Question 1

Exhibit 5-10
  
-In Exhibit 5-10,between the two equilibrium prices shown,demand is

Accepted Answer

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

Question 2

Which of the following will cause demand to be relatively elastic?

Accepted Answer

A)  There are few substitutes 
B)  The time interval is relatively long 
C)  The good is considered a necessity 
D)  The good involves a relatively small portion of the consumers' budget 
E)  The time interval is relatively short 
A)  There are few substitutes 
B)  The time interval is relatively long 
C)  The good is considered a necessity 
D)  The good involves a relatively small portion of the consumers' budget 
E)  The time interval is relatively short

Question 3

If the cross-price elasticity of demand is -3,then the goods are _____ and the consumers' responsiveness would be characterized as _____.

Accepted Answer

A)  substitutes;inelastic 
B)  substitutes;elastic 
C)  substitutes;unit elastic 
D)  complements;inelastic 
E)  complements;elastic 
A)  substitutes;inelastic 
B)  substitutes;elastic 
C)  substitutes;unit elastic 
D)  complements;inelastic 
E)  complements;elastic

Question 4

Exhibit 5-7
  
-In Exhibit 5-7,demand is unit elastic

Accepted Answer

A)  between points a and d 
B)  between points d and e 
C)  between points e and g 
D)  only at the top and bottom of the curve 
E)  anywhere along the curve 
A)  between points a and d 
B)  between points d and e 
C)  between points e and g 
D)  only at the top and bottom of the curve 
E)  anywhere along the curve

Question 5

The cross-price elasticity of demand between rifles and bullets is likely to be

Accepted Answer

A)  negative because the goods are complements 
B)  positive because the goods are complements 
C)  negative because the goods are substitutes 
D)  positive because the goods are substitutes 
E)  0 because the goods are not substitutes 
A)  negative because the goods are complements 
B)  positive because the goods are complements 
C)  negative because the goods are substitutes 
D)  positive because the goods are substitutes 
E)  0 because the goods are not substitutes

Question 6

The price elasticity of today's supply curve of classrooms on campus is likely to

Accepted Answer

A)  be greater than 1 
B)  be less than 1 
C)  be equal to 1 
D)  approach zero 
E)  be infinity 
A)  be greater than 1 
B)  be less than 1 
C)  be equal to 1 
D)  approach zero 
E)  be infinity

Question 7

A normal good is defined as a product for which quantity demanded increases as price decreases.

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)  furniture 
B)  automobiles 
C)  hotel rooms 
D)  airline travel 
E)  candy bars 
A)  furniture 
B)  automobiles 
C)  hotel rooms 
D)  airline travel 
E)  candy bars

Question 9

A perfectly elastic demand curve is

Accepted Answer

A)  a vertical straight line 
B)  a horizontal straight line 
C)  a downward-sloping straight line 
D)  an upward-sloping straight line 
E)  not a straight line 
A)  a vertical straight line 
B)  a horizontal straight line 
C)  a downward-sloping straight line 
D)  an upward-sloping straight line 
E)  not a straight line

Question 10

Total revenue is the same for every price-quantity combination along a unit elastic demand curve.

Accepted Answer

A) True 
 B)False

Question 11

If Katherine claims that when it comes to buying shoes,"price is no object," her demand curve for shoes is likely to be

Accepted Answer

A)  horizontal 
B)  nonexistent 
C)  upward sloping 
D)  highly inelastic 
E)  unit elastic 
A)  horizontal 
B)  nonexistent 
C)  upward sloping 
D)  highly inelastic 
E)  unit elastic

Question 12

If the demand for swordfish is price elastic and the price of swordfish increases,then

Accepted Answer

A)  the quantity of swordfish demanded will increase 
B)  the total revenue from swordfish sales will decrease 
C)  the total revenue from swordfish sales will increase 
D)  the total revenue from swordfish sales will not change 
E)  whether total revenue rises or falls depends on how much the price of swordfish increases 
A)  the quantity of swordfish demanded will increase 
B)  the total revenue from swordfish sales will decrease 
C)  the total revenue from swordfish sales will increase 
D)  the total revenue from swordfish sales will not change 
E)  whether total revenue rises or falls depends on how much the price of swordfish increases

Question 13

If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units,then the value of price elasticity of demand is

Accepted Answer

A)  elastic 
B)  inelastic 
C)  unit elastic 
D)  suggestive of an inferior good 
E)  equal to -20 
A)  elastic 
B)  inelastic 
C)  unit elastic 
D)  suggestive of an inferior good 
E)  equal to -20

Question 14

Income elasticity of demand is greater than zero for all of the following except

Accepted Answer

A)  restaurant meals 
B)  beer 
C)  owner-occupied housing 
D)  food 
E)  rental housing 
A)  restaurant meals 
B)  beer 
C)  owner-occupied housing 
D)  food 
E)  rental housing

