Question 1

The price elasticity of demand for a good is the response of:

Accepted Answer

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

Question 2

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

Question 3

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

Accepted Answer

A) 5/2. 
B) 5/8. 
C) 2/5. 
D) 8/5. 
A) 5/2. 
B) 5/8. 
C) 2/5. 
D) 8/5.

Question 4

If cross price elasticity is positive but less than one,the two goods are:

Accepted Answer

A) substitutes. 
B) inelastically demanded. 
C) complements. 
D) normal. 
A) substitutes. 
B) inelastically demanded. 
C) complements. 
D) normal.

Question 5

The cross-price elasticity for bread and potatoes is estimated to be 0.5.This implies bread and potatoes are:

Accepted Answer

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

Question 6

Suppose the price P on a given demand curve results in a price elasticity of demand equal to 1.This price is on the ______ portion of the demand curve.

Accepted Answer

A) elastic 
B) unitary elastic 
C) inelastic 
D) steepest 
A) elastic 
B) unitary elastic 
C) inelastic 
D) steepest

Question 7

Suppose that a new drug has been approved to treat a life-threatening disease.Demand for that drug is shown on the graph below.Prior to approval of this drug,the only treatment for this condition was non-prescription pain relief.Demand for one brand of non-prescription pain reliever is also shown on the graph below.  
Refer to the figure above.At a price of $15,price elasticity of demand for the new drug is _______ price elasticity of demand for an over-the-counter pain reliever.

Accepted Answer

A) greater than 
B) less than 
C) the same as 
D) the reciprocal of 
A) greater than 
B) less than 
C) the same as 
D) the reciprocal of

Question 8

If most consumer goods and services are ______,then most income elasticities are ______.

Accepted Answer

A) normal;negative 
B) inferior;positive 
C) normal;greater than one 
D) normal;positive 
A) normal;negative 
B) inferior;positive 
C) normal;greater than one 
D) normal;positive

Question 9

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,durables are:

Accepted Answer

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

Question 10

If the percentage change in price for a good is equal to the percentage change in quantity demanded of that good,then the demand for that good,with respect to price,is:

Accepted Answer

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

Question 11

Satellite TV is a close substitute for cable TV.In the 1990's,small satellite TV units were developed that made it more practical for individual consumers to subscribe to satellite TV service.This caused the price elasticity of demand for cable TV service to:

Accepted Answer

A) become more inelastic. 
B) become less elastic. 
C) become more elastic. 
D) shift to the left. 
A) become more inelastic. 
B) become less elastic. 
C) become more elastic. 
D) shift to the left.

Question 12

If the price of a good increases by 20% and that leads to a decrease in quantity demanded by 60%,what is the price elasticity of demand for that good?

Accepted Answer

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

Question 13

For which of the following products is demand likely to be least price elastic?

Accepted Answer

A) Frozen food 
B) Soft drinks 
C) Groceries 
D) Diet Coke 
A) Frozen food 
B) Soft drinks 
C) Groceries 
D) Diet Coke

Question 14

If the price elasticity of demand for tickets to a football game is 2 then,when the price increases by 1%,quantity demanded decreases by:

Accepted Answer

A) ½%. 
B) 1%. 
C) 2%. 
D) 4%. 
A) ½%. 
B) 1%. 
C) 2%. 
D) 4%.

Question 15

If the demand for salad dressing increased when the price of lettuce decreased,cross price elasticity would be ________,and we would say these two goods are _______.

Accepted Answer

A) unitary;inelastic 
B) zero;inferior 
C) negative;substitutes 
D) negative;complements 
A) unitary;inelastic 
B) zero;inferior 
C) negative;substitutes 
D) negative;complements

Question 16

The following graph depicts demand.  
Refer to the figure above.At point A,demand is:

Accepted Answer

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

Question 17

The percentage change in quantity demanded that results from the percentage change in price is known as the:

Accepted Answer

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

Question 18

Suppose that a new drug has been approved to treat a life-threatening disease.Demand for that drug is shown on the graph below.Prior to approval of this drug,the only treatment for this condition was non-prescription pain relief.Demand for one brand of non-prescription pain reliever is also shown on the graph below.  
Refer to the figure above.If the manufacturer of the new drug chose to increase its price from $30 to $40,consumers would acquire ______ doses,and have _____ total expenditures.

Accepted Answer

A) more;higher 
B) fewer;lower 
C) more;lower 
D) fewer;higher 
A) more;higher 
B) fewer;lower 
C) more;lower 
D) fewer;higher

Question 19

If the price of cheese falls by one percent and the quantity demanded rises by 3 percent,then the price elasticity of demand for cheese has a value of:

Accepted Answer

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

Question 20

If the slope of the demand curve is zero,the price elasticity of demand is:

Accepted Answer

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

Exam 4: Elasticity

The price elasticity of demand for a good is the response of:

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

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

If cross price elasticity is positive but less than one,the two goods are:

The cross-price elasticity for bread and potatoes is estimated to be 0.5.This implies bread and potatoes are:

Suppose the price P on a given demand curve results in a price elasticity of demand equal to 1.This price is on the ______ portion of the demand curve.

If most consumer goods and services are ______,then most income elasticities are ______.

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,durables are:

If the percentage change in price for a good is equal to the percentage change in quantity demanded of that good,then the demand for that good,with respect to price,is:

Satellite TV is a close substitute for cable TV.In the 1990's,small satellite TV units were developed that made it more practical for individual consumers to subscribe to satellite TV service.This caused the price elasticity of demand for cable TV service to:

If the price of a good increases by 20% and that leads to a decrease in quantity demanded by 60%,what is the price elasticity of demand for that good?

For which of the following products is demand likely to be least price elastic?

If the price elasticity of demand for tickets to a football game is 2 then,when the price increases by 1%,quantity demanded decreases by:

If the demand for salad dressing increased when the price of lettuce decreased,cross price elasticity would be ________,and we would say these two goods are _______.

The following graph depicts demand. Refer to the figure above.At point A,demand is:

The percentage change in quantity demanded that results from the percentage change in price is known as the:

If the price of cheese falls by one percent and the quantity demanded rises by 3 percent,then the price elasticity of demand for cheese has a value of:

If the slope of the demand curve is zero,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

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

If most consumer goods and services are ,then most income elasticities are .

If the demand for salad dressing increased when the price of lettuce decreased,cross price elasticity would be __,and we would say these two goods are _.