Question 1

Demand Schedule for Ski Tickets
   TABLE 4-2
-Refer to Table 4-2.Price elasticity over the interval of the demand curve between prices of $90 and $70 is

Accepted Answer

A) 0.5. 
B) 2.0. 
C) -0.5. 
D) 4.0. 
E) 1.0. 
A) 0.5. 
B) 2.0. 
C) -0.5. 
D) 4.0. 
E) 1.0.

Question 2

Consider the following data for a hypothetical economy.
   TABLE 4-4
-Refer to Table 4-4.The income elasticity of demand for transit passes in this economy is

Accepted Answer

A) 0.4. 
B) 0.5. 
C) 2.5. 
D) 2.5%. 
E) 3.0%. 
A) 0.4. 
B) 0.5. 
C) 2.5. 
D) 2.5%. 
E) 3.0%.

Question 3

When the percentage change in quantity demanded is greater than the percentage change in price that brought it about,demand is said to be

Accepted Answer

A) zero elastic. 
B) unelastic. 
C) inelastic. 
D) unit elastic. 
E) elastic. 
A) zero elastic. 
B) unelastic. 
C) inelastic. 
D) unit elastic. 
E) elastic.

Question 4

A value of infinity for the elasticity of supply of some product implies that

Accepted Answer

A) the supply curve is horizontal. 
B) supply is very unresponsive to price. 
C) the supply curve is vertical. 
D) the product will be supplied at any price. 
E) no product will be supplied at any price. 
A) the supply curve is horizontal. 
B) supply is very unresponsive to price. 
C) the supply curve is vertical. 
D) the product will be supplied at any price. 
E) no product will be supplied at any price.

Question 5

If a product's income elasticity of demand is -1.7,then we can conclude that

Accepted Answer

A) an increase in income will lead to an increase in demand for the product. 
B) the product is certainly a necessity. 
C) the product is a luxury good. 
D) a decrease in income will lead to an increase in demand for the product. 
E) the product is a normal good. 
A) an increase in income will lead to an increase in demand for the product. 
B) the product is certainly a necessity. 
C) the product is a luxury good. 
D) a decrease in income will lead to an increase in demand for the product. 
E) the product is a normal good.

Question 6

A value of zero for the elasticity of supply of some product implies that

Accepted Answer

A) the supply curve is horizontal. 
B) supply is highly responsive to price. 
C) the supply curve is vertical. 
D) the product will not be supplied at any price. 
E) there is no supply. 
A) the supply curve is horizontal. 
B) supply is highly responsive to price. 
C) the supply curve is vertical. 
D) the product will not be supplied at any price. 
E) there is no supply.

Question 7

Nancy's income has just risen from $950 per week to $1050 per week.As a result,she decides to double the number of movies she attends each week.Nancy's demand for movies is

Accepted Answer

A) price elastic. 
B) income elastic. 
C) price inelastic. 
D) income inelastic. 
E) positively cross inelastic. 
A) price elastic. 
B) income elastic. 
C) price inelastic. 
D) income inelastic. 
E) positively cross inelastic.

Question 8

If a product's income elasticity of demand is 1.7,we can conclude that

Accepted Answer

A) an increase in income will lead to an increase in demand for the product. 
B) the product is certainly a necessity. 
C) the product is an inferior good. 
D) a decrease in income will lead to an increase in demand for the product. 
E) an increase in income will lead to an increase in quantity demanded of this product by 1.7%. 
A) an increase in income will lead to an increase in demand for the product. 
B) the product is certainly a necessity. 
C) the product is an inferior good. 
D) a decrease in income will lead to an increase in demand for the product. 
E) an increase in income will lead to an increase in quantity demanded of this product by 1.7%.

Question 9

FIGURE 4-2
-Refer to Figure 4-2.In diagram 1,the elasticity of demand over the price range $12 to $14 is

Accepted Answer

A) 0. 
B) less than 1. 
C) 1. 
D) greater than 1. 
E) infinity. 
A) 0. 
B) less than 1. 
C) 1. 
D) greater than 1. 
E) infinity.

Question 10

If per capita income increases by 10% and household expenditure on fur coats increases by 15%,one can conclude that the price elasticity of demand for fur coats is

Accepted Answer

A) elastic. 
B) inelastic. 
C) unity. 
D) positive. 
E) not determinable from the information given. 
A) elastic. 
B) inelastic. 
C) unity. 
D) positive. 
E) not determinable from the information given.

Question 11

A demand curve for which any price-quantity combination yields the same total expenditure reveals a price elasticity of demand equal to

Accepted Answer

A) infinity. 
B) zero. 
C) one. 
D) some value greater than one but less than infinity. 
E) not enough information to know. 
A) infinity. 
B) zero. 
C) one. 
D) some value greater than one but less than infinity. 
E) not enough information to know.

Question 12

If Vicky's income increases by 8% and she increases her consumption of music downloads by 4%,then her income elasticity of demand for music downloads is

Accepted Answer

A) 4.0. 
B) -0.5. 
C) -2.0. 
D) 2.0. 
E) 0.5. 
A) 4.0. 
B) -0.5. 
C) -2.0. 
D) 2.0. 
E) 0.5.

Question 13

There have been proposals that a tax be imposed on sugar-laden soft drinks in an attempt to reduce their consumption.Assume for simplicity that all bottled soft drinks are the same size.Suppose the initial market equilibrium is P = $2.00 and Q = 1000.   FIGURE 4-4
-Refer to Figure 4-4.Suppose the government imposes a tax of $0.60 per soft-drink purchased.The after-tax price received by the seller becomes

Accepted Answer

A) $1.80. 
B) $2.00. 
C) $2.20. 
D) $2.40. 
E) $2.60. 
A) $1.80. 
B) $2.00. 
C) $2.20. 
D) $2.40. 
E) $2.60.

