Question 1

Suppose a decrease in the supply of paper results in an increase in revenue.This indicates that________.

Accepted Answer

A)  the demand for paper is inelastic 
B)  the demand for paper is elastic 
C)  the supply of paper is inelastic 
D)  the supply of paper is elastic 
A)  the demand for paper is inelastic 
B)  the demand for paper is elastic 
C)  the supply of paper is inelastic 
D)  the supply of paper is elastic

Question 2

Figure 4.7  
-Refer to Figure 4.7.The supply curve on which price elasticity changes at every point is shown in ________.

Accepted Answer

A)  Panel A 
B)  Panel B 
C)  Panel C 
D)  Panel D 
A)  Panel A 
B)  Panel B 
C)  Panel C 
D)  Panel D

Question 3

According to a study of the price elasticities of products sold in supermarkets,the price elasticity of demand for toothpaste is estimated at −0.45.Which of the following could explain why the price elasticity of demand for toothpaste is so low?

Accepted Answer

A)  The toothpaste industry is highly competitive. 
B)  Toothpaste is relatively inexpensive. 
C)  Toothpaste is heavily endorsed by dentists. 
D)  There are few close substitutes for toothpaste. 
A)  The toothpaste industry is highly competitive. 
B)  Toothpaste is relatively inexpensive. 
C)  Toothpaste is heavily endorsed by dentists. 
D)  There are few close substitutes for toothpaste.

Question 4

If the percentage change in the quantity of teapots demanded is greater than the percentage change in the price of teapots,then________.

Accepted Answer

A)  the price elasticity of demand for teapots is greater than 1 in absolute value 
B)  the demand for teapots is unit-elastic 
C)  the price elasticity of demand for teapots is equal to zero 
D)  the price elasticity of demand for teapots is less than 1 in absolute value 
A)  the price elasticity of demand for teapots is greater than 1 in absolute value 
B)  the demand for teapots is unit-elastic 
C)  the price elasticity of demand for teapots is equal to zero 
D)  the price elasticity of demand for teapots is less than 1 in absolute value

Question 5

If the demand for mobile phone service is inelastic,then________.

Accepted Answer

A)  the percentage change in quantity demanded is greater than the percentage change in price (in absolute value) 
B)  the percentage change in quantity demanded is equal to the percentage change in price 
C)  the quantity demanded does not change in response to changes in price 
D)  the percentage change in quantity demanded is less than the percentage change in price (in absolute value) 
A)  the percentage change in quantity demanded is greater than the percentage change in price (in absolute value) 
B)  the percentage change in quantity demanded is equal to the percentage change in price 
C)  the quantity demanded does not change in response to changes in price 
D)  the percentage change in quantity demanded is less than the percentage change in price (in absolute value)

Question 6

Explain the relationship between price elasticity of demand and total revenue.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

If demand is elastic,an increase in pric

Question 7

The current price of canvas messenger bags is $36 each,and sales of the bags equal 400 per week.If the price elasticity of demand is −2.5 and the price changes to $44,how many messenger bags will be sold per week? Use the midpoint formula.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

Using the midpoint formula:
−2.5 = (400

Question 8

What does price elasticity of demand measure? When is demand elastic? Inelastic? Unit-elastic?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

Price elasticity of demand measures the

Question 9

Most food products have low income and price elasticities of demand.

Accepted Answer

A) True 
 B)False

Question 10

Assume that the demand curve for sunblock is linear and downward sloping.Which of the following statements about the slope of the demand curve for sunblock and the price elasticity of demand for sunblock is true?

Accepted Answer

A)  The slope and the price elasticity of demand are constant at all points along the demand curve for sunblock. 
B)  The slope is constant, but the price elasticity of demand is not constant at all points along the demand curve for sunblock. 
C)  The slope is not constant, but the price elasticity of demand is constant at all points along the demand curve for sunblock. 
D)  The slope of the demand curve for sunblock is constant and equal to zero; demand is perfectly inelastic. 
A)  The slope and the price elasticity of demand are constant at all points along the demand curve for sunblock. 
B)  The slope is constant, but the price elasticity of demand is not constant at all points along the demand curve for sunblock. 
C)  The slope is not constant, but the price elasticity of demand is constant at all points along the demand curve for sunblock. 
D)  The slope of the demand curve for sunblock is constant and equal to zero; demand is perfectly inelastic.

Question 11

If you expect the economy is going to boom and average income in the economy will rise in the foreseeable future,the type of firm that would be able to increase its sales if your expectations are met is _________.

Accepted Answer

A)  one that sells an inferior good 
B)  one that sells a necessity good 
C)  one that sells a luxury good 
D)  one that sells a price inelastic good 
A)  one that sells an inferior good 
B)  one that sells a necessity good 
C)  one that sells a luxury good 
D)  one that sells a price inelastic good

Question 12

Economists estimated that the cross-price elasticity of demand for beer and wine is −0.83 and the income elasticity of wine is 5.03.This means that________.

Accepted Answer

A)  beer and wine are substitutes and wine is an inferior good 
B)  beer and wine are complements and wine is a luxury good 
C)  beer and wine are substitutes and wine is a luxury good 
D)  beer and wine are complements and wine is an inferior good 
A)  beer and wine are substitutes and wine is an inferior good 
B)  beer and wine are complements and wine is a luxury good 
C)  beer and wine are substitutes and wine is a luxury good 
D)  beer and wine are complements and wine is an inferior good

Question 13

Figure 4.8  
-Refer to Figure 4.8.What is the value of the price elasticity of supply between g and h?

Accepted Answer

A)  20 
B)  0.5 
C)  2 
D)  0.02 
A)  20 
B)  0.5 
C)  2 
D)  0.02

Question 14

If,for a given percentage increase in price,quantity supplied increases by a proportionately larger percentage,then supply is ________.

Accepted Answer

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

Question 15

If at a price of $10,a vendor sells 5 units of a product and at a price of $8,6 units are sold,then,using the midpoint formula,the demand for this good is inelastic.

Accepted Answer

A) True 
 B)False

Question 16

If the income elasticity for canned food is 0.8,then canned food is an inferior good.

Accepted Answer

A) True 
 B)False

Question 17

Suppose at a price of $50,Yoshi's Jazz Bar sells 20 tickets to its nightly jazz performance and at a price of $40,it sells 25 tickets.Based on this information,the demand for Yoshi's jazz performance is elastic.

Accepted Answer

A) True 
 B)False

Question 18

When there are few substitutes available for a good,demand tends to be relatively inelastic.

Accepted Answer

A) True 
 B)False

Question 19

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative,demand for using the toll road must be ________.

Accepted Answer

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

Question 20

If the demand for a product is elastic,the quantity demanded changes by a smaller percentage than the percentage change in price.

Accepted Answer

A) True 
 B)False

Suppose a decrease in the supply of paper results in an increase in revenue.This indicates that________.

Figure 4.7 -Refer to Figure 4.7.The supply curve on which price elasticity changes at every point is shown in ________.

According to a study of the price elasticities of products sold in supermarkets,the price elasticity of demand for toothpaste is estimated at −0.45.Which of the following could explain why the price elasticity of demand for toothpaste is so low?

If the percentage change in the quantity of teapots demanded is greater than the percentage change in the price of teapots,then________.

If the demand for mobile phone service is inelastic,then________.

Explain the relationship between price elasticity of demand and total revenue. __________________________________________________________________________________________________________________________________________________________________________________________

What does price elasticity of demand measure? When is demand elastic? Inelastic? Unit-elastic? __________________________________________________________________________________________________________________________________________________________________________________________

Most food products have low income and price elasticities of demand.

Assume that the demand curve for sunblock is linear and downward sloping.Which of the following statements about the slope of the demand curve for sunblock and the price elasticity of demand for sunblock is true?

If you expect the economy is going to boom and average income in the economy will rise in the foreseeable future,the type of firm that would be able to increase its sales if your expectations are met is _________.

Economists estimated that the cross-price elasticity of demand for beer and wine is −0.83 and the income elasticity of wine is 5.03.This means that________.

Figure 4.8 -Refer to Figure 4.8.What is the value of the price elasticity of supply between g and h?

If,for a given percentage increase in price,quantity supplied increases by a proportionately larger percentage,then supply is ________.

If at a price of $10,a vendor sells 5 units of a product and at a price of $8,6 units are sold,then,using the midpoint formula,the demand for this good is inelastic.

If the income elasticity for canned food is 0.8,then canned food is an inferior good.

Suppose at a price of $50,Yoshi's Jazz Bar sells 20 tickets to its nightly jazz performance and at a price of $40,it sells 25 tickets.Based on this information,the demand for Yoshi's jazz performance is elastic.

When there are few substitutes available for a good,demand tends to be relatively inelastic.

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative,demand for using the toll road must be ________.

If the demand for a product is elastic,the quantity demanded changes by a smaller percentage than the percentage change in price.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters

Exam 4: Elasticity: The Responsiveness of Demand and Supply

Suppose a decrease in the supply of paper results in an increase in revenue.This indicates that________.

Figure 4.7 -Refer to Figure 4.7.The supply curve on which price elasticity changes at every point is shown in ________.

According to a study of the price elasticities of products sold in supermarkets,the price elasticity of demand for toothpaste is estimated at −0.45.Which of the following could explain why the price elasticity of demand for toothpaste is so low?

If the percentage change in the quantity of teapots demanded is greater than the percentage change in the price of teapots,then________.

If the demand for mobile phone service is inelastic,then________.

Explain the relationship between price elasticity of demand and total revenue. __________________________________________________________________________________________________________________________________________________________________________________________

What does price elasticity of demand measure? When is demand elastic? Inelastic? Unit-elastic? __________________________________________________________________________________________________________________________________________________________________________________________

Most food products have low income and price elasticities of demand.

Assume that the demand curve for sunblock is linear and downward sloping.Which of the following statements about the slope of the demand curve for sunblock and the price elasticity of demand for sunblock is true?

If you expect the economy is going to boom and average income in the economy will rise in the foreseeable future,the type of firm that would be able to increase its sales if your expectations are met is _________.

Economists estimated that the cross-price elasticity of demand for beer and wine is −0.83 and the income elasticity of wine is 5.03.This means that________.

Figure 4.8 -Refer to Figure 4.8.What is the value of the price elasticity of supply between g and h?

If,for a given percentage increase in price,quantity supplied increases by a proportionately larger percentage,then supply is ________.

If at a price of $10,a vendor sells 5 units of a product and at a price of $8,6 units are sold,then,using the midpoint formula,the demand for this good is inelastic.

If the income elasticity for canned food is 0.8,then canned food is an inferior good.

Suppose at a price of $50,Yoshi's Jazz Bar sells 20 tickets to its nightly jazz performance and at a price of $40,it sells 25 tickets.Based on this information,the demand for Yoshi's jazz performance is elastic.

When there are few substitutes available for a good,demand tends to be relatively inelastic.

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative,demand for using the toll road must be ________.

If the demand for a product is elastic,the quantity demanded changes by a smaller percentage than the percentage change in price.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency,government Price Setting and Taxes

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters