Question 1

When the demand curve is perfectly horizontal the demand curve has

Accepted Answer

A)  zero elasticity. 
B)  a large,but not infinite,elasticity. 
C)  perfect elasticity. 
D)  a small,but nonzero,elasticity. 
E)  negative elasticity. 
A)  zero elasticity. 
B)  a large,but not infinite,elasticity. 
C)  perfect elasticity. 
D)  a small,but nonzero,elasticity. 
E)  negative elasticity.

Question 2

The government is exploring ways to increase revenues through taxation.Lisette is an economic adviser to public policy makers,and they pose to her the following question: Should the government tax yachts or should it tax gasoline? Explain your answer using price elasticity of demand.

Accepted Answer

It is likely that yachts are a luxury go

Question 3

The government estimates that the demand curve for DVDs is represented by the equation Qd = -5P + 20.
a.Graph the demand curve.
b.Using prices of $2 and $3,determine the price elasticity of demand.

Accepted Answer

a.
 @#IMG-DLM& 
b.At price = $2,quantity

Question 4

When the price of erasers increases from $1.50 to $2.50,the quantity demanded of pencils is unchanged.The cross-price elasticity of demand between erasers and pencils is ________ because erasers and pencils are ________.

Accepted Answer

A)   1; substitutes 
B)   1/2 ; complements. 
C)    0; normal goods 
D)   0; unrelated 
E)  -1/2 ; complements 
A)   1; substitutes 
B)   1/2 ; complements. 
C)    0; normal goods 
D)   0; unrelated 
E)  -1/2 ; complements

Question 5

When the price increases by 30 percent and the quantity demanded drops by 30 percent,the price elasticity of demand is

Accepted Answer

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

Question 6

If the income elasticity of demand for good smartphone apps is 5 and the percentage change in income is 10 percent,what is the percentage change in the quantity consumed?

Accepted Answer

A)  -0.5 percent 
B)  -5 percent 
C)  50 percent 
D)  0.5 percent 
E)  2 percent 
A)  -0.5 percent 
B)  -5 percent 
C)  50 percent 
D)  0.5 percent 
E)  2 percent

Question 7

When two goods are unrelated then

Accepted Answer

A)  cross-price elasticity of demand will be zero. 
B)  cross-price elasticity of demand will be positive. 
C)  cross-price elasticity of demand will be negative. 
D)  the demand for both goods will be elastic. 
E)  cross-price elasticity of demand will be infinite. 
A)  cross-price elasticity of demand will be zero. 
B)  cross-price elasticity of demand will be positive. 
C)  cross-price elasticity of demand will be negative. 
D)  the demand for both goods will be elastic. 
E)  cross-price elasticity of demand will be infinite.

Question 8

Super Economy Brand products have an income elasticity of -1.4.Thus,these are ________ goods.

Accepted Answer

A)  necessity 
B)  inferior 
C)  luxury 
D)  normal 
E)  complementary 
A)  necessity 
B)  inferior 
C)  luxury 
D)  normal 
E)  complementary

Question 9

A producer knows that the price elasticity for his product is -0.5.He wants to increase quantity demanded by 30 percent.By what percentage does he need to change the price?

Accepted Answer

A)  10 percent 
B)  6 percent 
C)  -9.5 percent 
D)  -60 percent 
E)  -6 percent 
A)  10 percent 
B)  6 percent 
C)  -9.5 percent 
D)  -60 percent 
E)  -6 percent

Question 10

Graph and explain the appropriate shape of the supply or demand curve for Jocelyn's Jammin Jelly Beans when:
a.there is a hurricane that destroys most sugarcane fields.
b.a new candy vendor opens a shop in town.
c.Jocelyn's Jammin Jelly Beans become the hottest item to have at parties.

Accepted Answer

a.
 @#IMG-DLM& 
Sugar,a key input into jelly beans

Question 11

If the income elasticity of demand for laptops is 3.5,you know that laptops are a(n)________ good.

Accepted Answer

A)  substitute 
B)  inferior 
C)  luxury 
D)  necessity 
E)  complement 
A)  substitute 
B)  inferior 
C)  luxury 
D)  necessity 
E)  complement

Question 12

If the cross-price elasticity of demand between Good A and Good B is 2 and the percentage change in price of Good A is 5 percent,what is the percentage change in quantity demanded of Good B?

