Question 1

If demand is unitary elastic,a price decrease results in

Accepted Answer

A)  an increase in total seller's total revenue 
B)  no change in total seller's total revenue 
C)  a decrease in total expenditure on the good 
D)  a decrease in quantity demanded of the good 
E)  an increase in supply of the good 
A)  an increase in total seller's total revenue 
B)  no change in total seller's total revenue 
C)  a decrease in total expenditure on the good 
D)  a decrease in quantity demanded of the good 
E)  an increase in supply of the good

Question 2

The price elasticity of demand is

Accepted Answer

A)  irrelevant to the determination of prices,incomes,and interest rates 
B)  indeterminate in most cases 
C)  the percentage change in price divided by the percentage change in quantity demanded 
D)  the percentage change in price with respect to the percentage change in quantity supplied 
E)  the percentage change in quantity demanded divided by the percentage change in price 
A)  irrelevant to the determination of prices,incomes,and interest rates 
B)  indeterminate in most cases 
C)  the percentage change in price divided by the percentage change in quantity demanded 
D)  the percentage change in price with respect to the percentage change in quantity supplied 
E)  the percentage change in quantity demanded divided by the percentage change in price

Question 3

As a result of heavy spring rains in the Midwest,the corn crop declined sharply.If corn growers experienced an increase in sales revenue,the demand for corn must be

Accepted Answer

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

Question 4

-Figure 5-4 shows the demand schedule for hockey pucks.What is the price elasticity of demand when the price changes from $2 per puck to $1 per puck (using the midpoint formula)?

Accepted Answer

A)  0.33 
B)  0.15 
C)  3.00 
D)  1.00 
E)  none of these 
A)  0.33 
B)  0.15 
C)  3.00 
D)  1.00 
E)  none of these

Question 5

If the demand for a good is price inelastic,a decrease in total revenue from the good would result from a(n)

Accepted Answer

A)  increase in price 
B)  decrease in quantity demanded 
C)  favorable shift in tastes and preferences 
D)  decrease in price 
E)  increase in consumers' incomes 
A)  increase in price 
B)  decrease in quantity demanded 
C)  favorable shift in tastes and preferences 
D)  decrease in price 
E)  increase in consumers' incomes

Question 6

-Figure 5-9 shows Sally's demand for movie theater tickets (quantity of movies per year).If the price per ticket fell from $8 to $7,

Accepted Answer

A)  there would be no change in Sally's total expenditure on movie tickets 
B)  Sally would spend less money on movie tickets 
C)  Sally would spend more money on movie tickets 
D)  Sally's demand curve would shift to the left 
E)  the supply curve would shift to the right 
A)  there would be no change in Sally's total expenditure on movie tickets 
B)  Sally would spend less money on movie tickets 
C)  Sally would spend more money on movie tickets 
D)  Sally's demand curve would shift to the left 
E)  the supply curve would shift to the right

Question 7

If a 10 percent rise in the price of bananas leads to a 20 percent reduction in the quantity of bananas demanded,then the price elasticity of demand is 2.00.

Accepted Answer

A) True 
 B)False

Question 8

If the income elasticity of demand is negative,this means that the good is

Accepted Answer

A)  an inferior good 
B)  sold at a lower than equilibrium price 
C)  provided by a monopoly producer 
D)  provided by competitive producers 
E)  a normal good 
A)  an inferior good 
B)  sold at a lower than equilibrium price 
C)  provided by a monopoly producer 
D)  provided by competitive producers 
E)  a normal good

Question 9

The cross-price elasticity of demand is measured by the

Accepted Answer

A)  change in quantity demanded of one good divided by the change in price of another good 
B)  percentage change in quantity demanded of one good divided by the percentage change in its price 
C)  percentage change in demand for one good divided by the percentage change in income 
D)  percentage change in quantity supplied of one good divided by the percentage change in the price of another good 
E)  percentage change in quantity demanded of one good divided by the percentage change in price of another good 
A)  change in quantity demanded of one good divided by the change in price of another good 
B)  percentage change in quantity demanded of one good divided by the percentage change in its price 
C)  percentage change in demand for one good divided by the percentage change in income 
D)  percentage change in quantity supplied of one good divided by the percentage change in the price of another good 
E)  percentage change in quantity demanded of one good divided by the percentage change in price of another good

Question 10

-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).Given this information,what can be said about the state's demand for public higher education?

