Question 1

When price was 5,quantity demanded was 10.When price increased to 6,quantity demanded decreased to 9.Therefore,when price increased,total revenue

Accepted Answer

A)  decreased from 54 to 50, indicating that demand is inelastic. 
B)  decreased from 54 to 50, indicating that demand is elastic. 
C)  increased from 50 to 54, indicating that demand is inelastic. 
D)  increased from 50 to 54, indicating that demand is elastic. 
A)  decreased from 54 to 50, indicating that demand is inelastic. 
B)  decreased from 54 to 50, indicating that demand is elastic. 
C)  increased from 50 to 54, indicating that demand is inelastic. 
D)  increased from 50 to 54, indicating that demand is elastic.

Question 2

The demand for steak is _______________________ than is the demand for food because _____________________.

Accepted Answer

A)  less price elastic; the scope of the market for steak is more broadly defined 
B)  more price elastic; the scope of the market for steak is more broadly defined 
C)  less price elastic; the scope of the market for steak is less broadly defined 
D)  more price elastic; the scope of the market for steak is less broadly defined 
A)  less price elastic; the scope of the market for steak is more broadly defined 
B)  more price elastic; the scope of the market for steak is more broadly defined 
C)  less price elastic; the scope of the market for steak is less broadly defined 
D)  more price elastic; the scope of the market for steak is less broadly defined

Question 3

Suppose quantity supplied increases from 16 to 24.Using the mid-point formula,the percentage change in quantity supplied is:

Accepted Answer

A)  40% 
B)  0.4% 
C)  4% 
D)  40%. 
A)  40% 
B)  0.4% 
C)  4% 
D)  40%.

Question 4

Assuming price elasticity of demand is reported as an absolute value,an elastic demand has an elasticity:

Accepted Answer

A)  greater than one. 
B)  less than one. 
C)  exactly one. 
D)  greater than zero and less than one. 
A)  greater than one. 
B)  less than one. 
C)  exactly one. 
D)  greater than zero and less than one.

Question 5

Suppose when the price of a cookie is $2.50,the quantity demanded is 50,and when the price is $1,the quantity demanded is 200.Using the midpoint method,the price elasticity of demand is:

Accepted Answer

A)  -1.40 
B)  -0.72 
C)  -140 
D)  -7.2 
A)  -1.40 
B)  -0.72 
C)  -140 
D)  -7.2

Question 6

A tavern is likely to have a ______________________ price elasticity of supply than does an antiques dealer due to ______________________.

Accepted Answer

A)  more elastic; availability of inputs 
B)  less elastic; availability of inputs 
C)  less elastic; a longer adjustment time 
D)  less elastic; a shorter adjustment time 
A)  more elastic; availability of inputs 
B)  less elastic; availability of inputs 
C)  less elastic; a longer adjustment time 
D)  less elastic; a shorter adjustment time

Question 7

Price elasticity of supply:

Accepted Answer

A)  is the percentage change in the quantity supplied of a good or service divided by the percentage change in the price of the good or service. 
B)  measures consumers' responsiveness to a change in price. 
C)  is always a negative number. 
D)  is the percentage change in the price of a good or service divided by the percentage change in the quantity supplied of the good or service. 
A)  is the percentage change in the quantity supplied of a good or service divided by the percentage change in the price of the good or service. 
B)  measures consumers' responsiveness to a change in price. 
C)  is always a negative number. 
D)  is the percentage change in the price of a good or service divided by the percentage change in the quantity supplied of the good or service.

Question 8

The price elasticity of supply is __________ elastic over time because ___________.