Question 15

Demand for clothing tends to be

Accepted Answer

A)  elastic because there are few substitutes for clothing 
B)  inelastic because there are few substitutes for clothing 
C)  elastic because expenditures for clothing represent a large part of the consumer's budget 
D)  inelastic because expenditures for clothing represent a large part of the consumer's budget 
E)  elastic because it is a broadly defined good 
A)  elastic because there are few substitutes for clothing 
B)  inelastic because there are few substitutes for clothing 
C)  elastic because expenditures for clothing represent a large part of the consumer's budget 
D)  inelastic because expenditures for clothing represent a large part of the consumer's budget 
E)  elastic because it is a broadly defined good

Question 16

Price elasticity of demand is calculated as

Accepted Answer

A)  the percentage change in quantity demanded divided by the percentage change in price 
B)  the percentage change in price divided by the percentage change in quantity demanded 
C)  the absolute change in quantity demanded divided by the absolute change in price 
D)  the absolute change in price divided by the absolute change in quantity demanded 
E)  none of the above 
A)  the percentage change in quantity demanded divided by the percentage change in price 
B)  the percentage change in price divided by the percentage change in quantity demanded 
C)  the absolute change in quantity demanded divided by the absolute change in price 
D)  the absolute change in price divided by the absolute change in quantity demanded 
E)  none of the above

Question 17

Along a linear demand curve,

Accepted Answer

A)  both the slope and price elasticity are constant 
B)  the price elasticity is constant,but the slope varies 
C)  total revenues are constant 
D)  the slope is constant,but the price elasticity varies 
E)  total revenues are negative 
A)  both the slope and price elasticity are constant 
B)  the price elasticity is constant,but the slope varies 
C)  total revenues are constant 
D)  the slope is constant,but the price elasticity varies 
E)  total revenues are negative

Question 18

The more broadly a good is defined

Accepted Answer

A)  the more substitutes it has,so demand will be more price-elastic 
B)  the less substitutes it has,so demand will be more price-elastic 
C)  the more substitutes it has,so demand will be less price-elastic 
D)  the less substitutes it has,so demand will be less price-elastic 
E)  has no effect on the good's price elasticity of demand 
A)  the more substitutes it has,so demand will be more price-elastic 
B)  the less substitutes it has,so demand will be more price-elastic 
C)  the more substitutes it has,so demand will be less price-elastic 
D)  the less substitutes it has,so demand will be less price-elastic 
E)  has no effect on the good's price elasticity of demand

Question 19

Cross-price elasticity of demand is used to determine whether

Accepted Answer

A)  a product is an inferior or normal good 
B)  a product is a necessity or a luxury 
C)  two products are substitutes or complements 
D)  price and total revenue are directly or inversely related 
E)  the product's demand curve is linear 
A)  a product is an inferior or normal good 
B)  a product is a necessity or a luxury 
C)  two products are substitutes or complements 
D)  price and total revenue are directly or inversely related 
E)  the product's demand curve is linear

Question 20

Exhibit 5-4
  
-What is the price elasticity of demand in Exhibit 5-4?

Accepted Answer

A)  0 
B)  -1 
C)  negative infinity 
D)  1 
E)  -100 
A)  0 
B)  -1 
C)  negative infinity 
D)  1 
E)  -100

Exam 5: Elasticity of Demand and Supply

Exhibit 5-10 -In Exhibit 5-10,between the two equilibrium prices shown,demand is

Which of the following will cause demand to be relatively elastic?

If the cross-price elasticity of demand is -3,then the goods are _____ and the consumers' responsiveness would be characterized as _____.

Exhibit 5-7 -In Exhibit 5-7,demand is unit elastic

The cross-price elasticity of demand between rifles and bullets is likely to be

The price elasticity of today's supply curve of classrooms on campus is likely to

A normal good is defined as a product for which quantity demanded increases as price decreases.

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

A perfectly elastic demand curve is

Total revenue is the same for every price-quantity combination along a unit elastic demand curve.

If Katherine claims that when it comes to buying shoes,"price is no object," her demand curve for shoes is likely to be

If the demand for swordfish is price elastic and the price of swordfish increases,then

If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units,then the value of price elasticity of demand is

Income elasticity of demand is greater than zero for all of the following except

Demand for clothing tends to be

Price elasticity of demand is calculated as

Along a linear demand curve,

The more broadly a good is defined

Cross-price elasticity of demand is used to determine whether

Exhibit 5-4 -What is the price elasticity of demand in Exhibit 5-4?

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If the cross-price elasticity of demand is -3,then the goods are _ and the consumers' responsiveness would be characterized as _.