Question 1

-The figure above represents the behavior of total revenue as price falls along a straight-line demand curve. Unit elasticity of demand occurs at

Accepted Answer

A)  point g. 
B)  point h. 
C)  point i. 
D)  point j. 
A)  point g. 
B)  point h. 
C)  point i. 
D)  point j.

Question 2

-The increase in the demand for widgets, shown in the figure above, is the result of a decrease in the price of McBoover devices. Therefore

Accepted Answer

A)  widgets and McBoover devices are substitutes. 
B)  widgets and McBoover devices are complements. 
C)  widgets are a normal good. 
D)  McBoover devices are a normal good. 
A)  widgets and McBoover devices are substitutes. 
B)  widgets and McBoover devices are complements. 
C)  widgets are a normal good. 
D)  McBoover devices are a normal good.

Question 3

The price elasticity of demand for oranges ________ change if the units of the quantity was changed from pounds to kilograms and ________ change if the units of the price was changed from dollars to cents.

Accepted Answer

A)  would; would 
B)  would; would not 
C)  would not; would 
D)  would not; would not 
A)  would; would 
B)  would; would not 
C)  would not; would 
D)  would not; would not

Question 4

Suppose a drought increased the price of corn by 25 percent while it decreased the quantity by 50 percent. The price elasticity of demand equals

Accepted Answer

A)  2.00. 
B)  0.50. 
C)  20.0. 
D)  zero. 
A)  2.00. 
B)  0.50. 
C)  20.0. 
D)  zero.

Question 5

If a 20 percent increase in the price of a used car results in a 10 percent decrease in the quantity of used cars demanded, then the demand for used cars is

Accepted Answer

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

Question 6

An inferior good is a good whose income elasticity of demand is less than 0.

Accepted Answer

A) True 
 B)False

Question 7

Netflix is the largest online DVD rental service offering flat rate online streaming to customers in the United States. Currently, there are approximately 8 million subscribers. Suppose Netflix increases their average flat rate by 10 percent and observe their total revenues increase. Based on this information, the

Accepted Answer

A)  price elasticity of demand for Netflix subscription is inelastic. 
B)  price elasticity of demand for Netflix subscription is elastic. 
C)  price elasticity of demand for Netflix subscription is unit elastic. 
D)  income elasticity of demand for Netflix subscription is elastic. 
A)  price elasticity of demand for Netflix subscription is inelastic. 
B)  price elasticity of demand for Netflix subscription is elastic. 
C)  price elasticity of demand for Netflix subscription is unit elastic. 
D)  income elasticity of demand for Netflix subscription is elastic.

Question 8

If students' expenditures on airline travel increase as a consequence of more heavily discounted fares, students' demand for airline travel must be

Accepted Answer

A)  income elastic. 
B)  income inelastic. 
C)  price elastic. 
D)  price inelastic. 
A)  income elastic. 
B)  income inelastic. 
C)  price elastic. 
D)  price inelastic.

Question 9

If the income elasticity for chocolate chip cookies is 1.84, then chocolate chip cookies are

Accepted Answer

A)  a normal good and income inelastic. 
B)  a normal good and income elastic. 
C)  an inferior good and income inelastic. 
D)  an inferior good and income elastic. 
A)  a normal good and income inelastic. 
B)  a normal good and income elastic. 
C)  an inferior good and income inelastic. 
D)  an inferior good and income elastic.

Question 10

For many goods, the price elasticity of demand increases over time because

Accepted Answer

A)  people's incomes tend to increase over time. 
B)  inflation increases all prices and incomes over time. 
C)  the ability to find substitutes for a good whose price has risen increases over time. 
D)  None of the above answers is correct. 
A)  people's incomes tend to increase over time. 
B)  inflation increases all prices and incomes over time. 
C)  the ability to find substitutes for a good whose price has risen increases over time. 
D)  None of the above answers is correct.

Question 11

A 10 percent increase in income increases the quantity of orange juice demanded from 19,200 to 20,800 gallons. The income elasticity of demand for orange juice is

Accepted Answer

A)  0.5. 
B)  0.8. 
C)  1.0. 
D)  1.2. 
A)  0.5. 
B)  0.8. 
C)  1.0. 
D)  1.2.

