Question 1

A 10 percent increase in the price of root beer causes a 5 percent increase in the quantity demanded of orange soda.This means that _____

Accepted Answer

A) root beer and orange soda are substitutes. 
B) root beer and orange soda are complements. 
C) the cross-price elasticity of demand is 1. 
D) the cross-price elasticity of demand is equal to 2. 
E) the cross-price elasticity of demand is equal to −2. 
A) root beer and orange soda are substitutes. 
B) root beer and orange soda are complements. 
C) the cross-price elasticity of demand is 1. 
D) the cross-price elasticity of demand is equal to 2. 
E) the cross-price elasticity of demand is equal to −2.

Question 2

If a firm raises the price of its product,its total revenue will _____

Accepted Answer

A) always increase. 
B) increase only if demand is price inelastic. 
C) increase only if demand is price elastic. 
D) remain constant regardless of the price elasticity of demand. 
E) never increase. 
A) always increase. 
B) increase only if demand is price inelastic. 
C) increase only if demand is price elastic. 
D) remain constant regardless of the price elasticity of demand. 
E) never increase.

Question 3

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 increases from $10 to $30,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 4

If the demand curve shifts,but the supply curve does not,and the price remains the same,supply must be perfectly inelastic.

Accepted Answer

A) True 
 B)False

Question 5

Exhibit 5.5
  
-Refer to Exhibit 5.5,which shows the total revenue curve for a firm.Which of the following statements is true at a quantity of 10?

Accepted Answer

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

Question 6

Which of the following determines a firm's revenue when it changes the price of its product?

Accepted Answer

A) the firm's cost function 
B) the elasticity of the firm's total product curve 
C) the plant size used by the firm in the long run 
D) the price elasticity of demand for the firm's product 
E) the price elasticity of supply 
A) the firm's cost function 
B) the elasticity of the firm's total product curve 
C) the plant size used by the firm in the long run 
D) the price elasticity of demand for the firm's product 
E) the price elasticity of supply

Question 7

The supply of paintings by Van Gogh is most likely to be _____

Accepted Answer

A) relatively elastic because supply is limited. 
B) relatively inelastic because supply is limited. 
C) perfectly elastic because the paintings are luxury goods. 
D) perfectly inelastic because supply is limited. 
E) unit elastic. 
A) relatively elastic because supply is limited. 
B) relatively inelastic because supply is limited. 
C) perfectly elastic because the paintings are luxury goods. 
D) perfectly inelastic because supply is limited. 
E) unit elastic.

Question 8

What does price elasticity of demand measure?

Accepted Answer

A) slope of supply curve at a given price point 
B) shifts of demand curve because of changes in price 
C) shifts of supply curve because of changes in price 
D) how sensitive changes in quantity supplied are to changes in price 
E) how sensitive changes in quantity demanded are to changes in price 
A) slope of supply curve at a given price point 
B) shifts of demand curve because of changes in price 
C) shifts of supply curve because of changes in price 
D) how sensitive changes in quantity supplied are to changes in price 
E) how sensitive changes in quantity demanded are to changes in price

Question 9

Demand is inelastic if _____

Accepted Answer

A) the percentage change in price is greater than the percentage change in quantity demanded. 
B) the percentage change in price is less than the percentage change in quantity demanded. 
C) the percentage change in price is equal to the percentage change in quantity demanded. 
D) the absolute value of price elasticity is equal to 1. 
E) the absolute value of price elasticity is greater than 1. 
A) the percentage change in price is greater than the percentage change in quantity demanded. 
B) the percentage change in price is less than the percentage change in quantity demanded. 
C) the percentage change in price is equal to the percentage change in quantity demanded. 
D) the absolute value of price elasticity is equal to 1. 
E) the absolute value of price elasticity is greater than 1.

Question 10

If a firm facing a perfectly elastic demand curve raises its price,then _____

Accepted Answer

A) it will still sell exactly the same amount of output as it did at the lower price. 
B) it will lose some, but not all, of its sales. 
C) its sales will fall to zero. 
D) its sales will increase. 
E) it will improve its market share. 
A) it will still sell exactly the same amount of output as it did at the lower price. 
B) it will lose some, but not all, of its sales. 
C) its sales will fall to zero. 
D) its sales will increase. 
E) it will improve its market share.

