Question 1

If the cross-price elasticity of demand between two goods is negative,then

Accepted Answer

A)  the two goods are complements 
B)  the two goods are substitutes 
C)  as price of one good rises,the quantity demanded of the other good also rises 
D)  one of the goods must be inferior 
E)  the two goods are rarely used together by consumers 
A)  the two goods are complements 
B)  the two goods are substitutes 
C)  as price of one good rises,the quantity demanded of the other good also rises 
D)  one of the goods must be inferior 
E)  the two goods are rarely used together by consumers A

Question 2

The cross-price elasticity of demand measures

Accepted Answer

A)  how the quantity demanded of one good changes along with income 
B)  the slope of the demand curve 
C)  the slope of the supply curve at the point of equilibrium 
D)  the responsiveness of the quantity demanded of one good to changes in the price of another good 
E)  how responsive changes in price are to changes in quantity demanded 
A)  how the quantity demanded of one good changes along with income 
B)  the slope of the demand curve 
C)  the slope of the supply curve at the point of equilibrium 
D)  the responsiveness of the quantity demanded of one good to changes in the price of another good 
E)  how responsive changes in price are to changes in quantity demanded D

Question 3

-Figure 5-1 shows the prices of two services offered by Earl's Barber Shop and the resulting quantities demanded by customers.In this example,the price elasticity of demand for manicures (using the midpoint formula)is

Accepted Answer

A)  1 
B)  2 
C)  3 
D)  0.5 
E)  0.4 
A)  1 
B)  2 
C)  3 
D)  0.5 
E)  0.4 A

Question 4

The elasticity approach to measuring the sensitivity of quantity demanded to changes in price differs from using the slope because the elasticity approach calculates the ratio of the

Accepted Answer

A)  absolute change in price to the absolute change in quantity demanded 
B)  absolute change in quantity demanded to the percentage change in price 
C)  average change in price to the average change in quantity demanded 
D)  percentage change in quantity demanded to the percentage change in price 
A)  absolute change in price to the absolute change in quantity demanded 
B)  absolute change in quantity demanded to the percentage change in price 
C)  average change in price to the average change in quantity demanded 
D)  percentage change in quantity demanded to the percentage change in price

Question 5

The price elasticity of demand is the

Accepted Answer

A)  percentage change in price divided by the percentage change in quantity demanded 
B)  average change in price divided by the average change in quantity demanded 
C)  percentage change in quantity demanded divided by the percentage change in price 
D)  percentage change in quantity demanded divided by the average change in price 
A)  percentage change in price divided by the percentage change in quantity demanded 
B)  average change in price divided by the average change in quantity demanded 
C)  percentage change in quantity demanded divided by the percentage change in price 
D)  percentage change in quantity demanded divided by the average change in price

Question 6

The income elasticity of demand measures

Accepted Answer

A)  the relative certainty of future income 
B)  how elastic supply is compared to demand 
C)  the percent change in quantity demanded relative to the percent change in income 
D)  the percent change in income relative to the percent change in quantity demanded 
E)  how much income will stretch to make expected payments 
A)  the relative certainty of future income 
B)  how elastic supply is compared to demand 
C)  the percent change in quantity demanded relative to the percent change in income 
D)  the percent change in income relative to the percent change in quantity demanded 
E)  how much income will stretch to make expected payments

Question 7

For which of the following medical services is the income elasticity of demand likely to be the smallest?

Accepted Answer

A)  face-lifts 
B)  plastic surgery 
C)  manicures 
D)  emergency services after a car accident 
E)  hair transplants 
A)  face-lifts 
B)  plastic surgery 
C)  manicures 
D)  emergency services after a car accident 
E)  hair transplants

Question 8

For which of the following is demand likely to be the most price elastic?

