Question 1

An important determinant of the price elasticity of supply is the extent to which

Accepted Answer

A)  the commodity is a luxury or a necessity. 
B)  the demand for it is both price and income elastic. 
C)  the product has many complements or substitutes. 
D)  production requires the use of particularly scarce or specialized resources. 
A)  the commodity is a luxury or a necessity. 
B)  the demand for it is both price and income elastic. 
C)  the product has many complements or substitutes. 
D)  production requires the use of particularly scarce or specialized resources.

Question 2

Apple, the consumer electronics giant, on Tuesday rolled out new versions of its popular iPhone. The CEO decided to decrease the price of iPhones in an attempt to increase total revenue from iPhone sales. One of his employees, Jess, disagrees and suggests that an iPhone price increase will increase total revenue. Who is CORRECT?

Accepted Answer

A)  The CEO is correct if demand is price elastic. 
B)  The CEO is correct if demand is price inelastic. 
C)  Jess is correct if demand is price elastic. 
D)  Jess is correct if demand is unit elastic. 
A)  The CEO is correct if demand is price elastic. 
B)  The CEO is correct if demand is price inelastic. 
C)  Jess is correct if demand is price elastic. 
D)  Jess is correct if demand is unit elastic.

Question 3

A 20 percent increase in the quantity of pizza demanded results from a 10 percent decline in its price. The price elasticity of demand for pizza is

Accepted Answer

A)  0.5. 
B)  2.0. 
C)  10.0. 
D)  20.0. 
A)  0.5. 
B)  2.0. 
C)  10.0. 
D)  20.0.

Question 4

Studies show that smoking cigars is inversely related to income. Thus cigars are an inferior good.

Accepted Answer

A) True 
 B)False

Question 5

For electricity, natural gas, or other forms of energy, it is very likely that the price elasticity of demand

Accepted Answer

A)  is zero. 
B)  is infinite. 
C)  will decrease in magnitude as more time passes after a price change. 
D)  will increase in magnitude as more time passes after a price change. 
A)  is zero. 
B)  is infinite. 
C)  will decrease in magnitude as more time passes after a price change. 
D)  will increase in magnitude as more time passes after a price change.

Question 6

If a 5 percent increase in the price of good A leads to a 4 percent decrease in the demand for good B, then ________.

Accepted Answer

A)  the goods are substitutes 
B)  only one good is a normal good 
C)  the goods are complements 
D)  both goods are normal goods 
A)  the goods are substitutes 
B)  only one good is a normal good 
C)  the goods are complements 
D)  both goods are normal goods

Question 7

An 18 percent increase in the price of a small car results in a 10 percent increase in the quantity supplied. The price elasticity of supply is equal to

Accepted Answer

A)  1.80. 
B)  0.55. 
C)  0.75. 
D)  0.40. 
A)  1.80. 
B)  0.55. 
C)  0.75. 
D)  0.40.

Question 8

If the quantity demanded changes by a relatively small amount for a given change in price, then demand is

Accepted Answer

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

Question 9

The quantity of new cars increases by 10 percent. If the price elasticity of demand for new cars is 1.25, the price of new cars will fall by

Accepted Answer

A)  2.5 percent. 
B)  8 percent. 
C)  10 percent. 
D)  12.5 percent. 
A)  2.5 percent. 
B)  8 percent. 
C)  10 percent. 
D)  12.5 percent.

Question 10

If the price elasticity of demand for peanut butter is 2.4, then peanut butter

Accepted Answer

A)  has an elastic demand. 
B)  has an inelastic demand. 
C)  has a unit elastic demand. 
D)  is a normal good. 
A)  has an elastic demand. 
B)  has an inelastic demand. 
C)  has a unit elastic demand. 
D)  is a normal good.

Question 11

The price of milk rises, so the supply of ice cream decreases. there is, as a result a 5 percent increase in the price of ice cream and a 3 percent decrease in the quantity of ice cream sold. The revenue received by ice cream suppliers will ________ because the demand for ice cream is ________.

Accepted Answer

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

Question 12

Damage from floods and hurricanes which destroy a large portion of this year's crop of oranges will definitely make oranges more price inelastic in supply.

Accepted Answer

A) True 
 B)False

Question 13

For baseball card collectors, Babe Ruth baseball cards from 1927 would most likely have a perfectly

Accepted Answer

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

Question 14

-The figure illustrates the demand for magazines. Newsagents will maximize their total revenue when they ________.

Accepted Answer

A)  sell 375 magazines a day 
B)  sell as many magazines as they can 
C)  charge $2.50 a magazine 
D)  sell 750 magazines a day 
A)  sell 375 magazines a day 
B)  sell as many magazines as they can 
C)  charge $2.50 a magazine 
D)  sell 750 magazines a day

Question 15

-The demand curve in the figure above illustrates the demand for a product with

Accepted Answer

A)  zero price elasticity of demand at all prices. 
B)  infinite price elasticity of demand. 
C)  unit price elasticity of demand at all prices. 
D)  a price elasticity of demand that is different at all prices. 
A)  zero price elasticity of demand at all prices. 
B)  infinite price elasticity of demand. 
C)  unit price elasticity of demand at all prices. 
D)  a price elasticity of demand that is different at all prices.

Question 16

The taxicab fare in Newville is regulated. The fare currently charged is $6 a ride. Newville taxicab drivers want to obtain government's permission to lower the fare, which they think will increase their total revenue. From this we can conclude that the drivers believe that the demand for taxicab rides is

Accepted Answer

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

Question 17

-The increase in the demand for widgets, shown in the figure above, is the result of an increase in people's incomes from $28,500 per year to $31,500 per year. Therefore, the income elasticity of demand for widgets is

Accepted Answer

A)  0.25. 
B)  0.75. 
C)  1.33. 
D)  4.00. 
A)  0.25. 
B)  0.75. 
C)  1.33. 
D)  4.00.

