Question 1

If people have more time to adjust to a price change,the price elasticity of demand for that good is likely to _____

Accepted Answer

A) increase. 
B) decrease. 
C) fall to zero. 
D) be equal to −1. 
E) remain unchanged. 
A) increase. 
B) decrease. 
C) fall to zero. 
D) be equal to −1. 
E) remain unchanged.

Question 2

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

Question 3

Luxury goods are _____

Accepted Answer

A) price inelastic. 
B) income inelastic. 
C) income elastic. 
D) goods with negative income elasticity. 
E) goods with positive price elasticity. 
A) price inelastic. 
B) income inelastic. 
C) income elastic. 
D) goods with negative income elasticity. 
E) goods with positive price elasticity.

Question 4

A 5 percent increase in income leads to a 10 percent increase in the quantity demanded for a service.This service is a(n)_____ good,and the demand is _____.

Accepted Answer

A) normal; elastic 
B) normal; inelastic 
C) normal; unit elastic 
D) inferior; elastic 
E) inferior; inelastic 
A) normal; elastic 
B) normal; inelastic 
C) normal; unit elastic 
D) inferior; elastic 
E) inferior; inelastic

Question 5

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

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 6

The price elasticity of demand is useful because it measures the responsiveness of _____ to changes in _____.

Accepted Answer

A) taxpayers; demand 
B) producers; supply 
C) consumers; price 
D) consumers; demand 
E) producers; income 
A) taxpayers; demand 
B) producers; supply 
C) consumers; price 
D) consumers; demand 
E) producers; income

Question 7

What is the effect of a 10 percent price increase on total revenue if elasticity is 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

One group of people uses the New York City subways only during the rush hour to travel to and from work.Another group uses them only at midday for leisure activity.If New York City wants to increase transit fares with the smallest possible reduction in revenue,for which group should it increase the fare?

Accepted Answer

A) the rush-hour group, because its demand for subway service is more elastic than that of the mid-day group 
B) the rush-hour group, because its demand for subway service is less elastic than that of the mid-day group 
C) the mid-day group, because its demand for subway service is more elastic than that of the rush-hour group 
D) the mid-day group, because its demand for subway service is less elastic than that of the rush-hour group 
E) It doesn't matter, because both groups have the same elasticity of demand. 
A) the rush-hour group, because its demand for subway service is more elastic than that of the mid-day group 
B) the rush-hour group, because its demand for subway service is less elastic than that of the mid-day group 
C) the mid-day group, because its demand for subway service is more elastic than that of the rush-hour group 
D) the mid-day group, because its demand for subway service is less elastic than that of the rush-hour group 
E) It doesn't matter, because both groups have the same elasticity of demand.

Question 9

Demand is inelastic only if the price elasticity of demand has an absolute value _____

Accepted Answer

A) of 1. 
B) greater than 1. 
C) greater than 0 but less than 1. 
D) less than 0. 
E) greater than 5. 
A) of 1. 
B) greater than 1. 
C) greater than 0 but less than 1. 
D) less than 0. 
E) greater than 5.

Question 10

If an increase in the price of peanut butter causes a decline in the demand for jelly,then _____

Accepted Answer

A) the goods are substitutes. 
B) jelly is an inferior good. 
C) the goods are complements. 
D) both goods are necessities. 
E) peanut butter is an inferior good. 
A) the goods are substitutes. 
B) jelly is an inferior good. 
C) the goods are complements. 
D) both goods are necessities. 
E) peanut butter is an inferior good.

Question 11

Table 5.7
 $$\begin{array}{l}
\quad\quad\quad\quad\quad\underline{\text { Restaurant Meals}}\
\begin{array} { c c c } 
\begin{array} { c } 
\text { Quantity } \
\text { supplied }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\text { demanded }
\end{array} & \text { Price } \
\hline 100 & 200 & \$ 10 \
150 & 150 & \$ 20
\end{array}
\end{array}$$
-Refer to Table 5.7,which shows the quantity supplied and the quantity demanded for restaurant meals at different prices.Use the information to calculate the price elasticity of supply for restaurant meals.

Accepted Answer

A) 7 
B) 2 
C) 1/2 
D) 3/5 
E) 5/3 
A) 7 
B) 2 
C) 1/2 
D) 3/5 
E) 5/3

Question 12

If elasticity is the same everywhere along the curve and the elasticity value is unchanged,the demand curve _____

Accepted Answer

A) is a linear demand curve. 
B) backward-bending curve. 
C) is a constant-elasticity demand curve. 
D) is a revenue curve. 
E) has a different elasticity value at each point along the curve. 
A) is a linear demand curve. 
B) backward-bending curve. 
C) is a constant-elasticity demand curve. 
D) is a revenue curve. 
E) has a different elasticity value at each point along the curve.

Question 13

A common determinant of both the price elasticity of demand and the price elasticity of supply for a product is _____

Accepted Answer

A) the availability of close substitutes for the product. 
B) the proportion of the consumer's budget spent on the product. 
C) the length of the adjustment period under consideration. 
D) the additional cost of increasing production. 
E) the availability of complements to the product. 
A) the availability of close substitutes for the product. 
B) the proportion of the consumer's budget spent on the product. 
C) the length of the adjustment period under consideration. 
D) the additional cost of increasing production. 
E) the availability of complements to the product.

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

If an increase in the price of gasoline decreases the demand for tires,it 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.

Question 16

Exhibit 5.4
  
-Refer to Exhibit 5.4,which shows a downward-sloping linear demand curve.Demand is unit elastic _____

Accepted Answer

A)  between points a and d. 
B)  between points d and e. 
C)  between points e and g. 
D)  at the top portion of the curve. 
E)  anywhere along the curve. 
A)  between points a and d. 
B)  between points d and e. 
C)  between points e and g. 
D)  at the top portion of the curve. 
E)  anywhere along the curve.

