Question 1

Total expenditure equals price times quantity.

Accepted Answer

A) True 
 B)False

Question 2

If Polaroid wanted damages against Kodak for infringing on its instant development film process,and the courts found a high positive cross elasticity between purchases of Polaroid instant film and 35mm regular film,would that have strengthened or weakened Polaroid's claim against Kodak?

Accepted Answer

A large positive cross elasticity showed

Question 3

Since an individual spends a small share of her income on salt,the elasticity of demand is likely to be low.

Accepted Answer

A) True 
 B)False

Question 4

Which of the following goods will have the most inelastic demand at any time?

Accepted Answer

A) jewelry 
B) Big Macs 
C) electricity 
D) pork chops 
A) jewelry 
B) Big Macs 
C) electricity 
D) pork chops

Question 5

The relationship between a change in consumer income and a resulting change in demand for a good is

Accepted Answer

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

Question 6

A vertical demand curve has an elasticity of demand equal to zero.

Accepted Answer

A) True 
 B)False

Question 7

A demand curve to remain unit elastic along its entire length should

Accepted Answer

A) cross the X axis. 
B) touch the X axis but not the Y axis. 
C) never touch either the X or the Y axis. 
D) touch the Y axis but not the X axis. 
A) cross the X axis. 
B) touch the X axis but not the Y axis. 
C) never touch either the X or the Y axis. 
D) touch the Y axis but not the X axis.

Question 8

If price goes up 20 percent and quantity demanded declines by 10 percent,total revenue will rise.

Accepted Answer

A) True 
 B)False

Question 9

A price cut will decrease the revenue a firm receives if the demand for its product is

Accepted Answer

A) elastic. 
B) inelastic. 
C) of unit elasticity. 
D) straight elastic. 
A) elastic. 
B) inelastic. 
C) of unit elasticity. 
D) straight elastic.

Question 10

The Sandy Deli operates near a college campus.It has been selling 325 sandwiches a day at $1.75 each and is considering a price cut.It estimates 450 sandwiches would sell per day at $1.50 each.Calculate the marginal revenue of such a price cut and the elasticity between the two points.

Accepted Answer

Revenue is currently 325 * $1.75 = $568.

Question 11

A demand curve with unit elasticity can never touch either the vertical or horizontal axes.

Accepted Answer

A) True 
 B)False

Question 12

Along a straight-line demand curve,why does the price elasticity of demand grow steadily smaller as we move from left to right?

Accepted Answer

As we move from left to right,the quanti

Question 13

A demand curve with an elasticity of 1.0 is said to be an elastic demand curve.

Accepted Answer

A) True 
 B)False

Question 14

Figure 6-3
  
-In Figure 6-3(a),at any price above $6,quantity demanded

Accepted Answer

A) falls to zero. 
B) becomes infinitely large. 
C) is equal to price. 
D) is equal to the elasticity of demand. 
A) falls to zero. 
B) becomes infinitely large. 
C) is equal to price. 
D) is equal to the elasticity of demand.

Question 15

If the demand curve is vertical,the elasticity is

Accepted Answer

A) 1.0. 
B) 0.0. 
C) 0.5. 
D) infinite. 
A) 1.0. 
B) 0.0. 
C) 0.5. 
D) infinite.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Two goods are substitutes if a decrease in the price of one raises the quantity demanded of the other.

Accepted Answer

A) True 
 B)False

Question 18

Two goods with a low cross elasticity of demand are competing in the same market.

Accepted Answer

A) True 
 B)False

Question 19

A straight-line demand curve has an elasticity that becomes smaller as we move from left to right along the schedule.

Accepted Answer

A) True 
 B)False

Question 20

If the cross elasticity of demand for potato chips and pretzels equals 1.5,

Accepted Answer

A) potato chips and pretzels must both be luxury goods. 
B) either potato chips or pretzels must be a luxury good, and both may be luxury goods. 
C) potato chips and pretzels must be substitutes. 
D) potato chips and pretzels must be complements. 
A) potato chips and pretzels must both be luxury goods. 
B) either potato chips or pretzels must be a luxury good, and both may be luxury goods. 
C) potato chips and pretzels must be substitutes. 
D) potato chips and pretzels must be complements.

Exam 6: Demand and Elasticity

Total expenditure equals price times quantity.

If Polaroid wanted damages against Kodak for infringing on its instant development film process,and the courts found a high positive cross elasticity between purchases of Polaroid instant film and 35mm regular film,would that have strengthened or weakened Polaroid's claim against Kodak?

Since an individual spends a small share of her income on salt,the elasticity of demand is likely to be low.

Which of the following goods will have the most inelastic demand at any time?

The relationship between a change in consumer income and a resulting change in demand for a good is

A vertical demand curve has an elasticity of demand equal to zero.

A demand curve to remain unit elastic along its entire length should

If price goes up 20 percent and quantity demanded declines by 10 percent,total revenue will rise.

A price cut will decrease the revenue a firm receives if the demand for its product is

The Sandy Deli operates near a college campus.It has been selling 325 sandwiches a day at $1.75 each and is considering a price cut.It estimates 450 sandwiches would sell per day at $1.50 each.Calculate the marginal revenue of such a price cut and the elasticity between the two points.

A demand curve with unit elasticity can never touch either the vertical or horizontal axes.

Along a straight-line demand curve,why does the price elasticity of demand grow steadily smaller as we move from left to right?

A demand curve with an elasticity of 1.0 is said to be an elastic demand curve.

Figure 6-3 -In Figure 6-3(a),at any price above $6,quantity demanded

If the demand curve is vertical,the elasticity is

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

Two goods are substitutes if a decrease in the price of one raises the quantity demanded of the other.

Two goods with a low cross elasticity of demand are competing in the same market.

A straight-line demand curve has an elasticity that becomes smaller as we move from left to right along the schedule.

If the cross elasticity of demand for potato chips and pretzels equals 1.5,

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

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