Question 1

If the price of plane tickets increased,more people might choose to travel by train.If this happened,you would know that:

Accepted Answer

A)  plane tickets are now an inferior good. 
B)  the cross-price elasticity between plane tickets and train tickets is positive. 
C)  the cross-price elasticity between plane tickets and train tickets is negative. 
D)  plane tickets and train tickets are complements. 
A)  plane tickets are now an inferior good. 
B)  the cross-price elasticity between plane tickets and train tickets is positive. 
C)  the cross-price elasticity between plane tickets and train tickets is negative. 
D)  plane tickets and train tickets are complements.

Question 2

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 3

You read online that,at current rates of production,the yearly world supply of food is sufficient to feed the projected 2010 population of the earth,and that after 2010 there will be massive starvation.One assumption behind this prediction is that:

Accepted Answer

A)  food supply is infinitely elastic. 
B)  the long run elasticity of supply of food is inelastic. 
C)  prices will allocate food supplies to only wealthy countries. 
D)  short run supply elasticity is greater than long run supply elasticity. 
A)  food supply is infinitely elastic. 
B)  the long run elasticity of supply of food is inelastic. 
C)  prices will allocate food supplies to only wealthy countries. 
D)  short run supply elasticity is greater than long run supply elasticity.

Question 4

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 5

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 6

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 7

Suppose you believe that plaid flannel shirts are an inferior good,and want to test this with economic data.You expect to find that the income elasticity for plaid flannel shirts is:

Accepted Answer

A)  close to zero. 
B)  greater than zero,but less than one. 
C)  greater than one. 
D)  less than zero. 
A)  close to zero. 
B)  greater than zero,but less than one. 
C)  greater than one. 
D)  less than zero.

Question 8

If the demand for a good is elastic,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 9

If a product has lots of substitutes:

Accepted Answer

A)  its income elasticity will be high. 
B)  its price elasticity of demand will be low. 
C)  the cross-price elasticity among those substitutes will be negative. 
D)  the cross-price elasticity among those substitutes will be positive. 
A)  its income elasticity will be high. 
B)  its price elasticity of demand will be low. 
C)  the cross-price elasticity among those substitutes will be negative. 
D)  the cross-price elasticity among those substitutes will be positive.

Question 10

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 11

When Joe's Gas raises its prices for regular unleaded,total revenue from both regular unleaded falls to zero.It must be the case that:

Accepted Answer

A)  the demand for Joe's regular unleaded gasoline is perfectly elastic. 
B)  the demand for regular unleaded must be inelastic. 
C)  there are NOT many good substitutes for regular unleaded gasoline. 
D)  consumers are switching to premium grades of gasoline. 
A)  the demand for Joe's regular unleaded gasoline is perfectly elastic. 
B)  the demand for regular unleaded must be inelastic. 
C)  there are NOT many good substitutes for regular unleaded gasoline. 
D)  consumers are switching to premium grades of gasoline.

Question 12

The championship game will be held next weekend in your college's 40,000-seat stadium.The supply of tickets:

Accepted Answer

A)  will increase because the price charged will be higher. 
B)  is price elastic. 
C)  is perfectly inelastic. 
D)  depends on which teams make it to the championship game. 
A)  will increase because the price charged will be higher. 
B)  is price elastic. 
C)  is perfectly inelastic. 
D)  depends on which teams make it to the championship game.

Question 13

If the quantity demanded of a good is Q when the price for the good is P,the price elasticity of demand for that good at that point is:

Accepted Answer

A)  (P/Q)*(1/slope) 
B)  (Q/P)*(1/slope) 
C)  (P/Q)*(slope) 
D)  Q*P*(1/slope) 
A)  (P/Q)*(1/slope) 
B)  (Q/P)*(1/slope) 
C)  (P/Q)*(slope) 
D)  Q*P*(1/slope)

Question 14

Suppose that Chris had been charging $1.00 per pound for potatoes.When Chris lowered the price to $0.90 per pound,total revenue fell.When Chris raised the price to $1.10,total revenue also fell.Why?

Accepted Answer

A)  $1.00 is the equilibrium price for potatoes. 
B)  At 90 cents,there is excess demand for potatoes. 
C)  $1.10 is more than Chris's customers' reservation prices. 
D)  Price elasticity of demand is unitary at $1.00. 
A)  $1.00 is the equilibrium price for potatoes. 
B)  At 90 cents,there is excess demand for potatoes. 
C)  $1.10 is more than Chris's customers' reservation prices. 
D)  Price elasticity of demand is unitary at $1.00.

Question 15

A pizza shop observes that when it raises the price of the large pizza,total revenue from pizza decreases and when they lower the price of the large pizza,total revenue increases.This suggests that:

Accepted Answer

A)  pizza lovers act irrationally. 
B)  the demand for large pizza must be elastic. 
C)  there are few good substitutes for large pizza. 
D)  the demand for large pizza must be inelastic. 
A)  pizza lovers act irrationally. 
B)  the demand for large pizza must be elastic. 
C)  there are few good substitutes for large pizza. 
D)  the demand for large pizza must be inelastic.

Question 16

As one moves down along a linear demand curve (i.e. ,from high price,low quantity pairs to low price,high quantity pairs),the demand:

Accepted Answer

A)  becomes more price elastic. 
B)  increases. 
C)  decreases. 
D)  becomes less price elastic. 
A)  becomes more price elastic. 
B)  increases. 
C)  decreases. 
D)  becomes less price elastic.

