Question 1

If the price elasticity of demand for chicken is 2, then a 20% decrease in the price of chicken will lead to a:

Accepted Answer

A) 10% decrease in the quantity demanded of chicken. 
B) 10% increase in the quantity demanded of chicken. 
C) 40% decrease in the quantity demanded of chicken. 
D) 40% increase in the quantity demanded of chicken. 
A) 10% decrease in the quantity demanded of chicken. 
B) 10% increase in the quantity demanded of chicken. 
C) 40% decrease in the quantity demanded of chicken. 
D) 40% increase in the quantity demanded of chicken.

Question 2

The demand for a good is inelastic with respect to price if the price elasticity of demand is:

Accepted Answer

A) equal to one. 
B) greater than one. 
C) less than one. 
D) equal to negative one. 
A) equal to one. 
B) greater than one. 
C) less than one. 
D) equal to negative one.

Question 3

Pepsi One is a close substitute for Diet Coke. When Pepsi introduced Pepsi One, the price elasticity of demand for Diet Coke ______ and Coke's ability to raise revenues through price increases ______.

Accepted Answer

A) increased; was reduced 
B) increased; increased 
C) decreased; was reduced 
D) had no effect; was reduced 
A) increased; was reduced 
B) increased; increased 
C) decreased; was reduced 
D) had no effect; was reduced

Question 4

Suppose you have one hour to catch a flight to Miami for spring break, and it takes 45 minutes to drive to the airport. Your car is almost out of gas and the price of gas at the closest gas station is higher than at other gas stations that are much farther away. To you, the price elasticity of demand for gas is likely to be ______ than it would be if you had several hours before the flight.

Accepted Answer

A) higher 
B) lower 
C) more variable 
D) no different 
A) higher 
B) lower 
C) more variable 
D) no different

Question 5

During recessions, when some workers lose their jobs and have lower incomes, sales of durable goods (goods with a life expectancy of 3 years or more) decline. Apparently, durable goods are:

Accepted Answer

A) substitutes. 
B) normal goods. 
C) complements. 
D) inferior goods. 
A) substitutes. 
B) normal goods. 
C) complements. 
D) inferior goods.

Question 6

The following graph depicts demand.   The price elasticity of demand at point C is:

Accepted Answer

A) 3/16. 
B) 16/3. 
C) 3/4. 
D) 3/8. 
A) 3/16. 
B) 16/3. 
C) 3/4. 
D) 3/8.

Question 7

The price elasticity of demand for a good measures the responsiveness of:

Accepted Answer

A) demand to a one percent change in price of that good. 
B) price to a one percent change in the demand for that good. 
C) quantity demanded to a one percent change in price of that good. 
D) price to a one percent change in the quantity demanded of that good. 
A) demand to a one percent change in price of that good. 
B) price to a one percent change in the demand for that good. 
C) quantity demanded to a one percent change in price of that good. 
D) price to a one percent change in the quantity demanded of that good.

Question 8

If 20% increase in the price of a good leads to a 60% decrease in the quantity demanded, then what is the price elasticity of demand?

Accepted Answer

A) 30. 
B) 3. 
C) 1/3. 
D) 1/6. 
A) 30. 
B) 3. 
C) 1/3. 
D) 1/6.

Question 9

If the slope of a demand curve is infinite, then the price elasticity of demand is:

Accepted Answer

A) zero. 
B) infinite. 
C) one. 
D) equal to the price of the good. 
A) zero. 
B) infinite. 
C) one. 
D) equal to the price of the good.

Question 10

For any horizontal demand curve, the price elasticity of demand is:

Accepted Answer

A) 0. 
B) 1. 
C) infinite. 
D) equal to the price of the good. 
A) 0. 
B) 1. 
C) infinite. 
D) equal to the price of the good.

Question 11

If a 10% decrease in the price of a good leads to a 20% increase in the quantity demanded, then what is the price elasticity of demand?

Accepted Answer

A) ½. 
B) 2. 
C) 10. 
D) 20. 
A) ½. 
B) 2. 
C) 10. 
D) 20.

Question 12

If the price of textbooks increases by one percent and the quantity demanded falls by one-half percent, then demand for textbooks is:

Accepted Answer

A) negative. 
B) inelastic. 
C) elastic. 
D) unit elastic. 
A) negative. 
B) inelastic. 
C) elastic. 
D) unit elastic.

