Question 1

If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units,then the demand is _____

Accepted Answer

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

Question 2

Exhibit 5.7
  
-Refer to Exhibit 5.7,which shows four demand curves.At any given price which curve is the least elastic?

Accepted Answer

A) curve D(1) 
B) curve D(2) 
C) curve D(3) 
D) curve D(4) 
E) None of the curves demonstrate elasticity. 
A) curve D(1) 
B) curve D(2) 
C) curve D(3) 
D) curve D(4) 
E) None of the curves demonstrate elasticity.

Question 3

Table 5.2
 $\begin{array}{c}
\begin{array}{lll}
\
  \text {Old}\
  \text {New}
\end{array}
\begin{array}{lll}
\text {Quantity}\
\hline 20\
10
\end{array}
\begin{array}{lll}
\text{ Price}\
\hline \$ 40 \
 \$ 60 
\end{array}
\end{array}$

-Refer to Table 5.2,which shows the change in the quantity demanded for a product as a result of a change in the price of the product.Use the information to calculate the value of the price elasticity of demand.

Accepted Answer

A) ?2/3 
B) ?1/3 
C) ?3/5 
D) ?5/3 
E) 0 
A) ?2/3 
B) ?1/3 
C) ?3/5 
D) ?5/3 
E) 0

Question 4

Income elasticity of demand is greater than zero for all of the following except _____

Accepted Answer

A) restaurant meals. 
B) beer. 
C) owner-occupied housing. 
D) food items. 
E) automobiles. 
A) restaurant meals. 
B) beer. 
C) owner-occupied housing. 
D) food items. 
E) automobiles.

Question 5

If elasticity for a product is 2 and demand decreases by 10 percent,what was the percent price change for the 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 6

Which of the following does not determine a good's price elasticity of demand?

Accepted Answer

A) the time interval considered 
B) the number of substitutes available for the good 
C) expenditure on the good as a percentage of the total consumer budget 
D) the slope of the demand curve 
E) the more of a luxury a particular good there is 
A) the time interval considered 
B) the number of substitutes available for the good 
C) expenditure on the good as a percentage of the total consumer budget 
D) the slope of the demand curve 
E) the more of a luxury a particular good there is

Question 7

What is the effect of a 10 percent price increase on total revenue if 1 is less than elasticity and elasticity is less than infinity?

Accepted Answer

A) Revenue increases by 10 percent. 
B) Revenue increases by less than 10 percent. 
C) Revenue does not change. 
D) Revenue decreases. 
E) Revenue drops to 0. 
A) Revenue increases by 10 percent. 
B) Revenue increases by less than 10 percent. 
C) Revenue does not change. 
D) Revenue decreases. 
E) Revenue drops to 0.

Question 8

The larger the proportion of a consumer's budget that is spent on a product,the more the consumer will be affected by a change in the price of the product.

Accepted Answer

A) True 
 B)False

Question 9

Table 5.3
 $$\begin{array} { c c c } 
& \text { Quantity } & \text { Price } \
 \text { Good A } & 100 & \$ 10 \
& 120 & \$ 9 \\
\text { Good B } & 200 & \$ 20 \
& 140 & \$ 35
\end{array}$$
-Refer to Table 5.3,which shows the change in the quantity demanded for Good A and Good B as a result of the change in their price.Use the information to calculate the price elasticity of demand for Good A.

Accepted Answer

A) ?5/2 
B) ?11/3 
C) ?3/10 
D) ?10/3 
E) ?19/11 
A) ?5/2 
B) ?11/3 
C) ?3/10 
D) ?10/3 
E) ?19/11

Question 10

If the income elasticity of demand for a service is 0.6,then a 5 percent increase in income will generate a _____ in quantity demanded.

Accepted Answer

A) 3 percent decrease 
B) 3 percent increase 
C) 8.33 percent decrease 
D) 8.33 percent increase 
E) 0.12 percent decrease 
A) 3 percent decrease 
B) 3 percent increase 
C) 8.33 percent decrease 
D) 8.33 percent increase 
E) 0.12 percent decrease

Question 11

Table 5.2
 $\begin{array}{c}
\begin{array}{lll}
\
  \text {Old}\
  \text {New}
\end{array}
\begin{array}{lll}
\text {Quantity}\
\hline 20\
10
\end{array}
\begin{array}{lll}
\text{ Price}\
\hline \$ 40 \
 \$ 60 
\end{array}
\end{array}$

-If the price elasticity of demand is ?0.5,then a _____

Accepted Answer

A) 1 percent decrease in quantity demanded leads to a 0.5 percent decrease in price. 
B) 1 percent decrease in price leads to a 0.5 percent increase in quantity demanded. 
C) 50 percent decrease in price leads to a 1 percent increase in quantity demanded. 
D) 50 percent decrease in price leads to a 100 percent increase in quantity demanded. 
E) 50 percent decrease in quantity demanded leads to a 1 percent decrease in price. 
A) 1 percent decrease in quantity demanded leads to a 0.5 percent decrease in price. 
B) 1 percent decrease in price leads to a 0.5 percent increase in quantity demanded. 
C) 50 percent decrease in price leads to a 1 percent increase in quantity demanded. 
D) 50 percent decrease in price leads to a 100 percent increase in quantity demanded. 
E) 50 percent decrease in quantity demanded leads to a 1 percent decrease in price.