Accepted Answer

A)  3 percent 
B)  10 percent 
C)  -1.25 percent 
D)  1.50 percent 
E)  -3 percent 
A)  3 percent 
B)  10 percent 
C)  -1.25 percent 
D)  1.50 percent 
E)  -3 percent

Question 13

As we move right along a demand curve,the price elasticity of demand

Accepted Answer

A)  becomes more inelastic. 
B)  becomes more elastic. 
C)  does not change. 
D)  becomes infinite. 
E)  moves closer to zero. 
A)  becomes more inelastic. 
B)  becomes more elastic. 
C)  does not change. 
D)  becomes infinite. 
E)  moves closer to zero.

Question 14

Price elasticity of demand is measured as the

Accepted Answer

A)  change in quantity demanded divided by the change in price. 
B)  change in price divided by the change in quantity demanded. 
C)  percentage change in price divided by the percentage change in quantity demanded. 
D)  percentage change in demand divided by the percentage change in income. 
E)  percentage change in quantity demanded divided by the percentage change in price. 
A)  change in quantity demanded divided by the change in price. 
B)  change in price divided by the change in quantity demanded. 
C)  percentage change in price divided by the percentage change in quantity demanded. 
D)  percentage change in demand divided by the percentage change in income. 
E)  percentage change in quantity demanded divided by the percentage change in price.

Question 15

Assume that the market for pencils is in equilibrium and that demand is very price elastic.The popularity of digital tablets and electronic pens increases and demand for pencils declines.The equilibrium change in quantity demanded is

Accepted Answer

A)  zero. 
B)  relatively small. 
C)  proportional to the shift in demand. 
D)  relatively large. 
E)  infinite. 
A)  zero. 
B)  relatively small. 
C)  proportional to the shift in demand. 
D)  relatively large. 
E)  infinite.

Question 16

Which of the following would NOT affect a good's price elasticity of demand?

Accepted Answer

A)  whether the good is a necessity 
B)  the proportion of the budget devoted to the good 
C)  the number of substitute goods 
D)  the ease of substituting between the goods 
E)  the cost of producing the good 
A)  whether the good is a necessity 
B)  the proportion of the budget devoted to the good 
C)  the number of substitute goods 
D)  the ease of substituting between the goods 
E)  the cost of producing the good

Question 17

Cross-price elasticity measures the relationship between

Accepted Answer

A)  normal goods and inferior goods. 
B)  complements and inferior goods. 
C)  necessities and luxuries. 
D)  two goods and services. 
E)  income and substitute goods. 
A)  normal goods and inferior goods. 
B)  complements and inferior goods. 
C)  necessities and luxuries. 
D)  two goods and services. 
E)  income and substitute goods.

Question 18

The local National Hockey League (NHL)team decides to lower its ticket prices in order to attract more fans.It is hoping that the

Accepted Answer

A)  price elasticity of demand is perfectly inelastic. 
B)  price decrease matters more than the quantity increase to total revenue. 
C)  quantity increase matters more than the price decrease to total revenue. 
D)  price elasticity of demand is unitary elastic. 
E)  price elasticity of demand is perfectly elastic. 
A)  price elasticity of demand is perfectly inelastic. 
B)  price decrease matters more than the quantity increase to total revenue. 
C)  quantity increase matters more than the price decrease to total revenue. 
D)  price elasticity of demand is unitary elastic. 
E)  price elasticity of demand is perfectly elastic.

Question 19

If the owner of Kuji's Treats finds that,in the long run,he can trade one type of input for another,the price elasticity of supply is

Accepted Answer

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

Question 20

Refer to the information in the accompanying table.Without any calculations,we know that sushi is a(n)

Accepted Answer

A)  necessity. 
B)  substitute for fish sticks. 
C)  normal good. 
D)  inferior good. 
E)  complement to sake. 
A)  necessity. 
B)  substitute for fish sticks. 
C)  normal good. 
D)  inferior good. 
E)  complement to sake.

When the demand curve is perfectly horizontal the demand curve has

The government is exploring ways to increase revenues through taxation.Lisette is an economic adviser to public policy makers,and they pose to her the following question: Should the government tax yachts or should it tax gasoline? Explain your answer using price elasticity of demand.

The government estimates that the demand curve for DVDs is represented by the equation Q_d = -5P + 20. a.Graph the demand curve. b.Using prices of $2 and $3,determine the price elasticity of demand.

When the price of erasers increases from $1.50 to $2.50,the quantity demanded of pencils is unchanged.The cross-price elasticity of demand between erasers and pencils is because erasers and pencils are .

When the price increases by 30 percent and the quantity demanded drops by 30 percent,the price elasticity of demand is

If the income elasticity of demand for good smartphone apps is 5 and the percentage change in income is 10 percent,what is the percentage change in the quantity consumed?

When two goods are unrelated then

Super Economy Brand products have an income elasticity of -1.4.Thus,these are ________ goods.

