Question 1

The total revenue from selling trucks is equal to:​

Accepted Answer

A) the price of a truck times the quantity sold. 
B) the change in quantity sold divided by the change in price. 
C) average cost times the quantity produced. 
D) the price of a truck times the quantity produced. 
E) the price of a truck times the price elasticity of demand. 
A) the price of a truck times the quantity sold. 
B) the change in quantity sold divided by the change in price. 
C) average cost times the quantity produced. 
D) the price of a truck times the quantity produced. 
E) the price of a truck times the price elasticity of demand.

Question 2

If the price elasticity of demand is −0.5, then a:​

Accepted Answer

A) 1 percent decrease in quantity demanded leads to a 0.5 percent decrease in price. 
B) 1 percent decrease in price leads to a 0.5 percent increase in quantity demanded. 
C) 50 percent decrease in price leads to a 1 percent increase in quantity demanded. 
D) 50 percent decrease in price leads to a 100 percent increase in quantity demanded. 
E) 50 percent decrease in quantity demanded leads to a 1 percent decrease in price. 
A) 1 percent decrease in quantity demanded leads to a 0.5 percent decrease in price. 
B) 1 percent decrease in price leads to a 0.5 percent increase in quantity demanded. 
C) 50 percent decrease in price leads to a 1 percent increase in quantity demanded. 
D) 50 percent decrease in price leads to a 100 percent increase in quantity demanded. 
E) 50 percent decrease in quantity demanded leads to a 1 percent decrease in price.

Question 3

Table 5.2 shows the change in the quantity demanded for Good A and Good B as a result of the change in their price. Use the information in the table below to calculate the value of the price elasticity of demand for Good B.​ Table 5.2
​
​
Quantity
Price
Good A
​
100
$10
120
​
$ 9
Good B
200
$20
140
$35

Accepted Answer

A) −2/3 
B) −1/6 
C) −1/2 
D) −11/17 
E) −17/11 
A) −2/3 
B) −1/6 
C) −1/2 
D) −11/17 
E) −17/11

Question 4

As DVDs become popular substitutes for video cassettes, demand for video cassettes is likely to:​

Accepted Answer

A) become less price elastic. 
B) become more price elastic. 
C) increase. 
D) stay the same. 
E) become unit elastic. 
A) become less price elastic. 
B) become more price elastic. 
C) increase. 
D) stay the same. 
E) become unit elastic.

Question 5

If city officials expect that an increase in bus fares will raise mass transit revenues, they must think that the demand for bus travel is _____.​

Accepted Answer

A) elastic 
B) unit elastic 
C) inelastic 
D) upward-sloping 
E) perfectly elastic 
A) elastic 
B) unit elastic 
C) inelastic 
D) upward-sloping 
E) perfectly elastic

Question 6

Both the income elasticity of demand and the cross-price elasticity of demand coefficients can take on negative, zero, or positive values.​

Accepted Answer

A) True 
 B)False

Question 7

Figure 5.1 shows the demand curve for a firm. In the figure below, the total revenue at point a is _____.​ Figure 5.1
​

Accepted Answer

A) $4 
B) $5 
C) $10 
D) $50 
E) $100 
A) $4 
B) $5 
C) $10 
D) $50 
E) $100

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

The percentage change in the demand for film divided by the percentage change in the price of cameras indicates:​

Accepted Answer

A) the cross-price elasticity of demand between film and cameras. 
B) the cross-price elasticity of demand for photographs. 
C) the price elasticity of demand for film. 
D) the price elasticity of demand for cameras. 
E) the income elasticity of demand between film and camera. 
A) the cross-price elasticity of demand between film and cameras. 
B) the cross-price elasticity of demand for photographs. 
C) the price elasticity of demand for film. 
D) the price elasticity of demand for cameras. 
E) the income elasticity of demand between film and camera.

Question 10

If the price of Pepsi-Cola increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the demand for Pepsi-Cola is:​

Accepted Answer

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

Question 11

As consumers have a longer time period to respond, the demand for a product typically becomes more inelastic.​

Accepted Answer

A) True 
 B)False

Question 12

Figure 5.3 shows a linear demand curve. Between points C and D, the demand is:​ ​
Figure 5.3

Accepted Answer

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

Question 13

The greater the availability of close substitutes for a product, the greater the price elasticity of demand for that product.​

Accepted Answer

A) True 
 B)False

Question 14

Suppose the price elasticity of demand for your economics textbook is −1. If the publisher raises the price by 5 percent:​

Accepted Answer

A) revenues will rise by 5 percent. 
B) quantity demanded will rise by 5 percent. 
C) total revenue will not change. 
D) revenues will fall. 
E) revenues will fall by 5 percent. 
A) revenues will rise by 5 percent. 
B) quantity demanded will rise by 5 percent. 
C) total revenue will not change. 
D) revenues will fall. 
E) revenues will fall by 5 percent.

