Question 1

-The figure shows the demand curve for popsicles. The price elasticity of demand when the price of a popsicle increases from $0.30 to $0.50 is ________.

Accepted Answer

A)  0 
B)  1 
C)  1/2 
D)  2 
A)  0 
B)  1 
C)  1/2 
D)  2

Question 2

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 3

The cross elasticity of demand between Coca-Cola and Pepsi-Cola is ________ so that Coke and Pepsi are ________.

Accepted Answer

A)  positive; complements 
B)  positive; substitutes 
C)  negative; normal goods 
D)  negative; substitutes 
A)  positive; complements 
B)  positive; substitutes 
C)  negative; normal goods 
D)  negative; substitutes

Question 4

The price elasticity of demand for new cars is 1.2. Hence, a 10 percent price increase will

Accepted Answer

A)  decrease the quantity of new cars demanded by 1.2 percent. 
B)  increase consumer expenditure on new cars by 1.2 percent. 
C)  decrease the quantity of new cars demanded by 12 percent. 
D)  increase consumer expenditure on new cars by 12 percent. 
A)  decrease the quantity of new cars demanded by 1.2 percent. 
B)  increase consumer expenditure on new cars by 1.2 percent. 
C)  decrease the quantity of new cars demanded by 12 percent. 
D)  increase consumer expenditure on new cars by 12 percent.

Question 5

-The above figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $2.00 to $1.50, then total revenue would ________ because demand is ________.

Accepted Answer

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

Question 6

If the price elasticity of demand for a good is 0.8, then a

Accepted Answer

A)  1 percent rise in the price leads to a 0.8 percent decrease in the quantity demanded. 
B)  one dollar rise in the price leads to a 0.8 percent decrease in the quantity demanded. 
C)  1 percent rise in the price leads to an 80 percent decrease in the quantity demanded. 
D)  1 percent rise in the price leads to an 8 percent decrease in the quantity demanded. 
A)  1 percent rise in the price leads to a 0.8 percent decrease in the quantity demanded. 
B)  one dollar rise in the price leads to a 0.8 percent decrease in the quantity demanded. 
C)  1 percent rise in the price leads to an 80 percent decrease in the quantity demanded. 
D)  1 percent rise in the price leads to an 8 percent decrease in the quantity demanded.

Question 7

If a 3 percent increase in the price of tennis shoes leads to a 7 percent increase in the number of tennis shoes supplied

Accepted Answer

A)  the elasticity of supply equals 0.43. 
B)  the elasticity of supply equals 2.33. 
C)  income elasticity equals 2.33. 
D)  supply is inelastic. 
A)  the elasticity of supply equals 0.43. 
B)  the elasticity of supply equals 2.33. 
C)  income elasticity equals 2.33. 
D)  supply is inelastic.

Question 8

A fall in the price of X from $12 to $8 causes an increase in the quantity of Y demanded from 900 to 1,100 units. What is the cross elasticity of demand between X and Y?

Accepted Answer

A)  0.5 
B)  -0.5 
C)  2 
D)  -2 
A)  0.5 
B)  -0.5 
C)  2 
D)  -2

Question 9

A good with a vertical demand curve has a price elasticity of demand that ________.

Accepted Answer

A)  is equal to 1 
B)  is equal to infinite 
C)  is equal to zero 
D)  varies between 0 and 1 
A)  is equal to 1 
B)  is equal to infinite 
C)  is equal to zero 
D)  varies between 0 and 1

Question 10

-In the above figure, the price elasticity of supply at any given quantity is

Accepted Answer

A)  highest along S1, next highest along S2, and lowest along S3. 
B)  highest along S3, next highest along S2, and lowest along S1. 
C)  equal to zero on each of the three supply curves. 
D)  equal to one on each of the three supply curves. 
A)  highest along S1, next highest along S2, and lowest along S3. 
B)  highest along S3, next highest along S2, and lowest along S1. 
C)  equal to zero on each of the three supply curves. 
D)  equal to one on each of the three supply curves.

