Question 1

A perfectly elastic demand curve has a slope of ______ while a perfectly inelastic demand curve has a slope of ______.

Accepted Answer

A) infinity;0 
B) 1;0 
C) 0;1 
D) 0;infinity 
A) infinity;0 
B) 1;0 
C) 0;1 
D) 0;infinity

Question 2

Mike knows how to make hamburgers (like many other people)and got a minimum wage job at Burger King.With respect to price elasticity of supply,the supply curve for hamburgers is __________ because the inputs to production are __________.

Accepted Answer

A) inelastic;mobile 
B) inelastic;immobile 
C) inelastic;flexible 
D) elastic;flexible 
A) inelastic;mobile 
B) inelastic;immobile 
C) inelastic;flexible 
D) elastic;flexible

Question 3

The reason a brand name item (e.g. ,Tyson chicken)has a larger price elasticity than a class of items (e.g. ,chicken),is because:

Accepted Answer

A) there are fewer substitutes for Tyson chicken. 
B) it takes a lot of time to adjust to a substitute brand of chicken. 
C) the share of income spent on "chicken" is larger than spent on "Tyson Chicken". 
D) there are fewer substitutes for chicken than for Tyson chicken. 
A) there are fewer substitutes for Tyson chicken. 
B) it takes a lot of time to adjust to a substitute brand of chicken. 
C) the share of income spent on "chicken" is larger than spent on "Tyson Chicken". 
D) there are fewer substitutes for chicken than for Tyson chicken.

Question 4

Generally speaking,demand for a good will be more inelastic:

Accepted Answer

A) if few substitutes exist. 
B) when the good represents a large share of the consumer's budget. 
C) in the long run. 
D) when many substitutes exist. 
A) if few substitutes exist. 
B) when the good represents a large share of the consumer's budget. 
C) in the long run. 
D) when many substitutes exist.

Question 5

When Taylor raised the price of earrings at Taylor's Boutique,total revenue from earrings increased.This suggests that:

Accepted Answer

A) the demand for Taylor's earrings at the original price must be elastic. 
B) there are too many other boutiques competing with Taylor. 
C) there was excess demand for earrings at the original price. 
D) the demand for Taylor's earrings at the original price was inelastic. 
A) the demand for Taylor's earrings at the original price must be elastic. 
B) there are too many other boutiques competing with Taylor. 
C) there was excess demand for earrings at the original price. 
D) the demand for Taylor's earrings at the original price was inelastic.

Question 6

An increase in the price of golf clubs from $75 to $125 led to an increase in quantity supplied from 200 units to 300 units.The price elasticity of supply for golf club is _____ so the supply curve is _______.

Accepted Answer

A) 2;elastic 
B) 2;inelastic 
C) 4/3;elastic 
D) 3/4;inelastic 
A) 2;elastic 
B) 2;inelastic 
C) 4/3;elastic 
D) 3/4;inelastic

Question 7

If the percent change in quantity demanded is zero for any percent change in the price,demand is classified as:

Accepted Answer

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

Question 8

If the slope of the demand curve is -1.4,price is $5 and quantity demanded is 13 units,the price elasticity of demand is:

Accepted Answer

A) 0.27. 
B) 0.38. 
C) 1.4. 
D) 1.8. 
A) 0.27. 
B) 0.38. 
C) 1.4. 
D) 1.8.

Question 9

If the consumers can easily switch to a close substitute when the price of a good increases,demand for that good is likely to be:

Accepted Answer

A) elastic. 
B) inelastic. 
C) unitary elastic. 
D) perfectly inelastic. 
A) elastic. 
B) inelastic. 
C) unitary elastic. 
D) perfectly inelastic.

Question 10

The following graph depicts demand.  
Refer to the figure above.The slope of the demand curve (if you ignore the negative sign)is:

Accepted Answer

A) 2. 
B) 1.5. 
C) 1. 
D) 0.5. 
A) 2. 
B) 1.5. 
C) 1. 
D) 0.5.

Question 11

If the price is $2.00 in both locations,the price elasticity of demand for a candy bar at an airport is likely to be _________ the price elasticity of demand for a candy bar in a grocery store.

Accepted Answer

A) less than 
B) equal to 
C) greater than 
D) the reciprocal of 
A) less than 
B) equal to 
C) greater than 
D) the reciprocal of

Question 12

If the price elasticity of demand for pineapple is 0.75,a 4% increase in the price of pineapple will lead to a:

Accepted Answer

A) 3% decrease in the quantity demanded of pineapple. 
B) 3% increase in the quantity demanded of pineapple. 
C) 4% decrease in the quantity demanded of pineapple. 
D) 0.1875% increase in the quantity demanded of pineapple. 
A) 3% decrease in the quantity demanded of pineapple. 
B) 3% increase in the quantity demanded of pineapple. 
C) 4% decrease in the quantity demanded of pineapple. 
D) 0.1875% increase in the quantity demanded of pineapple.

Question 13

The demand for a good is unitary elastic 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) greater than negative one. 
A) equal to one. 
B) greater than one. 
C) less than one. 
D) greater than negative one.

Question 14

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) price inelastic. 
C) price elastic. 
D) perfectly inelastic. 
A) negative. 
B) price inelastic. 
C) price elastic. 
D) perfectly inelastic.

Question 15

Suppose that the demand for electricity has been found to be inelastic.The most likely explanation for this finding is that:

Accepted Answer

A) electricity is a luxury commodity. 
B) the fraction of income spent on electricity is large. 
C) few substitutes exist for electricity. 
D) electricity is a monopoly market. 
A) electricity is a luxury commodity. 
B) the fraction of income spent on electricity is large. 
C) few substitutes exist for electricity. 
D) electricity is a monopoly market.

