Question 1

Goods with an income elasticity of demand greater than 1 are called _____

Accepted Answer

A) necessities. 
B) inferior goods. 
C) substitutes. 
D) luxuries. 
E) complements. 
A) necessities. 
B) inferior goods. 
C) substitutes. 
D) luxuries. 
E) complements.

Question 2

Demand is more elastic _____

Accepted Answer

A) in the short run than in the long run. 
B) for necessities than for luxuries. 
C) for goods with no substitutes. 
D) for goods with many substitutes than for goods with only a few. 
E) for broadly defined goods than for narrowly defined ones. 
A) in the short run than in the long run. 
B) for necessities than for luxuries. 
C) for goods with no substitutes. 
D) for goods with many substitutes than for goods with only a few. 
E) for broadly defined goods than for narrowly defined ones.

Question 3

If the price elasticity of supply in the kiwi fruit industry equals 1,supply is _____

Accepted Answer

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

Question 4

Elasticity measures _____

Accepted Answer

A) the ability of a firm to introduce new products. 
B) the strength of an economy's tendency to recover from recession. 
C) the responsiveness of decision makers to changes in price, income, and other variables. 
D) the profitability of investment in an industry. 
E) the long-run price trends in an economy. 
A) the ability of a firm to introduce new products. 
B) the strength of an economy's tendency to recover from recession. 
C) the responsiveness of decision makers to changes in price, income, and other variables. 
D) the profitability of investment in an industry. 
E) the long-run price trends in an economy.

Question 5

The availability of substitutes makes the demand for a good less elastic.

Accepted Answer

A) True 
 B)False

Question 6

Any supply curve that is a straight line passing through the graph's origin is unit elastic.

Accepted Answer

A) True 
 B)False

Question 7

If elasticity for a product is 2 and demand increases 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

For which of the following is demand most likely to be perfectly inelastic?

Accepted Answer

A) BMW automobiles 
B) Coca-Cola 
C) hot dogs 
D) insulin 
E) coffee 
A) BMW automobiles 
B) Coca-Cola 
C) hot dogs 
D) insulin 
E) coffee

Question 9

Table 5.1
 $$\begin{array} { | l | l | } 
\hline \text { Quantity Demanded } & \text { Price } \
\hline 10 & \$ 50 \
\hline 20 & \$ 40 \
\hline 30 & \$ 30 \
\hline 40 & \$ 20 \
\hline 50 & \$ 10 \
\hline
\end{array}$$
-Refer to Table 5.1.If price decreases from $50 to $40,the price elasticity of demand is _____

Accepted Answer

A) 10. 
B) 5. 
C) 3.3. 
D) 3. 
E) 0.5. 
A) 10. 
B) 5. 
C) 3.3. 
D) 3. 
E) 0.5.

Question 10

Total revenue is the same for every price-quantity combination along a unit-elastic demand curve.

Accepted Answer

A) True 
 B)False

Question 11

If the price elasticity of supply for a product is 5,and prices decrease 10 percent then supply will _____

Accepted Answer

A) increase by 5 percent. 
B) increase by 10 percent. 
C) increase by 50 percent. 
D) decrease by 50 percent. 
E) decrease by 3 percent. 
A) increase by 5 percent. 
B) increase by 10 percent. 
C) increase by 50 percent. 
D) decrease by 50 percent. 
E) decrease by 3 percent.

Question 12

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

Accepted Answer

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

Question 13

The demand for Olin skis is likely to be _____

Accepted Answer

A) less elastic than the demand for skis in general. 
B) more elastic than the demand for skis in general. 
C) unit elastic relative to the demand for skis in general. 
D) as elastic as the demand for skis in general. 
E) greater than the demand for skis in general. 
A) less elastic than the demand for skis in general. 
B) more elastic than the demand for skis in general. 
C) unit elastic relative to the demand for skis in general. 
D) as elastic as the demand for skis in general. 
E) greater than the demand for skis in general.

Question 14

Exhibit 5.4
  
-Refer to Exhibit 5.4,which shows a downward-sloping linear demand curve.Which of the following is true between points g and h?

Accepted Answer

A) Total revenue remains constant at $180. 
B) Total revenue falls by $12. 
C) Total revenue falls by $60. 
D) Total revenue falls by $180. 
E) Total revenue increases by $300. 
A) Total revenue remains constant at $180. 
B) Total revenue falls by $12. 
C) Total revenue falls by $60. 
D) Total revenue falls by $180. 
E) Total revenue increases by $300.

