Question 1

If the demand for farm products is price inelastic,a good harvest will cause farm revenues to:

Accepted Answer

A)  increase. 
B)  decrease. 
C)  be unchanged. 
D)  either increase or decrease,depending on what happens to supply. 
A)  increase. 
B)  decrease. 
C)  be unchanged. 
D)  either increase or decrease,depending on what happens to supply. B

Question 2

The concept of price elasticity of demand measures:

Accepted Answer

A)  the slope of the demand curve. 
B)  the number of buyers in a market. 
C)  the extent to which the demand curve shifts as the result of a price decline. 
D)  the sensitivity of consumer purchases to price changes. 
A)  the slope of the demand curve. 
B)  the number of buyers in a market. 
C)  the extent to which the demand curve shifts as the result of a price decline. 
D)  the sensitivity of consumer purchases to price changes. D

Question 3

Studies of the minimum wage suggest that the price elasticity of demand for teenage workers is relatively inelastic.This means that:

Accepted Answer

A)  an increase in the minimum wage would increase the total incomes of teenage workers as a group. 
B)  an increase in the minimum wage would decrease the total incomes of teenage workers as a group. 
C)  the unemployment effect of an increase in the minimum wage would be relatively large. 
D)  the cross elasticity of demand between teenage and adult workers is positive and very large. 
A)  an increase in the minimum wage would increase the total incomes of teenage workers as a group. 
B)  an increase in the minimum wage would decrease the total incomes of teenage workers as a group. 
C)  the unemployment effect of an increase in the minimum wage would be relatively large. 
D)  the cross elasticity of demand between teenage and adult workers is positive and very large. A

Question 4

If the demand for product X is inelastic,a 4 percent increase in the price of X will:

Accepted Answer

A)  decrease the quantity of X demanded by more than 4 percent. 
B)  decrease the quantity of X demanded by less than 4 percent. 
C)  increase the quantity of X demanded by more than 4 percent. 
D)  increase the quantity of X demanded by less than 4 percent. 
A)  decrease the quantity of X demanded by more than 4 percent. 
B)  decrease the quantity of X demanded by less than 4 percent. 
C)  increase the quantity of X demanded by more than 4 percent. 
D)  increase the quantity of X demanded by less than 4 percent.

Question 5

A linear demand curve has a constant elasticity over the full range of the curve.

Accepted Answer

A) True 
 B)False

Question 6

The supply curve of a one-of-a-kind original painting is:

Accepted Answer

A)  relatively elastic. 
B)  relatively inelastic. 
C)  perfectly inelastic. 
D)  perfectly elastic. 
A)  relatively elastic. 
B)  relatively inelastic. 
C)  perfectly inelastic. 
D)  perfectly elastic.

Question 7

The demand for a necessity whose cost is a small portion of one's total income is:

Accepted Answer

A)  perfectly price inelastic. 
B)  perfectly price elastic. 
C)  relatively price inelastic. 
D)  relatively price elastic. 
A)  perfectly price inelastic. 
B)  perfectly price elastic. 
C)  relatively price inelastic. 
D)  relatively price elastic.

Question 8

(Consider This)Elasticity can be thought of as degree of relative:

Accepted Answer

A)  video brightness. 
B)  price bounce. 
C)  audio volume. 
D)  quantity stretch. 
A)  video brightness. 
B)  price bounce. 
C)  audio volume. 
D)  quantity stretch.

Question 9

The demand for autos is likely to be:

Accepted Answer

A)  less price elastic than the demand for Honda Accords. 
B)  more price elastic than the demand for Honda Accords. 
C)  of the same price elasticity as the demand for Honda Accords. 
D)  perfectly inelastic. 
A)  less price elastic than the demand for Honda Accords. 
B)  more price elastic than the demand for Honda Accords. 
C)  of the same price elasticity as the demand for Honda Accords. 
D)  perfectly inelastic.

Question 10

If the income elasticity of demand for lard is -3.00,this means that:

Accepted Answer

A)  lard is a substitute for butter. 
B)  lard is a normal good. 
C)  lard is an inferior good. 
D)  more lard will be purchased when its price falls. 
A)  lard is a substitute for butter. 
B)  lard is a normal good. 
C)  lard is an inferior good. 
D)  more lard will be purchased when its price falls.

Question 11

Cross elasticity of demand measures the effect of a change in the price of one product on the quantity demanded of another product.

Accepted Answer

A) True 
 B)False

Question 12

A supply curve that is parallel to the horizontal axis suggests that:

Accepted Answer

A)  the industry is organized monopolistically. 
B)  the relationship between price and quantity supplied is inverse. 
C)  a change in demand will change price in the same direction. 
D)  a change in demand will change the equilibrium quantity but not price. 
A)  the industry is organized monopolistically. 
B)  the relationship between price and quantity supplied is inverse. 
C)  a change in demand will change price in the same direction. 
D)  a change in demand will change the equilibrium quantity but not price.

Question 13

A demand curve that is parallel to the horizontal axis is:

Accepted Answer

A)  perfectly inelastic. 
B)  perfectly elastic. 
C)  relatively inelastic. 
D)  relatively elastic. 
A)  perfectly inelastic. 
B)  perfectly elastic. 
C)  relatively inelastic. 
D)  relatively elastic.

Question 14

Answer the question on the basis of the following demand schedule: $\begin{array}{l}
\begin{array}{ccc}
&\text { Quantity }\
\underline{\text { Price} } &  \underline{\text { Demanded}} \
 \$6 & 1 \
5 &  2 \
4 &  3 \
3 &  4 \
2 &  5 \
1 &  6
\end{array}
\end{array}$ Refer to the data.Which of the following is correct?

