Question 1

-The table above gives the demand schedule for snow peas. The price elasticity of demand between $6.00 and $7.00 per bushel is

Accepted Answer

A)  1.0. 
B)  2.0. 
C)  2.6. 
D)  5.0. 
A)  1.0. 
B)  2.0. 
C)  2.6. 
D)  5.0.

Question 2

-The demand curve in the figure above illustrates a product whose demand has a price elasticity of demand equal to

Accepted Answer

A)  zero at all prices. 
B)  infinity. 
C)  one at all prices. 
D)  a different amount at different prices. 
A)  zero at all prices. 
B)  infinity. 
C)  one at all prices. 
D)  a different amount at different prices.

Question 3

If Pepsi decided to raise its price, you would expect the price of Coca Cola

Accepted Answer

A)  to fall. 
B)  to raise. 
C)  Their prices should have no relationship because Pepsi and Coca Cola are not related. 
D)  None of the above answers are correct. 
A)  to fall. 
B)  to raise. 
C)  Their prices should have no relationship because Pepsi and Coca Cola are not related. 
D)  None of the above answers are correct.

Question 4

If the demand for a good is perfectly elastic, then the demand curve is horizontal.

Accepted Answer

A) True 
 B)False

Question 5

-The table above gives the demand schedule for museum visits.
a) You, as the resident economist, have been given the task of maximizing the museum's total revenue. What admission price should you charge?
b) What is the elasticity of demand between $6 and $4?
c) Moving along the demand schedule from $10 to $8 to $6 and ultimately to $4, how does the price elasticity of demand change in size?

Accepted Answer

a) The admission price you should charge

Question 6

A good with a horizontal demand curve has a demand

Accepted Answer

A)  with an income elasticity of demand equal to 0. 
B)  with a price elasticity of demand equal to 0. 
C)  with a price elasticity of demand equal to infinity. 
D)  for which there are no substitutes. 
A)  with an income elasticity of demand equal to 0. 
B)  with a price elasticity of demand equal to 0. 
C)  with a price elasticity of demand equal to infinity. 
D)  for which there are no substitutes.

Question 7

-In the figure above, at which point (a, b, or c) along the linear demand curve illustrated would demand be
a) most elastic?
b) most inelastic?

Accepted Answer

a) The demand would

Question 8

If the demand for a good is unit elastic

Accepted Answer

A)  a 5 percent increase in price results in a 5 percent increase in total revenue. 
B)  a 5 percent increase in price results in a 5 percent decrease in total revenue. 
C)  a 5 percent increase in price does not change total revenue. 
D)  the demand curve is a straight line with slope of -1. 
A)  a 5 percent increase in price results in a 5 percent increase in total revenue. 
B)  a 5 percent increase in price results in a 5 percent decrease in total revenue. 
C)  a 5 percent increase in price does not change total revenue. 
D)  the demand curve is a straight line with slope of -1.

Question 9

-The increase in the demand for widgets, shown in the figure above, is the result of an increase in income. Therefore, widgets

Accepted Answer

A)  are a normal good. 
B)  are an inferior good. 
C)  are elastically demanded. 
D)  are inelastically demanded. 
A)  are a normal good. 
B)  are an inferior good. 
C)  are elastically demanded. 
D)  are inelastically demanded.

Question 10

If a rise in the price of good 1 decreases the quantity of good 2 demanded

Accepted Answer

A)  the cross elasticity of demand is negative. 
B)  the cross elasticity of demand is positive. 
C)  good 1 is an inferior good. 
D)  good 2 is an inferior good. 
A)  the cross elasticity of demand is negative. 
B)  the cross elasticity of demand is positive. 
C)  good 1 is an inferior good. 
D)  good 2 is an inferior good.

Question 11

If the price of a burger decreases by 5 percent and as a result the quantity of burgers demanded increases by 8 percent, the price elasticity of demand equals

Accepted Answer

A)  0.60. 
B)  0.40. 
C)  1.60. 
D)  0.625. 
A)  0.60. 
B)  0.40. 
C)  1.60. 
D)  0.625.

Question 12

If the demand for a good is elastic, when the price increases, the

Accepted Answer

A)  demand will decrease. 
B)  quantity demanded will increase. 
C)  quantity demanded will decrease by a smaller percentage than the price increased. 
D)  quantity demanded will decrease by a greater percentage than the price increased. 
A)  demand will decrease. 
B)  quantity demanded will increase. 
C)  quantity demanded will decrease by a smaller percentage than the price increased. 
D)  quantity demanded will decrease by a greater percentage than the price increased.

Question 13

When the price of a Caesar salad is $5.00, the demand for Caesar salads is elastic, and when the price is $4.00, the demand is inelastic. If Mike's Roadside Restaurant cuts the price from $5.00 to $4.00, its total revenue from Caesar salads ________.

Accepted Answer

A)  will increase 
B)  will decrease 
C)  will remain the same 
D)  might increase, decrease, or remain the same 
A)  will increase 
B)  will decrease 
C)  will remain the same 
D)  might increase, decrease, or remain the same

Question 14

If the cross elasticity of demand between goods A and B is negative

Accepted Answer

A)  the demands for A and B are both price elastic. 
B)  the demands for A and B are both price inelastic. 
C)  A and B are complements. 
D)  A and B are substitutes. 
A)  the demands for A and B are both price elastic. 
B)  the demands for A and B are both price inelastic. 
C)  A and B are complements. 
D)  A and B are substitutes.

Question 15

When the price of a movie ticket falls from $14 to $10, the quantity of tickets demanded increases from 500 to 700 a day. What is the price elasticity of demand for movie tickets? (Use the midpoint method.)

