Question 1

Determining whether the price elasticity of demand is price elastic, unit price elastic, or price inelastic is done by:

Accepted Answer

A)  comparing the percentage change in quantity demanded to the percentage change in price. 
B)  examining the ratio of the change in quantity to the change in price. 
C)  examining the slope of the demand curve. 
D)  examining the ratio of the change in price to the change in quantity 
A)  comparing the percentage change in quantity demanded to the percentage change in price. 
B)  examining the ratio of the change in quantity to the change in price. 
C)  examining the slope of the demand curve. 
D)  examining the ratio of the change in price to the change in quantity

Question 2

If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year when your income increases from $19,000 to $21,000 a year, then your income elasticity of demand for shoes is.

Accepted Answer

A)  -2. 
B)  -0.67. 
C)  0.67. 
D)  2. 
A)  -2. 
B)  -0.67. 
C)  0.67. 
D)  2.

Question 3

If the price of a good is increased by 15 percent and the quantity demanded changes by 20 percent, then the price elasticity of demand is equal to:

Accepted Answer

A)  0.75. 
B)  approximately -0.33 
C)  approximately -1.33. 
D)  -1. 
A)  0.75. 
B)  approximately -0.33 
C)  approximately -1.33. 
D)  -1.

Question 4

If an increase in income leads to a decrease in the demand for a good, then the good is said to be:

Accepted Answer

A)  normal. 
B)  a luxury. 
C)  inferior. 
D)  a staple or necessity. 
A)  normal. 
B)  a luxury. 
C)  inferior. 
D)  a staple or necessity.

Question 5

A newspaper typically consumes a smaller fraction of a consumer's budget than a home entertainment system.Therefore, you would expect the demand for:

Accepted Answer

A)  a home entertainment system to be more price elastic. 
B)  a home entertainment system to be more price inelastic. 
C)  newspapers to be more price elastic. 
D)  both to be equally price elastic. 
A)  a home entertainment system to be more price elastic. 
B)  a home entertainment system to be more price inelastic. 
C)  newspapers to be more price elastic. 
D)  both to be equally price elastic.

Question 6

Use the following for questions 163-168.
Exhibit: Johnson's Income and Expenditures
Quantity Purchased per Month
  
-(Exhibit: Johnson's Income and Expenditures) Johnson's income elasticity of demand for pizzas is:

Accepted Answer

A)  -1.4. 
B)  approximately -0.7. 
C)  0. 
D)  approximately 0.7. 
A)  -1.4. 
B)  approximately -0.7. 
C)  0. 
D)  approximately 0.7.

Question 7

If demand is price elastic, a change in price in either direction (up or down) causes:

Accepted Answer

A)  a change in total revenue in the opposite direction. 
B)  a change in total revenue in the same direction. 
C)  no change in total revenue. 
D)  an increase in total revenue. 
A)  a change in total revenue in the opposite direction. 
B)  a change in total revenue in the same direction. 
C)  no change in total revenue. 
D)  an increase in total revenue.

Question 8

If price increases, quantity demanded decreases and, therefore, total revenue must fall.

Accepted Answer

A) True 
 B)False

Question 9

If the absolute value of price elasticity is greater than 1, this means the demand curve in that region is:

Accepted Answer

A)  price elastic. 
B)  price inelastic. 
C)  unit price elastic. 
D)  upward sloping. 
A)  price elastic. 
B)  price inelastic. 
C)  unit price elastic. 
D)  upward sloping.

Question 10

The concept of price elasticity of supply can be applied to labor:

Accepted Answer

A)  to show the amount of income earned at different wage rates. 
B)  to show how the quantity of labor supplied responds to changes in wages and salaries. 
C)  to determine how responsive the demand for labor is to changes in wages and salaries. 
D)  to do all of the above. 
A)  to show the amount of income earned at different wage rates. 
B)  to show how the quantity of labor supplied responds to changes in wages and salaries. 
C)  to determine how responsive the demand for labor is to changes in wages and salaries. 
D)  to do all of the above.