Accepted Answer

A)  Although the slope of the demand curve is constant,price elasticity declines as we move from high to low price ranges. 
B)  Although the slope of the demand curve is constant,price elasticity increases as we move from high to low price ranges. 
C)  Although the demand curve is convex to the origin,price elasticity of demand is constant throughout. 
D)  A steep slope means demand is inelastic;a flat slope means demand is elastic. 
A)  Although the slope of the demand curve is constant,price elasticity declines as we move from high to low price ranges. 
B)  Although the slope of the demand curve is constant,price elasticity increases as we move from high to low price ranges. 
C)  Although the demand curve is convex to the origin,price elasticity of demand is constant throughout. 
D)  A steep slope means demand is inelastic;a flat slope means demand is elastic.

Question 15

Gigantic State University raises tuition for the purpose of increasing its revenue so that more faculty can be hired.GSU is assuming that the demand for education at GSU is:

Accepted Answer

A)  decreasing. 
B)  relatively elastic. 
C)  perfectly elastic. 
D)  relatively inelastic. 
A)  decreasing. 
B)  relatively elastic. 
C)  perfectly elastic. 
D)  relatively inelastic.

Question 16

Price elasticity of demand is generally:

Accepted Answer

A)  greater in the long run than in the short run. 
B)  greater in the short run than in the long run. 
C)  the same in both the short run and the long run. 
D)  greater for "necessities" than it is for "luxuries." 
A)  greater in the long run than in the short run. 
B)  greater in the short run than in the long run. 
C)  the same in both the short run and the long run. 
D)  greater for "necessities" than it is for "luxuries."

Question 17

A supply curve that is a vertical straight line indicates that:

Accepted Answer

A)  production costs for this product cannot be calculated. 
B)  the relationship between price and quantity supplied is inverse. 
C)  a change in price will have no effect on the quantity supplied. 
D)  an unlimited amount of the product will be supplied at a constant price. 
A)  production costs for this product cannot be calculated. 
B)  the relationship between price and quantity supplied is inverse. 
C)  a change in price will have no effect on the quantity supplied. 
D)  an unlimited amount of the product will be supplied at a constant price.

Question 18

Suppose that the price of peanuts falls from $3 to $2 per bushel and that,as a result,the total revenue received by peanut farmers changes from $16 to $14 billion.Thus:

Accepted Answer

A)  the demand for peanuts is elastic. 
B)  the demand for peanuts is inelastic. 
C)  the demand curve for peanuts has shifted to the right. 
D)  no inference can be made as to the elasticity of demand for peanuts. 
A)  the demand for peanuts is elastic. 
B)  the demand for peanuts is inelastic. 
C)  the demand curve for peanuts has shifted to the right. 
D)  no inference can be made as to the elasticity of demand for peanuts.

Question 19

An income elasticity coefficient of -1.8 means the product is a normal good.

Accepted Answer

A) True 
 B)False

Question 20

(Last Word)Based on the concept of price elasticity of demand,which of the following cases is most likely to occur?

Accepted Answer

A)  Golf courses charging higher prices for golf during the week than on weekends. 
B)  Movie theaters charging higher prices for senior citizens. 
C)  Colleges charging lower tuition for low-income students. 
D)  Airlines charging lower fares for business travelers. 
A)  Golf courses charging higher prices for golf during the week than on weekends. 
B)  Movie theaters charging higher prices for senior citizens. 
C)  Colleges charging lower tuition for low-income students. 
D)  Airlines charging lower fares for business travelers.

Exam 6: Elasticity

If the demand for farm products is price inelastic,a good harvest will cause farm revenues to:

The concept of price elasticity of demand measures:

Studies of the minimum wage suggest that the price elasticity of demand for teenage workers is relatively inelastic.This means that:

If the demand for product X is inelastic,a 4 percent increase in the price of X will:

A linear demand curve has a constant elasticity over the full range of the curve.

The supply curve of a one-of-a-kind original painting is:

The demand for a necessity whose cost is a small portion of one's total income is:

(Consider This)Elasticity can be thought of as degree of relative:

The demand for autos is likely to be:

If the income elasticity of demand for lard is -3.00,this means that:

Cross elasticity of demand measures the effect of a change in the price of one product on the quantity demanded of another product.

A supply curve that is parallel to the horizontal axis suggests that:

A demand curve that is parallel to the horizontal axis is:

Answer the question on the basis of the following demand schedule: Quantity \6 1 5 2 4 3 3 4 2 5 1 6 Refer to the data.Which of the following is correct?

Gigantic State University raises tuition for the purpose of increasing its revenue so that more faculty can be hired.GSU is assuming that the demand for education at GSU is:

Price elasticity of demand is generally:

A supply curve that is a vertical straight line indicates that:

Suppose that the price of peanuts falls from $3 to $2 per bushel and that,as a result,the total revenue received by peanut farmers changes from $16 to $14 billion.Thus:

An income elasticity coefficient of -1.8 means the product is a normal good.

(Last Word)Based on the concept of price elasticity of demand,which of the following cases is most likely to occur?

Limits, Alternatives, and Choices

The Market System and the Circular Flow

Demand, Supply, and Market Equilibrium

Market Failures: Public Goods and Externalities

Governments Role and Government Failure

Utility Maximization

Behavioral Economics

Businesses and the Cost of Production

Pure Competition in the Short Run

Pure Competition in the Long Run

Pure Monopoly

Monopolistic Competition and Oligopoly

Technology RD and Efficiency

The Demand for Resources

Wage Determination

Rent Interest and Profit

Natural Resource and Energy Economics

Public Finance: Expenditures and Taxes

Antitrust Policy and Regulation

Agriculture: Economics and Policy

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