Question 12

The price elasticity of demand for furniture is estimated at 1.3. This value means a one percent increase in the

Accepted Answer

A)  price of furniture will increase the quantity of furniture demanded by 1.3 percent. 
B)  price of furniture will decrease the quantity of furniture demanded by 1.3 percent. 
C)  quantity of furniture demanded will decrease the price of furniture by 1.3 percent. 
D)  quantity of furniture demanded will increase the price of furniture by 1.3 percent. 
A)  price of furniture will increase the quantity of furniture demanded by 1.3 percent. 
B)  price of furniture will decrease the quantity of furniture demanded by 1.3 percent. 
C)  quantity of furniture demanded will decrease the price of furniture by 1.3 percent. 
D)  quantity of furniture demanded will increase the price of furniture by 1.3 percent.

Question 13

If the price of gasoline fell from $2.95 to $2.85 per gallon, your expenditure on gasoline would increase if your price elasticity of demand for gasoline equals

Accepted Answer

A)  1.1. 
B)  1.0. 
C)  0.9. 
D)  Total revenue would increase at all of the above elasticities. 
A)  1.1. 
B)  1.0. 
C)  0.9. 
D)  Total revenue would increase at all of the above elasticities.

Question 14

Suppose the price elasticity of demand for oil is 0.1. In order to lower the price of oil by 20 percent, the quantity of oil supplied must be increased by

Accepted Answer

A)  200 percent. 
B)  20 percent. 
C)  2 percent. 
D)  0.2 percent. 
A)  200 percent. 
B)  20 percent. 
C)  2 percent. 
D)  0.2 percent.

Question 15

Producers' total revenue will increase if

Accepted Answer

A)  income increases and the good is an inferior good. 
B)  the price rises and demand is elastic. 
C)  the price rises and demand is inelastic. 
D)  income falls and the good is a normal good. 
A)  income increases and the good is an inferior good. 
B)  the price rises and demand is elastic. 
C)  the price rises and demand is inelastic. 
D)  income falls and the good is a normal good.

Question 16

For many goods, the price elasticity of demand increases over time after a price hike because

Accepted Answer

A)  consumer incomes tend to increase over time. 
B)  inflation increases all prices and incomes over time. 
C)  the ability to find good substitutes for the product whose price rose increases over time. 
D)  All of the above answers are correct. 
A)  consumer incomes tend to increase over time. 
B)  inflation increases all prices and incomes over time. 
C)  the ability to find good substitutes for the product whose price rose increases over time. 
D)  All of the above answers are correct.

Question 17

A local pizzeria charges $10 for a pizza. The owner of the pizzeria wants to increase the company's total revenue. A recent market research shows that the price elasticity of demand for his pizza is about 1.5. Should the pizzeria lower or raise the price? Explain your answer.

Accepted Answer

The pizzeria should lower the price. Sin

Question 18

A shift of the supply curve of DVDs raises the price of a DVD from $9.50 to $10.50 a DVD and reduces the quantity demanded from 41 million to 39 million DVDs a month. The price elasticity of demand for DVDs is

Accepted Answer

A)  2 million DVDs a month per dollar. 
B)  $1 per 2 million barrels a day. 
C)  0.5. 
D)  2.0. 
A)  2 million DVDs a month per dollar. 
B)  $1 per 2 million barrels a day. 
C)  0.5. 
D)  2.0.

Question 19

Suppose Target decided to lower the price on all shirts as part of its Back to School promotion. The cross elasticity of demand between pants and shirts is negative. Lowering the price on shirts will ________ the demand for pants because shirts and pants are ________.

Accepted Answer

A)  increase; substitutes 
B)  decrease; substitutes 
C)  increase; complements 
D)  decrease; complements 
A)  increase; substitutes 
B)  decrease; substitutes 
C)  increase; complements 
D)  decrease; complements

Question 20

What kind of elasticity is relevant when you are trying to figure out how a price cut by the burger shop next door will affect the demand for your pizza? Explain.

Accepted Answer

The cross elasticity of demand is the re

-The figure above represents the behavior of total revenue as price falls along a straight-line demand curve. Unit elasticity of demand occurs at

-The increase in the demand for widgets, shown in the figure above, is the result of a decrease in the price of McBoover devices. Therefore

The price elasticity of demand for oranges change if the units of the quantity was changed from pounds to kilograms and change if the units of the price was changed from dollars to cents.

Suppose a drought increased the price of corn by 25 percent while it decreased the quantity by 50 percent. The price elasticity of demand equals

If a 20 percent increase in the price of a used car results in a 10 percent decrease in the quantity of used cars demanded, then the demand for used cars is

An inferior good is a good whose income elasticity of demand is less than 0.

