Question 1

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 2

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 3

Suppose the demand curve for open-heart surgery is vertical among people with serious heart conditions.Therefore,demand for open-heart surgery is _____ with respect to price.

Accepted Answer

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

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.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 5

Oil and oil products remain the main fuel for cars,planes,ships,and power plants.The amount of oil still in the earth is finite.According to this information,the supply of gasoline is relatively _______.

Accepted Answer

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

Question 6

Suppose you have one hour to catch a flight to Miami for spring break.It takes 45 minutes to drive to the airport.Your car is almost out of gas;the price of gas at the closest gas station is higher than at the one on the other side of the town.To you,the price elasticity of demand for gas is likely to be ______ than it would be if you had several hours before the flight.

Accepted Answer

A)  higher 
B)  more inelastic 
C)  more elastic 
D)  no different 
A)  higher 
B)  more inelastic 
C)  more elastic 
D)  no different

Question 7

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 8

If a demand curve is the line defined by P = $5,the absolute value of the price elasticity of demand is:

Accepted Answer

A)  5. 
B)  0.2. 
C)  0. 
D)  infinity. 
A)  5. 
B)  0.2. 
C)  0. 
D)  infinity.

Question 9

You have found data that indicates that the income elasticity of demand for generic (unbranded)shampoo is -0.7.You conclude that generic shampoo:

Accepted Answer

A)  is a normal good. 
B)  has inelastic demand. 
C)  is not in equilibrium. 
D)  is an inferior good. 
A)  is a normal good. 
B)  has inelastic demand. 
C)  is not in equilibrium. 
D)  is an inferior good.

Question 10

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.

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

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?

Suppose the demand curve for open-heart surgery is vertical among people with serious heart conditions.Therefore,demand for open-heart surgery is _____ with respect to price.

Oil and oil products remain the main fuel for cars,planes,ships,and power plants.The amount of oil still in the earth is finite.According to this information,the supply of gasoline is relatively _______.

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 a demand curve is the line defined by P = $5,the absolute value of the price elasticity of demand is:

You have found data that indicates that the income elasticity of demand for generic (unbranded)shampoo is -0.7.You conclude that generic shampoo:

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:

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

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Exam 4: Elasticity

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

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?

Suppose the demand curve for open-heart surgery is vertical among people with serious heart conditions.Therefore,demand for open-heart surgery is _____ with respect to price.

Oil and oil products remain the main fuel for cars,planes,ships,and power plants.The amount of oil still in the earth is finite.According to this information,the supply of gasoline is relatively _______.

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 a demand curve is the line defined by P = $5,the absolute value of the price elasticity of demand is:

You have found data that indicates that the income elasticity of demand for generic (unbranded)shampoo is -0.7.You conclude that generic shampoo:

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:

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