Accepted Answer

A)  a good for which there are no close substitutes 
B)  a good for which there are no easily-obtained substitutes 
C)  a good with close substitutes that are difficult to obtain 
D)  a good that is no longer being produced 
E)  a good for which close substitutes are easily obtained 
A)  a good for which there are no close substitutes 
B)  a good for which there are no easily-obtained substitutes 
C)  a good with close substitutes that are difficult to obtain 
D)  a good that is no longer being produced 
E)  a good for which close substitutes are easily obtained

Question 9

In general,the more of an individual's total budget that is spent on a given product,the

Accepted Answer

A)  greater the supply-side response 
B)  less elastic is the demand for that good 
C)  more elastic is the demand for that good 
D)  more the demand curve will shift when the price changes 
E)  less the demand curve will shift when the price changes 
A)  greater the supply-side response 
B)  less elastic is the demand for that good 
C)  more elastic is the demand for that good 
D)  more the demand curve will shift when the price changes 
E)  less the demand curve will shift when the price changes

Question 10

A less elastic demand for a good could result from

Accepted Answer

A)  strong supply-side reactions 
B)  an increased number of available substitutes 
C)  lower consumer incomes 
D)  a longer time horizon 
E)  a shorter time horizon 
A)  strong supply-side reactions 
B)  an increased number of available substitutes 
C)  lower consumer incomes 
D)  a longer time horizon 
E)  a shorter time horizon

Question 11

If the demand curve is a straight line with a negative slope,then demand is more elastic at higher prices than lower prices.

Accepted Answer

A) True 
 B)False

Question 12

-If demand for a good is represented by curve D" in Figure 5-10,then an increase in supply of the good will cause the equilibrium

Accepted Answer

A)  price to fall,but revenue will not change 
B)  quantity to fall,but revenue to rise 
C)  quantity to rise,but revenue will not change 
D)  price to rise,but revenue to fall 
E)  price to fall.Seller's total revenue could rise or fall depending on the price elasticity of demand 
A)  price to fall,but revenue will not change 
B)  quantity to fall,but revenue to rise 
C)  quantity to rise,but revenue will not change 
D)  price to rise,but revenue to fall 
E)  price to fall.Seller's total revenue could rise or fall depending on the price elasticity of demand

Question 13

-Figure 5-1 shows the prices of two services offered by Earl's Barber Shop and the resulting quantities demanded by customers.Suppose that the current price for a haircut is $20 and the current price for a manicure is $12,and Earl has a sale of $4 off the price of either a haircut or a manicure.In this example,

Accepted Answer

A)  haircuts have the smaller absolute change in quantity demanded and the more elastic demand 
B)  Earl can earn more revenue from manicures at the lower price 
C)  Earl should decrease the number of spaces in his shop allocated to haircuts 
D)  the demand for haircuts is unitary elastic 
E)  the demand for haircuts is inelastic 
A)  haircuts have the smaller absolute change in quantity demanded and the more elastic demand 
B)  Earl can earn more revenue from manicures at the lower price 
C)  Earl should decrease the number of spaces in his shop allocated to haircuts 
D)  the demand for haircuts is unitary elastic 
E)  the demand for haircuts is inelastic

Question 14

If a price decrease results in no change in seller's total revenue then

Accepted Answer

A)  supply determined demand 
B)  supply is unresponsive to demand 
C)  demand is elastic 
D)  demand is inelastic 
E)  demand is unitary elastic 
A)  supply determined demand 
B)  supply is unresponsive to demand 
C)  demand is elastic 
D)  demand is inelastic 
E)  demand is unitary elastic

Question 15

-Bill's Office Furniture sells office chairs and desks.Bill's has changed the price per chair by $10 in each of four successive weeks.Figure 5-12 shows the four prices along with the corresponding sales of desks.From this information,it can be seen that

Accepted Answer

A)  office chairs and desks are unrelated goods 
B)  office chairs and desks are complementary goods 
C)  office chairs and desks are substitute goods 
D)  both goods are normal goods 
E)  both goods obey the law of demand 
A)  office chairs and desks are unrelated goods 
B)  office chairs and desks are complementary goods 
C)  office chairs and desks are substitute goods 
D)  both goods are normal goods 
E)  both goods obey the law of demand

Question 16

If a change in price does not lead to any change in revenue,then demand over that range of prices is inelastic.