Question 13

If the price of cheese falls by 1 percent and the quantity demanded rises by 3 percent, then the price elasticity of demand for cheese is equal to:

Accepted Answer

A) 30. 
B) 0.30. 
C) 0.333. 
D) 3. 
A) 30. 
B) 0.30. 
C) 0.333. 
D) 3.

Question 14

Suppose that a new drug has been approved to treat a life-threatening disease. The demand for that drug is shown on the graph below. Prior to approval of this drug, the only treatment for this condition was any one of several non-prescription, or over-the-counter, pain relievers. The demand for one brand of the several non-prescription pain relievers is also shown on the graph.   A likely reason for the difference in the slopes of the demand curves is that:

Accepted Answer

A) the over-the-counter pain reliever has many substitutes, but the new drug does not. 
B) one drug is new on the market, but the other has been available for a long time. 
C) one drug is heavily regulated by the Food and Drug Administration and the other is not. 
D) one market is in equilibrium and the other is not. 
A) the over-the-counter pain reliever has many substitutes, but the new drug does not. 
B) one drug is new on the market, but the other has been available for a long time. 
C) one drug is heavily regulated by the Food and Drug Administration and the other is not. 
D) one market is in equilibrium and the other is not.

Question 15

Suppose an increase in the price of hamburger from $3 to $4 leads to an increase in quantity supplied from 100 units to 150 units. At the original price, the price elasticity of supply for hamburgers is ______ so supply is ______.

Accepted Answer

A) 2/3; elastic 
B) 2/3; inelastic 
C) 3/2; elastic 
D) 3/2; inelastic 
A) 2/3; elastic 
B) 2/3; inelastic 
C) 3/2; elastic 
D) 3/2; inelastic

Question 16

Suppose that a new drug has been approved to treat a life-threatening disease. The demand for that drug is shown on the graph below. Prior to approval of this drug, the only treatment for this condition was any one of several non-prescription, or over-the-counter, pain relievers. The demand for one brand of the several non-prescription pain relievers is also shown on the graph.   The manufacturer of the over-the-counter pain reliever would _______ total revenue by increasing the price from $15 to $16.

Accepted Answer

A) increase 
B) decrease 
C) experience no change in 
D) experience an uncertain change in 
A) increase 
B) decrease 
C) experience no change in 
D) experience an uncertain change in

Question 17

It takes many years to train to become an orthopedic surgeon. This suggests that, in the short run, a sudden increase in the demand for orthopedic surgeons will:

Accepted Answer

A) not affect the salaries of orthopedic surgeons. 
B) have no impact on the number of people who decide to become orthopedic surgeons. 
C) lead to a large increase in the number of orthopedic surgeons. 
D) have little effect on the number of trained orthopedic surgeons. 
A) not affect the salaries of orthopedic surgeons. 
B) have no impact on the number of people who decide to become orthopedic surgeons. 
C) lead to a large increase in the number of orthopedic surgeons. 
D) have little effect on the number of trained orthopedic surgeons.

Question 18

Refer to the figure below. At P = 4, how does the price elasticity of demand for D1 compare to that for D2?

Accepted Answer

A) It will be equal for D1 and D2. 
B) It will be greater for D1 than for D2. 
C) It will be lower for D1 than D2. 
D) The price elasticity of demand for both D1 and D2 will be greater than one. 
A) It will be equal for D1 and D2. 
B) It will be greater for D1 than for D2. 
C) It will be lower for D1 than D2. 
D) The price elasticity of demand for both D1 and D2 will be greater than one.

Question 19

If the cross-price elasticity of demand between lettuce and salad dressing is negative, then when the price of lettuce rises, the demand for salad dressing will ______.

Accepted Answer

A) increase 
B) decrease 
C) remain the same 
D) become more inelastic 
A) increase 
B) decrease 
C) remain the same 
D) become more inelastic

Question 20

If a demand curve is horizontal at P = $5, then the price elasticity of demand is:

Accepted Answer

A) 5. 
B) 0.2. 
C) 0. 
D) infinite. 
A) 5. 
B) 0.2. 
C) 0. 
D) infinite.

If the price elasticity of demand for chicken is 2, then a 20% decrease in the price of chicken will lead to a:

The demand for a good is inelastic with respect to price if the price elasticity of demand is:

Pepsi One is a close substitute for Diet Coke. When Pepsi introduced Pepsi One, the price elasticity of demand for Diet Coke and Coke's ability to raise revenues through price increases .

