Question 1

If the total revenue received by a firm increases 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 2

The income elasticity of demand for peaches has been estimated to be 1.43.If income grows by 15 percent in a period, how will that affect total expenditures on peaches in that period, all other things unchanged?

Accepted Answer

A)  total expenditures will rise 
B)  total expenditures will fall 
C)  total expenditures will remain unchanged 
D)  not enough information is given to answer the question 
A)  total expenditures will rise 
B)  total expenditures will fall 
C)  total expenditures will remain unchanged 
D)  not enough information is given to answer the question

Question 3

If demand is price inelastic, 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)  an increase in total revenue. 
D)  a decrease in total revenue. 
A)  a change in total revenue in the opposite direction. 
B)  a change in total revenue in the same direction. 
C)  an increase in total revenue. 
D)  a decrease in total revenue.

Question 4

Use the following for questions 108-115.
Exhibit: The Demand for Bungalow Bob's Bagels
  
-(Exhibit: The Demand for Bungalow Bob's Bagels) Demand is price elastic between:

Accepted Answer

A)  $0.30 and $0.40. 
B)  $0.40 and $0.50. 
C)  $0.50 and $0.60. 
D)  $0.60 and $0.70. 
A)  $0.30 and $0.40. 
B)  $0.40 and $0.50. 
C)  $0.50 and $0.60. 
D)  $0.60 and $0.70.

Question 5

Using the method of arc elasticity to calculate price elasticity of demand eliminates the problem of:

Accepted Answer

A)  different elasticities, depending on whether price decreases or increases. 
B)  different elasticities, because price and quantity are inversely related on the demand curve. 
C)  total revenue falling when price falls and demand is inelastic. 
D)  total revenue increasing when price falls and demand is elastic. 
A)  different elasticities, depending on whether price decreases or increases. 
B)  different elasticities, because price and quantity are inversely related on the demand curve. 
C)  total revenue falling when price falls and demand is inelastic. 
D)  total revenue increasing when price falls and demand is elastic.

Question 6

Assuming a linear demand curve, lower prices would result in:

Accepted Answer

A)  less price elastic demand. 
B)  more price elastic demand. 
C)  an increase in demand. 
D)  none of the above. 
A)  less price elastic demand. 
B)  more price elastic demand. 
C)  an increase in demand. 
D)  none of the above.

Question 7

If the quantity supplied responds substantially to a relatively small change in price, supply would be:

Accepted Answer

A)  price elastic. 
B)  price inelastic. 
C)  negatively sloped. 
D)  insensitive to changes in price. 
A)  price elastic. 
B)  price inelastic. 
C)  negatively sloped. 
D)  insensitive to changes in price.

Question 8

The price elasticity of demand for fresh tomatoes has been estimated to be -2.22.If a new insecticide and fertilizer treatment yields a 20 percent increase in the nation's fresh tomato crop, how will that affect total expenditures on fresh tomatoes, all other things unchanged?

Accepted Answer

A)  total expenditures will remain unchanged 
B)  total expenditures will fall 
C)  total expenditures will rise 
D)  not enough information is given to answer the question 
A)  total expenditures will remain unchanged 
B)  total expenditures will fall 
C)  total expenditures will rise 
D)  not enough information is given to answer the question

Question 9

The price elasticity of demand for lettuce has been estimated to be -2.58.If an insect infestation destroys 10 percent of the nation's lettuce crop, how will that affect total expenditures on lettuce, all other things unchanged?

Accepted Answer

A)  total expenditures will remain unchanged 
B)  total expenditures will fall 
C)  total expenditures will rise 
D)  not enough information is given to answer the question 
A)  total expenditures will remain unchanged 
B)  total expenditures will fall 
C)  total expenditures will rise 
D)  not enough information is given to answer the question

Question 10

Give the definitions for goods that are substitutes or complements.Discuss and explain their cross price elasticity of demand.

Accepted Answer

Substitute goods are products that can b

Question 11

If your purchases of shoes decrease from 11 pairs per year to 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)  superior goods. 
C)  substitute goods. 
D)  complementary goods. 
A)  inferior goods. 
B)  superior goods. 
C)  substitute goods. 
D)  complementary goods.

Question 12

If a good is a luxury item that looms large in the household budget, then the price elasticity of demand will tend to be:

Accepted Answer

A)  more price elastic. 
B)  less price elastic. 
C)  equal to -1. 
D)  the same as that of a good that is a necessity. 
A)  more price elastic. 
B)  less price elastic. 
C)  equal to -1. 
D)  the same as that of a good that is a necessity.

Question 13

The ratio of the percentage change in a dependent variable to the percentage change in an independent variable, all other things unchanged, is:

Accepted Answer

A)  total revenue. 
B)  production possibilities. 
C)  elasticity. 
D)  slope. 
A)  total revenue. 
B)  production possibilities. 
C)  elasticity. 
D)  slope.

Question 14

If changes in price and total revenue move in the same direction, demand is price elastic in that portion of the demand curve.

Accepted Answer

A) True 
 B)False

Question 15

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 magazines is:

Accepted Answer

A)  negative. 
B)  0. 
C)  greater than 0 but less than 1. 
D)  1. 
A)  negative. 
B)  0. 
C)  greater than 0 but less than 1. 
D)  1.

Question 16

If along a given segment of a demand curve price falls and total revenue ____________, then demand is price inelastic along that segment.

Accepted Answer

A)  increases 
B)  decreases 
C)  stays the same 
D)  decreases at first and then increases 
A)  increases 
B)  decreases 
C)  stays the same 
D)  decreases at first and then increases

Question 17

The cross price elasticity of demand for Coke with respect to the price of Pepsi has been estimated to be 0.61.If the price of Pepsi falls by 10 percent in a period, how will that affect the demand for Coke in that period, all other things unchanged?