Question 14

Suppose the market supply curve for some good is upward sloping.If the imposition of an excise tax causes no change in the equilibrium quantity sold in the market,the good's demand curve must be ________,meaning that the burden of the tax has fallen completely on the ________.

Accepted Answer

A) vertical; firms 
B) vertical; consumers 
C) horizontal; firms 
D) horizontal; consumers 
E) unit elastic; government 
A) vertical; firms 
B) vertical; consumers 
C) horizontal; firms 
D) horizontal; consumers 
E) unit elastic; government

Question 15

We can expect that the income elasticity of demand for gourmet catered meals would be ________ the income elasticity of demand for basic groceries.

Accepted Answer

A) equivalent to 
B) not comparable to 
C) less than 
D) higher than 
E) lower than 
A) equivalent to 
B) not comparable to 
C) less than 
D) higher than 
E) lower than

Question 16

If a producer knew his product to be an inferior good and he also knew average household income was falling,he might

Accepted Answer

A) decrease output because the demand for his product would rise. 
B) increase output because the demand for his product would rise. 
C) keep his output the same. 
D) cut output immediately because the demand for his product would surely fall. 
E) close down,because inferior goods are the first to be eliminated from household budgets when income falls. 
A) decrease output because the demand for his product would rise. 
B) increase output because the demand for his product would rise. 
C) keep his output the same. 
D) cut output immediately because the demand for his product would surely fall. 
E) close down,because inferior goods are the first to be eliminated from household budgets when income falls.

Question 17

Consumers will bear a larger burden of an excise tax if

Accepted Answer

A) demand is relatively elastic and supply is relatively inelastic. 
B) demand is relatively inelastic and supply is relatively elastic. 
C) both demand and supply are relatively inelastic. 
D) both demand and supply are relatively elastic. 
E) the tax is collected by firms rather than remitted directly to the government by consumers. 
A) demand is relatively elastic and supply is relatively inelastic. 
B) demand is relatively inelastic and supply is relatively elastic. 
C) both demand and supply are relatively inelastic. 
D) both demand and supply are relatively elastic. 
E) the tax is collected by firms rather than remitted directly to the government by consumers.

Question 18

If the value of the price elasticity of demand is 0.6,demand is said to be

Accepted Answer

A) elastic. 
B) partially elastic. 
C) inelastic. 
D) partially inelastic. 
E) somewhat inelastic. 
A) elastic. 
B) partially elastic. 
C) inelastic. 
D) partially inelastic. 
E) somewhat inelastic.

Question 19

When the percentage change in quantity demanded is less than the percentage change in price that brought it about,demand is said to be

Accepted Answer

A) zero elastic. 
B) unelastic. 
C) inelastic. 
D) unit elastic. 
E) elastic. 
A) zero elastic. 
B) unelastic. 
C) inelastic. 
D) unit elastic. 
E) elastic.

Question 20

Suppose national income is rising steadily at 2% per year over a 5-year period.Over the same time period,suppose quantity demanded for iPods and iPhones increases at 5% per year,but no other relevant variables are changing.We can conclude that the income elasticity for these products is ________ and that these products are ________ goods.

Accepted Answer

A) 0.4; inferior 
B) 4.0; normal 
C) 2.5; luxury 
D) 10.0; necessities 
E) 4.0; necessities 
A) 0.4; inferior 
B) 4.0; normal 
C) 2.5; luxury 
D) 10.0; necessities 
E) 4.0; necessities

Exam 4: Elasticity

Demand Schedule for Ski Tickets TABLE 4-2 -Refer to Table 4-2.Price elasticity over the interval of the demand curve between prices of $90 and $70 is

Consider the following data for a hypothetical economy. TABLE 4-4 -Refer to Table 4-4.The income elasticity of demand for transit passes in this economy is

When the percentage change in quantity demanded is greater than the percentage change in price that brought it about,demand is said to be

A value of infinity for the elasticity of supply of some product implies that

If a product's income elasticity of demand is -1.7,then we can conclude that

A value of zero for the elasticity of supply of some product implies that

Nancy's income has just risen from $950 per week to $1050 per week.As a result,she decides to double the number of movies she attends each week.Nancy's demand for movies is

If a product's income elasticity of demand is 1.7,we can conclude that

FIGURE 4-2 -Refer to Figure 4-2.In diagram 1,the elasticity of demand over the price range $12 to $14 is

If per capita income increases by 10% and household expenditure on fur coats increases by 15%,one can conclude that the price elasticity of demand for fur coats is

A demand curve for which any price-quantity combination yields the same total expenditure reveals a price elasticity of demand equal to

If Vicky's income increases by 8% and she increases her consumption of music downloads by 4%,then her income elasticity of demand for music downloads is

Suppose the market supply curve for some good is upward sloping.If the imposition of an excise tax causes no change in the equilibrium quantity sold in the market,the good's demand curve must be ________,meaning that the burden of the tax has fallen completely on the ________.

We can expect that the income elasticity of demand for gourmet catered meals would be ________ the income elasticity of demand for basic groceries.

If a producer knew his product to be an inferior good and he also knew average household income was falling,he might

Consumers will bear a larger burden of an excise tax if

If the value of the price elasticity of demand is 0.6,demand is said to be

When the percentage change in quantity demanded is less than the percentage change in price that brought it about,demand is said to be

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Suppose the market supply curve for some good is upward sloping.If the imposition of an excise tax causes no change in the equilibrium quantity sold in the market,the good's demand curve must be ,meaning that the burden of the tax has fallen completely on the .