Question 1

Lewis has a fixed budget and buys all of the items listed below.When will a 20 percent reduction in price cause him to change the amount he buys the most?

Accepted Answer

A)  scented candles,regular price is $25 
B)  jasmine rice,regular price is $4/lb 
C)  GAP jeans,regular price is $75 
D)  flat-screen LCD TV,regular price is $400 
E)  living room couch,regular price is $300 
A)  scented candles,regular price is $25 
B)  jasmine rice,regular price is $4/lb 
C)  GAP jeans,regular price is $75 
D)  flat-screen LCD TV,regular price is $400 
E)  living room couch,regular price is $300

Question 2

Which one of the following pairs of goods is likely to have a negative cross-price elasticity of demand?

Accepted Answer

A)  tea and coffee 
B)  soda and water 
C)  spaghetti and ravioli 
D)  tennis shoes and flip-flops 
E)  coffee and cream 
A)  tea and coffee 
B)  soda and water 
C)  spaghetti and ravioli 
D)  tennis shoes and flip-flops 
E)  coffee and cream

Question 3

Over time,the price elasticity of supply for sunglasses will become more

Accepted Answer

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

Question 4

For each of the following situations,explain whether the demand for Gatorade would become more elastic or less elastic and why.
a.Competitors introduce new brands of sports drinks into the market.
b.A study finds that Gatorade consumption improves player performance.
c.Consumer spending studies show that people spend a small proportion of their budgets on Gatorade.

Accepted Answer

a.There are more substitutes available,s

Question 5

Demand for which of the following goods or services is likely to be the LEAST elastic in cold weather?

Accepted Answer

A)  a blue hooded sweatshirt with fur-lined pockets 
B)  a blue hooded sweatshirt 
C)  a hooded sweatshirt 
D)  a blue sweatshirt 
E)  a sweatshirt 
A)  a blue hooded sweatshirt with fur-lined pockets 
B)  a blue hooded sweatshirt 
C)  a hooded sweatshirt 
D)  a blue sweatshirt 
E)  a sweatshirt

Question 6

When two goods are substitutes for each other,what will the cross-price elasticity be?

Accepted Answer

A)  The cross-price elasticity will initially be positive but eventually become negative. 
B)  It is unaffected by goods being substitutes. 
C)  It will be zero. 
D)  It will be positive. 
E)  It will be negative. 
A)  The cross-price elasticity will initially be positive but eventually become negative. 
B)  It is unaffected by goods being substitutes. 
C)  It will be zero. 
D)  It will be positive. 
E)  It will be negative.

Question 7

What is the price elasticity of demand? How is it calculated?

Accepted Answer

The price elasticity of demand is the me

Question 8

If the price elasticity of demand for Good A is -0.2 and the price increases from $2.25 to $2.75,the percentage change in the quantity demanded of Good A is

Accepted Answer

A)  -100 percent. 
B)  100 percent. 
C)  4.0 percent 
D)  -4.0 percent. 
E)  unknown because not enough information is provided. 
A)  -100 percent. 
B)  100 percent. 
C)  4.0 percent 
D)  -4.0 percent. 
E)  unknown because not enough information is provided.

Question 9

From the accompanying table,we would expect that,for recreational skaters,the price elasticity of demand for ice skates between $10 and $20 to be ________ than that of hockey players because ________.

Accepted Answer

A)  more elastic; ice skates are a normal good 
B)  less elastic; ice skates are an inferior good 
C)  the same; they both skate 
D)  more elastic; recreational skaters can substitute other activities 
E)  less elastic; hockey players need skates 
A)  more elastic; ice skates are a normal good 
B)  less elastic; ice skates are an inferior good 
C)  the same; they both skate 
D)  more elastic; recreational skaters can substitute other activities 
E)  less elastic; hockey players need skates

Question 10

Refer to the accompanying table to answer the following questions.
  
-The price of erasers increases from $0.50 to $1.00 per eraser.By what percentage does the quantity demanded of pencils change? (Use the midpoint method. )

Accepted Answer

A)  8.70 percent 
B)  22.22 percent 
C)  -22.22 percent 
D)  -8.70 percent 
E)  6.67 percent 
A)  8.70 percent 
B)  22.22 percent 
C)  -22.22 percent 
D)  -8.70 percent 
E)  6.67 percent

Question 11

When Ruben starts working at his first full-time job out of college with a $60,000 salary,he is likely to buy more ________ and less ________.

