastic. 
A)  demand is elastic. 
B)  demand is inelastic. 
C)  supply is elastic. 
D)  supply is inelastic.

Question 7

The price elasticity of demand for adults for cigarettes is 0.4. If government wants to reduce smoking among adults by 15 percent, by what percentage should it raise the price of cigarettes?
Teenagers have a higher price elasticity of demand for cigarettes than do adults. Suppose the price elasticity of teenagers' demand for cigarettes is 0.8. If the government imposes a tax on cigarettes that raises the price to reduce overall smoking by 15 percent, by what percentage will the government reduce teenage smoking?

Accepted Answer

The government should raise the price of

Question 8

If a shift in the demand curve that raises the price of oranges from $7 to $9 a bushel increases the quantity of oranges supplied from 4,000 bushels to 6,000 bushels, the

Accepted Answer

A)  supply of oranges is elastic. 
B)  supply of oranges is inelastic. 
C)  demand for oranges is elastic. 
D)  demand for oranges is inelastic. 
A)  supply of oranges is elastic. 
B)  supply of oranges is inelastic. 
C)  demand for oranges is elastic. 
D)  demand for oranges is inelastic.

Question 9

-In the above figure, if the two goods A and B, are complements, which of the following is TRUE?

Accepted Answer

A)  The shift from D0 to D1 for good B leads to a shift from S0 to S1 for good A. 
B)  The shift from S0 to S1 for good A leads to the shift from D0 to D1 for good B. 
C)  The law of demand is violated in both markets. 
D)  The cross elasticity of demand between them is positive. 
A)  The shift from D0 to D1 for good B leads to a shift from S0 to S1 for good A. 
B)  The shift from S0 to S1 for good A leads to the shift from D0 to D1 for good B. 
C)  The law of demand is violated in both markets. 
D)  The cross elasticity of demand between them is positive.

Question 10

-In the above figure, which demand curve illustrates perfectly elastic demand?

Accepted Answer

A)  G 
B)  H 
C)  I 
D)  J 
A)  G 
B)  H 
C)  I 
D)  J

Question 11

On a linear demand curve that intersects both axes

Accepted Answer

A)  the elasticity exceeds 1.00 at all prices. 
B)  the elasticity is less than 1.00 at all prices. 
C)  the elasticity equals 1.00 at all prices. 
D)  the elasticity decreases as the price falls and quantity increases. 
A)  the elasticity exceeds 1.00 at all prices. 
B)  the elasticity is less than 1.00 at all prices. 
C)  the elasticity equals 1.00 at all prices. 
D)  the elasticity decreases as the price falls and quantity increases.

Question 12

-The above table gives the demand schedule for Billy Bob's BBQ ribs. The demand for Billy Bob's ribs is unit elastic at which of the following prices?

Accepted Answer

A)  $10 
B)  $7 
C)  $5 
D)  $1 
A)  $10 
B)  $7 
C)  $5 
D)  $1

Question 13

At a local ice cream parlor, when the price of half-gallons of chocolate ice cream was lowered by fifty cents per half-gallon, total revenue from the sale of chocolate ice cream decreased. This result indicates that

Accepted Answer

A)  there are more people who like vanilla ice cream than there are people who like chocolate ice cream. 
B)  the demand for chocolate ice cream is inelastic. 
C)  the demand for chocolate ice cream is elastic. 
D)  None of the above answers is correct. 
A)  there are more people who like vanilla ice cream than there are people who like chocolate ice cream. 
B)  the demand for chocolate ice cream is inelastic. 
C)  the demand for chocolate ice cream is elastic. 
D)  None of the above answers is correct.

Question 14

If the demand for KFC chicken is price inelastic, a fall in the price of KFC chicken will raise the total revenue.

Accepted Answer

A) True 
 B)False

Question 15

A straight-line demand curve along which the price elasticity of demand equals 0 is one that

Accepted Answer

A)  forms a 45 degree angle with the vertical axis. 
B)  forms a 60 degree angle with the horizontal axis. 
C)  is vertical. 
D)  is horizontal. 
A)  forms a 45 degree angle with the vertical axis. 
B)  forms a 60 degree angle with the horizontal axis. 
C)  is vertical. 
D)  is horizontal.

Question 16

The demand for food in poor countries is

Accepted Answer

A)  inelastic and more inelastic than in rich countries. 
B)  inelastic but more elastic than in rich countries. 
C)  elastic but less elastic than in rich countries. 
D)  elastic and more elastic than in rich countries. 
A)  inelastic and more inelastic than in rich countries. 
B)  inelastic but more elastic than in rich countries. 
C)  elastic but less elastic than in rich countries. 
D)  elastic and more elastic than in rich countries.

Question 17

Consider two goods: peanut butter and jelly. If the price of jelly increases from $2 a jar to $3 per jar and the quantity demanded of peanut butter decreases from 50 jars to 45 jars, what is the cross elasticity of demand? Are the goods substitutes or complements?

