Question 1

Antiques tend to have highly inelastic supply curves.

Accepted Answer

A) True 
 B)False

Question 2

We would expect:

Accepted Answer

A)  the demand for Coca-Cola to be less price elastic than the demand for soft drinks in general. 
B)  the demand for Coca-Cola to be more price elastic than the demand for soft drinks in general. 
C)  no relationship between the price elasticity of demand for Coca-Cola and the price elasticity of demand for soft drinks in general. 
D)  none of these to hold true. 
A)  the demand for Coca-Cola to be less price elastic than the demand for soft drinks in general. 
B)  the demand for Coca-Cola to be more price elastic than the demand for soft drinks in general. 
C)  no relationship between the price elasticity of demand for Coca-Cola and the price elasticity of demand for soft drinks in general. 
D)  none of these to hold true.

Question 3

Suppose the supply of product X is perfectly inelastic.If there is an increase in the demand for this product,equilibrium price:

Accepted Answer

A)  will decrease but equilibrium quantity will increase. 
B)  and quantity will both decrease. 
C)  will increase,but equilibrium quantity will decline. 
D)  will increase,but equilibrium quantity will be unchanged. 
A)  will decrease but equilibrium quantity will increase. 
B)  and quantity will both decrease. 
C)  will increase,but equilibrium quantity will decline. 
D)  will increase,but equilibrium quantity will be unchanged.

Question 4

The larger the coefficient of price elasticity of demand for a product,the:

Accepted Answer

A)  larger the resulting price change for an increase in supply. 
B)  more rapid the rate at which the marginal utility of that product diminishes. 
C)  less competitive will be the industry supplying that product. 
D)  smaller the resulting price change for an increase in supply. 
A)  larger the resulting price change for an increase in supply. 
B)  more rapid the rate at which the marginal utility of that product diminishes. 
C)  less competitive will be the industry supplying that product. 
D)  smaller the resulting price change for an increase in supply.

Question 5

Suppose Aiyanna's Pizzeria currently faces a linear demand curve and is charging a very high price per pizza and doing very little business.Aiyanna now decides to lower pizza prices by 5 percent per week for an indefinite period of time.We can expect that each successive week:

Accepted Answer

A)  demand will become more price elastic. 
B)  price elasticity of demand will not change as price is lowered. 
C)  demand will become less price elastic. 
D)  the elasticity of supply will increase. 
A)  demand will become more price elastic. 
B)  price elasticity of demand will not change as price is lowered. 
C)  demand will become less price elastic. 
D)  the elasticity of supply will increase.

Question 6

(Consider This)Which of the following best explains the significant increases in the equilibrium prices for higher education in the United States since the 1980s?

Accepted Answer

A)  The demand for higher education is highly price inelastic and the supply has decreased substantially. 
B)  The demand for higher education is highly price elastic and the supply has decreased substantially. 
C)  The supply of higher education is highly price inelastic and demand has increased substantially. 
D)  The supply of higher education is highly price elastic and demand has increased substantially. 
A)  The demand for higher education is highly price inelastic and the supply has decreased substantially. 
B)  The demand for higher education is highly price elastic and the supply has decreased substantially. 
C)  The supply of higher education is highly price inelastic and demand has increased substantially. 
D)  The supply of higher education is highly price elastic and demand has increased substantially.

Question 7

In which of the following cases will total revenue increase?

Accepted Answer

A)  Price falls and demand is inelastic. 
B)  Price falls and supply is elastic. 
C)  Price rises and demand is inelastic. 
D)  Price rises and demand is elastic. 
A)  Price falls and demand is inelastic. 
B)  Price falls and supply is elastic. 
C)  Price rises and demand is inelastic. 
D)  Price rises and demand is elastic.

Question 8

Suppose the income elasticity of demand for toys is +2.00.This means that:

Accepted Answer

A)  a 10 percent increase in income will increase the purchase of toys by 20 percent. 
B)  a 10 percent increase in income will increase the purchase of toys by 2 percent. 
C)  a 10 percent increase in income will decrease the purchase of toys by 2 percent. 
D)  toys are an inferior good. 
A)  a 10 percent increase in income will increase the purchase of toys by 20 percent. 
B)  a 10 percent increase in income will increase the purchase of toys by 2 percent. 
C)  a 10 percent increase in income will decrease the purchase of toys by 2 percent. 
D)  toys are an inferior good.

Question 9

A cross elasticity of demand coefficient of +2.5 indicates that the two products are substitutes.

