Question 1

If the price effect outweighs the quantity effect of a price decrease,then:

Accepted Answer

A) total revenue will decrease. 
B) the good is price inelastic. 
C) the measured elasticity must be greater than 1. 
D) All of these are true. 
A) total revenue will decrease. 
B) the good is price inelastic. 
C) the measured elasticity must be greater than 1. 
D) All of these are true.

Question 2

Whether a cross-price elasticity of demand is positive or negative:

Accepted Answer

A) tells us whether the goods are substitutes or complements. 
B) tells us whether the elasticity is reported in absolute value. 
C) tells us whether the good is elastic or inelastic. 
D) None of these is true. 
A) tells us whether the goods are substitutes or complements. 
B) tells us whether the elasticity is reported in absolute value. 
C) tells us whether the good is elastic or inelastic. 
D) None of these is true.

Question 3

A decrease in price:

Accepted Answer

A) causes a quantity effect,which is an increase in revenue that results from selling fewer units of the good. 
B) causes a price effect,which is a decrease in revenue that results from receiving a lower price for each unit sold. 
C) causes both a price effect and quantity effect. 
D) All of these are true. 
A) causes a quantity effect,which is an increase in revenue that results from selling fewer units of the good. 
B) causes a price effect,which is a decrease in revenue that results from receiving a lower price for each unit sold. 
C) causes both a price effect and quantity effect. 
D) All of these are true.

Question 4

It is most likely for ______________ to have an income elasticity less than 1,and _____________ to have an income elasticity of more than one.

Accepted Answer

A) coffee;boat 
B) boat;car 
C) vacation;cell phone 
D) filet mignon;chicken 
A) coffee;boat 
B) boat;car 
C) vacation;cell phone 
D) filet mignon;chicken

Question 5

Pencils are likely ____________ than diamonds because ___________.

Accepted Answer

A) less price elastic;they have more available substitutes 
B) more price elastic;they have more available substitutes 
C) less price elastic;they cost much less than a diamond 
D) more price elastic;they have more practical uses 
A) less price elastic;they have more available substitutes 
B) more price elastic;they have more available substitutes 
C) less price elastic;they cost much less than a diamond 
D) more price elastic;they have more practical uses

Question 6

Total revenue is:

Accepted Answer

A) the amount that a firm receives from the sale of goods and services. 
B) the amount that a firm keeps after all expenses are paid. 
C) the amount of sales that get reinvested in the firm. 
D) the amount a firm receives from dividends. 
A) the amount that a firm receives from the sale of goods and services. 
B) the amount that a firm keeps after all expenses are paid. 
C) the amount of sales that get reinvested in the firm. 
D) the amount a firm receives from dividends.

Question 7

Ice cream is _________________ than frozen treats because ________________.

Accepted Answer

A) less price elastic;it is a smaller portion of one's income 
B) more price elastic;it is a smaller portion of one's income 
C) less price elastic;the scope of the market is less broadly defined 
D) more price elastic;the scope of the market is less broadly defined 
A) less price elastic;it is a smaller portion of one's income 
B) more price elastic;it is a smaller portion of one's income 
C) less price elastic;the scope of the market is less broadly defined 
D) more price elastic;the scope of the market is less broadly defined

Question 8

The size of the percentage change in the quantity supplied of a good or service when its price changes is called by one percent is called:

Accepted Answer

A) price elasticity of supply. 
B) price elasticity of demand. 
C) cross-price elasticity. 
D) income elasticity of supply. 
A) price elasticity of supply. 
B) price elasticity of demand. 
C) cross-price elasticity. 
D) income elasticity of supply.

Question 9

Some determinants of the price elasticity of supply are:

Accepted Answer

A) availability of substitutes,adjustment time. 
B) availability of inputs,adjustment time. 
C) flexibility of the production process,availability of substitutes. 
D) availability of inputs,presence of competition. 
A) availability of substitutes,adjustment time. 
B) availability of inputs,adjustment time. 
C) flexibility of the production process,availability of substitutes. 
D) availability of inputs,presence of competition.

Question 10

Assuming elasticity is reported in absolute value,a measured elasticity of greater than one implies:

Accepted Answer

A) the good is elastic. 
B) the good is inelastic. 
C) the good is unitary elastic. 
D) Cannot be determined without more information. 
A) the good is elastic. 
B) the good is inelastic. 
C) the good is unitary elastic. 
D) Cannot be determined without more information.

Question 11

A good is unit elastic if:

Accepted Answer

A) total revenue stays the same as a result of a price increase. 
B) the quantity effect outweighs the price effect of a price increase. 
C) the measured elasticity is less than 1. 
D) All of these are true. 
A) total revenue stays the same as a result of a price increase. 
B) the quantity effect outweighs the price effect of a price increase. 
C) the measured elasticity is less than 1. 
D) All of these are true.

Question 12

If the price of a cup of Dunkin' Donuts coffee rises,while the price of a Starbucks latte doesn't,we expect the quantity of lattes demanded to:

Accepted Answer

A) increase as some people switch from coffee to the relatively cheaper latte. 
B) decrease as some people switch from coffee to the relatively cheaper latte. 
C) increase as some people switch from coffee to the relatively more expensive latte. 
D) decrease as some people switch from coffee to the relatively more expensive latte. 
A) increase as some people switch from coffee to the relatively cheaper latte. 
B) decrease as some people switch from coffee to the relatively cheaper latte. 
C) increase as some people switch from coffee to the relatively more expensive latte. 
D) decrease as some people switch from coffee to the relatively more expensive latte.

