Question 1

If the local electricity utility wants to raise revenues,it should _______ its price because demand for electricity is likely to be ________.

Accepted Answer

A)  lower;inelastic 
B)  raise;elastic 
C)  lower;elastic 
D)  raise;inelastic 
A)  lower;inelastic 
B)  raise;elastic 
C)  lower;elastic 
D)  raise;inelastic

Question 2

Suppose that the company that owns all of the vending machines on your campus has doubled the price of a can of soda,but they still sell almost the same number of sodas per day because:

Accepted Answer

A)  students do not have good nutritional information. 
B)  soda purchases represent a large fraction of students' budgets. 
C)  there are few other places to purchase soda on campus. 
D)  price elasticity of demand for soda is almost unitary. 
A)  students do not have good nutritional information. 
B)  soda purchases represent a large fraction of students' budgets. 
C)  there are few other places to purchase soda on campus. 
D)  price elasticity of demand for soda is almost unitary.

Question 3

A change in consumers' income levels:

Accepted Answer

A)  changes demand. 
B)  changes supply. 
C)  changes price. 
D)  creates cross-price elasticity. 
A)  changes demand. 
B)  changes supply. 
C)  changes price. 
D)  creates cross-price elasticity.

Question 4

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.The manufacturer of the new drug would _______ total revenue by increasing the price from $15 to $25.

Accepted Answer

A)  increase 
B)  decrease,but continue to earn some 
C)  experience no change 
D)  completely eliminate 
A)  increase 
B)  decrease,but continue to earn some 
C)  experience no change 
D)  completely eliminate

Question 5

If the price elasticity of demand for chicken is 2,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 6

Suppose a 10% increase in the price of pain relievers leads to a 5% decrease in quantity demanded of pain relievers.The demand for pain relievers,with respect to price,is:

Accepted Answer

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

Question 7

Economists have found that the price elasticity of demand for water is higher in the summer than in the winter.Why?

Accepted Answer

A)  Winter is longer than summer,and price elasticity is lower over longer time horizons. 
B)  Winter is longer than summer,and price elasticity is higher over longer time horizons. 
C)  Winter water use tends to be for necessities like cleaning and cooking,and summer water use tends to be for both necessities and non-necessities,like gardening and recreation. 
D)  People take more vacations in the summer and so use less water at home. 
A)  Winter is longer than summer,and price elasticity is lower over longer time horizons. 
B)  Winter is longer than summer,and price elasticity is higher over longer time horizons. 
C)  Winter water use tends to be for necessities like cleaning and cooking,and summer water use tends to be for both necessities and non-necessities,like gardening and recreation. 
D)  People take more vacations in the summer and so use less water at home.

Question 8

Elvis loves to eat peanut butter with bananas.Martha thinks the combination of peanut butter and bananas is repulsive.Therefore,economists would classify peanut butter and bananas as:

Accepted Answer

A)  complements for Elvis,but not for Martha. 
B)  complements only if their cross-price elasticity is negative. 
C)  complements only if their cross-price elasticity is positive. 
D)  unrelated because whether or not they are complements depends in individual tastes. 
A)  complements for Elvis,but not for Martha. 
B)  complements only if their cross-price elasticity is negative. 
C)  complements only if their cross-price elasticity is positive. 
D)  unrelated because whether or not they are complements depends in individual tastes.

Question 9

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 10

If the slope of the demand curve is equal to infinity,the price elasticity of demand will be:

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 11

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 12

Suppose that each serving of Mac & Cheese costs exactly $0.50 to make no matter how many servings are produced.This means that the price elasticity of supply for Mac & Cheese is ______ and the supply is _______.

Accepted Answer

A)  one;perfectly inelastic 
B)  zero;perfectly elastic 
C)  infinity;perfectly inelastic 
D)  infinity;perfectly elastic 
A)  one;perfectly inelastic 
B)  zero;perfectly elastic 
C)  infinity;perfectly inelastic 
D)  infinity;perfectly elastic

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 elasticity of demand for cell phone service is 3,if the price increases by 1%,quantity demanded decreases by:

Accepted Answer

A)  0.33%. 
B)  0.67%. 
C)  1.33%. 
D)  3%. 
A)  0.33%. 
B)  0.67%. 
C)  1.33%. 
D)  3%.

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

When the demand for a good is inelastic,that good is likely to have:

Accepted Answer

A)  many close complements. 
B)  few close complements. 
C)  many close substitutes. 
D)  few close substitutes. 
A)  many close complements. 
B)  few close complements. 
C)  many close substitutes. 
D)  few close substitutes.

Question 17

When the price of hot dogs is $1.50 each,500 hot dogs are sold every day.After the price falls to $1.35 each,510 hot dogs are sold every day.At the original price,what is the price elasticity of demand for hot dogs?