Question 18

Florida State University has just lowered the price of its season football tickets from $350.00 to $300.00. As a result, there was an increase in the number of season tickets purchased from 43,000 to 47,000. The price elasticity of demand for season tickets equals

Accepted Answer

A)  1.71. 
B)  1.58. 
C)  0.71. 
D)  0.58. 
A)  1.71. 
B)  1.58. 
C)  0.71. 
D)  0.58.

Question 19

The closer the substitutes for a good, the

Accepted Answer

A)  more elastic is the demand for the good. 
B)  less elastic is the demand for the good. 
C)  smaller the degree of substitutability between the goods. 
D)  larger the proportion of income that is spent on the good. 
A)  more elastic is the demand for the good. 
B)  less elastic is the demand for the good. 
C)  smaller the degree of substitutability between the goods. 
D)  larger the proportion of income that is spent on the good.

Question 20

Studies have shown that the price elasticity of demand for necessities, such as food, are higher in developing countries and lower in developed countries. What is the reason for this difference in elasticity?

Accepted Answer

One of the determinants of elasticity is

An important determinant of the price elasticity of supply is the extent to which

A 20 percent increase in the quantity of pizza demanded results from a 10 percent decline in its price. The price elasticity of demand for pizza is

Studies show that smoking cigars is inversely related to income. Thus cigars are an inferior good.

For electricity, natural gas, or other forms of energy, it is very likely that the price elasticity of demand

If a 5 percent increase in the price of good A leads to a 4 percent decrease in the demand for good B, then ________.

An 18 percent increase in the price of a small car results in a 10 percent increase in the quantity supplied. The price elasticity of supply is equal to

If the quantity demanded changes by a relatively small amount for a given change in price, then demand is

The quantity of new cars increases by 10 percent. If the price elasticity of demand for new cars is 1.25, the price of new cars will fall by

If the price elasticity of demand for peanut butter is 2.4, then peanut butter

The price of milk rises, so the supply of ice cream decreases. there is, as a result a 5 percent increase in the price of ice cream and a 3 percent decrease in the quantity of ice cream sold. The revenue received by ice cream suppliers will because the demand for ice cream is .

Damage from floods and hurricanes which destroy a large portion of this year's crop of oranges will definitely make oranges more price inelastic in supply.

For baseball card collectors, Babe Ruth baseball cards from 1927 would most likely have a perfectly

-The figure illustrates the demand for magazines. Newsagents will maximize their total revenue when they ________.

-The demand curve in the figure above illustrates the demand for a product with

-The increase in the demand for widgets, shown in the figure above, is the result of an increase in people's incomes from $28,500 per year to $31,500 per year. Therefore, the income elasticity of demand for widgets is

Florida State University has just lowered the price of its season football tickets from $350.00 to $300.00. As a result, there was an increase in the number of season tickets purchased from 43,000 to 47,000. The price elasticity of demand for season tickets equals

The closer the substitutes for a good, the

Studies have shown that the price elasticity of demand for necessities, such as food, are higher in developing countries and lower in developed countries. What is the reason for this difference in elasticity?

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

An important determinant of the price elasticity of supply is the extent to which

A 20 percent increase in the quantity of pizza demanded results from a 10 percent decline in its price. The price elasticity of demand for pizza is

Studies show that smoking cigars is inversely related to income. Thus cigars are an inferior good.

For electricity, natural gas, or other forms of energy, it is very likely that the price elasticity of demand

If a 5 percent increase in the price of good A leads to a 4 percent decrease in the demand for good B, then ________.

An 18 percent increase in the price of a small car results in a 10 percent increase in the quantity supplied. The price elasticity of supply is equal to

If the quantity demanded changes by a relatively small amount for a given change in price, then demand is

The quantity of new cars increases by 10 percent. If the price elasticity of demand for new cars is 1.25, the price of new cars will fall by

If the price elasticity of demand for peanut butter is 2.4, then peanut butter

The price of milk rises, so the supply of ice cream decreases. there is, as a result a 5 percent increase in the price of ice cream and a 3 percent decrease in the quantity of ice cream sold. The revenue received by ice cream suppliers will ________ because the demand for ice cream is ________.

Damage from floods and hurricanes which destroy a large portion of this year's crop of oranges will definitely make oranges more price inelastic in supply.

For baseball card collectors, Babe Ruth baseball cards from 1927 would most likely have a perfectly

-The figure illustrates the demand for magazines. Newsagents will maximize their total revenue when they ________.

-The demand curve in the figure above illustrates the demand for a product with

-The increase in the demand for widgets, shown in the figure above, is the result of an increase in people's incomes from $28,500 per year to $31,500 per year. Therefore, the income elasticity of demand for widgets is

Florida State University has just lowered the price of its season football tickets from $350.00 to $300.00. As a result, there was an increase in the number of season tickets purchased from 43,000 to 47,000. The price elasticity of demand for season tickets equals

The closer the substitutes for a good, the

Studies have shown that the price elasticity of demand for necessities, such as food, are higher in developing countries and lower in developed countries. What is the reason for this difference in elasticity?

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

The price of milk rises, so the supply of ice cream decreases. there is, as a result a 5 percent increase in the price of ice cream and a 3 percent decrease in the quantity of ice cream sold. The revenue received by ice cream suppliers will because the demand for ice cream is .