Accepted Answer

A)  less; producers get accustomed to the price changes 
B)  less; the ideal number of firms have time to move into or out of the industry 
C)  more; producers have a longer time to adjust their production decisions 
D)  more; producers get accustomed to the price changes 
A)  less; producers get accustomed to the price changes 
B)  less; the ideal number of firms have time to move into or out of the industry 
C)  more; producers have a longer time to adjust their production decisions 
D)  more; producers get accustomed to the price changes

Question 9

Considering the concept of cross-price elasticity,if two goods are complements:

Accepted Answer

A)  an increase in the price of one will cause a decrease in the demand for the other. 
B)  an increase in the price of one will cause an increase in the demand for the other. 
C)  a decrease in the price of one will cause a decrease in the demand for the other. 
D)  the cross-price elasticity is positive. 
A)  an increase in the price of one will cause a decrease in the demand for the other. 
B)  an increase in the price of one will cause an increase in the demand for the other. 
C)  a decrease in the price of one will cause a decrease in the demand for the other. 
D)  the cross-price elasticity is positive.

Question 10

Suppose when the price of a can of tuna is $1.30,the quantity demanded is 9,and when the price is $1.50,the quantity demanded is 7.Using the mid-point method,the price elasticity of demand is:

Accepted Answer

A)  -1.75 
B)  -0.57 
C)  0.57 
D)  29 percent 
A)  -1.75 
B)  -0.57 
C)  0.57 
D)  29 percent

Question 11

A perfectly inelastic demand is one in which the:

Accepted Answer

A)  demand curve is perfectly vertical. 
B)  demand curve is perfectly horizontal. 
C)  measured elasticity is exactly 1. 
D)  response to a change in price is immediate. 
A)  demand curve is perfectly vertical. 
B)  demand curve is perfectly horizontal. 
C)  measured elasticity is exactly 1. 
D)  response to a change in price is immediate.

Question 12

A baker of chocolate chip cookies is likely to have a ______________ price elasticity of supply than does the seller of rare baseball cards due to ______________.

Accepted Answer

A)  more elastic; the availability of inputs 
B)  less elastic; the availability of inputs 
C)  less elastic; a shorter adjustment time 
D)  less elastic; a more flexible production process 
A)  more elastic; the availability of inputs 
B)  less elastic; the availability of inputs 
C)  less elastic; a shorter adjustment time 
D)  less elastic; a more flexible production process

Question 13

The amount that a firm receives from the sale of goods and services is:

Accepted Answer

A)  total profit. 
B)  total revenue. 
C)  total cost. 
D)  total benefit. 
A)  total profit. 
B)  total revenue. 
C)  total cost. 
D)  total benefit.

Question 14

If consumers spend more money on coffee than on sugar,then the demand for a pound of coffee is probably _________________ than is the demand for a pound sugar of because ________________.

Accepted Answer

A)  less price elastic; coffee requires a larger portion of consumers' incomes. 
B)  more price elastic; coffee requires a larger portion of consumers' incomes. 
C)  less price elastic; people will take a longer time to adjust to the change in its price. 
D)  more price elastic; people will take a longer time to adjust to the change in its price 
A)  less price elastic; coffee requires a larger portion of consumers' incomes. 
B)  more price elastic; coffee requires a larger portion of consumers' incomes. 
C)  less price elastic; people will take a longer time to adjust to the change in its price. 
D)  more price elastic; people will take a longer time to adjust to the change in its price

Question 15

A decrease in price causes:

Accepted Answer

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

Question 16

Cross-price elasticity refers to:

Accepted Answer

A)  how much the quantity demanded of one good changes in response to a change in the price of a different good. 
B)  how much the quantity demanded of one good changes in response to a change in its price. 
C)  the magnitude of the shift in demand for a good in response to a change in its price. 
D)  how much the quantity demanded of a good changes in response to a change in consumers' incomes. 
A)  how much the quantity demanded of one good changes in response to a change in the price of a different good. 
B)  how much the quantity demanded of one good changes in response to a change in its price. 
C)  the magnitude of the shift in demand for a good in response to a change in its price. 
D)  how much the quantity demanded of a good changes in response to a change in consumers' incomes.