Accepted Answer

A)  The demand for Coke will increase but by less than 6.1 percent. 
B)  The demand for Coke will increase by 6.1 percent. 
C)  The demand for Coke will not change because many people prefer Coke over Pepsi. 
D)  The demand for Coke will fall. 
A)  The demand for Coke will increase but by less than 6.1 percent. 
B)  The demand for Coke will increase by 6.1 percent. 
C)  The demand for Coke will not change because many people prefer Coke over Pepsi. 
D)  The demand for Coke will fall.

Question 18

List and discuss why two products you buy have price elastic demand.List and discuss why two products you buy have price inelastic demand.

Accepted Answer

Price elastic demand refers to a situati

Question 19

If a good is a necessity with few substitutes, then the price elasticity of demand will tend to be:

Accepted Answer

A)  more price elastic. 
B)  less price elastic. 
C)  equal to -1. 
D)  the same as that of a luxury good. 
A)  more price elastic. 
B)  less price elastic. 
C)  equal to -1. 
D)  the same as that of a luxury good.

Question 20

The concept of price elasticity shows the relationship between a quantity response and a percentage change in price.

Accepted Answer

A) True 
 B)False

If the total revenue received by a firm increases when it raises its price, this indicates that the demand for the firm's product is:

The income elasticity of demand for peaches has been estimated to be 1.43.If income grows by 15 percent in a period, how will that affect total expenditures on peaches in that period, all other things unchanged?

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

Use the following for questions 108-115. Exhibit: The Demand for Bungalow Bob's Bagels -(Exhibit: The Demand for Bungalow Bob's Bagels) Demand is price elastic between:

Using the method of arc elasticity to calculate price elasticity of demand eliminates the problem of:

Assuming a linear demand curve, lower prices would result in:

If the quantity supplied responds substantially to a relatively small change in price, supply would be:

The price elasticity of demand for fresh tomatoes has been estimated to be -2.22.If a new insecticide and fertilizer treatment yields a 20 percent increase in the nation's fresh tomato crop, how will that affect total expenditures on fresh tomatoes, all other things unchanged?

The price elasticity of demand for lettuce has been estimated to be -2.58.If an insect infestation destroys 10 percent of the nation's lettuce crop, how will that affect total expenditures on lettuce, all other things unchanged?

Give the definitions for goods that are substitutes or complements.Discuss and explain their cross price elasticity of demand.

If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year when the price of shirts increases from $8 to $12, then, for you, shoes and shirts are considered:

If a good is a luxury item that looms large in the household budget, then the price elasticity of demand will tend to be:

The ratio of the percentage change in a dependent variable to the percentage change in an independent variable, all other things unchanged, is:

If changes in price and total revenue move in the same direction, demand is price elastic in that portion of the demand curve.

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 magazines is:

If along a given segment of a demand curve price falls and total revenue ____________, then demand is price inelastic along that segment.

The cross price elasticity of demand for Coke with respect to the price of Pepsi has been estimated to be 0.61.If the price of Pepsi falls by 10 percent in a period, how will that affect the demand for Coke in that period, all other things unchanged?

List and discuss why two products you buy have price elastic demand.List and discuss why two products you buy have price inelastic demand.

If a good is a necessity with few substitutes, then the price elasticity of demand will tend to be:

The concept of price elasticity shows the relationship between a quantity response and a percentage change in price.

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

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Exam 5: Elasticity: a Measure of Response

If the total revenue received by a firm increases when it raises its price, this indicates that the demand for the firm's product is:

The income elasticity of demand for peaches has been estimated to be 1.43.If income grows by 15 percent in a period, how will that affect total expenditures on peaches in that period, all other things unchanged?

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

Use the following for questions 108-115. Exhibit: The Demand for Bungalow Bob's Bagels -(Exhibit: The Demand for Bungalow Bob's Bagels) Demand is price elastic between:

Using the method of arc elasticity to calculate price elasticity of demand eliminates the problem of:

Assuming a linear demand curve, lower prices would result in:

If the quantity supplied responds substantially to a relatively small change in price, supply would be:

The price elasticity of demand for fresh tomatoes has been estimated to be -2.22.If a new insecticide and fertilizer treatment yields a 20 percent increase in the nation's fresh tomato crop, how will that affect total expenditures on fresh tomatoes, all other things unchanged?

The price elasticity of demand for lettuce has been estimated to be -2.58.If an insect infestation destroys 10 percent of the nation's lettuce crop, how will that affect total expenditures on lettuce, all other things unchanged?

Give the definitions for goods that are substitutes or complements.Discuss and explain their cross price elasticity of demand.

If your purchases of shoes decrease from 11 pairs per year to 9 pairs per year when the price of shirts increases from $8 to $12, then, for you, shoes and shirts are considered:

If a good is a luxury item that looms large in the household budget, then the price elasticity of demand will tend to be:

The ratio of the percentage change in a dependent variable to the percentage change in an independent variable, all other things unchanged, is:

If changes in price and total revenue move in the same direction, demand is price elastic in that portion of the demand curve.

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 magazines is:

If along a given segment of a demand curve price falls and total revenue ____________, then demand is price inelastic along that segment.

The cross price elasticity of demand for Coke with respect to the price of Pepsi has been estimated to be 0.61.If the price of Pepsi falls by 10 percent in a period, how will that affect the demand for Coke in that period, all other things unchanged?

List and discuss why two products you buy have price elastic demand.List and discuss why two products you buy have price inelastic demand.

If a good is a necessity with few substitutes, then the price elasticity of demand will tend to be:

The concept of price elasticity shows the relationship between a quantity response and a percentage change in price.

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