Accepted Answer

The cross elasticity

Question 18

The demand for ________ is more elastic than the demand for ________.

Accepted Answer

A)  chewing gum; cars 
B)  all personal computers; Dell computers 
C)  Pepsi; all soft beverages 
D)  food; exotic vacations 
A)  chewing gum; cars 
B)  all personal computers; Dell computers 
C)  Pepsi; all soft beverages 
D)  food; exotic vacations

Question 19

What happens to the price elasticity of demand moving down along a downward-sloping, linear demand curve?

Accepted Answer

Moving down along a downward-sloping, li

Question 20

If the cross elasticity of demand for good x with respect to the price of good y is positive, then goods x and y are

Accepted Answer

A)  normal goods. 
B)  inferior goods. 
C)  complements. 
D)  substitutes. 
A)  normal goods. 
B)  inferior goods. 
C)  complements. 
D)  substitutes.

The demand curve for microwave popcorn is linear. Which of the following definitely makes the demand for microwave popcorn more inelastic?

If the demand for a good is perfectly elastic, the price elasticity of demand is and the demand curve is .

The cross elasticity of demand for substitutes is always positive.

Dell lowers the price of their PCs by 10 percent. As a result, the quantity of Gateway computers demanded at the current price decreases by 12 percent. What is the cross elasticity of demand for Gateway computers with respect to the price of Dell computers?

The elasticity of supply does NOT depend on

If a 1 percent decrease in the price of a pound of squash results in a larger percentage decrease in the quantity supplied

If a shift in the demand curve that raises the price of oranges from $7 to $9 a bushel increases the quantity of oranges supplied from 4,000 bushels to 6,000 bushels, the

-In the above figure, if the two goods A and B, are complements, which of the following is TRUE?

-In the above figure, which demand curve illustrates perfectly elastic demand?

On a linear demand curve that intersects both axes

-The above table gives the demand schedule for Billy Bob's BBQ ribs. The demand for Billy Bob's ribs is unit elastic at which of the following prices?

At a local ice cream parlor, when the price of half-gallons of chocolate ice cream was lowered by fifty cents per half-gallon, total revenue from the sale of chocolate ice cream decreased. This result indicates that

If the demand for KFC chicken is price inelastic, a fall in the price of KFC chicken will raise the total revenue.

A straight-line demand curve along which the price elasticity of demand equals 0 is one that

The demand for food in poor countries is

Consider two goods: peanut butter and jelly. If the price of jelly increases from $2 a jar to $3 per jar and the quantity demanded of peanut butter decreases from 50 jars to 45 jars, what is the cross elasticity of demand? Are the goods substitutes or complements?

The demand for is more elastic than the demand for .

What happens to the price elasticity of demand moving down along a downward-sloping, linear demand curve?

If the cross elasticity of demand for good x with respect to the price of good y is positive, then goods x and y are

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

The demand curve for microwave popcorn is linear. Which of the following definitely makes the demand for microwave popcorn more inelastic?

If the demand for a good is perfectly elastic, the price elasticity of demand is ________ and the demand curve is ________.

The cross elasticity of demand for substitutes is always positive.

Dell lowers the price of their PCs by 10 percent. As a result, the quantity of Gateway computers demanded at the current price decreases by 12 percent. What is the cross elasticity of demand for Gateway computers with respect to the price of Dell computers?

The elasticity of supply does NOT depend on

If a 1 percent decrease in the price of a pound of squash results in a larger percentage decrease in the quantity supplied

If a shift in the demand curve that raises the price of oranges from $7 to $9 a bushel increases the quantity of oranges supplied from 4,000 bushels to 6,000 bushels, the

-In the above figure, if the two goods A and B, are complements, which of the following is TRUE?

-In the above figure, which demand curve illustrates perfectly elastic demand?

On a linear demand curve that intersects both axes

-The above table gives the demand schedule for Billy Bob's BBQ ribs. The demand for Billy Bob's ribs is unit elastic at which of the following prices?

At a local ice cream parlor, when the price of half-gallons of chocolate ice cream was lowered by fifty cents per half-gallon, total revenue from the sale of chocolate ice cream decreased. This result indicates that

If the demand for KFC chicken is price inelastic, a fall in the price of KFC chicken will raise the total revenue.

A straight-line demand curve along which the price elasticity of demand equals 0 is one that

The demand for food in poor countries is

Consider two goods: peanut butter and jelly. If the price of jelly increases from $2 a jar to $3 per jar and the quantity demanded of peanut butter decreases from 50 jars to 45 jars, what is the cross elasticity of demand? Are the goods substitutes or complements?

The demand for ________ is more elastic than the demand for ________.

What happens to the price elasticity of demand moving down along a downward-sloping, linear demand curve?

If the cross elasticity of demand for good x with respect to the price of good y is positive, then goods x and y are

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

If the demand for a good is perfectly elastic, the price elasticity of demand is and the demand curve is .

The demand for is more elastic than the demand for .