Question 1

If demand is price elastic,total revenue is _____

Accepted Answer

A) directly related to quantity demanded. 
B) inversely related to quantity demanded. 
C) directly related to price. 
D) directly related to price and inversely related to quantity demanded. 
E) not related to either price or to quantity demanded. 
A) directly related to quantity demanded. 
B) inversely related to quantity demanded. 
C) directly related to price. 
D) directly related to price and inversely related to quantity demanded. 
E) not related to either price or to quantity demanded. A

Question 2

Identify a statement that is true about a linear demand curve.

Accepted Answer

A) Along a linear demand curve, both the slope and price elasticity are constant. 
B) Along a linear demand curve, the price elasticity is constant, but the slope varies. 
C) Along a linear demand curve, total revenues are constant. 
D) Along a linear demand curve, the slope is constant, but the price elasticity varies. 
E) Along a linear demand curve, total revenues are negative. 
A) Along a linear demand curve, both the slope and price elasticity are constant. 
B) Along a linear demand curve, the price elasticity is constant, but the slope varies. 
C) Along a linear demand curve, total revenues are constant. 
D) Along a linear demand curve, the slope is constant, but the price elasticity varies. 
E) Along a linear demand curve, total revenues are negative. D

Question 3

If a price reduction leads to an increase in total revenue,demand is _____

Accepted Answer

A) perfectly inelastic. 
B) inelastic. 
C) unit elastic. 
D) elastic. 
E) perfectly elastic. 
A) perfectly inelastic. 
B) inelastic. 
C) unit elastic. 
D) elastic. 
E) perfectly elastic. D

Question 4

Suppose the price elasticity of demand for your economics textbook is −1.If the publisher raises the price by 5 percent,then _____

Accepted Answer

A) revenues will rise by 5 percent. 
B) quantity demanded will rise by 5 percent. 
C) total revenue will not change. 
D) revenues will fall by 1 percent. 
E) revenues will fall by 5 percent. 
A) revenues will rise by 5 percent. 
B) quantity demanded will rise by 5 percent. 
C) total revenue will not change. 
D) revenues will fall by 1 percent. 
E) revenues will fall by 5 percent.

Question 5

Given the proportion of a consumer's income spent on various goods,the demand for _____ is likely to be the most price inelastic.

Accepted Answer

A) furniture 
B) automobiles 
C) hotel rooms 
D) airline travel 
E) candy bars 
A) furniture 
B) automobiles 
C) hotel rooms 
D) airline travel 
E) candy bars

Question 6

Demand is unit elastic whenever _____

Accepted Answer

A) price elasticity has an absolute value of 1. 
B) price elasticity has an absolute value greater than 1. 
C) price elasticity has an absolute value less than 1. 
D) price elasticity is negative. 
E) consumers do not respond to a change in price. 
A) price elasticity has an absolute value of 1. 
B) price elasticity has an absolute value greater than 1. 
C) price elasticity has an absolute value less than 1. 
D) price elasticity is negative. 
E) consumers do not respond to a change in price.

Question 7

If elasticity for a product is 2 and supply decreases by 10 percent,what was the percent price change for this product?

Accepted Answer

A) an increase of 2 percent 
B) a decrease of 2 percent 
C) an increase of 10 percent 
D) a decrease of 5 percent 
E) an increase of 5 percent 
A) an increase of 2 percent 
B) a decrease of 2 percent 
C) an increase of 10 percent 
D) a decrease of 5 percent 
E) an increase of 5 percent

Question 8

If an increase in the price of a product from $100 to $200 per unit leads to a decrease in the quantity demanded from 10 to 8 units,then demand is _____

Accepted Answer

A) elastic. 
B) inelastic. 
C) unit elastic. 
D) zero. 
E) perfectly elastic. 
A) elastic. 
B) inelastic. 
C) unit elastic. 
D) zero. 
E) perfectly elastic.

Question 9

One determinant of the price elasticity of supply is _____

Accepted Answer

A) the price elasticity of demand. 
B) how rapidly costs increase when a firm increases its output. 
C) whether the production process relies heavily on capital or on labor. 
D) the number and closeness of available substitutes. 
E) whether the product is a normal good or an inferior good. 
A) the price elasticity of demand. 
B) how rapidly costs increase when a firm increases its output. 
C) whether the production process relies heavily on capital or on labor. 
D) the number and closeness of available substitutes. 
E) whether the product is a normal good or an inferior good.

Question 10

A perfectly inelastic demand curve is _____

Accepted Answer

A) a vertical straight line. 
B) a horizontal straight line. 
C) a downward-sloping straight line. 
D) an upward-sloping straight line. 
E) a u-shaped curve. 
A) a vertical straight line. 
B) a horizontal straight line. 
C) a downward-sloping straight line. 
D) an upward-sloping straight line. 
E) a u-shaped curve.

Question 11

For which of the following products is the consumer's demand curve most likely to be vertical?

Accepted Answer

A) lobster, for a seafood lover. 
B) cars, for high school students 
C) insulin, for a diabetic 
D) compact discs, for a music lover 
E) beef, for a food lover 
A) lobster, for a seafood lover. 
B) cars, for high school students 
C) insulin, for a diabetic 
D) compact discs, for a music lover 
E) beef, for a food lover

Question 12

If demand is inelastic,the percentage change in price is greater than the resulting percentage change in quantity demanded.

Accepted Answer

A) True 
 B)False

Question 13

Elasticity is always _____

Accepted Answer

A) measured in dollars. 
B) measured in cents. 
C) measured in units of quantity. 
D) measured in pounds. 
E) independent of the units of measurement for price and quantity. 
A) measured in dollars. 
B) measured in cents. 
C) measured in units of quantity. 
D) measured in pounds. 
E) independent of the units of measurement for price and quantity.

