Question 1

Which is NOT a determinant of the elasticity of demand?

Accepted Answer

A) The proportion of income consumers spend on the good 
B) The number of sellers 
C) The availability of substitutes 
D) Time 
A) The proportion of income consumers spend on the good 
B) The number of sellers 
C) The availability of substitutes 
D) Time

Question 2

Use the following figure to answer the question :  
-An elasticity of 0.75 means that a 1% change in price will lead to a _____% change in quantity demanded.

Accepted Answer

A) 0.25 
B) 0.75 
C) 2.5 
D) 7.5 
A) 0.25 
B) 0.75 
C) 2.5 
D) 7.5

Question 3

Use the following figure to answer the question :  
-The curve in the above graph:

Accepted Answer

A) can only be a perfectly inelastic demand curve. 
B) can only be a perfectly inelastic supply curve. 
C) may be either a perfectly inelastic demand curve or a perfectly inelastic supply curve. 
D) can be neither a perfectly inelastic demand curve nor a perfectly inelastic supply curve. 
A) can only be a perfectly inelastic demand curve. 
B) can only be a perfectly inelastic supply curve. 
C) may be either a perfectly inelastic demand curve or a perfectly inelastic supply curve. 
D) can be neither a perfectly inelastic demand curve nor a perfectly inelastic supply curve.

Question 4

If demand is __________ and price is _________, total revenue will ________.

Accepted Answer

A) inelastic; raised; increase 
B) elastic; raised; increase 
C) inelastic; lowered; increase 
D) elastic; lowered; decrease 
A) inelastic; raised; increase 
B) elastic; raised; increase 
C) inelastic; lowered; increase 
D) elastic; lowered; decrease

Question 5

If demand is inelastic and price is raised

Accepted Answer

A) quantity demanded will fall and total revenue will fall. 
B) quantity demanded will fall and total revenue will rise. 
C) quantity demanded will rise and total revenue will rise. 
D) quantity demanded will rise and total revenue will fall. 
A) quantity demanded will fall and total revenue will fall. 
B) quantity demanded will fall and total revenue will rise. 
C) quantity demanded will rise and total revenue will rise. 
D) quantity demanded will rise and total revenue will fall.

Question 6

Use the following figure to answer the question :  
-Assume that demand is elastic. Of the elasticities shown here, which is the lowest that would still be considered elastic?

Accepted Answer

A) 10.0 
B) 1.01 
C) 1.00 
D) 0.01 
A) 10.0 
B) 1.01 
C) 1.00 
D) 0.01

Question 7

In general, the more the substitutes available for a good

Accepted Answer

A) the more inelastic the demand for the good. 
B) the more elastic the demand for the good. 
C) the greater the demand for the good. 
D) the less the demand for the good. 
A) the more inelastic the demand for the good. 
B) the more elastic the demand for the good. 
C) the greater the demand for the good. 
D) the less the demand for the good.

Question 8

Total revenue will increase if price

Accepted Answer

A) rises and demand is elastic. 
B) rises and demand is unit elastic. 
C) falls and demand is inelastic. 
D) falls and demand is elastic. 
A) rises and demand is elastic. 
B) rises and demand is unit elastic. 
C) falls and demand is inelastic. 
D) falls and demand is elastic.

Question 9

If the elasticity of demand for a good is 0.2, then the demand for that good 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 10

An elasticity of 1 would be considered

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 11

Mathematically, elasticity is the percentage change in _____ brought about by a percentage change in ______.

Accepted Answer

The answer of Mathematically, elasticity is the percentage change in...

Question 12

What is the key difference between the short-run and long-run in terms of elasticity of supply?

Accepted Answer

A) Fixed productive capacity 
B) Labor changes 
C) No changes can be made to capital or labor 
D) No difference 
A) Fixed productive capacity 
B) Labor changes 
C) No changes can be made to capital or labor 
D) No difference

Question 13

If a car dealership decides to offer a rebate to reduce the selling price of its cars and as a result finds an increase in its total revenues, then the demand for cars from this dealership is

Accepted Answer

A) price elastic. 
B) price inelastic. 
C) rebate inelastic. 
D) unit elastic. 
E) unknown. 
A) price elastic. 
B) price inelastic. 
C) rebate inelastic. 
D) unit elastic. 
E) unknown.

Question 14

Use the following figure to answer the question :  
-Statement I: A perfectly inelastic demand curve and a perfectly elastic supply curve are represented the same way on a graph. Statement II: A perfectly elastic demand curve and a perfectly elastic supply curve are represented the same way on a graph.

Accepted Answer

A) Statement I is true and statement II is false. 
B) Statement II is true and statement I is false. 
C) Both statements are true. 
D) Both statements are false. 
A) Statement I is true and statement II is false. 
B) Statement II is true and statement I is false. 
C) Both statements are true. 
D) Both statements are false.

Question 15

Which of the following characteristics would describe a product with an inelastic demand?

Accepted Answer

A) The good is considered a necessity and the price of the product is high relative to the buyer's income. 
B) The good is considered a necessity and the price of the product is low relative to the buyer's income. 
C) The good is considered a luxury and the price of the product is high relative to the buyer's income. 
D) The good is considered a luxury and the price of the product is low relative to the buyer's income. 
A) The good is considered a necessity and the price of the product is high relative to the buyer's income. 
B) The good is considered a necessity and the price of the product is low relative to the buyer's income. 
C) The good is considered a luxury and the price of the product is high relative to the buyer's income. 
D) The good is considered a luxury and the price of the product is low relative to the buyer's income.

Question 16

The consumer will pay for ______ of the tax and the seller will pay for ______ of the tax.

Accepted Answer

A) some; some 
B) most; a little 
C) all; none 
D) none; all 
A) some; some 
B) most; a little 
C) all; none 
D) none; all

Question 17

The imposition of an excise tax on a service will _____ the supply of that service.

Accepted Answer

The answer of The imposition of an excise tax on...

Question 18

On the demand curve shown in the graph above, label it where it is very elastic, unit elastic, and very inelastic.

Accepted Answer

The answer of On the demand curve shown in the...

Question 19

Use the following figure to answer the question :  
-The curve in the above graph

Accepted Answer

A) is a perfectly elastic demand curve. 
B) is a perfectly inelastic demand curve. 
C) is a very elastic demand curve. 
D) is a very inelastic demand curve. 
A) is a perfectly elastic demand curve. 
B) is a perfectly inelastic demand curve. 
C) is a very elastic demand curve. 
D) is a very inelastic demand curve.

Which is NOT a determinant of the elasticity of demand?

Use the following figure to answer the question : -An elasticity of 0.75 means that a 1% change in price will lead to a _____% change in quantity demanded.

Use the following figure to answer the question : -The curve in the above graph:

If demand is ______ and price is _, total revenue will ____.

If demand is inelastic and price is raised

Use the following figure to answer the question : -Assume that demand is elastic. Of the elasticities shown here, which is the lowest that would still be considered elastic?

In general, the more the substitutes available for a good

Total revenue will increase if price

If the elasticity of demand for a good is 0.2, then the demand for that good is

An elasticity of 1 would be considered

Mathematically, elasticity is the percentage change in _ brought about by a percentage change in __.

What is the key difference between the short-run and long-run in terms of elasticity of supply?

If a car dealership decides to offer a rebate to reduce the selling price of its cars and as a result finds an increase in its total revenues, then the demand for cars from this dealership is

Which of the following characteristics would describe a product with an inelastic demand?

The consumer will pay for of the tax and the seller will pay for of the tax.

The imposition of an excise tax on a service will _____ the supply of that service.

On the demand curve shown in the graph above, label it where it is very elastic, unit elastic, and very inelastic.

Use the following figure to answer the question : -The curve in the above graph

A Brief Economic History of the United States

Resource Utilization

The Mixed Economy

Supply and Demand

Demand, Supply, and Equilibrium

Theory of Consumer Behavior

Cost

Profit, Loss, and Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Corporate Mergers and Antitrust

Demand in the Factor Market

Labor Unions

Labor Markets and Wage Rates

Rent, Interest, and Profit

Income Distribution and Poverty

International Trade

International Finance

Filters

Exam 6: The Price Elasticities of Demand and Supply

Which is NOT a determinant of the elasticity of demand?

Use the following figure to answer the question : -An elasticity of 0.75 means that a 1% change in price will lead to a _____% change in quantity demanded.

Use the following figure to answer the question : -The curve in the above graph:

If demand is __________ and price is _________, total revenue will ________.

If demand is inelastic and price is raised

Use the following figure to answer the question : -Assume that demand is elastic. Of the elasticities shown here, which is the lowest that would still be considered elastic?

In general, the more the substitutes available for a good

Total revenue will increase if price

If the elasticity of demand for a good is 0.2, then the demand for that good is

An elasticity of 1 would be considered

Mathematically, elasticity is the percentage change in _____ brought about by a percentage change in ______.

What is the key difference between the short-run and long-run in terms of elasticity of supply?

If a car dealership decides to offer a rebate to reduce the selling price of its cars and as a result finds an increase in its total revenues, then the demand for cars from this dealership is

Which of the following characteristics would describe a product with an inelastic demand?

The consumer will pay for ______ of the tax and the seller will pay for ______ of the tax.

The imposition of an excise tax on a service will _____ the supply of that service.

On the demand curve shown in the graph above, label it where it is very elastic, unit elastic, and very inelastic.

Use the following figure to answer the question : -The curve in the above graph

A Brief Economic History of the United States

Resource Utilization

The Mixed Economy

Supply and Demand

Demand, Supply, and Equilibrium

Theory of Consumer Behavior

Cost

Profit, Loss, and Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Corporate Mergers and Antitrust

Demand in the Factor Market

Labor Unions

Labor Markets and Wage Rates

Rent, Interest, and Profit

Income Distribution and Poverty

International Trade

International Finance

Filters

If demand is ______ and price is _, total revenue will ____.

Mathematically, elasticity is the percentage change in _ brought about by a percentage change in __.

The consumer will pay for of the tax and the seller will pay for of the tax.