Question 11

If a 1 percent decrease in the price of a pound of oranges results in a smaller percentage decrease in the quantity supplied

Accepted Answer

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

Question 12

The income elasticity of demand is

Accepted Answer

A)  always positive. 
B)  always negative. 
C)  negative for a normal good and positive for an inferior good. 
D)  positive for a normal good and negative for an inferior good. 
A)  always positive. 
B)  always negative. 
C)  negative for a normal good and positive for an inferior good. 
D)  positive for a normal good and negative for an inferior good.

Question 13

Suppose the quantity supplied of computers increases from 2 million to 4 million units as the price of a computer increases from $600 to $700. What does the price elasticity of supply equal?

Accepted Answer

The price elasticity of supply = (percen

Question 14

As the price of cell phones fell during the last decade, consumers' total expenditures on cell phones increased. If the demand curve for cell phones did not shift, this fact means that the demand for cell phones

Accepted Answer

A)  must have shifted leftward. 
B)  must be upward sloping. 
C)  is elastic. 
D)  is inelastic. 
A)  must have shifted leftward. 
B)  must be upward sloping. 
C)  is elastic. 
D)  is inelastic.

Question 15

If the demand for farm products is income elastic, that would mean that farm products were a necessity.

Accepted Answer

A) True 
 B)False

Question 16

If hot dog vendors at baseball games want to maximize their total sales revenue, they will have to

Accepted Answer

A)  be willing to experience reduced hot dog expenditure by baseball fans. 
B)  set the price of their hot dogs so that the demand is unit elastic. 
C)  sell as many hot dogs as they can, even if it means lowering price. 
D)  raise their price, even if it means selling fewer hot dogs. 
A)  be willing to experience reduced hot dog expenditure by baseball fans. 
B)  set the price of their hot dogs so that the demand is unit elastic. 
C)  sell as many hot dogs as they can, even if it means lowering price. 
D)  raise their price, even if it means selling fewer hot dogs.

Question 17

Demand is unit elastic when

Accepted Answer

A)  the slope of the demand curve is -1. 
B)  a shift of the supply curve leads to no change in price. 
C)  a shift of the supply curve leads to an equal shift of the demand curve. 
D)  a change in the price of the product leads to no change in the total revenue. 
A)  the slope of the demand curve is -1. 
B)  a shift of the supply curve leads to no change in price. 
C)  a shift of the supply curve leads to an equal shift of the demand curve. 
D)  a change in the price of the product leads to no change in the total revenue.

Question 18

"The Department of Agriculture came out today with its prediction for food price next year-4 to 5 percent increases on top of this year's already steep gains… Eggs, dairy products and cereals are up 10 percent... But the USDA says another big part of the American diet has seen only moderate price increases. Beef, poultry and pork will be up only 3 percent this year." Calculate Jennika's price elasticity of demand for pork if she decreases her consumption by 4 percent.

Accepted Answer

A)  1.25 
B)  1 
C)  0.75 
D)  0.66 
A)  1.25 
B)  1 
C)  0.75 
D)  0.66

Question 19

If when income increases by 2 percent and the price does not change, the quantity of airplane travel demanded increases by 6 percent, then the income elasticity of demand of airplane travel is ________.

Accepted Answer

A)  0.33 
B)  0 
C)  negative 
D)  3.00 
A)  0.33 
B)  0 
C)  negative 
D)  3.00

Question 20

The amount of time elapsed since a price change impacts the elasticity of demand because as more time passes,

Accepted Answer

A)  people can find more substitutes, and so the elasticity of demand decreases. 
B)  people can find more substitutes, and so the elasticity of demand increases. 
C)  people's incomes will increase, and so the elasticity of demand decreases. 
D)  the good's price will have a chance to return to its previous level. 
A)  people can find more substitutes, and so the elasticity of demand decreases. 
B)  people can find more substitutes, and so the elasticity of demand increases. 
C)  people's incomes will increase, and so the elasticity of demand decreases. 
D)  the good's price will have a chance to return to its previous level.