Question 11

Use the following for questions 124-127.
Exhibit: Estimating Price Elasticity
  
-(Exhibit: Estimating Price Elasticity) Between the two prices, P₁ and P₂, the absolute value of the price elasticity of demand is ________ for D₂.

Accepted Answer

A)  0 
B)  greater than 1 
C)  equal to 1 
D)  greater than 0 but less than 1 
A)  0 
B)  greater than 1 
C)  equal to 1 
D)  greater than 0 but less than 1

Question 12

Use the following to answer question(s):  
-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $2.25 and $2.00?

Accepted Answer

A)  -4.00 
B)  -5.67 
C)  -9.00 
D)  -17.6 
A)  -4.00 
B)  -5.67 
C)  -9.00 
D)  -17.6

Question 13

If your purchases of shoes remain constant at 9 pairs per year when the price of shirts increases from $8 to $12, then, for you, shoes and shirts are considered:

Accepted Answer

A)  inferior goods. 
B)  unrelated goods. 
C)  substitute goods. 
D)  complementary goods. 
A)  inferior goods. 
B)  unrelated goods. 
C)  substitute goods. 
D)  complementary goods.

Question 14

According to the Case in Point on Conventional and Organic Milk, the demand for organic milk is price _____ and the demand for conventional milk is price _____.

Accepted Answer

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

Question 15

If the price of chocolate-covered peanuts increases and the demand for strawberries does not change, this indicates that these two goods are:

Accepted Answer

A)  unrelated goods. 
B)  inferior goods. 
C)  substitute goods. 
D)  complementary goods. 
A)  unrelated goods. 
B)  inferior goods. 
C)  substitute goods. 
D)  complementary goods.

Question 16

If the total revenue received by a firm does not change when it raises its price, this indicates that the demand for the firm's product is:

Accepted Answer

A)  unstable. 
B)  price inelastic. 
C)  price elastic. 
D)  unit price elastic. 
A)  unstable. 
B)  price inelastic. 
C)  price elastic. 
D)  unit price elastic.

Question 17

Which of the following is not a factor in determining the price elasticity of demand?

Accepted Answer

A)  the number of available substitutes 
B)  the time period involved 
C)  the proportion of the budget spent on the item 
D)  the slope of the supply curve 
A)  the number of available substitutes 
B)  the time period involved 
C)  the proportion of the budget spent on the item 
D)  the slope of the supply curve

Question 18

When the price of a good goes up, quantity demanded will always go down, but total revenue could go up, go down, or stay the same.

Accepted Answer

A) True 
 B)False

Question 19

The price elasticity of a demand curve with a constant slope:

Accepted Answer

A)  is equal to the slope. 
B)  is greater than the slope. 
C)  is less than the slope. 
D)  decreases in absolute value as quantity demanded rises. 
A)  is equal to the slope. 
B)  is greater than the slope. 
C)  is less than the slope. 
D)  decreases in absolute value as quantity demanded rises.

Question 20

If demand is unit price elastic, a change in price causes:

Accepted Answer

A)  no change in total revenue. 
B)  a decrease in total revenue. 
C)  a change in total revenue in the opposite direction. 
D)  an increase in total revenue. 
A)  no change in total revenue. 
B)  a decrease in total revenue. 
C)  a change in total revenue in the opposite direction. 
D)  an increase in total revenue.

Determining whether the price elasticity of demand is price elastic, unit price elastic, or price inelastic is done by:

If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year when your income increases from $19,000 to $21,000 a year, then your income elasticity of demand for shoes is.

If the price of a good is increased by 15 percent and the quantity demanded changes by 20 percent, then the price elasticity of demand is equal to:

If an increase in income leads to a decrease in the demand for a good, then the good is said to be:

A newspaper typically consumes a smaller fraction of a consumer's budget than a home entertainment system.Therefore, you would expect the demand for:

Use the following for questions 163-168. Exhibit: Johnson's Income and Expenditures Quantity Purchased per Month -(Exhibit: Johnson's Income and Expenditures) Johnson's income elasticity of demand for pizzas is:

If demand is price elastic, a change in price in either direction (up or down) causes:

If price increases, quantity demanded decreases and, therefore, total revenue must fall.