Accepted Answer

The price elasticity of demand = (percen

Question 16

Suppose Clyde always eats ice cream and chocolate syrup together. If the price of syrup increases by 10 percent, and the cross elasticity of demand is -2, the demand for ice cream

Accepted Answer

A)  increases by 5 percent. 
B)  increases by 20 percent. 
C)  decreases by 5 percent. 
D)  decreases by 20 percent. 
A)  increases by 5 percent. 
B)  increases by 20 percent. 
C)  decreases by 5 percent. 
D)  decreases by 20 percent.

Question 17

A product is likely to have a price elasticity of demand that exceeds 1 when

Accepted Answer

A)  its price falls. 
B)  the percentage of income spent on it decreases. 
C)  it is a necessity. 
D)  it has close substitutes. 
A)  its price falls. 
B)  the percentage of income spent on it decreases. 
C)  it is a necessity. 
D)  it has close substitutes.

Question 18

If cable TV subscriptions and movie rentals are substitutes for each other, what is the effect in each of these markets of an increase in wages for people who work for the cable TV company? Use your analysis to determine the sign of the cross elasticity of demand between the quantity of movie rentals and the price of cable TV.

Accepted Answer

The supply curve of cable TV shifts left

Question 19

Demand is income elastic if

Accepted Answer

A)  a large percentage increase in income results in a small percentage increase in quantity demanded. 
B)  a small percentage increase in income results in a large percentage increase in quantity demanded. 
C)  an increase in income does not affect the quantity demanded. 
D)  the good in question has close substitutes. 
A)  a large percentage increase in income results in a small percentage increase in quantity demanded. 
B)  a small percentage increase in income results in a large percentage increase in quantity demanded. 
C)  an increase in income does not affect the quantity demanded. 
D)  the good in question has close substitutes.

Question 20

Apple, the consumer electronics giant, on Tuesday rolled out new versions of its popular iPod music player. CEO Steve Jobs also unveiled cheaper models of its Touch music player, a touchscreen-only device. An 8-gigabyte version now costs $230, down from $300. A 32-gigabyte model costs $400, down from $500. Calculate the price elasticity of demand for a 32 gigabyte Touch player if the quantity demanded increases from 850,000 to 950,000 the month after the price decrease.

Accepted Answer

A)  0.5 
B)  1.5 
C)  1 
D)  0.75 
A)  0.5 
B)  1.5 
C)  1 
D)  0.75

-The table above gives the demand schedule for snow peas. The price elasticity of demand between $6.00 and $7.00 per bushel is

-The demand curve in the figure above illustrates a product whose demand has a price elasticity of demand equal to

If Pepsi decided to raise its price, you would expect the price of Coca Cola

If the demand for a good is perfectly elastic, then the demand curve is horizontal.

A good with a horizontal demand curve has a demand

-In the figure above, at which point (a, b, or c) along the linear demand curve illustrated would demand be a) most elastic? b) most inelastic?

If the demand for a good is unit elastic

-The increase in the demand for widgets, shown in the figure above, is the result of an increase in income. Therefore, widgets

If a rise in the price of good 1 decreases the quantity of good 2 demanded

If the price of a burger decreases by 5 percent and as a result the quantity of burgers demanded increases by 8 percent, the price elasticity of demand equals

If the demand for a good is elastic, when the price increases, the

When the price of a Caesar salad is $5.00, the demand for Caesar salads is elastic, and when the price is $4.00, the demand is inelastic. If Mike's Roadside Restaurant cuts the price from $5.00 to $4.00, its total revenue from Caesar salads ________.

If the cross elasticity of demand between goods A and B is negative

When the price of a movie ticket falls from $14 to $10, the quantity of tickets demanded increases from 500 to 700 a day. What is the price elasticity of demand for movie tickets? (Use the midpoint method.)

Suppose Clyde always eats ice cream and chocolate syrup together. If the price of syrup increases by 10 percent, and the cross elasticity of demand is -2, the demand for ice cream

A product is likely to have a price elasticity of demand that exceeds 1 when

Demand is income elastic if

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 table above gives the demand schedule for snow peas. The price elasticity of demand between $6.00 and $7.00 per bushel is

-The demand curve in the figure above illustrates a product whose demand has a price elasticity of demand equal to

If Pepsi decided to raise its price, you would expect the price of Coca Cola

If the demand for a good is perfectly elastic, then the demand curve is horizontal.

A good with a horizontal demand curve has a demand

-In the figure above, at which point (a, b, or c) along the linear demand curve illustrated would demand be a) most elastic? b) most inelastic?

If the demand for a good is unit elastic

-The increase in the demand for widgets, shown in the figure above, is the result of an increase in income. Therefore, widgets

If a rise in the price of good 1 decreases the quantity of good 2 demanded

If the price of a burger decreases by 5 percent and as a result the quantity of burgers demanded increases by 8 percent, the price elasticity of demand equals

If the demand for a good is elastic, when the price increases, the

When the price of a Caesar salad is $5.00, the demand for Caesar salads is elastic, and when the price is $4.00, the demand is inelastic. If Mike's Roadside Restaurant cuts the price from $5.00 to $4.00, its total revenue from Caesar salads ________.

If the cross elasticity of demand between goods A and B is negative

When the price of a movie ticket falls from $14 to $10, the quantity of tickets demanded increases from 500 to 700 a day. What is the price elasticity of demand for movie tickets? (Use the midpoint method.)

Suppose Clyde always eats ice cream and chocolate syrup together. If the price of syrup increases by 10 percent, and the cross elasticity of demand is -2, the demand for ice cream

A product is likely to have a price elasticity of demand that exceeds 1 when

Demand is income elastic if

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