Question 17

Exhibit 5.1
  
-Refer to Exhibit 5.1,which shows the demand curve for a firm.The total revenue at point a is _____

Accepted Answer

A) $4. 
B) $5. 
C) $10. 
D) $50. 
E) $100. 
A) $4. 
B) $5. 
C) $10. 
D) $50. 
E) $100.

Question 18

Table 5.6
 $$\begin{array} { | c | c | } 
\hline \text { Quantity Supplied } & \text { Frice } \
\hline 10 & \$ 10 \
\hline 20 & \$ 20 \
\hline 30 & \$ 30 \
\hline 40 & \$ 40 \
\hline 50 & \$ 50 \
\hline
\end{array}$$
-Refer to Table 5.6.If price increases from $10 to $30,the price elasticity of supply is _____

Accepted Answer

A) 10. 
B) 5. 
C) 1. 
D) 2. 
E) 0.5. 
A) 10. 
B) 5. 
C) 1. 
D) 2. 
E) 0.5.

Question 19

Luis wonders why commercials appear more frequently toward the end of a TV movie than at the beginning.Carol says that this pattern can be explained by the _____

Accepted Answer

A) amount of time Luis spends watching TV. 
B) length of the adjustment period. 
C) cost of supplying additional minutes of the movie. 
D) high elasticity of demand for watching the end of a TV movie. 
E) availability of substitutes for the TV movie. 
A) amount of time Luis spends watching TV. 
B) length of the adjustment period. 
C) cost of supplying additional minutes of the movie. 
D) high elasticity of demand for watching the end of a TV movie. 
E) availability of substitutes for the TV movie.

Question 20

Total revenue is maximized where demand is inelastic.

Accepted Answer

A) True 
 B)False

If people have more time to adjust to a price change,the price elasticity of demand for that good is likely to _____

A perfectly elastic demand curve is _____

Luxury goods are _____

A 5 percent increase in income leads to a 10 percent increase in the quantity demanded for a service.This service is a(n)_ good,and the demand is _.

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

The price elasticity of demand is useful because it measures the responsiveness of _ to changes in _.

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

Demand is inelastic only if the price elasticity of demand has an absolute value _____

If an increase in the price of peanut butter causes a decline in the demand for jelly,then _____

Table 5.7 Quantity supplied Quantity demanded Price 100 200 \ 10 150 150 \ 20 -Refer to Table 5.7,which shows the quantity supplied and the quantity demanded for restaurant meals at different prices.Use the information to calculate the price elasticity of supply for restaurant meals.

If elasticity is the same everywhere along the curve and the elasticity value is unchanged,the demand curve _____

A common determinant of both the price elasticity of demand and the price elasticity of supply for a product is _____

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?

If an increase in the price of gasoline decreases the demand for tires,it indicates that _____

Exhibit 5.4 -Refer to Exhibit 5.4,which shows a downward-sloping linear demand curve.Demand is unit elastic _____

Exhibit 5.1 -Refer to Exhibit 5.1,which shows the demand curve for a firm.The total revenue at point a is _____

Table 5.6 Quantity Supplied Frice 10 \ 10 20 \ 20 30 \ 30 40 \ 40 50 \ 50 -Refer to Table 5.6.If price increases from $10 to $30,the price elasticity of supply is _____

Luis wonders why commercials appear more frequently toward the end of a TV movie than at the beginning.Carol says that this pattern can be explained by the _____

Total revenue is maximized where demand is inelastic.

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

Exam 5: Elasticity of Demand and Supply

If people have more time to adjust to a price change,the price elasticity of demand for that good is likely to _____

A perfectly elastic demand curve is _____

Luxury goods are _____

A 5 percent increase in income leads to a 10 percent increase in the quantity demanded for a service.This service is a(n)_____ good,and the demand is _____.

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

The price elasticity of demand is useful because it measures the responsiveness of _____ to changes in _____.

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

Demand is inelastic only if the price elasticity of demand has an absolute value _____

If an increase in the price of peanut butter causes a decline in the demand for jelly,then _____

Table 5.7 Quantity supplied Quantity demanded Price 100 200 \ 10 150 150 \ 20 -Refer to Table 5.7,which shows the quantity supplied and the quantity demanded for restaurant meals at different prices.Use the information to calculate the price elasticity of supply for restaurant meals.

If elasticity is the same everywhere along the curve and the elasticity value is unchanged,the demand curve _____

A common determinant of both the price elasticity of demand and the price elasticity of supply for a product is _____

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?

If an increase in the price of gasoline decreases the demand for tires,it indicates that _____

Exhibit 5.4 -Refer to Exhibit 5.4,which shows a downward-sloping linear demand curve.Demand is unit elastic _____

Exhibit 5.1 -Refer to Exhibit 5.1,which shows the demand curve for a firm.The total revenue at point a is _____

Table 5.6 Quantity Supplied Frice 10 \ 10 20 \ 20 30 \ 30 40 \ 40 50 \ 50 -Refer to Table 5.6.If price increases from $10 to $30,the price elasticity of supply is _____

Luis wonders why commercials appear more frequently toward the end of a TV movie than at the beginning.Carol says that this pattern can be explained by the _____

Total revenue is maximized where demand is inelastic.

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

A 5 percent increase in income leads to a 10 percent increase in the quantity demanded for a service.This service is a(n)_ good,and the demand is _.

The price elasticity of demand is useful because it measures the responsiveness of _ to changes in _.