Question 1

The cross-price elasticity of demand between Texaco gasoline and Mobil gasoline sold at the same intersection would be

Accepted Answer

A)  positive 
B)  negative 
C)  0 
D)  1.0 
E)  -1.0 
A)  positive 
B)  negative 
C)  0 
D)  1.0 
E)  -1.0

Question 2

The price elasticity of demand will be larger in absolute value if

Accepted Answer

A)  expenditure on the good represents a smaller proportion of the consumer's total expenditure 
B)  we define the good more broadly 
C)  we define the good more narrowly 
D)  the number of substitutes is smaller 
E)  the number of consumers is larger 
A)  expenditure on the good represents a smaller proportion of the consumer's total expenditure 
B)  we define the good more broadly 
C)  we define the good more narrowly 
D)  the number of substitutes is smaller 
E)  the number of consumers is larger

Question 3

When calculating the price elasticity of demand,we assume that the price of the good changes while all other variables affecting

Accepted Answer

A)  demand except buyers' incomes remain constant 
B)  demand except the population size remain constant 
C)  demand and supply remain constant 
D)  supply remain constant 
E)  demand remain constant 
A)  demand except buyers' incomes remain constant 
B)  demand except the population size remain constant 
C)  demand and supply remain constant 
D)  supply remain constant 
E)  demand remain constant

Question 4

-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 haircuts (using the midpoint formula)is

Accepted Answer

A)  1 
B)  1.8 
C)  3.5 
D)  2.25 
E)  0.5 
A)  1 
B)  1.8 
C)  3.5 
D)  2.25 
E)  0.5

Question 5

-Figure 5-6 shows the demand curve for chicken.Between points L and M,the price elasticity of demand is

Accepted Answer

A)  0.44,and demand is elastic 
B)  0.44,and demand is inelastic 
C)  2.25,and demand is elastic 
D)  2.25,and demand is inelastic 
E)  0.028,and demand is inelastic 
A)  0.44,and demand is elastic 
B)  0.44,and demand is inelastic 
C)  2.25,and demand is elastic 
D)  2.25,and demand is inelastic 
E)  0.028,and demand is inelastic

Question 6

Which of the following goods is likely to have the least elastic demand over the relevant range of prices?

Accepted Answer

A)  insulin 
B)  eggs 
C)  milk 
D)  Pepsi Cola 
E)  gasoline 
A)  insulin 
B)  eggs 
C)  milk 
D)  Pepsi Cola 
E)  gasoline

Question 7

Perfect planting and harvesting weather results in a record high crop of wheat.If wheat growers experience an increase in total sales revenue,then the demand for wheat must be

Accepted Answer

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

Question 8

If a 5 percent increase in income leads to a 15 percent increase in the quantity demanded of a service,then the income elasticity of demand for that service equals 0.33.

Accepted Answer

A) True 
 B)False

Question 9

The price elasticity of supply

Accepted Answer

A)  is a number between 0 and 1. 
B)  measures the percent change in quantity supply as a result of a 1-percent change in price 
C)  measures the percent change in quantity supplied as a result of a 1-percent change in cost. 
D)  measures the shift in supply as the result of a price change 
E)  measures the movement of a supply curve along a fixed demand curve 
A)  is a number between 0 and 1. 
B)  measures the percent change in quantity supply as a result of a 1-percent change in price 
C)  measures the percent change in quantity supplied as a result of a 1-percent change in cost. 
D)  measures the shift in supply as the result of a price change 
E)  measures the movement of a supply curve along a fixed demand curve

Question 10

-In Figure 5-3,the price elasticity of demand equals __________ between points T and U and equals __________ between points V and W.

Accepted Answer

A)  0.33;1.86 
B)  0.54;3 
C)  3;0.54 
D)  1.86;0.33 
E)  2;2 
A)  0.33;1.86 
B)  0.54;3 
C)  3;0.54 
D)  1.86;0.33 
E)  2;2

Question 11

Price elasticity of supply

Accepted Answer

A)  is always a number between 0 and 1 
B)  is always a negative number 
C)  is always greater than or equal to 0 
D)  is always greater than 1. 
E)  can take on any value. 
A)  is always a number between 0 and 1 
B)  is always a negative number 
C)  is always greater than or equal to 0 
D)  is always greater than 1. 
E)  can take on any value.