Question 14

If supply is perfectly elastic,the supply curve is _____

Accepted Answer

A) vertical. 
B) horizontal. 
C) downward sloping. 
D) upward sloping. 
E) u-shaped. 
A) vertical. 
B) horizontal. 
C) downward sloping. 
D) upward sloping. 
E) u-shaped.

Question 15

If an increase in the price of Pepsi prompts some consumers to buy close substitutes,the demand for Pepsi is _____

Accepted Answer

A) relatively price elastic. 
B) relatively income elastic. 
C) relatively price inelastic. 
D) unit elastic. 
E) perfectly elastic. 
A) relatively price elastic. 
B) relatively income elastic. 
C) relatively price inelastic. 
D) unit elastic. 
E) perfectly elastic.

Question 16

In order to prove that Coca-Cola and 7UP are substitutes,one should test the _____ and get a _____.

Accepted Answer

A) price elasticity of demand; number less than −1 
B) income elasticity of demand; positive number 
C) cross-price elasticity of demand; negative number 
D) price elasticity of demand; number greater than −1 
E) cross-price elasticity of demand; positive number 
A) price elasticity of demand; number less than −1 
B) income elasticity of demand; positive number 
C) cross-price elasticity of demand; negative number 
D) price elasticity of demand; number greater than −1 
E) cross-price elasticity of demand; positive number

Question 17

A good that is defined narrowly has _____

Accepted Answer

A) more substitutes and a more elastic demand. 
B) fewer substitutes and a more elastic demand. 
C) more substitutes and a less elastic demand. 
D) fewer substitutes and a less elastic demand. 
E) more complements and a more elastic demand. 
A) more substitutes and a more elastic demand. 
B) fewer substitutes and a more elastic demand. 
C) more substitutes and a less elastic demand. 
D) fewer substitutes and a less elastic demand. 
E) more complements and a more elastic demand.

Question 18

Wheat farmers in Kansas would benefit from a devastating crop failure in North Dakota (another major wheat-producing state)if the U.S.demand for wheat is _____

Accepted Answer

A) inelastic. 
B) elastic. 
C) unit elastic. 
D) downward sloping. 
E) perfectly elastic. 
A) inelastic. 
B) elastic. 
C) unit elastic. 
D) downward sloping. 
E) perfectly elastic.

Question 19

Exhibit 5.3
  
-Refer to Exhibit 5.3,which shows a linear demand curve.Between points B and C,the elasticity of demand is ____ and demand is _____.

Accepted Answer

A) 1; unit elastic 
B) 1.89; elastic 
C) 0.73; inelastic 
D) infinity; perfectly elastic 
E) 1; perfectly inelastic 
A) 1; unit elastic 
B) 1.89; elastic 
C) 0.73; inelastic 
D) infinity; perfectly elastic 
E) 1; perfectly inelastic

Question 20

The cross-price elasticity between Coke and Pepsi has been estimated at about 0.7,which indicates that _____

Accepted Answer

A) the two goods are substitutes. 
B) the two goods are complements. 
C) Coke is a substitute and Pepsi is a complement. 
D) Pepsi is a substitute and Coke is a complement. 
E) the two goods are income elastic. 
A) the two goods are substitutes. 
B) the two goods are complements. 
C) Coke is a substitute and Pepsi is a complement. 
D) Pepsi is a substitute and Coke is a complement. 
E) the two goods are income elastic.

Exam 5: Elasticity of Demand and Supply

If demand is price elastic,total revenue is _____

Identify a statement that is true about a linear demand curve.

If a price reduction leads to an increase in total revenue,demand is _____

Suppose the price elasticity of demand for your economics textbook is −1.If the publisher raises the price by 5 percent,then _____

Given the proportion of a consumer's income spent on various goods,the demand for _____ is likely to be the most price inelastic.

Demand is unit elastic whenever _____

If elasticity for a product is 2 and supply decreases by 10 percent,what was the percent price change for this product?

If an increase in the price of a product from $100 to $200 per unit leads to a decrease in the quantity demanded from 10 to 8 units,then demand is _____

One determinant of the price elasticity of supply is _____

A perfectly inelastic demand curve is _____

For which of the following products is the consumer's demand curve most likely to be vertical?

If demand is inelastic,the percentage change in price is greater than the resulting percentage change in quantity demanded.

Elasticity is always _____

If supply is perfectly elastic,the supply curve is _____

If an increase in the price of Pepsi prompts some consumers to buy close substitutes,the demand for Pepsi is _____

In order to prove that Coca-Cola and 7UP are substitutes,one should test the _____ and get a _____.

A good that is defined narrowly has _____

Wheat farmers in Kansas would benefit from a devastating crop failure in North Dakota (another major wheat-producing state)if the U.S.demand for wheat is _____

Exhibit 5.3 -Refer to Exhibit 5.3,which shows a linear demand curve.Between points B and C,the elasticity of demand is ____ and demand is _____.

The cross-price elasticity between Coke and Pepsi has been estimated at about 0.7,which indicates that _____

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, supply, and Markets

Consumer Choice and Demand

Production and Cost in the Firm

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, interest, entrepreneurship, and Corporate Finance

Transaction Costs, asymmetric Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Poverty and Redistribution

International Trade

International Finance

Economic Development

Filters

In order to prove that Coca-Cola and 7UP are substitutes,one should test the _ and get a _.

Exhibit 5.3 -Refer to Exhibit 5.3,which shows a linear demand curve.Between points B and C,the elasticity of demand is and demand is _.