Question 12

Exhibit 5.3
  
-Refer to Exhibit 5.3,which shows a linear demand curve.Between points B and C,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

If the cross-price elasticity of demand between Good X and Good Y is 0.4,then _____

Accepted Answer

A) the demand for Good X is highly responsive to changes in the price of Good Y. 
B) a 10 percent increase in the price of Good Y leads to a 0.4 percent increase in the quantity demanded of Good X. 
C) a 10 percent decrease in the price of Good Y leads to a 4 percent decrease in the demand for Good Y. 
D) Good X and Good Y are complements. 
E) Good X is a normal good and Good Y is an inferior good. 
A) the demand for Good X is highly responsive to changes in the price of Good Y. 
B) a 10 percent increase in the price of Good Y leads to a 0.4 percent increase in the quantity demanded of Good X. 
C) a 10 percent decrease in the price of Good Y leads to a 4 percent decrease in the demand for Good Y. 
D) Good X and Good Y are complements. 
E) Good X is a normal good and Good Y is an inferior good.

Question 14

If demand is elastic,a decrease in price leads to a decrease in total revenue.

Accepted Answer

A) True 
 B)False

Question 15

A change in the price of paper towels 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 16

Exhibit 5.4
  
-Refer to Exhibit 5.4,which shows a downward-sloping linear demand curve.Between points b and c price decreases by $1,quantity demanded increases by 10 units,_____

Accepted Answer

A) total revenue decreases by $1, and demand is elastic. 
B) total revenue decreases by $1, and demand is inelastic. 
C) total revenue increases by $40, and demand is elastic. 
D) total revenue increases by $40, and demand is inelastic. 
E) and total revenue increases by $80. 
A) total revenue decreases by $1, and demand is elastic. 
B) total revenue decreases by $1, and demand is inelastic. 
C) total revenue increases by $40, and demand is elastic. 
D) total revenue increases by $40, and demand is inelastic. 
E) and total revenue increases by $80.

Question 17

Exhibit 5.3
  
-Refer to Exhibit 5.3 which shows a linear demand curve.As you move from point B to point C along the demand curve,total revenue _____ and the demand is _____.

Accepted Answer

A) stays the same; unitary 
B) decreases; inelastic 
C) increases; elastic 
D) decreases; elastic 
E) increases, inelastic 
A) stays the same; unitary 
B) decreases; inelastic 
C) increases; elastic 
D) decreases; elastic 
E) increases, inelastic

Question 18

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

Accepted Answer

A) 1; unit elastic 
B) 1.89; elastic 
C) 0.2; inelastic 
D) infinity; perfectly elastic 
E) 1; perfectly inelastic 
A) 1; unit elastic 
B) 1.89; elastic 
C) 0.2; inelastic 
D) infinity; perfectly elastic 
E) 1; perfectly inelastic

Question 19

What is the effect of a 10 percent price increase on quantity demanded if elasticity is infinite?

Accepted Answer

A) Quantity demanded does not change. 
B) Quantity demanded drops by less than 10 percent. 
C) Quantity demanded drops by 10 percent. 
D) Quantity demanded drops by more than 10 percent. 
E) Quantity demanded drops to 0. 
A) Quantity demanded does not change. 
B) Quantity demanded drops by less than 10 percent. 
C) Quantity demanded drops by 10 percent. 
D) Quantity demanded drops by more than 10 percent. 
E) Quantity demanded drops to 0.

Question 20

Exhibit 5.7
  
-Refer to Exhibit 5.7,which shows four demand curves.At any given price which curve is the most elastic?

Accepted Answer

A) curve D(1) 
B) curve D(2) 
C) curve D(3) 
D) curve D(4) 
E) None of the curves demonstrate elasticity. 
A) curve D(1) 
B) curve D(2) 
C) curve D(3) 
D) curve D(4) 
E) None of the curves demonstrate elasticity.

Exam 5: Elasticity of Demand and Supply

If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units,then the demand is _____

Exhibit 5.7 -Refer to Exhibit 5.7,which shows four demand curves.At any given price which curve is the least elastic?

Table 5.2 Old New Quantity 20 10 Price \ 40 \ 60 -Refer to Table 5.2,which shows the change in the quantity demanded for a product as a result of a change in the price of the product.Use the information to calculate the value of the price elasticity of demand.

Income elasticity of demand is greater than zero for all of the following except _____

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

Which of the following does not determine a good's price elasticity of demand?

What is the effect of a 10 percent price increase on total revenue if 1 is less than elasticity and elasticity is less than infinity?

The larger the proportion of a consumer's budget that is spent on a product,the more the consumer will be affected by a change in the price of the product.

Table 5.3 Quantity Price Good A 100 \ 10 120 \ 9 Good B 200 \ 20 140 \ 35 -Refer to Table 5.3,which shows the change in the quantity demanded for Good A and Good B as a result of the change in their price.Use the information to calculate the price elasticity of demand for Good A.

If the income elasticity of demand for a service is 0.6,then a 5 percent increase in income will generate a _____ in quantity demanded.

Table 5.2 Old New Quantity 20 10 Price \ 40 \ 60 -If the price elasticity of demand is ?0.5,then a _____

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

If the cross-price elasticity of demand between Good X and Good Y is 0.4,then _____

If demand is elastic,a decrease in price leads to a decrease in total revenue.

A change in the price of paper towels will tend to have _____

Exhibit 5.4 -Refer to Exhibit 5.4,which shows a downward-sloping linear demand curve.Between points b and c price decreases by $1,quantity demanded increases by 10 units,_____

Exhibit 5.3 -Refer to Exhibit 5.3 which shows a linear demand curve.As you move from point B to point C along the demand curve,total revenue _____ and the demand is _____.

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

What is the effect of a 10 percent price increase on quantity demanded if elasticity is infinite?

Exhibit 5.7 -Refer to Exhibit 5.7,which shows four demand curves.At any given price which curve is the most elastic?

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

Exhibit 5.3 -Refer to Exhibit 5.3 which shows a linear demand curve.As you move from point B to point C along the demand curve,total revenue _ and the demand is _.

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