Accepted Answer

A)  sushi; canned tuna 
B)  ramen noodles; steak 
C)  BMWs; Kias 
D)  computer hardware; computer software 
E)  hamburger; salmon 
A)  sushi; canned tuna 
B)  ramen noodles; steak 
C)  BMWs; Kias 
D)  computer hardware; computer software 
E)  hamburger; salmon

Question 12

When her income increases from $10,000 to $20,000,as shown in the accompanying table,Juanita increases the quantity demanded from 3 to 7 rolls at a price of $3.From the midpoint method,income elasticity of demand for sushi is

Accepted Answer

A)  0.67. 
B)  1.20. 
C)  1.33. 
D)  0.83. 
E)  0.50. 
A)  0.67. 
B)  1.20. 
C)  1.33. 
D)  0.83. 
E)  0.50.

Question 13

Refer to the following graphs to answer the following questions.
A.   B.   C.   D.   E.  
-Which graph most likely shows the price elasticity of demand for the following situation: Lin's Boots can sell out its entire stock of shoe polish at $2.50 but can sell none if it raises the price to $2.55?

Accepted Answer

A)  A 
B)  B 
C)  C 
D)  D 
E)  E 
A)  A 
B)  B 
C)  C 
D)  D 
E)  E

Question 14

If the cross-price elasticity of demand between Good A and Good B is 3,the price of Good B increases,and the price elasticity of demand for Good B is inelastic,we can expect to see a ________ change in the quantity demanded for Good A.

Accepted Answer

A)  positive,zero 
B)  positive,small 
C)  negative,infinite 
D)  negative,one-for-one 
E)  positive,large 
A)  positive,zero 
B)  positive,small 
C)  negative,infinite 
D)  negative,one-for-one 
E)  positive,large

Question 15

Toyota uses a just-in-time production method to respond to consumer demand for its vehicles.In essence,it relies on various cues to signal when new vehicles should be made rather than stocking inventory.This allows Toyota to respond very quickly to changes in consumer demand.Explain whether this system makes elasticity of supply relatively price elastic or price inelastic.

Accepted Answer

It is easy for Toyota to respond to chan

Question 16

If the percentage change in the quantity consumed of pizza is 8 percent and the percentage change in income is 2 percent,what is the income elasticity of demand for pizza?

Accepted Answer

A)  -0.25 
B)  4 
C)  0.25 
D)  -4 
E)  -1 
A)  -0.25 
B)  4 
C)  0.25 
D)  -4 
E)  -1

Question 17

When the quantity demanded is less sensitive to a change in price,then the absolute value of the price elasticity of demand is

Accepted Answer

A)  smaller. 
B)  larger. 
C)  close to infinity. 
D)  close to 1. 
E)  unaffected by the change in sensitivity. 
A)  smaller. 
B)  larger. 
C)  close to infinity. 
D)  close to 1. 
E)  unaffected by the change in sensitivity.

Question 18

How can a firm increase total revenue?

Accepted Answer

A)  when demand is inelastic and the price decreases 
B)  when demand is inelastic and the price increases 
C)  when demand is elastic and the price increases 
D)  when demand is unitary elastic and the price decreases 
E)  when demand is unitary elastic and the price increases 
A)  when demand is inelastic and the price decreases 
B)  when demand is inelastic and the price increases 
C)  when demand is elastic and the price increases 
D)  when demand is unitary elastic and the price decreases 
E)  when demand is unitary elastic and the price increases

Question 19

When would oil producers see the largest percentage decline in the quantity demanded for oil due to an increase in the price of oil today?

Accepted Answer

A)  tomorrow 
B)  in 6 months 
C)  in 2 years 
D)  in 8 years 
E)  in 15 years 
A)  tomorrow 
B)  in 6 months 
C)  in 2 years 
D)  in 8 years 
E)  in 15 years

Question 20

Refer to the following graphs to answer the following questions.
A.   B.   C.   D.   E.  
-Which of these graphs most likely depicts a price elasticity of demand of -0.2?

Accepted Answer

A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
E)  Graph E 
A)  Graph A 
B)  Graph B 
C)  Graph C 
D)  Graph D 
E)  Graph E

Lewis has a fixed budget and buys all of the items listed below.When will a 20 percent reduction in price cause him to change the amount he buys the most?

Which one of the following pairs of goods is likely to have a negative cross-price elasticity of demand?