Accepted Answer

A)  It follows the law of demand. 
B)  It violates the law of demand. 
C)  Public higher education is an inferior good for income levels above $65 million. 
D)  Public higher education is a normal good. 
A)  It follows the law of demand. 
B)  It violates the law of demand. 
C)  Public higher education is an inferior good for income levels above $65 million. 
D)  Public higher education is a normal good.

Question 11

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

Accepted Answer

A)  the equilibrium quantity to rise,but seller's total revenue to fall 
B)  the equilibrium quantity to fall,but seller's total revenue to rise 
C)  both the equilibrium quantity and seller's total revenue to fall 
D)  the equilibrium quantity to rise,but seller's total revenue will not change 
E)  both the equilibrium quantity and seller's total revenue to rise 
A)  the equilibrium quantity to rise,but seller's total revenue to fall 
B)  the equilibrium quantity to fall,but seller's total revenue to rise 
C)  both the equilibrium quantity and seller's total revenue to fall 
D)  the equilibrium quantity to rise,but seller's total revenue will not change 
E)  both the equilibrium quantity and seller's total revenue to rise

Question 12

Generally,as goods are more broadly defined,

Accepted Answer

A)  demand becomes more price elastic 
B)  demand becomes less price elastic 
C)  total expenditure falls as the price decreases 
D)  the demand curve becomes straighter 
E)  more substitute goods can be identified 
A)  demand becomes more price elastic 
B)  demand becomes less price elastic 
C)  total expenditure falls as the price decreases 
D)  the demand curve becomes straighter 
E)  more substitute goods can be identified

Question 13

If the price of a good increases from $20 to $25 and the quantity demanded declines from 15 to 10 units of the good,the price elasticity of demand is 5.

Accepted Answer

A) True 
 B)False

Question 14

An inferior good is

Accepted Answer

A)  any good whose demand curve shifts to the left as income rises 
B)  any good of low quality 
C)  one that has few substitutes 
D)  any good produced by inexpensive labor 
E)  any good that consumers buy less of as its price falls 
A)  any good whose demand curve shifts to the left as income rises 
B)  any good of low quality 
C)  one that has few substitutes 
D)  any good produced by inexpensive labor 
E)  any good that consumers buy less of as its price falls

Question 15

A price elasticity of demand of 2 for a specific cola means that if the price increases 1 percent,the quantity demanded of the cola will decrease by 2 percent.

Accepted Answer

A) True 
 B)False

Question 16

If the cross-price elasticity of demand is positive,then the

Accepted Answer

A)  two goods are complements 
B)  two goods are substitutes 
C)  two goods have no relationship to each other 
D)  price is below the equilibrium 
E)  price is above the equilibrium 
A)  two goods are complements 
B)  two goods are substitutes 
C)  two goods have no relationship to each other 
D)  price is below the equilibrium 
E)  price is above the equilibrium

Question 17

Which of the following statements about straight-line demand curves is true?

Accepted Answer

A)  The price elasticity of demand becomes larger in absolute value as price falls. 
B)  The price elasticity of demand becomes smaller in absolute value as price falls. 
C)  The price elasticity of demand is constant along the curve. 
D)  The price elasticity of demand and the slope of the demand curve are the same. 
E)  Demand is price elastic everywhere along the curve. 
A)  The price elasticity of demand becomes larger in absolute value as price falls. 
B)  The price elasticity of demand becomes smaller in absolute value as price falls. 
C)  The price elasticity of demand is constant along the curve. 
D)  The price elasticity of demand and the slope of the demand curve are the same. 
E)  Demand is price elastic everywhere along the curve.