During recessions, when some workers lose their jobs and have lower incomes, sales of durable goods (goods with a life expectancy of 3 years or more) decline. Apparently, durable goods are:

The following graph depicts demand. The price elasticity of demand at point C is:

The price elasticity of demand for a good measures the responsiveness of:

If 20% increase in the price of a good leads to a 60% decrease in the quantity demanded, then what is the price elasticity of demand?

If the slope of a demand curve is infinite, then the price elasticity of demand is:

For any horizontal demand curve, the price elasticity of demand is:

If a 10% decrease in the price of a good leads to a 20% increase in the quantity demanded, then what is the price elasticity of demand?

If the price of textbooks increases by one percent and the quantity demanded falls by one-half percent, then demand for textbooks is:

If the price of cheese falls by 1 percent and the quantity demanded rises by 3 percent, then the price elasticity of demand for cheese is equal to:

Suppose an increase in the price of hamburger from $3 to $4 leads to an increase in quantity supplied from 100 units to 150 units. At the original price, the price elasticity of supply for hamburgers is so supply is .

It takes many years to train to become an orthopedic surgeon. This suggests that, in the short run, a sudden increase in the demand for orthopedic surgeons will:

Refer to the figure below. At P = 4, how does the price elasticity of demand for D1 compare to that for D2?

If the cross-price elasticity of demand between lettuce and salad dressing is negative, then when the price of lettuce rises, the demand for salad dressing will ______.

If a demand curve is horizontal at P = $5, then the price elasticity of demand is:

Thinking Like an Economist

Comparative Advantage

Supply and Demand

Demand

Perfectly Competitive Supply

Efficiency, Exchange, and the Invisible Hand in Action

Monopoly, Oligopoly, and Monopolistic Competition

Games and Strategic Behavior

Externalities and Property Rights

The Economics of Information

Labor Markets, Poverty, and Income Distribution

The Environment, Health, and Safety

Public Goods and Tax Policy

Filters

Exam 4: Elasticity

If the price elasticity of demand for chicken is 2, then a 20% decrease in the price of chicken will lead to a:

The demand for a good is inelastic with respect to price if the price elasticity of demand is:

Pepsi One is a close substitute for Diet Coke. When Pepsi introduced Pepsi One, the price elasticity of demand for Diet Coke ______ and Coke's ability to raise revenues through price increases ______.

During recessions, when some workers lose their jobs and have lower incomes, sales of durable goods (goods with a life expectancy of 3 years or more) decline. Apparently, durable goods are:

The following graph depicts demand. The price elasticity of demand at point C is:

The price elasticity of demand for a good measures the responsiveness of:

If 20% increase in the price of a good leads to a 60% decrease in the quantity demanded, then what is the price elasticity of demand?

If the slope of a demand curve is infinite, then the price elasticity of demand is:

For any horizontal demand curve, the price elasticity of demand is:

If a 10% decrease in the price of a good leads to a 20% increase in the quantity demanded, then what is the price elasticity of demand?

If the price of textbooks increases by one percent and the quantity demanded falls by one-half percent, then demand for textbooks is:

If the price of cheese falls by 1 percent and the quantity demanded rises by 3 percent, then the price elasticity of demand for cheese is equal to:

Suppose an increase in the price of hamburger from $3 to $4 leads to an increase in quantity supplied from 100 units to 150 units. At the original price, the price elasticity of supply for hamburgers is ______ so supply is ______.

It takes many years to train to become an orthopedic surgeon. This suggests that, in the short run, a sudden increase in the demand for orthopedic surgeons will:

Refer to the figure below. At P = 4, how does the price elasticity of demand for D1 compare to that for D2?

If the cross-price elasticity of demand between lettuce and salad dressing is negative, then when the price of lettuce rises, the demand for salad dressing will ______.

If a demand curve is horizontal at P = $5, then the price elasticity of demand is:

Thinking Like an Economist

Comparative Advantage

Supply and Demand

Demand

Perfectly Competitive Supply

Efficiency, Exchange, and the Invisible Hand in Action

Monopoly, Oligopoly, and Monopolistic Competition

Games and Strategic Behavior

Externalities and Property Rights

The Economics of Information

Labor Markets, Poverty, and Income Distribution

The Environment, Health, and Safety

Public Goods and Tax Policy

Filters

Pepsi One is a close substitute for Diet Coke. When Pepsi introduced Pepsi One, the price elasticity of demand for Diet Coke and Coke's ability to raise revenues through price increases .

Suppose an increase in the price of hamburger from $3 to $4 leads to an increase in quantity supplied from 100 units to 150 units. At the original price, the price elasticity of supply for hamburgers is so supply is .