If students' expenditures on airline travel increase as a consequence of more heavily discounted fares, students' demand for airline travel must be

If the income elasticity for chocolate chip cookies is 1.84, then chocolate chip cookies are

For many goods, the price elasticity of demand increases over time because

A 10 percent increase in income increases the quantity of orange juice demanded from 19,200 to 20,800 gallons. The income elasticity of demand for orange juice is

The price elasticity of demand for furniture is estimated at 1.3. This value means a one percent increase in the

If the price of gasoline fell from $2.95 to $2.85 per gallon, your expenditure on gasoline would increase if your price elasticity of demand for gasoline equals

Suppose the price elasticity of demand for oil is 0.1. In order to lower the price of oil by 20 percent, the quantity of oil supplied must be increased by

Producers' total revenue will increase if

For many goods, the price elasticity of demand increases over time after a price hike because

A local pizzeria charges $10 for a pizza. The owner of the pizzeria wants to increase the company's total revenue. A recent market research shows that the price elasticity of demand for his pizza is about 1.5. Should the pizzeria lower or raise the price? Explain your answer.

A shift of the supply curve of DVDs raises the price of a DVD from $9.50 to $10.50 a DVD and reduces the quantity demanded from 41 million to 39 million DVDs a month. The price elasticity of demand for DVDs is

Suppose Target decided to lower the price on all shirts as part of its Back to School promotion. The cross elasticity of demand between pants and shirts is negative. Lowering the price on shirts will the demand for pants because shirts and pants are .

What kind of elasticity is relevant when you are trying to figure out how a price cut by the burger shop next door will affect the demand for your pizza? Explain.

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 figure above represents the behavior of total revenue as price falls along a straight-line demand curve. Unit elasticity of demand occurs at

-The increase in the demand for widgets, shown in the figure above, is the result of a decrease in the price of McBoover devices. Therefore

The price elasticity of demand for oranges ________ change if the units of the quantity was changed from pounds to kilograms and ________ change if the units of the price was changed from dollars to cents.

Suppose a drought increased the price of corn by 25 percent while it decreased the quantity by 50 percent. The price elasticity of demand equals

If a 20 percent increase in the price of a used car results in a 10 percent decrease in the quantity of used cars demanded, then the demand for used cars is

An inferior good is a good whose income elasticity of demand is less than 0.

If students' expenditures on airline travel increase as a consequence of more heavily discounted fares, students' demand for airline travel must be

If the income elasticity for chocolate chip cookies is 1.84, then chocolate chip cookies are

For many goods, the price elasticity of demand increases over time because

A 10 percent increase in income increases the quantity of orange juice demanded from 19,200 to 20,800 gallons. The income elasticity of demand for orange juice is

The price elasticity of demand for furniture is estimated at 1.3. This value means a one percent increase in the

If the price of gasoline fell from $2.95 to $2.85 per gallon, your expenditure on gasoline would increase if your price elasticity of demand for gasoline equals

Suppose the price elasticity of demand for oil is 0.1. In order to lower the price of oil by 20 percent, the quantity of oil supplied must be increased by

Producers' total revenue will increase if

For many goods, the price elasticity of demand increases over time after a price hike because

A local pizzeria charges $10 for a pizza. The owner of the pizzeria wants to increase the company's total revenue. A recent market research shows that the price elasticity of demand for his pizza is about 1.5. Should the pizzeria lower or raise the price? Explain your answer.

A shift of the supply curve of DVDs raises the price of a DVD from $9.50 to $10.50 a DVD and reduces the quantity demanded from 41 million to 39 million DVDs a month. The price elasticity of demand for DVDs is

Suppose Target decided to lower the price on all shirts as part of its Back to School promotion. The cross elasticity of demand between pants and shirts is negative. Lowering the price on shirts will ________ the demand for pants because shirts and pants are ________.

What kind of elasticity is relevant when you are trying to figure out how a price cut by the burger shop next door will affect the demand for your pizza? Explain.

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 elasticity of demand for oranges change if the units of the quantity was changed from pounds to kilograms and change if the units of the price was changed from dollars to cents.

Suppose Target decided to lower the price on all shirts as part of its Back to School promotion. The cross elasticity of demand between pants and shirts is negative. Lowering the price on shirts will the demand for pants because shirts and pants are .