Question 1

Paul's monthly income decreased from $2,500 to $2,300. As a result, he decreased the number of DVDs he rents per month from 5 to 4. Paul's demand for DVD rentals is

Accepted Answer

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

Question 2

Demand is inelastic if

Accepted Answer

A)  a large change in quantity demanded results in a small change in price. 
B)  the quantity demanded is very responsive to changes in price. 
C)  the price elasticity of demand is less than 1. 
D)  the price elasticity of demand is greater than 1. 
A)  a large change in quantity demanded results in a small change in price. 
B)  the quantity demanded is very responsive to changes in price. 
C)  the price elasticity of demand is less than 1. 
D)  the price elasticity of demand is greater than 1.

Question 3

Because Product X has a very small, positive income elasticity of demand, it is likely that product X is a

Accepted Answer

A)  luxury. 
B)  necessity. 
C)  product with many good substitutes. 
D)  product with many good complements. 
A)  luxury. 
B)  necessity. 
C)  product with many good substitutes. 
D)  product with many good complements.

Question 4

All normal goods have

Accepted Answer

A)  income elasticities of demand greater than 1.0. 
B)  price elasticities of demand greater than 1.0. 
C)  negative price elasticities of demand. 
D)  positive income elasticities of demand. 
A)  income elasticities of demand greater than 1.0. 
B)  price elasticities of demand greater than 1.0. 
C)  negative price elasticities of demand. 
D)  positive income elasticities of demand.

Question 5

Which of the following makes demand less elastic?

Accepted Answer

A)  the existence of many close substitutes for the good 
B)  spending a large proportion of income on the good 
C)  a short time elapsing since the product's price changed 
D)  All of the above answers are correct. 
A)  the existence of many close substitutes for the good 
B)  spending a large proportion of income on the good 
C)  a short time elapsing since the product's price changed 
D)  All of the above answers are correct.

Question 6

During a recession when people's incomes drop, grocery chains experience much smaller declines in sales than do upscale department stores. Explain this phenomenon using the concept of elasticity.

Accepted Answer

During a recession, people's income decr

Question 7

A decrease in the supply of sugar increases the price of sugar from $1.00 a packet to $1.25 a packet. The quantity decreases from 100 packets a day to 80 packets a day. The price elasticity of demand of sugar is ________.

Accepted Answer

A)  0.75 
B)  0.5 
C)  1.0 
D)  1.25 
A)  0.75 
B)  0.5 
C)  1.0 
D)  1.25

Question 8

Most college courses have a required textbook. Previously, textbooks were only available through the campus bookstore, but now, these texts can be purchased from online retailers, other bookstores, or students can buy an electronic version of the text. Because of this, we can predict the price elasticity of demand for textbooks from the campus bookstore is ________.

Accepted Answer

A)  increasing 
B)  decreasing 
C)  staying the same 
D)  increasing and then decreasing 
A)  increasing 
B)  decreasing 
C)  staying the same 
D)  increasing and then decreasing

Question 9

Pizza Hut pizza has more close substitutes than does food in general. The price elasticity of demand for Pizza Hut pizza is ________ the price elasticity of demand for food in general.

Accepted Answer

A)  not comparable to 
B)  greater than 
C)  less than 
D)  the same as 
A)  not comparable to 
B)  greater than 
C)  less than 
D)  the same as

Question 10

A necessity (such as food and shelter) generally has an inelastic demand.

Accepted Answer

A) True 
 B)False

Question 11

If a product has very few substitutes, demand elasticity is likely to be

Accepted Answer

A)  1. 
B)  elastic. 
C)  infinitely elastic. 
D)  inelastic. 
A)  1. 
B)  elastic. 
C)  infinitely elastic. 
D)  inelastic.

Question 12

If Sam wants to increase her total revenue from her sales of flowers and she knows that the demand for flowers is price elastic, she should

Accepted Answer

A)  lower her price to increase the demand and shift the demand curve rightward. 
B)  raise her price because she knows that the quantity demanded will also increase. 
C)  raise her price because she knows that the percentage decrease in the quantity demanded will be smaller than the percentage increase in price. 
D)  lower her price because she knows that the percentage increase in the quantity demanded will be greater than the percentage decrease in price. 
A)  lower her price to increase the demand and shift the demand curve rightward. 
B)  raise her price because she knows that the quantity demanded will also increase. 
C)  raise her price because she knows that the percentage decrease in the quantity demanded will be smaller than the percentage increase in price. 
D)  lower her price because she knows that the percentage increase in the quantity demanded will be greater than the percentage decrease in price.

Question 13

Goods or services that can be produced only by using unique or rare productive resources tend to have a low elasticity of supply.

