Question 1

If a rise in the price of oranges from $7 to $9 a bushel increases the quantity of bushels supplied from 4,500 to 5,500 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 2

Using the average price and average quantity, what is the elasticity of demand for oranges when the price of oranges changes from $200 to $160 per bushel and so the quantity demanded changes from 1000 to 1400 bushels?

Accepted Answer

A)  1.5 
B)  0.1 
C)  10.0 
D)  0.67 
A)  1.5 
B)  0.1 
C)  10.0 
D)  0.67

Question 3

If the long-run supply of rice is perfectly elastic, then

Accepted Answer

A)  as people's incomes rise, the quantity of rice supplied decreases. 
B)  as the price of corn falls, the quantity of rice demanded decreases. 
C)  in the long run, a large rise in the price of rice causes no change in the quantity of rice supplied. 
D)  in the long run, an increase in the demand for rice leaves the price of rice unchanged. 
A)  as people's incomes rise, the quantity of rice supplied decreases. 
B)  as the price of corn falls, the quantity of rice demanded decreases. 
C)  in the long run, a large rise in the price of rice causes no change in the quantity of rice supplied. 
D)  in the long run, an increase in the demand for rice leaves the price of rice unchanged.

Question 4

Peter's monthly income increases from $1,500 to $1,600. As a result, he increases the number of DVDs he buys per month from 2 to 3. Peter's demand for DVDs 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 5

Because there are numerous choices for fast food purchases, the price elasticity of demand for Taco Bell food is likely

Accepted Answer

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

Question 6

-In the above figure, at which point on the demand curve is the price elasticity of demand equal to 1?

Accepted Answer

A)  a 
B)  b 
C)  c 
D)  It is impossible to say at which point the elasticity equals one. 
A)  a 
B)  b 
C)  c 
D)  It is impossible to say at which point the elasticity equals one.

Question 7

Demand is perfectly inelastic when

Accepted Answer

A)  shifts in the supply curve results in no change in price. 
B)  the good in question has perfect substitutes. 
C)  shifts of the supply curve result in no change in quantity demanded. 
D)  shifts of the supply curve result in no change in the total revenue from the quantity sold. 
A)  shifts in the supply curve results in no change in price. 
B)  the good in question has perfect substitutes. 
C)  shifts of the supply curve result in no change in quantity demanded. 
D)  shifts of the supply curve result in no change in the total revenue from the quantity sold.

Question 8

If the elasticity of supply of a good is zero, then its

Accepted Answer

A)  supply curve is vertical. 
B)  supply curve is horizontal. 
C)  demand curve must be vertical. 
D)  supply curve is positively sloped. 
A)  supply curve is vertical. 
B)  supply curve is horizontal. 
C)  demand curve must be vertical. 
D)  supply curve is positively sloped.

Question 9

Suppose bad weather decreases the wheat harvest by 12 percent. If the price elasticity of demand for wheat is 0.6, how would the crop failure affect the price of wheat? Would the crop failure benefit or harm wheat farmers?

Accepted Answer

When the price elasticity of demand is 0

Question 10

-The price elasticity of demand equals the slope of the demand curve.

Accepted Answer

A) True 
 B)False

Question 11

-The table above gives the demand schedule for a good. What is the total revenue at point A? At point B? At point C? At point D? At point E?

Accepted Answer

The total revenue is the price times the

Question 12

The income elasticity of demand is ________ for a normal good and ________ for an inferior good.

Accepted Answer

A)  positive; positive 
B)  positive; negative 
C)  negative; positive 
D)  negative; negative 
A)  positive; positive 
B)  positive; negative 
C)  negative; positive 
D)  negative; negative

Question 13

-Suppose that business travelers and leisure travelers have the demand schedules for airline tickets from Atlanta to Philadelphia given in the table above.
a) Draw both demand curves.
b) As the price of tickets rises from $200 to $300, what is the price elasticity of business travelers' demand? What is the price elasticity of leisure travelers' demand? (Use the midpoint method in your calculations.)
c) Why do business travelers and leisure travelers have different price elasticities of demand for airline tickets?
d) At what price is the price elasticity of demand equal to 1 for business travelers? For leisure travelers? Explain.

Accepted Answer

@#IMG-DLM& a) The figure above shows the demand cu

Question 14

The price elasticity of demand is calculated as the absolute value of the

Accepted Answer

A)  percentage change in quantity demanded divided by the percentage change in price. 
B)  percentage change in price divided by the percentage change in quantity demanded. 
C)  change in quantity demanded divided by the change in price. 
D)  change in price divided by the change in quantity demanded. 
A)  percentage change in quantity demanded divided by the percentage change in price. 
B)  percentage change in price divided by the percentage change in quantity demanded. 
C)  change in quantity demanded divided by the change in price. 
D)  change in price divided by the change in quantity demanded.

Question 15

When the price of perfume changes from $24 to $26, the quantity supplied increases from 100 jars to 150 jars. What is the elasticity of supply of perfume?