Question 12

The fact that travel on buses fell as incomes increased in many cities suggests that

Accepted Answer

A)  bus travel is a normal good 
B)  the law of demand does not apply to bus travel 
C)  bus travel is an inferior good 
D)  there are no good substitute goods for bus travel 
A)  bus travel is a normal good 
B)  the law of demand does not apply to bus travel 
C)  bus travel is an inferior good 
D)  there are no good substitute goods for bus travel

Question 13

If the demand curve is a vertical line,then

Accepted Answer

A)  demand is perfectly elastic 
B)  demand is perfectly inelastic 
C)  demand is unit elastic 
D)  demand is determined by supply 
E)  supply is a horizontal line 
A)  demand is perfectly elastic 
B)  demand is perfectly inelastic 
C)  demand is unit elastic 
D)  demand is determined by supply 
E)  supply is a horizontal line

Question 14

If demand is elastic,then

Accepted Answer

A)  the percentage change in quantity demanded is larger in absolute value than the percentage change in price 
B)  supply is inelastic 
C)  prices can neither rise nor fall 
D)  the percentage change in quantity demanded is smaller in absolute value than the percentage change in price 
E)  supply is elastic 
A)  the percentage change in quantity demanded is larger in absolute value than the percentage change in price 
B)  supply is inelastic 
C)  prices can neither rise nor fall 
D)  the percentage change in quantity demanded is smaller in absolute value than the percentage change in price 
E)  supply is elastic

Question 15

If the demand for good A is more elastic than the demand for good B,a small increase in supply in both markets will cause

Accepted Answer

A)  a much greater increase in the equilibrium quantity of good A than for good B 
B)  a much greater increase in the equilibrium quantity of good B than for good A 
C)  the equilibrium quantity will decrease by the same amount in both markets 
D)  only the equilibrium quantity of good B will decrease 
E)  only the equilibrium quantity of good A will decrease 
A)  a much greater increase in the equilibrium quantity of good A than for good B 
B)  a much greater increase in the equilibrium quantity of good B than for good A 
C)  the equilibrium quantity will decrease by the same amount in both markets 
D)  only the equilibrium quantity of good B will decrease 
E)  only the equilibrium quantity of good A will decrease

Question 16

For which of the following types of goods would demand be most price-elastic?

Accepted Answer

A)  necessities 
B)  goods with many substitutes 
C)  goods that require only a small portion of the buyer's budget 
D)  goods with vertical demand curves 
E)  goods with vertical supply curves 
A)  necessities 
B)  goods with many substitutes 
C)  goods that require only a small portion of the buyer's budget 
D)  goods with vertical demand curves 
E)  goods with vertical supply curves

Question 17

Which of the following goods is likely to have the most price inelastic demand?

Accepted Answer

A)  margarine 
B)  Tide detergent 
C)  cigarettes 
D)  Coca-Cola 
E)  ground beef 
A)  margarine 
B)  Tide detergent 
C)  cigarettes 
D)  Coca-Cola 
E)  ground beef

Question 18

-Figure 5-8 shows the demand schedule for hockey pucks.At which price is demand the least price elastic?

Accepted Answer

A)  $1 
B)  $2 
C)  $3 
D)  $4 
E)  $5 
A)  $1 
B)  $2 
C)  $3 
D)  $4 
E)  $5

Question 19

If the cross-price elasticity of demand between two goods is -2.2,then the

Accepted Answer

A)  two goods are substitutes 
B)  two goods are complements 
C)  income elasticity of demand must be between 0 and 1.0 
D)  goods are both normal goods 
E)  goods are both inferior goods 
A)  two goods are substitutes 
B)  two goods are complements 
C)  income elasticity of demand must be between 0 and 1.0 
D)  goods are both normal goods 
E)  goods are both inferior goods

Question 20

The long-run price elasticity of demand for a good is

Accepted Answer

A)  zero 
B)  smaller (in absolute value)than the short-run price elasticity 
C)  larger (in absolute value)than the short-run price elasticity 
D)  infinite 
E)  the same as the short-run elasticity 
A)  zero 
B)  smaller (in absolute value)than the short-run price elasticity 
C)  larger (in absolute value)than the short-run price elasticity 
D)  infinite 
E)  the same as the short-run elasticity

Exam 5: Elasticity

The cross-price elasticity of demand between Texaco gasoline and Mobil gasoline sold at the same intersection would be

The price elasticity of demand will be larger in absolute value if

When calculating the price elasticity of demand,we assume that the price of the good changes while all other variables affecting

-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 haircuts (using the midpoint formula)is

-Figure 5-6 shows the demand curve for chicken.Between points L and M,the price elasticity of demand is

Which of the following goods is likely to have the least elastic demand over the relevant range of prices?

Perfect planting and harvesting weather results in a record high crop of wheat.If wheat growers experience an increase in total sales revenue,then the demand for wheat must be

If a 5 percent increase in income leads to a 15 percent increase in the quantity demanded of a service,then the income elasticity of demand for that service equals 0.33.

The price elasticity of supply

-In Figure 5-3,the price elasticity of demand equals __________ between points T and U and equals __________ between points V and W.

Price elasticity of supply

The fact that travel on buses fell as incomes increased in many cities suggests that

If the demand curve is a vertical line,then

If demand is elastic,then

If the demand for good A is more elastic than the demand for good B,a small increase in supply in both markets will cause

For which of the following types of goods would demand be most price-elastic?

Which of the following goods is likely to have the most price inelastic demand?

-Figure 5-8 shows the demand schedule for hockey pucks.At which price is demand the least price elastic?

If the cross-price elasticity of demand between two goods is -2.2,then the

The long-run price elasticity of demand for a good is

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

Filters

-In Figure 5-3,the price elasticity of demand equals between points T and U and equals between points V and W.