If the absolute value of price elasticity is greater than 1, this means the demand curve in that region is:

The concept of price elasticity of supply can be applied to labor:

Use the following for questions 124-127. Exhibit: Estimating Price Elasticity -(Exhibit: Estimating Price Elasticity) Between the two prices, P₁ and P₂, the absolute value of the price elasticity of demand is ________ for D₂.

Use the following to answer question(s): -(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $2.25 and $2.00?

If your purchases of shoes remain constant at 9 pairs per year when the price of shirts increases from $8 to $12, then, for you, shoes and shirts are considered:

According to the Case in Point on Conventional and Organic Milk, the demand for organic milk is price _ and the demand for conventional milk is price _.

If the price of chocolate-covered peanuts increases and the demand for strawberries does not change, this indicates that these two goods are:

If the total revenue received by a firm does not change when it raises its price, this indicates that the demand for the firm's product is:

Which of the following is not a factor in determining the price elasticity of demand?

When the price of a good goes up, quantity demanded will always go down, but total revenue could go up, go down, or stay the same.

The price elasticity of a demand curve with a constant slope:

If demand is unit price elastic, a change in price causes:

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

Exam 5: Elasticity: a Measure of Response

Determining whether the price elasticity of demand is price elastic, unit price elastic, or price inelastic is done by:

If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year when your income increases from $19,000 to $21,000 a year, then your income elasticity of demand for shoes is.

If the price of a good is increased by 15 percent and the quantity demanded changes by 20 percent, then the price elasticity of demand is equal to:

If an increase in income leads to a decrease in the demand for a good, then the good is said to be:

A newspaper typically consumes a smaller fraction of a consumer's budget than a home entertainment system.Therefore, you would expect the demand for:

Use the following for questions 163-168. Exhibit: Johnson's Income and Expenditures Quantity Purchased per Month -(Exhibit: Johnson's Income and Expenditures) Johnson's income elasticity of demand for pizzas is:

If demand is price elastic, a change in price in either direction (up or down) causes:

If price increases, quantity demanded decreases and, therefore, total revenue must fall.

If the absolute value of price elasticity is greater than 1, this means the demand curve in that region is:

The concept of price elasticity of supply can be applied to labor:

Use the following for questions 124-127. Exhibit: Estimating Price Elasticity -(Exhibit: Estimating Price Elasticity) Between the two prices, P₁ and P₂, the absolute value of the price elasticity of demand is ________ for D₂.

Use the following to answer question(s): -(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $2.25 and $2.00?

If your purchases of shoes remain constant at 9 pairs per year when the price of shirts increases from $8 to $12, then, for you, shoes and shirts are considered:

According to the Case in Point on Conventional and Organic Milk, the demand for organic milk is price _____ and the demand for conventional milk is price _____.

If the price of chocolate-covered peanuts increases and the demand for strawberries does not change, this indicates that these two goods are:

If the total revenue received by a firm does not change when it raises its price, this indicates that the demand for the firm's product is:

Which of the following is not a factor in determining the price elasticity of demand?

When the price of a good goes up, quantity demanded will always go down, but total revenue could go up, go down, or stay the same.

The price elasticity of a demand curve with a constant slope:

If demand is unit price elastic, a change in price causes:

Economics: The Study of Choice

Confronting Scarcity: Choices in Production

Demand and Supply

Applications of Supply and Demand

Markets, Maximizers, and Efficiency

The Analysis of Consumer Choice

Production and Cost

Competitive Markets for Goods and Services

Monopoly

The World of Imperfect Competition

Wages and Employment in Perfect Competition

Interest Rates and the Markets for Capital and Natural Resources

Imperfectly Competitive Markets for Factors of Production

Public Finance and Public Choice

Antitrust Policy and Business Regulation

International Trade

The Economics of the Environment

Inequality, Poverty, and Discrimination

Filters

According to the Case in Point on Conventional and Organic Milk, the demand for organic milk is price _ and the demand for conventional milk is price _.