-The figure shows the demand curve for popsicles. The price elasticity of demand when the price of a popsicle increases from $0.30 to $0.50 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 .

The cross elasticity of demand between Coca-Cola and Pepsi-Cola is so that Coke and Pepsi are .

The price elasticity of demand for new cars is 1.2. Hence, a 10 percent price increase will

-The above figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $2.00 to $1.50, then total revenue would because demand is .

If the price elasticity of demand for a good is 0.8, then a

If a 3 percent increase in the price of tennis shoes leads to a 7 percent increase in the number of tennis shoes supplied

A fall in the price of X from $12 to $8 causes an increase in the quantity of Y demanded from 900 to 1,100 units. What is the cross elasticity of demand between X and Y?

A good with a vertical demand curve has a price elasticity of demand that ________.

-In the above figure, the price elasticity of supply at any given quantity is

If a 1 percent decrease in the price of a pound of oranges results in a smaller percentage decrease in the quantity supplied

The income elasticity of demand is

Suppose the quantity supplied of computers increases from 2 million to 4 million units as the price of a computer increases from $600 to $700. What does the price elasticity of supply equal?

As the price of cell phones fell during the last decade, consumers' total expenditures on cell phones increased. If the demand curve for cell phones did not shift, this fact means that the demand for cell phones

If the demand for farm products is income elastic, that would mean that farm products were a necessity.

If hot dog vendors at baseball games want to maximize their total sales revenue, they will have to

Demand is unit elastic when

If when income increases by 2 percent and the price does not change, the quantity of airplane travel demanded increases by 6 percent, then the income elasticity of demand of airplane travel is ________.

The amount of time elapsed since a price change impacts the elasticity of demand because as more time passes,

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 shows the demand curve for popsicles. The price elasticity of demand when the price of a popsicle increases from $0.30 to $0.50 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 ________.

The cross elasticity of demand between Coca-Cola and Pepsi-Cola is ________ so that Coke and Pepsi are ________.

The price elasticity of demand for new cars is 1.2. Hence, a 10 percent price increase will

-The above figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $2.00 to $1.50, then total revenue would ________ because demand is ________.

If the price elasticity of demand for a good is 0.8, then a

If a 3 percent increase in the price of tennis shoes leads to a 7 percent increase in the number of tennis shoes supplied

A fall in the price of X from $12 to $8 causes an increase in the quantity of Y demanded from 900 to 1,100 units. What is the cross elasticity of demand between X and Y?

A good with a vertical demand curve has a price elasticity of demand that ________.

-In the above figure, the price elasticity of supply at any given quantity is

If a 1 percent decrease in the price of a pound of oranges results in a smaller percentage decrease in the quantity supplied

The income elasticity of demand is

Suppose the quantity supplied of computers increases from 2 million to 4 million units as the price of a computer increases from $600 to $700. What does the price elasticity of supply equal?

As the price of cell phones fell during the last decade, consumers' total expenditures on cell phones increased. If the demand curve for cell phones did not shift, this fact means that the demand for cell phones

If the demand for farm products is income elastic, that would mean that farm products were a necessity.

If hot dog vendors at baseball games want to maximize their total sales revenue, they will have to

Demand is unit elastic when

If when income increases by 2 percent and the price does not change, the quantity of airplane travel demanded increases by 6 percent, then the income elasticity of demand of airplane travel is ________.

The amount of time elapsed since a price change impacts the elasticity of demand because as more time passes,

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

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 .

The cross elasticity of demand between Coca-Cola and Pepsi-Cola is so that Coke and Pepsi are .

-The above figure shows the demand curve for movie rentals from Redbox. If Redbox lowered its price from $2.00 to $1.50, then total revenue would because demand is .