Accepted Answer

A) True 
 B)False

Question 14

Suppose Carol's Candid Cameras wants to increase its total revenue. If the firm lowers the price of cameras by 2 percent, Carol must be predicting that the quantity

Accepted Answer

A)  supplied will increase by more than 2 percent. 
B)  demanded will increase by more than 2 percent. 
C)  demanded will decrease by less than 2 percent. 
D)  supply will decrease by less than 2 percent. 
A)  supplied will increase by more than 2 percent. 
B)  demanded will increase by more than 2 percent. 
C)  demanded will decrease by less than 2 percent. 
D)  supply will decrease by less than 2 percent.

Question 15

If the supply curve is vertical, then supply is

Accepted Answer

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

Question 16

In the summer 2012 the lobster catch in Maine was especially large, but instead of celebrating the fisherman were suffering from a lower total revenue. (Source: New York Times, July 28, 2012) We learn from the article that despite the larger quantity of lobster caught, the total revenue of the fisherman decreased. This fact means that the demand for lobster is

Accepted Answer

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

Question 17

If income increases by 2.0 percent, and quantity demanded of a good increases by 0.2 percent, the income elasticity for the good is

Accepted Answer

A)  0.22. 
B)  0.002. 
C)  0.10. 
D)  1.00. 
A)  0.22. 
B)  0.002. 
C)  0.10. 
D)  1.00.

Question 18

Fantastic growing conditions that produce a bumper crop of oranges on each tree this year will definitely make the short run supply of oranges more price elastic.

Accepted Answer

A) True 
 B)False

Question 19

Of the following items, which has the most inelastic demand?

Accepted Answer

A)  food 
B)  fruit 
C)  apples 
D)  Gala apples 
A)  food 
B)  fruit 
C)  apples 
D)  Gala apples

Question 20

Explain why the number of substitutes influences the price elasticity of demand.

Accepted Answer

The price elasticity of demand is a meas

Paul's monthly income decreased from $2,500 to $2,300. As a result, he decreased the number of DVDs he rents per month from 5 to 4. Paul's demand for DVD rentals is

Demand is inelastic if

Because Product X has a very small, positive income elasticity of demand, it is likely that product X is a

All normal goods have

Which of the following makes demand less elastic?

During a recession when people's incomes drop, grocery chains experience much smaller declines in sales than do upscale department stores. Explain this phenomenon using the concept of elasticity.

A decrease in the supply of sugar increases the price of sugar from $1.00 a packet to $1.25 a packet. The quantity decreases from 100 packets a day to 80 packets a day. The price elasticity of demand of sugar is ________.

Pizza Hut pizza has more close substitutes than does food in general. The price elasticity of demand for Pizza Hut pizza is ________ the price elasticity of demand for food in general.

A necessity (such as food and shelter) generally has an inelastic demand.

If a product has very few substitutes, demand elasticity is likely to be

If Sam wants to increase her total revenue from her sales of flowers and she knows that the demand for flowers is price elastic, she should

Goods or services that can be produced only by using unique or rare productive resources tend to have a low elasticity of supply.

Suppose Carol's Candid Cameras wants to increase its total revenue. If the firm lowers the price of cameras by 2 percent, Carol must be predicting that the quantity

If the supply curve is vertical, then supply is

If income increases by 2.0 percent, and quantity demanded of a good increases by 0.2 percent, the income elasticity for the good is

Fantastic growing conditions that produce a bumper crop of oranges on each tree this year will definitely make the short run supply of oranges more price elastic.

Of the following items, which has the most inelastic demand?

Explain why the number of substitutes influences the price elasticity of demand.

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

Paul's monthly income decreased from $2,500 to $2,300. As a result, he decreased the number of DVDs he rents per month from 5 to 4. Paul's demand for DVD rentals is

Demand is inelastic if

Because Product X has a very small, positive income elasticity of demand, it is likely that product X is a

All normal goods have

Which of the following makes demand less elastic?

During a recession when people's incomes drop, grocery chains experience much smaller declines in sales than do upscale department stores. Explain this phenomenon using the concept of elasticity.

A decrease in the supply of sugar increases the price of sugar from $1.00 a packet to $1.25 a packet. The quantity decreases from 100 packets a day to 80 packets a day. The price elasticity of demand of sugar is ________.

Pizza Hut pizza has more close substitutes than does food in general. The price elasticity of demand for Pizza Hut pizza is ________ the price elasticity of demand for food in general.

A necessity (such as food and shelter) generally has an inelastic demand.

If a product has very few substitutes, demand elasticity is likely to be

If Sam wants to increase her total revenue from her sales of flowers and she knows that the demand for flowers is price elastic, she should

Goods or services that can be produced only by using unique or rare productive resources tend to have a low elasticity of supply.

Suppose Carol's Candid Cameras wants to increase its total revenue. If the firm lowers the price of cameras by 2 percent, Carol must be predicting that the quantity

If the supply curve is vertical, then supply is

If income increases by 2.0 percent, and quantity demanded of a good increases by 0.2 percent, the income elasticity for the good is

Fantastic growing conditions that produce a bumper crop of oranges on each tree this year will definitely make the short run supply of oranges more price elastic.

Of the following items, which has the most inelastic demand?

Explain why the number of substitutes influences the price elasticity of demand.

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