Question 15

In economics,elasticity means _____

Accepted Answer

A) responsiveness to price changes. 
B) shifts in demand. 
C) shifts in supply. 
D) how many goods money can buy. 
E) how corporations maximize their revenue. 
A) responsiveness to price changes. 
B) shifts in demand. 
C) shifts in supply. 
D) how many goods money can buy. 
E) how corporations maximize their revenue.

Question 16

A change in the price of housing will tend to have _____

Accepted Answer

A) an elastic demand. 
B) a perfectly elastic demand. 
C) an inelastic demand. 
D) an upward-sloping demand curve. 
E) many close substitutes. 
A) an elastic demand. 
B) a perfectly elastic demand. 
C) an inelastic demand. 
D) an upward-sloping demand curve. 
E) many close substitutes.

Question 17

If an increase in price from $1 to $2 per unit leads to an increase in quantity supplied from 20 to 100 units,then the value of the price elasticity of supply is _____

Accepted Answer

A) 0.38. 
B) 2. 
C) 2.67. 
D) 4. 
E) 8. 
A) 0.38. 
B) 2. 
C) 2.67. 
D) 4. 
E) 8.

Question 18

Exhibit 5.8
  
-Refer to Exhibit 5.8,which shows a horizontal line.The curve could represent a _____

Accepted Answer

A) perfectly elastic demand or supply curve. 
B) perfectly inelastic supply curve or a perfectly elastic demand curve. 
C) perfectly elastic supply curve or a perfectly inelastic demand curve. 
D) perfectly inelastic supply or demand curve. 
E) perfectly inelastic supply curve or a unit-elastic demand curve. 
A) perfectly elastic demand or supply curve. 
B) perfectly inelastic supply curve or a perfectly elastic demand curve. 
C) perfectly elastic supply curve or a perfectly inelastic demand curve. 
D) perfectly inelastic supply or demand curve. 
E) perfectly inelastic supply curve or a unit-elastic demand curve.

Question 19

If quantity increases by 15 percent when prices decrease 5 percent,then elasticity for this product is _____

Accepted Answer

A) 15. 
B) 10. 
C) 5. 
D) 3. 
E) 1. 
A) 15. 
B) 10. 
C) 5. 
D) 3. 
E) 1.

Question 20

In order to prove that macaroni is an inferior good,we could test the _____ for macaroni and get a _____.

Accepted Answer

A) cross-price elasticity of demand; negative number. 
B) price elasticity of demand; negative number. 
C) income elasticity of demand; positive number. 
D) price elasticity of demand; positive number. 
E) income elasticity of demand; negative number. 
A) cross-price elasticity of demand; negative number. 
B) price elasticity of demand; negative number. 
C) income elasticity of demand; positive number. 
D) price elasticity of demand; positive number. 
E) income elasticity of demand; negative number.

Exam 5: Elasticity of Demand and Supply

Goods with an income elasticity of demand greater than 1 are called _____

Demand is more elastic _____

If the price elasticity of supply in the kiwi fruit industry equals 1,supply is _____

Elasticity measures _____

The availability of substitutes makes the demand for a good less elastic.

Any supply curve that is a straight line passing through the graph's origin is unit elastic.

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

For which of the following is demand most likely to be perfectly inelastic?

Table 5.1 Quantity Demanded Price 10 \ 50 20 \ 40 30 \ 30 40 \ 20 50 \ 10 -Refer to Table 5.1.If price decreases from $50 to $40,the price elasticity of demand is _____

Total revenue is the same for every price-quantity combination along a unit-elastic demand curve.

If the price elasticity of supply for a product is 5,and prices decrease 10 percent then supply will _____

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

The demand for Olin skis is likely to be _____

Exhibit 5.4 -Refer to Exhibit 5.4,which shows a downward-sloping linear demand curve.Which of the following is true between points g and h?

In economics,elasticity means _____

A change in the price of housing will tend to have _____

If an increase in price from $1 to $2 per unit leads to an increase in quantity supplied from 20 to 100 units,then the value of the price elasticity of supply is _____

Exhibit 5.8 -Refer to Exhibit 5.8,which shows a horizontal line.The curve could represent a _____

If quantity increases by 15 percent when prices decrease 5 percent,then elasticity for this product is _____

In order to prove that macaroni is an inferior good,we could test the _____ for macaroni and get a _____.

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In order to prove that macaroni is an inferior good,we could test the _ for macaroni and get a _.