Question 13

Spring break vacations are _________________ than tuition payments because ________________.

Accepted Answer

A) less price elastic;they have more available substitutes 
B) more price elastic;they have less available substitutes 
C) less price elastic;they are more of a luxury good 
D) more price elastic;they are more of a luxury good 
A) less price elastic;they have more available substitutes 
B) more price elastic;they have less available substitutes 
C) less price elastic;they are more of a luxury good 
D) more price elastic;they are more of a luxury good

Question 14

If supply and demand analysis is a measure of how,then elasticity is a measure of:

Accepted Answer

A) how much. 
B) when. 
C) why. 
D) how quickly. 
A) how much. 
B) when. 
C) why. 
D) how quickly.

Question 15

A cup of coffee is ______________ than dinner out at a fancy restaurant because _________________.

Accepted Answer

A) less price elastic;it is a smaller portion of one's income 
B) more price elastic;it is a smaller portion of one's income 
C) less price elastic;it is more of a luxury good 
D) more price elastic;it is more of a luxury good 
A) less price elastic;it is a smaller portion of one's income 
B) more price elastic;it is a smaller portion of one's income 
C) less price elastic;it is more of a luxury good 
D) more price elastic;it is more of a luxury good

Question 16

Cars are _________ than yachts because _______________.

Accepted Answer

A) less price elastic;they have more available substitutes 
B) more price elastic;they have more available substitutes 
C) less price elastic;they are more of a necessity good 
D) more price elastic;they are more of a necessity good 
A) less price elastic;they have more available substitutes 
B) more price elastic;they have more available substitutes 
C) less price elastic;they are more of a necessity good 
D) more price elastic;they are more of a necessity good

Question 17

A farmer is likely to have a _____________ price elasticity of supply than an auto mechanic due to ________________.

Accepted Answer

A) more elastic;a more flexible production process 
B) less elastic;a more flexible production process 
C) less elastic;a less flexible production process 
D) more elastic;a less flexible production process 
A) more elastic;a more flexible production process 
B) less elastic;a more flexible production process 
C) less elastic;a less flexible production process 
D) more elastic;a less flexible production process

Question 18

A linear demand curve:

Accepted Answer

A) has a measured slope that is the same as the measured elasticity. 
B) has a constant slope,but changing elasticity. 
C) has a changing slope,but constant elasticity. 
D) has a constant slope and a constant elasticity,but they need not equal one another. 
A) has a measured slope that is the same as the measured elasticity. 
B) has a constant slope,but changing elasticity. 
C) has a changing slope,but constant elasticity. 
D) has a constant slope and a constant elasticity,but they need not equal one another.

Question 19

When consumers' buying decisions are highly influenced by price,we say that their demand curve is:

Accepted Answer

A) highly elastic. 
B) less elastic. 
C) not very sensitive to changes in the price. 
D) unit elastic. 
A) highly elastic. 
B) less elastic. 
C) not very sensitive to changes in the price. 
D) unit elastic.

Question 20

A perfectly inelastic demand:

Accepted Answer

A) means people will not respond to any change in price. 
B) means people will respond to any change in price. 
C) means demand will drop to zero if the price changes by any amount. 
D) is demonstrated by a perfectly horizontal demand curve. 
A) means people will not respond to any change in price. 
B) means people will respond to any change in price. 
C) means demand will drop to zero if the price changes by any amount. 
D) is demonstrated by a perfectly horizontal demand curve.

Exam 4: Elasticity

If the price effect outweighs the quantity effect of a price decrease,then:

Whether a cross-price elasticity of demand is positive or negative:

A decrease in price:

It is most likely for ______________ to have an income elasticity less than 1,and _____________ to have an income elasticity of more than one.

Pencils are likely ____________ than diamonds because ___________.

Total revenue is:

Ice cream is _________________ than frozen treats because ________________.

The size of the percentage change in the quantity supplied of a good or service when its price changes is called by one percent is called:

Some determinants of the price elasticity of supply are:

Assuming elasticity is reported in absolute value,a measured elasticity of greater than one implies:

A good is unit elastic if:

If the price of a cup of Dunkin' Donuts coffee rises,while the price of a Starbucks latte doesn't,we expect the quantity of lattes demanded to:

Spring break vacations are _________________ than tuition payments because ________________.

If supply and demand analysis is a measure of how,then elasticity is a measure of:

A cup of coffee is ______________ than dinner out at a fancy restaurant because _________________.

Cars are _________ than yachts because _______________.

A farmer is likely to have a _____________ price elasticity of supply than an auto mechanic due to ________________.

A linear demand curve:

When consumers' buying decisions are highly influenced by price,we say that their demand curve is:

A perfectly inelastic demand:

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Filters

It is most likely for __ to have an income elasticity less than 1,and _ to have an income elasticity of more than one.

Pencils are likely __ than diamonds because _.

Ice cream is _ than frozen treats because .

Spring break vacations are _ than tuition payments because .

A cup of coffee is than dinner out at a fancy restaurant because ___.

Cars are _ than yachts because _______.

A farmer is likely to have a _ price elasticity of supply than an auto mechanic due to ____.