Question 17

The mid-point method of calculating price elasticity of demand:

Accepted Answer

A)  measures the percentage changes relative to a point midway between two points on a demand curve. 
B)  measures the absolute change relative to a point midway between two points on a demand curve. 
C)  measures the percentage change relative to a point midway between demand and supply. 
D)  None of these is true. 
A)  measures the percentage changes relative to a point midway between two points on a demand curve. 
B)  measures the absolute change relative to a point midway between two points on a demand curve. 
C)  measures the percentage change relative to a point midway between demand and supply. 
D)  None of these is true.

Question 18

When a good has many close substitutes available,it is likely to be:

Accepted Answer

A)  less price elastic than are goods without close substitutes available. 
B)  more price elastic than are goods with many complement goods available. 
C)  less price elastic than are goods with many complement goods available. 
D)  more price elastic than are goods without close substitutes available. 
A)  less price elastic than are goods without close substitutes available. 
B)  more price elastic than are goods with many complement goods available. 
C)  less price elastic than are goods with many complement goods available. 
D)  more price elastic than are goods without close substitutes available.

Question 19

A perfectly elastic demand is one in which the:

Accepted Answer

A)  demand curve is perfectly vertical. 
B)  demand curve is perfectly horizontal. 
C)  price elasticity is exactly 1. 
D)  response to a change in price is immediate. 
A)  demand curve is perfectly vertical. 
B)  demand curve is perfectly horizontal. 
C)  price elasticity is exactly 1. 
D)  response to a change in price is immediate.

Question 20

The more time people have to adjust to a price change:

Accepted Answer

A)  the less elastic their demand will be. 
B)  will not affect the elasticity of their response unless it is a luxury good. 
C)  the more elastic their demand will be. 
D)  will not affect the elasticity of their response unless the good is a necessity. 
A)  the less elastic their demand will be. 
B)  will not affect the elasticity of their response unless it is a luxury good. 
C)  the more elastic their demand will be. 
D)  will not affect the elasticity of their response unless the good is a necessity.

Exam 4: Elasticity

When price was 5,quantity demanded was 10.When price increased to 6,quantity demanded decreased to 9.Therefore,when price increased,total revenue

The demand for steak is _______________________ than is the demand for food because _____________________.

Suppose quantity supplied increases from 16 to 24.Using the mid-point formula,the percentage change in quantity supplied is:

Assuming price elasticity of demand is reported as an absolute value,an elastic demand has an elasticity:

Suppose when the price of a cookie is $2.50,the quantity demanded is 50,and when the price is $1,the quantity demanded is 200.Using the midpoint method,the price elasticity of demand is:

A tavern is likely to have a ______________________ price elasticity of supply than does an antiques dealer due to ______________________.

Price elasticity of supply:

The price elasticity of supply is __________ elastic over time because ___________.

Considering the concept of cross-price elasticity,if two goods are complements:

Suppose when the price of a can of tuna is $1.30,the quantity demanded is 9,and when the price is $1.50,the quantity demanded is 7.Using the mid-point method,the price elasticity of demand is:

A perfectly inelastic demand is one in which the:

A baker of chocolate chip cookies is likely to have a ______________ price elasticity of supply than does the seller of rare baseball cards due to ______________.

The amount that a firm receives from the sale of goods and services is:

If consumers spend more money on coffee than on sugar,then the demand for a pound of coffee is probably _________________ than is the demand for a pound sugar of because ________________.

A decrease in price causes:

Cross-price elasticity refers to:

The mid-point method of calculating price elasticity of demand:

When a good has many close substitutes available,it is likely to be:

A perfectly elastic demand is one in which the:

The more time people have to adjust to a price change:

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The demand for steak is ___ than is the demand for food because _.

A tavern is likely to have a price elasticity of supply than does an antiques dealer due to .

The price elasticity of supply is elastic over time because _.

A baker of chocolate chip cookies is likely to have a price elasticity of supply than does the seller of rare baseball cards due to .

If consumers spend more money on coffee than on sugar,then the demand for a pound of coffee is probably _ than is the demand for a pound sugar of because .