Question 1

Demand is price inelastic if:

Accepted Answer

A)  the price of the good responds slightly to a quantity change. 
B)  the demand curve shifts very little when a demand shifter changes. 
C)  the percentage change in quantity demanded is relatively small in response to a relatively large percentage change in price. 
D)  all of the above are true. 
A)  the price of the good responds slightly to a quantity change. 
B)  the demand curve shifts very little when a demand shifter changes. 
C)  the percentage change in quantity demanded is relatively small in response to a relatively large percentage change in price. 
D)  all of the above are true.

Question 2

If the price of chocolate-covered peanuts increases and the demand for strawberry licorice twists increases, this indicates that these two goods are:

Accepted Answer

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

Question 3

Calculating percentage changes relative to the average value of each variable between two points is:

Accepted Answer

A)  slope elasticity. 
B)  arc elasticity. 
C)  median elasticity. 
D)  differential elasticity. 
A)  slope elasticity. 
B)  arc elasticity. 
C)  median elasticity. 
D)  differential elasticity.

Question 4

If a 20 percent increase in the price of one good leads to a decrease of 10 percent in the demand for another good, the goods are:

Accepted Answer

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

Question 5

Use the following to answer question(s): Demand and Price Elasticity 2
  
-(Exhibit: Demand and Price Elasticity 2) The price elasticity of demand between points C and D is:

Accepted Answer

A)  -.33 
B)  -.60 
C)  -1.0 
D)  -1.3 
A)  -.33 
B)  -.60 
C)  -1.0 
D)  -1.3

Question 6

A linear demand curve will have which of the following properties?

Accepted Answer

A)  a slope that is constant and price elasticity that varies 
B)  constant slope and constant price elasticity 
C)  constant price elasticity and varying slope 
D)  varying slope and varying elasticity 
A)  a slope that is constant and price elasticity that varies 
B)  constant slope and constant price elasticity 
C)  constant price elasticity and varying slope 
D)  varying slope and varying elasticity

Question 7

An important determinant of the price elasticity of demand is the:

Accepted Answer

A)  time period. 
B)  price of related goods. 
C)  level of technology. 
D)  quantity of the good supplied. 
A)  time period. 
B)  price of related goods. 
C)  level of technology. 
D)  quantity of the good supplied.

Question 8

If demand is unit price elastic, then quantity changes by the same percentage as the percentage change in the price.

Accepted Answer

A) True 
 B)False

Question 9

If the quantity demanded of agricultural output is very unresponsive to a fall in price, the demand for agricultural output is:

Accepted Answer

A)  price elastic. 
B)  price inelastic. 
C)  positively sloped. 
D)  horizontal. 
A)  price elastic. 
B)  price inelastic. 
C)  positively sloped. 
D)  horizontal.

Question 10

Use the following to answer question(s):  
-(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.00 and $0.75?

Accepted Answer

A)  -0.54 
B)  -0.66 
C)  -0.75 
D)  -1.0 
A)  -0.54 
B)  -0.66 
C)  -0.75 
D)  -1.0

Question 11

Whenever supply increases, the resulting market price will always be lower except:

Accepted Answer

A)  when demand is perfectly price elastic (when the demand curve is horizontal). 
B)  when demand is completely price inelastic (when the demand curve is vertical). 
C)  when supply is perfectly price inelastic (when the supply curve is vertical). 
D)  in the case of demand having unit price elasticity throughout. 
A)  when demand is perfectly price elastic (when the demand curve is horizontal). 
B)  when demand is completely price inelastic (when the demand curve is vertical). 
C)  when supply is perfectly price inelastic (when the supply curve is vertical). 
D)  in the case of demand having unit price elasticity throughout.

Question 12

The demand for strawberry ice cream tends to be relatively price elastic because:

Accepted Answer

A)  for most people there are many close substitutes for strawberry ice cream. 
B)  there are few substitutes for it. 
C)  it has to be consumed very quickly. 
D)  it costs so little. 
A)  for most people there are many close substitutes for strawberry ice cream. 
B)  there are few substitutes for it. 
C)  it has to be consumed very quickly. 
D)  it costs so little.

Question 13

There is no total revenue test for price elasticity of supply because:

Accepted Answer

A)  price and quantity are inversely related. 
B)  price and quantity are usually directly related. 
C)  total revenue will usually change in the direction of a supply price change. 
D)  both B and C are true. 
A)  price and quantity are inversely related. 
B)  price and quantity are usually directly related. 
C)  total revenue will usually change in the direction of a supply price change. 
D)  both B and C are true.

Question 14

Other things being equal, the price elasticity of demand for a product will be less:

Accepted Answer

A)  if there are many substitutes available. 
B)  if it is a large part of the consumer's budget. 
C)  in the long run as compared to the short run. 
D)  if there are few or no substitutes available. 
A)  if there are many substitutes available. 
B)  if it is a large part of the consumer's budget. 
C)  in the long run as compared to the short run. 
D)  if there are few or no substitutes available.

Question 15

If someone did not regard health care as very important, often using home remedies and other substitutes, his or her demand curve for health care would most likely be ________ over the relevant range of prices for health care.

Accepted Answer

A)  more price elastic 
B)  more price inelastic 
C)  horizontal 
D)  vertical 
A)  more price elastic 
B)  more price inelastic 
C)  horizontal 
D)  vertical

Question 16

The price elasticity of demand for soft drinks has been estimated to be -0.55.If the government enacts a major increase in the tax on imported sugar (a major ingredient in soft drink manufacture and bottling), how will that affect total expenditures on soft drinks, all other things unchanged?