Question 17

If consumers respond to a 10% price reduction by buying twice as much of a particular good,we would conclude that:

Accepted Answer

A)  there was excess demand at the original price. 
B)  there was excess supply at the original price. 
C)  the absolute value of price elasticity at the original price was greater than one. 
D)  the absolute value of price elasticity at the original price was less than one. 
A)  there was excess demand at the original price. 
B)  there was excess supply at the original price. 
C)  the absolute value of price elasticity at the original price was greater than one. 
D)  the absolute value of price elasticity at the original price was less than one.

Question 18

The price elasticity of supply at a point is:

Accepted Answer

A)  the percentage change in quantity supplied divided by the percentage change in price. 
B)  the percentage change in price divided by the percentage change in quantity supplied. 
C)  the change in quantity supplied divided by the change in price. 
D)  the change in price divided by the change in quantity supplied. 
A)  the percentage change in quantity supplied divided by the percentage change in price. 
B)  the percentage change in price divided by the percentage change in quantity supplied. 
C)  the change in quantity supplied divided by the change in price. 
D)  the change in price divided by the change in quantity supplied.

Question 19

Pepsi One is a close substitute for Diet Coke.When Pepsi introduced Pepsi One,the price elasticity of demand for Diet Coke _______ and Coke's ability to raise revenues through price increases _________.

Accepted Answer

A)  increased;was reduced 
B)  increased;increased 
C)  decreased;was reduced 
D)  had no effect;was reduced 
A)  increased;was reduced 
B)  increased;increased 
C)  decreased;was reduced 
D)  had no effect;was reduced

Question 20

If the demand curve for a good is the line defined by Q = 1,then a decrease in the price of that good will:

Accepted Answer

A)  decrease the quantity demanded. 
B)  increase the quantity demanded. 
C)  result in a quantity of zero being demanded. 
D)  not change the quantity demanded. 
A)  decrease the quantity demanded. 
B)  increase the quantity demanded. 
C)  result in a quantity of zero being demanded. 
D)  not change the quantity demanded.

If the price of plane tickets increased,more people might choose to travel by train.If this happened,you would know that:

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.

You read online that,at current rates of production,the yearly world supply of food is sufficient to feed the projected 2010 population of the earth,and that after 2010 there will be massive starvation.One assumption behind this prediction is that:

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:

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:

Suppose you believe that plaid flannel shirts are an inferior good,and want to test this with economic data.You expect to find that the income elasticity for plaid flannel shirts is:

If the demand for a good is elastic,that good is likely to have:

If a product has lots of substitutes:

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

When Joe's Gas raises its prices for regular unleaded,total revenue from both regular unleaded falls to zero.It must be the case that:

The championship game will be held next weekend in your college's 40,000-seat stadium.The supply of tickets:

If the quantity demanded of a good is Q when the price for the good is P,the price elasticity of demand for that good at that point is:

Suppose that Chris had been charging $1.00 per pound for potatoes.When Chris lowered the price to $0.90 per pound,total revenue fell.When Chris raised the price to $1.10,total revenue also fell.Why?

A pizza shop observes that when it raises the price of the large pizza,total revenue from pizza decreases and when they lower the price of the large pizza,total revenue increases.This suggests that:

As one moves down along a linear demand curve (i.e. ,from high price,low quantity pairs to low price,high quantity pairs),the demand:

If consumers respond to a 10% price reduction by buying twice as much of a particular good,we would conclude that:

The price elasticity of supply at a point is:

Pepsi One is a close substitute for Diet Coke.When Pepsi introduced Pepsi One,the price elasticity of demand for Diet Coke _ and Coke's ability to raise revenues through price increases ___.

If the demand curve for a good is the line defined by Q = 1,then a decrease in the price of that good will:

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 price of plane tickets increased,more people might choose to travel by train.If this happened,you would know that:

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.

You read online that,at current rates of production,the yearly world supply of food is sufficient to feed the projected 2010 population of the earth,and that after 2010 there will be massive starvation.One assumption behind this prediction is that:

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:

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:

Suppose you believe that plaid flannel shirts are an inferior good,and want to test this with economic data.You expect to find that the income elasticity for plaid flannel shirts is:

If the demand for a good is elastic,that good is likely to have:

If a product has lots of substitutes:

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

When Joe's Gas raises its prices for regular unleaded,total revenue from both regular unleaded falls to zero.It must be the case that:

The championship game will be held next weekend in your college's 40,000-seat stadium.The supply of tickets:

If the quantity demanded of a good is Q when the price for the good is P,the price elasticity of demand for that good at that point is:

Suppose that Chris had been charging $1.00 per pound for potatoes.When Chris lowered the price to $0.90 per pound,total revenue fell.When Chris raised the price to $1.10,total revenue also fell.Why?

A pizza shop observes that when it raises the price of the large pizza,total revenue from pizza decreases and when they lower the price of the large pizza,total revenue increases.This suggests that:

As one moves down along a linear demand curve (i.e. ,from high price,low quantity pairs to low price,high quantity pairs),the demand:

If consumers respond to a 10% price reduction by buying twice as much of a particular good,we would conclude that:

The price elasticity of supply at a point is:

Pepsi One is a close substitute for Diet Coke.When Pepsi introduced Pepsi One,the price elasticity of demand for Diet Coke _______ and Coke's ability to raise revenues through price increases _________.

If the demand curve for a good is the line defined by Q = 1,then a decrease in the price of that good will:

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

Pepsi One is a close substitute for Diet Coke.When Pepsi introduced Pepsi One,the price elasticity of demand for Diet Coke _ and Coke's ability to raise revenues through price increases ___.