Question 18

The supply of a good is more price elastic

Accepted Answer

A)  the more alternatives there are to producing the good in question 
B)  the more broadly the market for the good is defined. 
C)  the shorter the time horizon over which it is measured. 
D)  the higher the cost of production. 
E)  the more elastic the demand for that good. 
A)  the more alternatives there are to producing the good in question 
B)  the more broadly the market for the good is defined. 
C)  the shorter the time horizon over which it is measured. 
D)  the higher the cost of production. 
E)  the more elastic the demand for that good.

Question 19

If the elasticity of demand is much greater than the elasticity of supply,an excise tax levied on the suppliers will

Accepted Answer

A)  cause the suppliers to incur a greater burden of the tax than demanders 
B)  cause the demanders to incur a greater burden of the tax than suppliers 
C)  the burden of the tax will be shared equally between the suppliers and the demanders 
D)  cause the entire burden of the tax to rest on the demanders 
E)  Without more information as to the amount of the excise tax,who will incur a greater burden will be unclear 
A)  cause the suppliers to incur a greater burden of the tax than demanders 
B)  cause the demanders to incur a greater burden of the tax than suppliers 
C)  the burden of the tax will be shared equally between the suppliers and the demanders 
D)  cause the entire burden of the tax to rest on the demanders 
E)  Without more information as to the amount of the excise tax,who will incur a greater burden will be unclear

Question 20

The more narrowly a good is defined,the

Accepted Answer

A)  easier it is to find substitutes,and the less price-elastic is the demand 
B)  easier it is to find substitutes,and the more price-elastic is the demand 
C)  more difficult it is to find substitutes,and the less price-elastic is the demand 
D)  more difficult it is to find substitutes,and the more price-elastic is the demand 
E)  more difficult it is to find substitutes,but this has no impact on the price elasticity of demand 
A)  easier it is to find substitutes,and the less price-elastic is the demand 
B)  easier it is to find substitutes,and the more price-elastic is the demand 
C)  more difficult it is to find substitutes,and the less price-elastic is the demand 
D)  more difficult it is to find substitutes,and the more price-elastic is the demand 
E)  more difficult it is to find substitutes,but this has no impact on the price elasticity of demand

Exam 5: Elasticity

If demand is unitary elastic,a price decrease results in

The price elasticity of demand is

As a result of heavy spring rains in the Midwest,the corn crop declined sharply.If corn growers experienced an increase in sales revenue,the demand for corn must be

-Figure 5-4 shows the demand schedule for hockey pucks.What is the price elasticity of demand when the price changes from $2 per puck to $1 per puck (using the midpoint formula)?

If the demand for a good is price inelastic,a decrease in total revenue from the good would result from a(n)

-Figure 5-9 shows Sally's demand for movie theater tickets (quantity of movies per year).If the price per ticket fell from $8 to $7,

If a 10 percent rise in the price of bananas leads to a 20 percent reduction in the quantity of bananas demanded,then the price elasticity of demand is 2.00.

If the income elasticity of demand is negative,this means that the good is

The cross-price elasticity of demand is measured by the

-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).Given this information,what can be said about the state's demand for public higher education?

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

Generally,as goods are more broadly defined,

If the price of a good increases from $20 to $25 and the quantity demanded declines from 15 to 10 units of the good,the price elasticity of demand is 5.

An inferior good is

A price elasticity of demand of 2 for a specific cola means that if the price increases 1 percent,the quantity demanded of the cola will decrease by 2 percent.

If the cross-price elasticity of demand is positive,then the

Which of the following statements about straight-line demand curves is true?

The supply of a good is more price elastic

If the elasticity of demand is much greater than the elasticity of supply,an excise tax levied on the suppliers will

The more narrowly a good is defined,the

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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