Accepted Answer

A) True 
 B)False

Question 10

The price elasticity of demand for beef is about 0.60.Other things equal,this means that a 20 percent increase in the price of beef will cause the quantity of beef demanded to:

Accepted Answer

A)  increase by approximately 12 percent. 
B)  decrease by approximately 12 percent. 
C)  decrease by approximately 32 percent. 
D)  decrease by approximately 26 percent. 
A)  increase by approximately 12 percent. 
B)  decrease by approximately 12 percent. 
C)  decrease by approximately 32 percent. 
D)  decrease by approximately 26 percent.

Question 11

Generally speaking,the demand for luxury goods is more price elastic than is the demand for necessities.

Accepted Answer

A) True 
 B)False

Question 12

In which of the following instances will total revenue decline?

Accepted Answer

A)  Price rises and supply is elastic. 
B)  Price falls and demand is elastic. 
C)  Price rises and demand is inelastic. 
D)  Price rises and demand is elastic. 
A)  Price rises and supply is elastic. 
B)  Price falls and demand is elastic. 
C)  Price rises and demand is inelastic. 
D)  Price rises and demand is elastic.

Question 13

Suppose the price elasticity coefficients of demand are 1.43,0.67,1.11,and 0.29 for products W,X,Y,and Z respectively.A 1 percent decrease in price will increase total revenue in the case(s)of:

Accepted Answer

A)  W and Y. 
B)  Y and Z. 
C)  X and Z. 
D)  Z and W. 
A)  W and Y. 
B)  Y and Z. 
C)  X and Z. 
D)  Z and W.

Question 14

For an increase in demand,the price effect is smallest and the quantity effect is largest:

Accepted Answer

A)  when supply is least elastic. 
B)  in the long run. 
C)  in the short run. 
D)  in the immediate market period. 
A)  when supply is least elastic. 
B)  in the long run. 
C)  in the short run. 
D)  in the immediate market period.

Antiques tend to have highly inelastic supply curves.

We would expect:

Suppose the supply of product X is perfectly inelastic.If there is an increase in the demand for this product,equilibrium price:

The larger the coefficient of price elasticity of demand for a product,the:

Suppose Aiyanna's Pizzeria currently faces a linear demand curve and is charging a very high price per pizza and doing very little business.Aiyanna now decides to lower pizza prices by 5 percent per week for an indefinite period of time.We can expect that each successive week:

(Consider This)Which of the following best explains the significant increases in the equilibrium prices for higher education in the United States since the 1980s?

In which of the following cases will total revenue increase?

Suppose the income elasticity of demand for toys is +2.00.This means that:

A cross elasticity of demand coefficient of +2.5 indicates that the two products are substitutes.

The price elasticity of demand for beef is about 0.60.Other things equal,this means that a 20 percent increase in the price of beef will cause the quantity of beef demanded to:

Generally speaking,the demand for luxury goods is more price elastic than is the demand for necessities.

In which of the following instances will total revenue decline?

Suppose the price elasticity coefficients of demand are 1.43,0.67,1.11,and 0.29 for products W,X,Y,and Z respectively.A 1 percent decrease in price will increase total revenue in the case(s)of:

For an increase in demand,the price effect is smallest and the quantity effect is largest:

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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Exam 6: Elasticity

Antiques tend to have highly inelastic supply curves.

We would expect:

Suppose the supply of product X is perfectly inelastic.If there is an increase in the demand for this product,equilibrium price:

The larger the coefficient of price elasticity of demand for a product,the:

Suppose Aiyanna's Pizzeria currently faces a linear demand curve and is charging a very high price per pizza and doing very little business.Aiyanna now decides to lower pizza prices by 5 percent per week for an indefinite period of time.We can expect that each successive week:

(Consider This)Which of the following best explains the significant increases in the equilibrium prices for higher education in the United States since the 1980s?

In which of the following cases will total revenue increase?

Suppose the income elasticity of demand for toys is +2.00.This means that:

A cross elasticity of demand coefficient of +2.5 indicates that the two products are substitutes.

The price elasticity of demand for beef is about 0.60.Other things equal,this means that a 20 percent increase in the price of beef will cause the quantity of beef demanded to:

Generally speaking,the demand for luxury goods is more price elastic than is the demand for necessities.

In which of the following instances will total revenue decline?

Suppose the price elasticity coefficients of demand are 1.43,0.67,1.11,and 0.29 for products W,X,Y,and Z respectively.A 1 percent decrease in price will increase total revenue in the case(s)of:

For an increase in demand,the price effect is smallest and the quantity effect is largest:

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

Filters