A producer knows that the price elasticity for his product is -0.5.He wants to increase quantity demanded by 30 percent.By what percentage does he need to change the price?

Graph and explain the appropriate shape of the supply or demand curve for Jocelyn's Jammin Jelly Beans when: a.there is a hurricane that destroys most sugarcane fields. b.a new candy vendor opens a shop in town. c.Jocelyn's Jammin Jelly Beans become the hottest item to have at parties.

If the income elasticity of demand for laptops is 3.5,you know that laptops are a(n)________ good.

If the cross-price elasticity of demand between Good A and Good B is 2 and the percentage change in price of Good A is 5 percent,what is the percentage change in quantity demanded of Good B?

As we move right along a demand curve,the price elasticity of demand

Price elasticity of demand is measured as the

Assume that the market for pencils is in equilibrium and that demand is very price elastic.The popularity of digital tablets and electronic pens increases and demand for pencils declines.The equilibrium change in quantity demanded is

Which of the following would NOT affect a good's price elasticity of demand?

Cross-price elasticity measures the relationship between

The local National Hockey League (NHL)team decides to lower its ticket prices in order to attract more fans.It is hoping that the

If the owner of Kuji's Treats finds that,in the long run,he can trade one type of input for another,the price elasticity of supply is

Refer to the information in the accompanying table.Without any calculations,we know that sushi is a(n)

Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Market Outcomes and Tax Incidence

Price Controls

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Understanding Monopoly

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

The Demand and Supply of Resources

Income,inequality,and Poverty

Consumer Choice

Behavioral Economics and Risk Taking

Health Insurance and Health Care

International Trade

Filters

Exam 4: Elasticity

When the demand curve is perfectly horizontal the demand curve has

The government is exploring ways to increase revenues through taxation.Lisette is an economic adviser to public policy makers,and they pose to her the following question: Should the government tax yachts or should it tax gasoline? Explain your answer using price elasticity of demand.

The government estimates that the demand curve for DVDs is represented by the equation Qd = -5P + 20. a.Graph the demand curve. b.Using prices of $2 and $3,determine the price elasticity of demand.

When the price of erasers increases from $1.50 to $2.50,the quantity demanded of pencils is unchanged.The cross-price elasticity of demand between erasers and pencils is ________ because erasers and pencils are ________.

When the price increases by 30 percent and the quantity demanded drops by 30 percent,the price elasticity of demand is

If the income elasticity of demand for good smartphone apps is 5 and the percentage change in income is 10 percent,what is the percentage change in the quantity consumed?

When two goods are unrelated then

Super Economy Brand products have an income elasticity of -1.4.Thus,these are ________ goods.

A producer knows that the price elasticity for his product is -0.5.He wants to increase quantity demanded by 30 percent.By what percentage does he need to change the price?

Graph and explain the appropriate shape of the supply or demand curve for Jocelyn's Jammin Jelly Beans when: a.there is a hurricane that destroys most sugarcane fields. b.a new candy vendor opens a shop in town. c.Jocelyn's Jammin Jelly Beans become the hottest item to have at parties.

If the income elasticity of demand for laptops is 3.5,you know that laptops are a(n)________ good.

If the cross-price elasticity of demand between Good A and Good B is 2 and the percentage change in price of Good A is 5 percent,what is the percentage change in quantity demanded of Good B?

As we move right along a demand curve,the price elasticity of demand

Price elasticity of demand is measured as the

Assume that the market for pencils is in equilibrium and that demand is very price elastic.The popularity of digital tablets and electronic pens increases and demand for pencils declines.The equilibrium change in quantity demanded is

Which of the following would NOT affect a good's price elasticity of demand?

Cross-price elasticity measures the relationship between

The local National Hockey League (NHL)team decides to lower its ticket prices in order to attract more fans.It is hoping that the

If the owner of Kuji's Treats finds that,in the long run,he can trade one type of input for another,the price elasticity of supply is

Refer to the information in the accompanying table.Without any calculations,we know that sushi is a(n)

Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Market Outcomes and Tax Incidence

Price Controls

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Understanding Monopoly

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

The Demand and Supply of Resources

Income,inequality,and Poverty

Consumer Choice

Behavioral Economics and Risk Taking

Health Insurance and Health Care

International Trade

Filters

The government estimates that the demand curve for DVDs is represented by the equation Q_d = -5P + 20. a.Graph the demand curve. b.Using prices of $2 and $3,determine the price elasticity of demand.

When the price of erasers increases from $1.50 to $2.50,the quantity demanded of pencils is unchanged.The cross-price elasticity of demand between erasers and pencils is because erasers and pencils are .