Accepted Answer

A)  0.04 
B)  25.0 
C)  5.0 
D)  0.2 
A)  0.04 
B)  25.0 
C)  5.0 
D)  0.2

Question 16

Explain why the cross elasticity of demand for substitute goods is positive and the cross elasticity of demand for complements is negative.

Accepted Answer

The equation for the cross elasticity of

Question 17

What does a horizontal demand curve indicate about the price elasticity of demand?

Accepted Answer

If the demand curve for a good

Question 18

"The price elasticity of demand is a measure of how sensitive demanders are to changes in the price of a product." Is this statement true or false?

Accepted Answer

The assertion is True. All elasticities

Question 19

-The table above gives the demand schedule for snow peas. The demand curve for snow peas is a straight line and so the elasticity of demand is

Accepted Answer

A)  1 at all prices. 
B)  the same at all prices but not 1. 
C)  higher at higher prices. 
D)  lower at higher prices. 
A)  1 at all prices. 
B)  the same at all prices but not 1. 
C)  higher at higher prices. 
D)  lower at higher prices.

Question 20

"The price elasticity of demand is constant along a straight-line demand curve." Is this statement true or false?

Accepted Answer

False. The price elasticity of

If a rise in the price of oranges from $7 to $9 a bushel increases the quantity of bushels supplied from 4,500 to 5,500 bushels, the

Using the average price and average quantity, what is the elasticity of demand for oranges when the price of oranges changes from $200 to $160 per bushel and so the quantity demanded changes from 1000 to 1400 bushels?

If the long-run supply of rice is perfectly elastic, then

Peter's monthly income increases from $1,500 to $1,600. As a result, he increases the number of DVDs he buys per month from 2 to 3. Peter's demand for DVDs is

Because there are numerous choices for fast food purchases, the price elasticity of demand for Taco Bell food is likely

-In the above figure, at which point on the demand curve is the price elasticity of demand equal to 1?

Demand is perfectly inelastic when

If the elasticity of supply of a good is zero, then its

Suppose bad weather decreases the wheat harvest by 12 percent. If the price elasticity of demand for wheat is 0.6, how would the crop failure affect the price of wheat? Would the crop failure benefit or harm wheat farmers?

-The price elasticity of demand equals the slope of the demand curve.

-The table above gives the demand schedule for a good. What is the total revenue at point A? At point B? At point C? At point D? At point E?

The income elasticity of demand is for a normal good and for an inferior good.

The price elasticity of demand is calculated as the absolute value of the

When the price of perfume changes from $24 to $26, the quantity supplied increases from 100 jars to 150 jars. What is the elasticity of supply of perfume?

Explain why the cross elasticity of demand for substitute goods is positive and the cross elasticity of demand for complements is negative.

What does a horizontal demand curve indicate about the price elasticity of demand?

"The price elasticity of demand is a measure of how sensitive demanders are to changes in the price of a product." Is this statement true or false?

-The table above gives the demand schedule for snow peas. The demand curve for snow peas is a straight line and so the elasticity of demand is

"The price elasticity of demand is constant along a straight-line demand curve." Is this statement true or false?

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

If a rise in the price of oranges from $7 to $9 a bushel increases the quantity of bushels supplied from 4,500 to 5,500 bushels, the

Using the average price and average quantity, what is the elasticity of demand for oranges when the price of oranges changes from $200 to $160 per bushel and so the quantity demanded changes from 1000 to 1400 bushels?

If the long-run supply of rice is perfectly elastic, then

Peter's monthly income increases from $1,500 to $1,600. As a result, he increases the number of DVDs he buys per month from 2 to 3. Peter's demand for DVDs is

Because there are numerous choices for fast food purchases, the price elasticity of demand for Taco Bell food is likely

-In the above figure, at which point on the demand curve is the price elasticity of demand equal to 1?

Demand is perfectly inelastic when

If the elasticity of supply of a good is zero, then its

Suppose bad weather decreases the wheat harvest by 12 percent. If the price elasticity of demand for wheat is 0.6, how would the crop failure affect the price of wheat? Would the crop failure benefit or harm wheat farmers?

-The price elasticity of demand equals the slope of the demand curve.

-The table above gives the demand schedule for a good. What is the total revenue at point A? At point B? At point C? At point D? At point E?

The income elasticity of demand is ________ for a normal good and ________ for an inferior good.

The price elasticity of demand is calculated as the absolute value of the

When the price of perfume changes from $24 to $26, the quantity supplied increases from 100 jars to 150 jars. What is the elasticity of supply of perfume?

Explain why the cross elasticity of demand for substitute goods is positive and the cross elasticity of demand for complements is negative.

What does a horizontal demand curve indicate about the price elasticity of demand?

"The price elasticity of demand is a measure of how sensitive demanders are to changes in the price of a product." Is this statement true or false?

-The table above gives the demand schedule for snow peas. The demand curve for snow peas is a straight line and so the elasticity of demand is

"The price elasticity of demand is constant along a straight-line demand curve." Is this statement true or false?

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 income elasticity of demand is for a normal good and for an inferior good.