Question 1

As one moves down a straight-line demand curve,the elasticity increases.

Accepted Answer

A) True 
 B)False

Question 2

Cross-elasticity of demand could be used to measure the responsiveness of the quantity demanded of swimming pools to a change in the price of picnic tables.

Accepted Answer

A) True 
 B)False

Question 3

What are the main determinants of demand elasticity? Explain their importance.

Accepted Answer

First is the nature of the good.Necessit

Question 4

A relatively large increase in the cost of electricity would likely

Accepted Answer

A) result in a large increase in the use of gas for home use immediately. 
B) cause an immediate large decline in the use of electricity. 
C) increase the use of gas and decrease the use of electricity after a time lapse. 
D) cause an equal reduction in the use of electricity immediately. 
A) result in a large increase in the use of gas for home use immediately. 
B) cause an immediate large decline in the use of electricity. 
C) increase the use of gas and decrease the use of electricity after a time lapse. 
D) cause an equal reduction in the use of electricity immediately.

Question 5

The term "unit elasticity" is used to describe a situation in which a rise in price is accompanied by

Accepted Answer

A) a fall in total expenditure. 
B) a rise in total expenditure. 
C) constant total expenditure. 
D) a unit decrease in total expenditure. 
A) a fall in total expenditure. 
B) a rise in total expenditure. 
C) constant total expenditure. 
D) a unit decrease in total expenditure.

Question 6

A tax on cigarettes can be expected to reduce teen smoking more than it reduces adult smoking.

Accepted Answer

A) True 
 B)False

Question 7

Along a straight-line demand curve the

Accepted Answer

A) slope is constant. 
B) ratio P/Q constantly changes. 
C) elasticity grows much smaller toward the right-hand end. 
D) All of the above are correct. 
A) slope is constant. 
B) ratio P/Q constantly changes. 
C) elasticity grows much smaller toward the right-hand end. 
D) All of the above are correct.

Question 8

A demand curve is described as perfectly elastic if

Accepted Answer

A) any quantity can be sold at a given price. 
B) the same quantity is sold regardless of price. 
C) neither price nor quantity demanded ever change. 
D) only price can change. 
A) any quantity can be sold at a given price. 
B) the same quantity is sold regardless of price. 
C) neither price nor quantity demanded ever change. 
D) only price can change.

Question 9

The market demand curve shows how the quantity demanded of a product,during a specified time period,changes as the price of that product changes.

Accepted Answer

A) True 
 B)False

Question 10

Perfectly inelastic demand curves are vertical.

Accepted Answer

A) True 
 B)False

Question 11

If demand is elastic,an increase in price will decrease total revenue.

Accepted Answer

A) True 
 B)False

Question 12

The unit-elastic demand curve bends in the middle toward the origin of the graph and at either end moves closer to the axes.

Accepted Answer

A) True 
 B)False

Question 13

The following table contains information regarding price and output for a firm.For each point except the first,calculate the elasticity between it and the point above.
 $\begin{array} { c c c } 
\text { Price } & \text { Quantity } & \text { Elasticity } \
\$ 7 & 10 & - --\
6 & 20 & - -- \
5 & 30 &  - --\
4 & 40 & - -- \
3 & 50 &  - --\
2 & 60 &  - --\
1 & 70 &  - --
\end{array}$

Accepted Answer

None

Question 14

If demand is unit elastic,then a 10 percent increase in the price will lead to a 10 percent increase in quantity demanded.

Accepted Answer

A) True 
 B)False

Question 15

John's Bait Shop was surprised to learn that when it raised prices by 10 percent,total revenue was unaffected.This is because the elasticity for bait is

Accepted Answer

A) unit elastic. 
B) inelastic. 
C) elastic. 
D) Not enough information is given. 
A) unit elastic. 
B) inelastic. 
C) elastic. 
D) Not enough information is given.

Question 16

Price elasticity of demand is a numerical measure of how much quantity demanded rises as price falls or quantity demanded falls as price rises.

Accepted Answer

A) True 
 B)False

Question 17

Figure 6-4
  
-If the elasticity of demand for cigarettes is 0.4,then an increase in the price of a pack of cigarettes from $5.00 to $6.00 would reduce quantities demanded by about

Accepted Answer

A) 7 percent. 
B) 40 percent. 
C) 42 percent. 
D) 220 percent. 
A) 7 percent. 
B) 40 percent. 
C) 42 percent. 
D) 220 percent.

Question 18

The measure used to determine whether two products are substitutes or complements is called

Accepted Answer

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

Question 19

How can one tell from cross elasticity what kind of relationship exists between any two goods?

Accepted Answer

If the price of X increases and the quan

Question 20

A decrease in the price of a good will cause a movement along the demand schedule to a higher quantity demanded.

Accepted Answer

A) True 
 B)False

Exam 6: Demand and Elasticity

As one moves down a straight-line demand curve,the elasticity increases.

Cross-elasticity of demand could be used to measure the responsiveness of the quantity demanded of swimming pools to a change in the price of picnic tables.

What are the main determinants of demand elasticity? Explain their importance.

A relatively large increase in the cost of electricity would likely

The term "unit elasticity" is used to describe a situation in which a rise in price is accompanied by

A tax on cigarettes can be expected to reduce teen smoking more than it reduces adult smoking.

Along a straight-line demand curve the

A demand curve is described as perfectly elastic if

The market demand curve shows how the quantity demanded of a product,during a specified time period,changes as the price of that product changes.

Perfectly inelastic demand curves are vertical.

If demand is elastic,an increase in price will decrease total revenue.

The unit-elastic demand curve bends in the middle toward the origin of the graph and at either end moves closer to the axes.

The following table contains information regarding price and output for a firm.For each point except the first,calculate the elasticity between it and the point above. Price Quantity Elasticity \ 7 10 --- 6 20 --- 5 30 --- 4 40 --- 3 50 --- 2 60 --- 1 70 ---

If demand is unit elastic,then a 10 percent increase in the price will lead to a 10 percent increase in quantity demanded.

John's Bait Shop was surprised to learn that when it raised prices by 10 percent,total revenue was unaffected.This is because the elasticity for bait is

Price elasticity of demand is a numerical measure of how much quantity demanded rises as price falls or quantity demanded falls as price rises.

Figure 6-4 -If the elasticity of demand for cigarettes is 0.4,then an increase in the price of a pack of cigarettes from $5.00 to $6.00 would reduce quantities demanded by about

The measure used to determine whether two products are substitutes or complements is called

How can one tell from cross elasticity what kind of relationship exists between any two goods?

A decrease in the price of a good will cause a movement along the demand schedule to a higher quantity demanded.

What Is Economics

The Economy: Myth and Reality

The Fundamental Economic Problem: Scarcity and Choice

Supply and Demand: An Initial Look

Consumer Choice: Individual and Market Demand

Production,Inputs,and Cost: Building Blocks for Supply Analysis

Output,Price,and Profit: The Importance of Marginal Analysis

Securities: Business Finance,and the Economy: The Tail That Wags the Dog

The Firm and the Industry Under Perfect Competition

Monopoly

Between Competition and Monopoly

Limiting Market Power: Regulation and Antitrust

The Case for Free Markets I: the Price System

The Shortcomings of Free Markets

The Markets Prime Achievement: Innovation and Growth

Externalities, the Environment, and Natural Resources

Taxation and Resource Allocation

Pricing the Factors of Production

Labor and Entrepreneurship: The Human Inputs

Poverty, Inequality, and Discrimination

International Trade and Comparative Advantage

Filters