Over time,the price elasticity of supply for sunglasses will become more

Demand for which of the following goods or services is likely to be the LEAST elastic in cold weather?

When two goods are substitutes for each other,what will the cross-price elasticity be?

What is the price elasticity of demand? How is it calculated?

If the price elasticity of demand for Good A is -0.2 and the price increases from $2.25 to $2.75,the percentage change in the quantity demanded of Good A is

From the accompanying table,we would expect that,for recreational skaters,the price elasticity of demand for ice skates between $10 and $20 to be than that of hockey players because .

Refer to the accompanying table to answer the following questions. -The price of erasers increases from $0.50 to $1.00 per eraser.By what percentage does the quantity demanded of pencils change? (Use the midpoint method. )

When Ruben starts working at his first full-time job out of college with a $60,000 salary,he is likely to buy more and less .

When her income increases from $10,000 to $20,000,as shown in the accompanying table,Juanita increases the quantity demanded from 3 to 7 rolls at a price of $3.From the midpoint method,income elasticity of demand for sushi is

Refer to the following graphs to answer the following questions. A. B. C. D. E. -Which graph most likely shows the price elasticity of demand for the following situation: Lin's Boots can sell out its entire stock of shoe polish at $2.50 but can sell none if it raises the price to $2.55?

If the cross-price elasticity of demand between Good A and Good B is 3,the price of Good B increases,and the price elasticity of demand for Good B is inelastic,we can expect to see a ________ change in the quantity demanded for Good A.

If the percentage change in the quantity consumed of pizza is 8 percent and the percentage change in income is 2 percent,what is the income elasticity of demand for pizza?

When the quantity demanded is less sensitive to a change in price,then the absolute value of the price elasticity of demand is

How can a firm increase total revenue?

When would oil producers see the largest percentage decline in the quantity demanded for oil due to an increase in the price of oil today?

Refer to the following graphs to answer the following questions. A. B. C. D. E. -Which of these graphs most likely depicts a price elasticity of demand of -0.2?

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

Lewis has a fixed budget and buys all of the items listed below.When will a 20 percent reduction in price cause him to change the amount he buys the most?

Which one of the following pairs of goods is likely to have a negative cross-price elasticity of demand?

Over time,the price elasticity of supply for sunglasses will become more

Demand for which of the following goods or services is likely to be the LEAST elastic in cold weather?

When two goods are substitutes for each other,what will the cross-price elasticity be?

What is the price elasticity of demand? How is it calculated?

If the price elasticity of demand for Good A is -0.2 and the price increases from $2.25 to $2.75,the percentage change in the quantity demanded of Good A is

From the accompanying table,we would expect that,for recreational skaters,the price elasticity of demand for ice skates between $10 and $20 to be ________ than that of hockey players because ________.

Refer to the accompanying table to answer the following questions. -The price of erasers increases from $0.50 to $1.00 per eraser.By what percentage does the quantity demanded of pencils change? (Use the midpoint method. )

When Ruben starts working at his first full-time job out of college with a $60,000 salary,he is likely to buy more ________ and less ________.

When her income increases from $10,000 to $20,000,as shown in the accompanying table,Juanita increases the quantity demanded from 3 to 7 rolls at a price of $3.From the midpoint method,income elasticity of demand for sushi is

Refer to the following graphs to answer the following questions. A. B. C. D. E. -Which graph most likely shows the price elasticity of demand for the following situation: Lin's Boots can sell out its entire stock of shoe polish at $2.50 but can sell none if it raises the price to $2.55?

If the cross-price elasticity of demand between Good A and Good B is 3,the price of Good B increases,and the price elasticity of demand for Good B is inelastic,we can expect to see a ________ change in the quantity demanded for Good A.

If the percentage change in the quantity consumed of pizza is 8 percent and the percentage change in income is 2 percent,what is the income elasticity of demand for pizza?

When the quantity demanded is less sensitive to a change in price,then the absolute value of the price elasticity of demand is

How can a firm increase total revenue?

When would oil producers see the largest percentage decline in the quantity demanded for oil due to an increase in the price of oil today?

Refer to the following graphs to answer the following questions. A. B. C. D. E. -Which of these graphs most likely depicts a price elasticity of demand of -0.2?

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

From the accompanying table,we would expect that,for recreational skaters,the price elasticity of demand for ice skates between $10 and $20 to be than that of hockey players because .

When Ruben starts working at his first full-time job out of college with a $60,000 salary,he is likely to buy more and less .