Question 11

Economists distinguish between normal and inferior goods using _____

Accepted Answer

A) the price elasticity of demand. 
B) the price elasticity of supply. 
C) the income elasticity of demand. 
D) the cross-price elasticity of demand. 
E) tax incidence. 
A) the price elasticity of demand. 
B) the price elasticity of supply. 
C) the income elasticity of demand. 
D) the cross-price elasticity of demand. 
E) tax incidence.

Question 12

If city officials expect that an increase in bus fares will raise mass transit revenues,they must think that the demand for bus travel is _____

Accepted Answer

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

Question 13

If a 5 percent increase in price leads to an 8 percent decrease in quantity demanded,demand is _____

Accepted Answer

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

Question 14

Which of the following is assumed to be constant while calculating the price elasticity of demand?

Accepted Answer

A) the price of the product itself 
B) the quantity demanded of the product 
C) total revenue received from the sale of the product 
D) the prices of all other products 
E) the cost of production 
A) the price of the product itself 
B) the quantity demanded of the product 
C) total revenue received from the sale of the product 
D) the prices of all other products 
E) the cost of production

Question 15

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 increases from $10 to $20,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 16

The price elasticity of demand is calculated as _____

Accepted Answer

A) the percentage change in quantity demanded divided by the percentage change in price. 
B) the percentage change in price divided by the percentage change in quantity demanded. 
C) the absolute change in quantity demanded divided by the absolute change in price. 
D) the absolute change in price divided by the absolute change in quantity demanded. 
E) price multiplied by quantity demanded at that price. 
A) the percentage change in quantity demanded divided by the percentage change in price. 
B) the percentage change in price divided by the percentage change in quantity demanded. 
C) the absolute change in quantity demanded divided by the absolute change in price. 
D) the absolute change in price divided by the absolute change in quantity demanded. 
E) price multiplied by quantity demanded at that price.

Question 17

A government-imposed price floor above the market price of milk would increase consumers' expenditures on milk only if _____

Accepted Answer

A) demand is elastic. 
B) supply is inelastic. 
C) demand falls. 
D) demand is inelastic. 
E) supply is unit elastic. 
A) demand is elastic. 
B) supply is inelastic. 
C) demand falls. 
D) demand is inelastic. 
E) supply is unit elastic.

Question 18

As consumers have a longer time period to respond,the demand for a product typically becomes more inelastic.

Accepted Answer

A) True 
 B)False

Question 19

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 $30,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 20

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 decreases from $50 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

Exam 5: Elasticity of Demand and Supply

A 10 percent increase in the price of root beer causes a 5 percent increase in the quantity demanded of orange soda.This means that _____

If a firm raises the price of its product,its total revenue will _____

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

If the demand curve shifts,but the supply curve does not,and the price remains the same,supply must be perfectly inelastic.

Exhibit 5.5 -Refer to Exhibit 5.5,which shows the total revenue curve for a firm.Which of the following statements is true at a quantity of 10?

Which of the following determines a firm's revenue when it changes the price of its product?

The supply of paintings by Van Gogh is most likely to be _____

What does price elasticity of demand measure?

Demand is inelastic if _____

If a firm facing a perfectly elastic demand curve raises its price,then _____

Economists distinguish between normal and inferior goods using _____

If city officials expect that an increase in bus fares will raise mass transit revenues,they must think that the demand for bus travel is _____

If a 5 percent increase in price leads to an 8 percent decrease in quantity demanded,demand is _____

Which of the following is assumed to be constant while calculating the price elasticity of demand?

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

The price elasticity of demand is calculated as _____

A government-imposed price floor above the market price of milk would increase consumers' expenditures on milk only if _____

As consumers have a longer time period to respond,the demand for a product typically becomes more 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 $30,the price elasticity of demand is _____

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

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