Accepted Answer

A)  66.67 
B)  5 
C)  2 
D)  0.2 
A)  66.67 
B)  5 
C)  2 
D)  0.2

Question 18

Suppose that the short run price elasticity of demand for electricity is 0.03 and the long run price elasticity of demand is 1.2.One would classify the short run elasticity as being ___________ and the long run elasticity as being ____________.

Accepted Answer

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

Question 19

Price elasticity of demand is _______ the slope of the demand curve.

Accepted Answer

A)  not related to 
B)  inversely related to 
C)  positively related to 
D)  equal to 
A)  not related to 
B)  inversely related to 
C)  positively related to 
D)  equal to

Question 20

Antony's Pizza uses the same dough,sauce,and cheese for pizza and calzones.When the price of pizza is low Antony produces more calzones.For Antony,with respect to price,supply of pizza is ________ compared to supply at a pizza restaurant that does not serve calzones.

Accepted Answer

A)  more inelastic 
B)  more elastic 
C)  unitary elastic 
D)  more unpredictable 
A)  more inelastic 
B)  more elastic 
C)  unitary elastic 
D)  more unpredictable

If the local electricity utility wants to raise revenues,it should _ its price because demand for electricity is likely to be __.

Suppose that the company that owns all of the vending machines on your campus has doubled the price of a can of soda,but they still sell almost the same number of sodas per day because:

A change in consumers' income levels:

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

Suppose a 10% increase in the price of pain relievers leads to a 5% decrease in quantity demanded of pain relievers.The demand for pain relievers,with respect to price,is:

Economists have found that the price elasticity of demand for water is higher in the summer than in the winter.Why?

Elvis loves to eat peanut butter with bananas.Martha thinks the combination of peanut butter and bananas is repulsive.Therefore,economists would classify peanut butter and bananas as:

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

If the slope of the demand curve is equal to infinity,the price elasticity of demand will be:

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 each serving of Mac & Cheese costs exactly $0.50 to make no matter how many servings are produced.This means that the price elasticity of supply for Mac & Cheese is and the supply is _.

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

If the price elasticity of demand for cell phone service is 3,if 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 _.

When the demand for a good is inelastic,that good is likely to have:

When the price of hot dogs is $1.50 each,500 hot dogs are sold every day.After the price falls to $1.35 each,510 hot dogs are sold every day.At the original price,what is the price elasticity of demand for hot dogs?

Suppose that the short run price elasticity of demand for electricity is 0.03 and the long run price elasticity of demand is 1.2.One would classify the short run elasticity as being _ and the long run elasticity as being __.

Price elasticity of demand is _______ the slope of the demand curve.

Antony's Pizza uses the same dough,sauce,and cheese for pizza and calzones.When the price of pizza is low Antony produces more calzones.For Antony,with respect to price,supply of pizza is ________ compared to supply at a pizza restaurant that does not serve calzones.

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 local electricity utility wants to raise revenues,it should _______ its price because demand for electricity is likely to be ________.

Suppose that the company that owns all of the vending machines on your campus has doubled the price of a can of soda,but they still sell almost the same number of sodas per day because:

A change in consumers' income levels:

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

Suppose a 10% increase in the price of pain relievers leads to a 5% decrease in quantity demanded of pain relievers.The demand for pain relievers,with respect to price,is:

Economists have found that the price elasticity of demand for water is higher in the summer than in the winter.Why?

Elvis loves to eat peanut butter with bananas.Martha thinks the combination of peanut butter and bananas is repulsive.Therefore,economists would classify peanut butter and bananas as:

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

If the slope of the demand curve is equal to infinity,the price elasticity of demand will be:

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 each serving of Mac & Cheese costs exactly $0.50 to make no matter how many servings are produced.This means that the price elasticity of supply for Mac & Cheese is ______ and the supply is _______.

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

If the price elasticity of demand for cell phone service is 3,if 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 _______.

When the demand for a good is inelastic,that good is likely to have:

When the price of hot dogs is $1.50 each,500 hot dogs are sold every day.After the price falls to $1.35 each,510 hot dogs are sold every day.At the original price,what is the price elasticity of demand for hot dogs?

Suppose that the short run price elasticity of demand for electricity is 0.03 and the long run price elasticity of demand is 1.2.One would classify the short run elasticity as being ___________ and the long run elasticity as being ____________.

Price elasticity of demand is _______ the slope of the demand curve.

Antony's Pizza uses the same dough,sauce,and cheese for pizza and calzones.When the price of pizza is low Antony produces more calzones.For Antony,with respect to price,supply of pizza is ________ compared to supply at a pizza restaurant that does not serve calzones.

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

If the local electricity utility wants to raise revenues,it should _ its price because demand for electricity is likely to be __.

Suppose that each serving of Mac & Cheese costs exactly $0.50 to make no matter how many servings are produced.This means that the price elasticity of supply for Mac & Cheese is and the supply is _.

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 _.

Suppose that the short run price elasticity of demand for electricity is 0.03 and the long run price elasticity of demand is 1.2.One would classify the short run elasticity as being _ and the long run elasticity as being __.