Accepted Answer

A)  total expenditures will remain unchanged 
B)  total expenditures will fall 
C)  total expenditures will rise 
D)  people will buy Pepsi instead of Coke 
A)  total expenditures will remain unchanged 
B)  total expenditures will fall 
C)  total expenditures will rise 
D)  people will buy Pepsi instead of Coke

Question 17

Explain, using the concept of elasticity of demand, why increased output could be a problem for farmers.

Accepted Answer

The concept of elasticity of demand refe

Question 18

If a 20 percent increase in the price of one good leads to a 10 percent increase in the quantity demanded of another good at a specific price, the goods are:

Accepted Answer

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

Question 19

A shirt manufacturer sold 10 dozen shirts per day when the price was $4 per shirt but sold 15 dozen shirts per day when the price was $3 per shirt.Hence, the absolute value of the price elasticity of demand is:

Accepted Answer

A)  greater than zero but less than 1. 
B)  equal to 1. 
C)  greater than 1 but less than 3. 
D)  greater than 3. 
A)  greater than zero but less than 1. 
B)  equal to 1. 
C)  greater than 1 but less than 3. 
D)  greater than 3.

Question 20

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 movies is:

Accepted Answer

A)  infinite. 
B)  1. 
C)  0. 
D)  -1. 
A)  infinite. 
B)  1. 
C)  0. 
D)  -1.

Demand is price inelastic if:

If the price of chocolate-covered peanuts increases and the demand for strawberry licorice twists increases, this indicates that these two goods are:

Calculating percentage changes relative to the average value of each variable between two points is:

If a 20 percent increase in the price of one good leads to a decrease of 10 percent in the demand for another good, the goods are:

Use the following to answer question(s): Demand and Price Elasticity 2 -(Exhibit: Demand and Price Elasticity 2) The price elasticity of demand between points C and D is:

A linear demand curve will have which of the following properties?

An important determinant of the price elasticity of demand is the:

If demand is unit price elastic, then quantity changes by the same percentage as the percentage change in the price.

If the quantity demanded of agricultural output is very unresponsive to a fall in price, the demand for agricultural output is:

Use the following to answer question(s): -(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.00 and $0.75?

Whenever supply increases, the resulting market price will always be lower except:

The demand for strawberry ice cream tends to be relatively price elastic because:

There is no total revenue test for price elasticity of supply because:

Other things being equal, the price elasticity of demand for a product will be less:

If someone did not regard health care as very important, often using home remedies and other substitutes, his or her demand curve for health care would most likely be ________ over the relevant range of prices for health care.

The price elasticity of demand for soft drinks has been estimated to be -0.55.If the government enacts a major increase in the tax on imported sugar (a major ingredient in soft drink manufacture and bottling), how will that affect total expenditures on soft drinks, all other things unchanged?

Explain, using the concept of elasticity of demand, why increased output could be a problem for farmers.

If a 20 percent increase in the price of one good leads to a 10 percent increase in the quantity demanded of another good at a specific price, the goods are:

A shirt manufacturer sold 10 dozen shirts per day when the price was $4 per shirt but sold 15 dozen shirts per day when the price was $3 per shirt.Hence, the absolute value of the price elasticity of demand is:

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 movies is:

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

Demand is price inelastic if:

If the price of chocolate-covered peanuts increases and the demand for strawberry licorice twists increases, this indicates that these two goods are:

Calculating percentage changes relative to the average value of each variable between two points is:

If a 20 percent increase in the price of one good leads to a decrease of 10 percent in the demand for another good, the goods are:

Use the following to answer question(s): Demand and Price Elasticity 2 -(Exhibit: Demand and Price Elasticity 2) The price elasticity of demand between points C and D is:

A linear demand curve will have which of the following properties?

An important determinant of the price elasticity of demand is the:

If demand is unit price elastic, then quantity changes by the same percentage as the percentage change in the price.

If the quantity demanded of agricultural output is very unresponsive to a fall in price, the demand for agricultural output is:

Use the following to answer question(s): -(Exhibit: Demand and Price Elasticity 1) What is the price elasticity of demand between $1.00 and $0.75?

Whenever supply increases, the resulting market price will always be lower except:

The demand for strawberry ice cream tends to be relatively price elastic because:

There is no total revenue test for price elasticity of supply because:

Other things being equal, the price elasticity of demand for a product will be less:

If someone did not regard health care as very important, often using home remedies and other substitutes, his or her demand curve for health care would most likely be ________ over the relevant range of prices for health care.

The price elasticity of demand for soft drinks has been estimated to be -0.55.If the government enacts a major increase in the tax on imported sugar (a major ingredient in soft drink manufacture and bottling), how will that affect total expenditures on soft drinks, all other things unchanged?

Explain, using the concept of elasticity of demand, why increased output could be a problem for farmers.

If a 20 percent increase in the price of one good leads to a 10 percent increase in the quantity demanded of another good at a specific price, the goods are:

A shirt manufacturer sold 10 dozen shirts per day when the price was $4 per shirt but sold 15 dozen shirts per day when the price was $3 per shirt.Hence, the absolute value of the price elasticity of demand is:

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 movies is:

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