Question 15

The price elasticity of demand for milk when quantity is measured in gallons will be _____ the price elasticity when quantity is measured in quarts.​

Accepted Answer

A) the same as 
B) four times 
C) one-fourth of 
D) two times 
E) less than 
A) the same as 
B) four times 
C) one-fourth of 
D) two times 
E) less than

Question 16

Total revenue is maximized where demand is inelastic.​

Accepted Answer

A) True 
 B)False

Question 17

Demand is more elastic:​

Accepted Answer

A) in the short run than in the long run. 
B) for necessities than for luxuries. 
C) for goods with no substitutes. 
D) for goods with many substitutes than for goods with only a few. 
E) for broadly defined goods than for narrowly defined ones. 
A) in the short run than in the long run. 
B) for necessities than for luxuries. 
C) for goods with no substitutes. 
D) for goods with many substitutes than for goods with only a few. 
E) for broadly defined goods than for narrowly defined ones.

Question 18

The cross-price elasticity of demand measures the:​

Accepted Answer

A) elasticity of demand at the intersection of the supply and demand curves. 
B) elasticity of supply at the intersection of supply and demand curves. 
C) relative elasticity of supply and demand at the intersection of the two curves. 
D) relationship between the demand for one good and the price of another. 
E) relationship between the demand for one good and the supply of another. 
A) elasticity of demand at the intersection of the supply and demand curves. 
B) elasticity of supply at the intersection of supply and demand curves. 
C) relative elasticity of supply and demand at the intersection of the two curves. 
D) relationship between the demand for one good and the price of another. 
E) relationship between the demand for one good and the supply of another.

Question 19

The demand curve for a good that has many perfect substitutes is likely to be:​

Accepted Answer

A) upward sloping. 
B) steep. 
C) backward-bending. 
D) horizontal. 
E) vertical. 
A) upward sloping. 
B) steep. 
C) backward-bending. 
D) horizontal. 
E) vertical.

Question 20

Table 5.2 shows the change in the quantity demanded for Good A and Good B as a result of the change in their price. Use the information in the table below to calculate the price elasticity of demand for Good A.​ Table 5.2
​
​
Quantity
Price
Good A
​
100
$10
120
​
$ 9
Good B
200
$20
140
$35

Accepted Answer

A) −5/2 
B) −11/3 
C) −3/10 
D) −10/3 
E) −19/11 
A) −5/2 
B) −11/3 
C) −3/10 
D) −10/3 
E) −19/11

Exam 5: Elasticity of Demand and Supply

The total revenue from selling trucks is equal to:​

If the price elasticity of demand is −0.5, then a:​

As DVDs become popular substitutes for video cassettes, demand for video cassettes is likely to:​

If city officials expect that an increase in bus fares will raise mass transit revenues, they must think that the demand for bus travel is _____.​

Both the income elasticity of demand and the cross-price elasticity of demand coefficients can take on negative, zero, or positive values.​

Figure 5.1 shows the demand curve for a firm. In the figure below, the total revenue at point a is _____.​ Figure 5.1 ​

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

The percentage change in the demand for film divided by the percentage change in the price of cameras indicates:​

If the price of Pepsi-Cola increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the demand for Pepsi-Cola is:​

As consumers have a longer time period to respond, the demand for a product typically becomes more inelastic.​

Figure 5.3 shows a linear demand curve. Between points C and D, the demand is:​ ​ Figure 5.3

The greater the availability of close substitutes for a product, the greater the price elasticity of demand for that product.​

Suppose the price elasticity of demand for your economics textbook is −1. If the publisher raises the price by 5 percent:​

The price elasticity of demand for milk when quantity is measured in gallons will be _____ the price elasticity when quantity is measured in quarts.​

Total revenue is maximized where demand is inelastic.​

Demand is more elastic:​

The cross-price elasticity of demand measures the:​

The demand curve for a good that has many perfect substitutes is likely to be:​

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The total revenue from selling trucks is equal to:

If the price elasticity of demand is −0.5, then a:

As DVDs become popular substitutes for video cassettes, demand for video cassettes is likely to:

If city officials expect that an increase in bus fares will raise mass transit revenues, they must think that the demand for bus travel is _____.

Both the income elasticity of demand and the cross-price elasticity of demand coefficients can take on negative, zero, or positive values.

Figure 5.1 shows the demand curve for a firm. In the figure below, the total revenue at point a is _____. Figure 5.1

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

The percentage change in the demand for film divided by the percentage change in the price of cameras indicates:

If the price of Pepsi-Cola increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the demand for Pepsi-Cola is:

As consumers have a longer time period to respond, the demand for a product typically becomes more inelastic.

Figure 5.3 shows a linear demand curve. Between points C and D, the demand is: Figure 5.3

The greater the availability of close substitutes for a product, the greater the price elasticity of demand for that product.

Suppose the price elasticity of demand for your economics textbook is −1. If the publisher raises the price by 5 percent:

The price elasticity of demand for milk when quantity is measured in gallons will be _____ the price elasticity when quantity is measured in quarts.

Total revenue is maximized where demand is inelastic.

Demand is more elastic:

The cross-price elasticity of demand measures the:

The demand curve for a good that has many perfect substitutes is likely to be: