Question 1

When the demand elasticity of a service is ____, a small increase in price will lead to a decline of the same percentage in quantity.

Accepted Answer

A) 10 
B) 1.0 
C) 0.0 
D) 0.1 
A) 10 
B) 1.0 
C) 0.0 
D) 0.1

Question 2

If income elasticity for a good or service is _____, then we can say that the good or service is _____.

Accepted Answer

A) zero; inferior 
B) negative; normal 
C) positive; inferior 
D) positive; normal 
A) zero; inferior 
B) negative; normal 
C) positive; inferior 
D) positive; normal

Question 3

Use the following Figure to answer the question :  
-About how much of the tax is paid by consumers in the form of higher prices?

Accepted Answer

A) 2 cents 
B) 8 cents 
C) 12 cents 
D) 18 cents 
E) 20 cents 
A) 2 cents 
B) 8 cents 
C) 12 cents 
D) 18 cents 
E) 20 cents

Question 4

When a tax is lowered this will

Accepted Answer

A) raise both demand and supply. 
B) lower both demand and supply. 
C) lower only supply. 
D) raise only supply. 
A) raise both demand and supply. 
B) lower both demand and supply. 
C) lower only supply. 
D) raise only supply.

Question 5

The demand for goods such as household electricity, bread and legal services tend to be

Accepted Answer

A) perfectly elastic 
B) relatively elastic 
C) unit elastic 
D) relatively inelastic 
A) perfectly elastic 
B) relatively elastic 
C) unit elastic 
D) relatively inelastic

Question 6

Use the following figure to answer the question :  
-In the above graph, unit elasticity would occur at approximately point ____.

Accepted Answer

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

Question 7

In the __________ (short run/long run) a steel manufacturer that has fixed productive capacity and is operating its plant with one eight-hour shift, can still increase output by adding a second or third shift.

Accepted Answer

The answer of In the __________ (short run/long run) a...

Question 8

Use the following Figure to answer the question :  
-As a result of the tax cigarette consumption declines by _____ million packs a week.

Accepted Answer

A) 5 
B) 10 
C) 40 
D) 50 
E) more than 60 
A) 5 
B) 10 
C) 40 
D) 50 
E) more than 60

Question 9

Use the following figure to answer the question : 
 
-The basic effect of a tax on a service is to _____ that service.

Accepted Answer

A) decrease the supply of 
B) increase the supply of 
C) decrease the demand for 
D) increase the demand for 
A) decrease the supply of 
B) increase the supply of 
C) decrease the demand for 
D) increase the demand for

Question 10

Which is the most accurate statement?

Accepted Answer

A) The most important determinant of the degree of elasticity of demand is the availability of substitutes. 
B) The demand for gasoline is very elastic. 
C) The advertiser wants to push her product's demand curve to the right and make it more elastic. 
D) Supply is most elastic in the market period. 
A) The most important determinant of the degree of elasticity of demand is the availability of substitutes. 
B) The demand for gasoline is very elastic. 
C) The advertiser wants to push her product's demand curve to the right and make it more elastic. 
D) Supply is most elastic in the market period.

Question 11

A demand curve that is perfectly horizontal is

Accepted Answer

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

Question 12

Advertisers try to

Accepted Answer

A) raise the demand for their product and make it more elastic. 
B) raise the demand for their product and make it less elastic. 
C) lower the demand for their product and make it more elastic. 
D) lower the demand for their product and make it less elastic. 
A) raise the demand for their product and make it more elastic. 
B) raise the demand for their product and make it less elastic. 
C) lower the demand for their product and make it more elastic. 
D) lower the demand for their product and make it less elastic.

Question 13

A car dealership estimates that the elasticity of demand for its top models is 0.5. If it raises its prices by 10%,

Accepted Answer

A) quantity demanded will decrease by 5% and total revenue will increase. 
B) there will be no change in either quantity demanded or total revenue because demand is inelastic. 
C) quantity demanded will decrease by 5% and total revenue will decrease. 
D) quantity demanded will decrease by 10% and total revenue will increase. 
A) quantity demanded will decrease by 5% and total revenue will increase. 
B) there will be no change in either quantity demanded or total revenue because demand is inelastic. 
C) quantity demanded will decrease by 5% and total revenue will decrease. 
D) quantity demanded will decrease by 10% and total revenue will increase.

Question 14

If price were lowered from $11 to $10 and quantity demanded rose from 87 to 89, calculate elasticity; state whether demand is elastic, unit elastic, or inelastic; and find how much total revenue was when price was $11 and $10.

Accepted Answer

P1 = $11;

Question 15

When supply is perfectly elastic, the entire tax burden falls on the ____.

Accepted Answer

The answer of When supply is perfectly elastic, the entire...

Question 16

When demand is perfectly elastic the buyer pays _____ of a tax.

Accepted Answer

A) all 
B) most 
C) half 
D) less than half 
E) none 
A) all 
B) most 
C) half 
D) less than half 
E) none

Question 17

Use the following figure to answer the question : 
 
-If the price elasticity of supply for a good increases over time

Accepted Answer

A) quantity supplied becomes more sensitive to price. 
B) quantity demanded is not sensitive to price. 
C) quantity supplied becomes less sensitive to price. 
D) quantity demanded is very sensitive to price. 
A) quantity supplied becomes more sensitive to price. 
B) quantity demanded is not sensitive to price. 
C) quantity supplied becomes less sensitive to price. 
D) quantity demanded is very sensitive to price.

Question 18

Which statement is the most accurate?

Accepted Answer

A) Almost all advertising has been found by the courts to be "false and deceptive." 
B) The goal of advertising is to make a firm's demand curve more elastic. 
C) It is illegal to make false and deceptive advertising claims. 
D) All forms of advertising are legal because advertising is a form of speech protected by the Bill of Rights. 
A) Almost all advertising has been found by the courts to be "false and deceptive." 
B) The goal of advertising is to make a firm's demand curve more elastic. 
C) It is illegal to make false and deceptive advertising claims. 
D) All forms of advertising are legal because advertising is a form of speech protected by the Bill of Rights.

Question 19

Statement I: In the very short run, the demand for gasoline and home heating oil is almost perfectly inelastic. Statement II: When American consumers traded in their gas-guzzler automobiles for Japanese fuel-efficient cars from the mid-1970s to the mid 1980s, this was an example of how the demand for gasoline had become more elastic in the long run.

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 20

If the demand for table salt were perfectly inelastic at all prices, a decrease in supply would

Accepted Answer

A) increase the price and decrease the quantity demanded. 
B) increase the price while not affecting the quantity demanded. 
C) reduce the quantity demanded to zero no matter what the initial price. 
D) have no effect on either price or quantity demanded. 
A) increase the price and decrease the quantity demanded. 
B) increase the price while not affecting the quantity demanded. 
C) reduce the quantity demanded to zero no matter what the initial price. 
D) have no effect on either price or quantity demanded.

When the demand elasticity of a service is ____, a small increase in price will lead to a decline of the same percentage in quantity.

If income elasticity for a good or service is _, then we can say that the good or service is _.

Use the following Figure to answer the question : -About how much of the tax is paid by consumers in the form of higher prices?

When a tax is lowered this will

The demand for goods such as household electricity, bread and legal services tend to be

Use the following figure to answer the question : -In the above graph, unit elasticity would occur at approximately point ____.

In the __________ (short run/long run) a steel manufacturer that has fixed productive capacity and is operating its plant with one eight-hour shift, can still increase output by adding a second or third shift.

Use the following Figure to answer the question : -As a result of the tax cigarette consumption declines by _____ million packs a week.

Use the following figure to answer the question : -The basic effect of a tax on a service is to _____ that service.

Which is the most accurate statement?

A demand curve that is perfectly horizontal is

Advertisers try to

A car dealership estimates that the elasticity of demand for its top models is 0.5. If it raises its prices by 10%,

If price were lowered from $11 to $10 and quantity demanded rose from 87 to 89, calculate elasticity; state whether demand is elastic, unit elastic, or inelastic; and find how much total revenue was when price was $11 and $10.

When supply is perfectly elastic, the entire tax burden falls on the ____.

When demand is perfectly elastic the buyer pays _____ of a tax.

Use the following figure to answer the question : -If the price elasticity of supply for a good increases over time

Which statement is the most accurate?

If the demand for table salt were perfectly inelastic at all prices, a decrease in supply would

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

When the demand elasticity of a service is ____, a small increase in price will lead to a decline of the same percentage in quantity.

If income elasticity for a good or service is _____, then we can say that the good or service is _____.

Use the following Figure to answer the question : -About how much of the tax is paid by consumers in the form of higher prices?

When a tax is lowered this will

The demand for goods such as household electricity, bread and legal services tend to be

Use the following figure to answer the question : -In the above graph, unit elasticity would occur at approximately point ____.

In the __________ (short run/long run) a steel manufacturer that has fixed productive capacity and is operating its plant with one eight-hour shift, can still increase output by adding a second or third shift.

Use the following Figure to answer the question : -As a result of the tax cigarette consumption declines by _____ million packs a week.

Use the following figure to answer the question : -The basic effect of a tax on a service is to _____ that service.

Which is the most accurate statement?

A demand curve that is perfectly horizontal is

Advertisers try to

A car dealership estimates that the elasticity of demand for its top models is 0.5. If it raises its prices by 10%,

If price were lowered from $11 to $10 and quantity demanded rose from 87 to 89, calculate elasticity; state whether demand is elastic, unit elastic, or inelastic; and find how much total revenue was when price was $11 and $10.

When supply is perfectly elastic, the entire tax burden falls on the ____.

When demand is perfectly elastic the buyer pays _____ of a tax.

Use the following figure to answer the question : -If the price elasticity of supply for a good increases over time

Which statement is the most accurate?

If the demand for table salt were perfectly inelastic at all prices, a decrease in supply would

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 income elasticity for a good or service is _, then we can say that the good or service is _.