Question 16

Lakeville is a small community that completely surrounds a scenic lake up north.Lakeville's zoning regulations require that residential lots have at least one hundred feet of frontage,or shoreline,on the lake.The total shoreline of the lake is 5,000 feet.
Suppose there are currently 50 homes on the lake,each with one hundred feet of shoreline.If demand for lakefront homes increased,

Accepted Answer

A) there would be excess demand for lakefront homes that the market could not correct. 
B) a new equilibrium would be established at a quantity greater than 50 and at a higher price. 
C) a new equilibrium would be established at a quantity equal to 50 and at a higher price. 
D) no new residents would be able to purchase a home on the lake because all of the lots are taken. 
A) there would be excess demand for lakefront homes that the market could not correct. 
B) a new equilibrium would be established at a quantity greater than 50 and at a higher price. 
C) a new equilibrium would be established at a quantity equal to 50 and at a higher price. 
D) no new residents would be able to purchase a home on the lake because all of the lots are taken.

Question 17

Suppose that there is only one small clothing store in the remote village of Green Acres,and until recently all of the townspeople bought most of their shirts there.As more people in Green Acres become connected to the Internet,the price elasticity of demand for shirts at the Green Acres store will:

Accepted Answer

A) increase because the Internet offers more substitutes. 
B) decrease because the Internet offers more substitutes. 
C) remain the same,but the quantity demanded will decrease as more people shop online. 
D) remain the same,but the quantity will decrease as more people shop online. 
A) increase because the Internet offers more substitutes. 
B) decrease because the Internet offers more substitutes. 
C) remain the same,but the quantity demanded will decrease as more people shop online. 
D) remain the same,but the quantity will decrease as more people shop online.

Question 18

At the price of $20 each,demand for T-shirts for students group's fundraising activity is unitary elastic.Total expenditure for T-shirts reaches ______ at a price of $20 each.

Accepted Answer

A) zero 
B) its minimum 
C) its maximum 
D) its maximum profit 
A) zero 
B) its minimum 
C) its maximum 
D) its maximum profit

Question 19

The following graph depicts demand.  
Refer to the figure above.The price elasticity of demand at point D is:

Accepted Answer

A) 5/2. 
B) 1/2. 
C) 2/5. 
D) 2. 
A) 5/2. 
B) 1/2. 
C) 2/5. 
D) 2.

Question 20

For OutBack Steakhouse,seating capacity is limited in the short run.In the long run they can add as many seats as they want.Therefore,the price elasticity of supply for the meals in OutBack would be _____ in the short run than in the long run.

Accepted Answer

A) higher 
B) lower 
C) the same 
D) more variable 
A) higher 
B) lower 
C) the same 
D) more variable

Exam 4: Elasticity

A perfectly elastic demand curve has a slope of ______ while a perfectly inelastic demand curve has a slope of ______.

Mike knows how to make hamburgers (like many other people)and got a minimum wage job at Burger King.With respect to price elasticity of supply,the supply curve for hamburgers is __________ because the inputs to production are __________.

The reason a brand name item (e.g. ,Tyson chicken)has a larger price elasticity than a class of items (e.g. ,chicken),is because:

Generally speaking,demand for a good will be more inelastic:

When Taylor raised the price of earrings at Taylor's Boutique,total revenue from earrings increased.This suggests that:

An increase in the price of golf clubs from $75 to $125 led to an increase in quantity supplied from 200 units to 300 units.The price elasticity of supply for golf club is _____ so the supply curve is _______.

If the percent change in quantity demanded is zero for any percent change in the price,demand is classified as:

If the slope of the demand curve is -1.4,price is $5 and quantity demanded is 13 units,the price elasticity of demand is:

If the consumers can easily switch to a close substitute when the price of a good increases,demand for that good is likely to be:

The following graph depicts demand. Refer to the figure above.The slope of the demand curve (if you ignore the negative sign)is:

If the price is $2.00 in both locations,the price elasticity of demand for a candy bar at an airport is likely to be _________ the price elasticity of demand for a candy bar in a grocery store.

If the price elasticity of demand for pineapple is 0.75,a 4% increase in the price of pineapple will lead to a:

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

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

Suppose that the demand for electricity has been found to be inelastic.The most likely explanation for this finding is that:

At the price of $20 each,demand for T-shirts for students group's fundraising activity is unitary elastic.Total expenditure for T-shirts reaches ______ at a price of $20 each.

The following graph depicts demand. Refer to the figure above.The price elasticity of demand at point D is:

For OutBack Steakhouse,seating capacity is limited in the short run.In the long run they can add as many seats as they want.Therefore,the price elasticity of supply for the meals in OutBack would be _____ in the short run than in the long run.

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

Spending, Income, and GDP

Inflation and the Price Level

Wages and Unemployment

Economic Growth

Saving, Capital Formation, and Financial Markets

Money, Prices, and the Financial System

Short-Term Economic Fluctuations

Spending, Output, and Fiscal Policy

Monetary Policy and the Federal Reserve

Aggregate Demand, Aggregate Supply, and Business Cycles

Macroeconomic Policy

Exchange Rates, International Trade, and Capital Flows

Filters

A perfectly elastic demand curve has a slope of while a perfectly inelastic demand curve has a slope of .

Mike knows how to make hamburgers (like many other people)and got a minimum wage job at Burger King.With respect to price elasticity of supply,the supply curve for hamburgers is because the inputs to production are .

An increase in the price of golf clubs from $75 to $125 led to an increase in quantity supplied from 200 units to 300 units.The price elasticity of supply for golf club is _ so the supply curve is ___.