Accepted Answer

A) True 
 B)False

Question 17

Celia buys 24 gallons of gasoline per month when the price is $2 per gallon,but only 16 gallons if the price rises to $3 per gallon.Within this range,her demand for gasoline is

Accepted Answer

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

Question 18

-Figure 5-11 shows five different levels of income for a particular state (in billions of dollars)and the quantity of public higher education demanded there (for a given level of tuition).What is the income elasticity of demand if income rises from $45 billion to $55 billion?

Accepted Answer

A)  1.00 
B)  0.06 
C)  -1.00 
D)  0 
E)  none of these 
A)  1.00 
B)  0.06 
C)  -1.00 
D)  0 
E)  none of these

Question 19

If the percentage change in quantity demanded is greater (in absolute value)than the percentage change in price,then demand

Accepted Answer

A)  determines supply 
B)  is indeterminate 
C)  is elastic 
D)  is inelastic 
E)  is unit elastic 
A)  determines supply 
B)  is indeterminate 
C)  is elastic 
D)  is inelastic 
E)  is unit elastic

Question 20

The price elasticity of demand is usually equal to the slope of the demand curve.

Accepted Answer

A) True 
 B)False

Exam 5: Elasticity

If the cross-price elasticity of demand between two goods is negative,then

The cross-price elasticity of demand measures

-Figure 5-1 shows the prices of two services offered by Earl's Barber Shop and the resulting quantities demanded by customers.In this example,the price elasticity of demand for manicures (using the midpoint formula)is

The elasticity approach to measuring the sensitivity of quantity demanded to changes in price differs from using the slope because the elasticity approach calculates the ratio of the

The price elasticity of demand is the

The income elasticity of demand measures

For which of the following medical services is the income elasticity of demand likely to be the smallest?

For which of the following is demand likely to be the most price elastic?

In general,the more of an individual's total budget that is spent on a given product,the

A less elastic demand for a good could result from

If the demand curve is a straight line with a negative slope,then demand is more elastic at higher prices than lower prices.

-If demand for a good is represented by curve D" in Figure 5-10,then an increase in supply of the good will cause the equilibrium

If a price decrease results in no change in seller's total revenue then

-Bill's Office Furniture sells office chairs and desks.Bill's has changed the price per chair by $10 in each of four successive weeks.Figure 5-12 shows the four prices along with the corresponding sales of desks.From this information,it can be seen that

If a change in price does not lead to any change in revenue,then demand over that range of prices is inelastic.

Celia buys 24 gallons of gasoline per month when the price is $2 per gallon,but only 16 gallons if the price rises to $3 per gallon.Within this range,her demand for gasoline is

-Figure 5-11 shows five different levels of income for a particular state (in billions of dollars)and the quantity of public higher education demanded there (for a given level of tuition).What is the income elasticity of demand if income rises from $45 billion to $55 billion?

If the percentage change in quantity demanded is greater (in absolute value)than the percentage change in price,then demand

The price elasticity of demand is usually equal to the slope of the demand curve.

What Is Economics

Scarcity,choice,and Economic Systems

Scarcity, choice, and Economic Systems: Part A

Working With Supply and Demand

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

Perfect Competition: Part A

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets

labor Markets: Part A

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

What Macroeconomics Tries to Explain

Production, income, and Employment

The Price Level and Inflation

The Classical Long-Run Model

Part A: The Classical Model in an Open Economy

Economic Growth and Rising Living Standards

Economic Fluctuations

The Short-Run Macro Model

Fiscal Policy

Money,banks,and the Federal Reserve

The Money Market and Monetary Policy

Feedback Effects From GDP to the Money Market

Aggregate Demand and Aggregate Supply

Inflation and Monetary Policy

Exchange Rates and Macroeconomic Policy

Appendix-finding Equilibrium GDP Algebraically

Appendix: Capital and Leverage

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