Question 1

If supply is perfectly elastic, the supply curve is:​

Accepted Answer

A) vertical. 
B) horizontal. 
C) downward sloping. 
D) upward sloping. 
E) u-shaped. 
A) vertical. 
B) horizontal. 
C) downward sloping. 
D) upward sloping. 
E) u-shaped.

Question 2

The supply curve for dorm rooms on a university campus is likely to be:​

Accepted Answer

A) downward sloping. 
B) relatively flat. 
C) vertical. 
D) horizontal. 
E) upward sloping. 
A) downward sloping. 
B) relatively flat. 
C) vertical. 
D) horizontal. 
E) upward sloping.

Question 3

Figure 5.6 shows a vertical demand curve. The price elasticity of demand in the figure below is _____.​ ​
Figure 5.6
​

Accepted Answer

A) 0 
B) −1 
C) infinity 
D) 1 
E) −100 
A) 0 
B) −1 
C) infinity 
D) 1 
E) −100

Question 4

The demand for firewood is likely to be more elastic in the summer than in the winter.​

Accepted Answer

A) True 
 B)False

Question 5

If an increase in price from $1 to $2 per unit leads to an increase in quantity supplied from 20 to 100 units, then the value of the price elasticity of supply is:​

Accepted Answer

A) 0.38. 
B) 2. 
C) 2.67. 
D) 4. 
E) 8. 
A) 0.38. 
B) 2. 
C) 2.67. 
D) 4. 
E) 8.

Question 6

A 10 percent increase in the price of root beer causes a 5 percent increase in the quantity demanded of orange soda. This means that:​

Accepted Answer

A) root beer and orange soda are substitutes. 
B) root beer and orange soda are complements. 
C) the cross-price elasticity of demand is 1. 
D) the cross-price elasticity of demand is equal to 2. 
E) the cross-price elasticity of demand is equal to −2. 
A) root beer and orange soda are substitutes. 
B) root beer and orange soda are complements. 
C) the cross-price elasticity of demand is 1. 
D) the cross-price elasticity of demand is equal to 2. 
E) the cross-price elasticity of demand is equal to −2.

Question 7

The demand for a good is elastic if:​

Accepted Answer

A) an increase in price leads to a decrease in total revenue. 
B) an increase in price leads to an increase in total revenue. 
C) an increase in price causes no change in total revenue. 
D) a decrease in price causes no changes in total revenue. 
E) a decrease in price leads to a decrease in total revenue. 
A) an increase in price leads to a decrease in total revenue. 
B) an increase in price leads to an increase in total revenue. 
C) an increase in price causes no change in total revenue. 
D) a decrease in price causes no changes in total revenue. 
E) a decrease in price leads to a decrease in total revenue.

Question 8

A good that is defined broadly has:​

Accepted Answer

A) more substitutes and a more elastic demand. 
B) fewer substitutes and a more elastic demand. 
C) more substitutes and a less elastic demand. 
D) fewer substitutes and a less elastic demand. 
E) more complements and a more elastic demand. 
A) more substitutes and a more elastic demand. 
B) fewer substitutes and a more elastic demand. 
C) more substitutes and a less elastic demand. 
D) fewer substitutes and a less elastic demand. 
E) more complements and a more elastic demand.

Question 9

Which of the following statements is not true?​

Accepted Answer

A) A perfectly elastic demand curve is a constant-elasticity demand curve. 
B) A linear demand curve with a slope of −4 is a constant-elasticity demand curve. 
C) A perfectly inelastic demand curve is a constant-elasticity demand curve. 
D) Total revenue increases along a unit-elastic demand curve. 
E) The elasticity value for a perfectly elastic demand curve is zero. 
A) A perfectly elastic demand curve is a constant-elasticity demand curve. 
B) A linear demand curve with a slope of −4 is a constant-elasticity demand curve. 
C) A perfectly inelastic demand curve is a constant-elasticity demand curve. 
D) Total revenue increases along a unit-elastic demand curve. 
E) The elasticity value for a perfectly elastic demand curve is zero.

Question 10

Figure 5.5 shows the total revenue curve for a firm. Which of the following statements is true at a quantity of 10?​ ​
Figure 5.5
​

Accepted Answer

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

Question 11

Which of the following goods will have a higher price elasticity of demand?​

Accepted Answer

A) A good with few substitutes. 
B) A good with many substitutes. 
C) A good that represents a small proportion of the consumer's budget. 
D) A good that is broadly defined. 
E) A good that is a necessity. 
A) A good with few substitutes. 
B) A good with many substitutes. 
C) A good that represents a small proportion of the consumer's budget. 
D) A good that is broadly defined. 
E) A good that is a necessity.

Question 12

The availability of substitutes makes the demand for a good less elastic.​

Accepted Answer

A) True 
 B)False

Question 13

If demand is inelastic, the percentage change in price is greater than the resulting percentage change in quantity demanded.​

Accepted Answer

A) True 
 B)False

Question 14

The value of the cross-price elasticity of demand between golf balls and golf clubs is:​

Accepted Answer

A) negative. 
B) positive. 
C) zero. 
D) greater than 1 but less than 3. 
E) equal to 1. 
A) negative. 
B) positive. 
C) zero. 
D) greater than 1 but less than 3. 
E) equal to 1.

Question 15

For which of the following goods is the value of income elasticity most likely to be negative?​

Accepted Answer

A) Macaroni and cheese. 
B) Champagne. 
C) Airline tickets. 
D) Clothes. 
E) Toothpaste. 
A) Macaroni and cheese. 
B) Champagne. 
C) Airline tickets. 
D) Clothes. 
E) Toothpaste.

Question 16

If the price of Pepsi-Cola increases from 40 cents to 50 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the value of the price elasticity of demand for Pepsi-Cola is:​

Accepted Answer

A) −0.5. 
B) −0.25. 
C) −1. 
D)  −3. 
E)  −2. 
A) −0.5. 
B) −0.25. 
C) −1. 
D)  −3. 
E)  −2.

Question 17

Suppose consumers spent $42 million on Christmas trees last year, when the average tree cost was $30. This year they spend $42 million, when the average tree costs $25. Assume that everything else remains constant. This data suggests that:​

Accepted Answer

A) consumers bought the same number of Christmas trees this year as last year. 
B) the price of the Christmas trees stayed the same. 
C) total revenue to tree producers rose this year. 
D) the demand for trees is unit elastic. 
E) the demand for trees is inelastic. 
A) consumers bought the same number of Christmas trees this year as last year. 
B) the price of the Christmas trees stayed the same. 
C) total revenue to tree producers rose this year. 
D) the demand for trees is unit elastic. 
E) the demand for trees is inelastic.

Question 18

A good that takes up a very large percentage of a consumer's budget will tend to have:​

Accepted Answer

A) an elastic demand. 
B) a perfectly elastic demand. 
C) an inelastic demand. 
D) an upward-sloping demand curve. 
E) many close substitutes. 
A) an elastic demand. 
B) a perfectly elastic demand. 
C) an inelastic demand. 
D) an upward-sloping demand curve. 
E) many close substitutes.

Question 19

The supply of paintings by Van Gogh is most likely to be:​

Accepted Answer

A) relatively elastic because supply is limited. 
B) relatively inelastic because supply is limited. 
C) perfectly elastic because the paintings are luxury goods. 
D) perfectly inelastic because supply is limited. 
E) unit elastic. 
A) relatively elastic because supply is limited. 
B) relatively inelastic because supply is limited. 
C) perfectly elastic because the paintings are luxury goods. 
D) perfectly inelastic because supply is limited. 
E) unit elastic.

Question 20

Figure 5.8 shows a horizontal line. The curve shown in the figure below could represent a:​ Figure 5.8

Accepted Answer

A) perfectly elastic demand or supply curve. 
B) perfectly inelastic supply curve or a perfectly elastic demand curve. 
C) perfectly elastic supply curve or a perfectly inelastic demand curve. 
D) perfectly inelastic supply or demand curve. 
E) perfectly inelastic supply curve or a demand that is unit elastic. 
A) perfectly elastic demand or supply curve. 
B) perfectly inelastic supply curve or a perfectly elastic demand curve. 
C) perfectly elastic supply curve or a perfectly inelastic demand curve. 
D) perfectly inelastic supply or demand curve. 
E) perfectly inelastic supply curve or a demand that is unit elastic.

Exam 5: Elasticity of Demand and Supply

If supply is perfectly elastic, the supply curve is:​

The supply curve for dorm rooms on a university campus is likely to be:​

Figure 5.6 shows a vertical demand curve. The price elasticity of demand in the figure below is _____.​ ​ Figure 5.6 ​

The demand for firewood is likely to be more elastic in the summer than in the winter.​

If an increase in price from $1 to $2 per unit leads to an increase in quantity supplied from 20 to 100 units, then the value of the price elasticity of supply is:​

A 10 percent increase in the price of root beer causes a 5 percent increase in the quantity demanded of orange soda. This means that:​

The demand for a good is elastic if:​

A good that is defined broadly has:​

Which of the following statements is not true?​

Figure 5.5 shows the total revenue curve for a firm. Which of the following statements is true at a quantity of 10?​ ​ Figure 5.5 ​

Which of the following goods will have a higher price elasticity of demand?​

The availability of substitutes makes the demand for a good less elastic.​

If demand is inelastic, the percentage change in price is greater than the resulting percentage change in quantity demanded.​

The value of the cross-price elasticity of demand between golf balls and golf clubs is:​

For which of the following goods is the value of income elasticity most likely to be negative?​

If the price of Pepsi-Cola increases from 40 cents to 50 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the value of the price elasticity of demand for Pepsi-Cola is:​

Suppose consumers spent $42 million on Christmas trees last year, when the average tree cost was $30. This year they spend $42 million, when the average tree costs $25. Assume that everything else remains constant. This data suggests that:​

A good that takes up a very large percentage of a consumer's budget will tend to have:​

The supply of paintings by Van Gogh is most likely to be:​

Figure 5.8 shows a horizontal line. The curve shown in the figure below could represent a:​ Figure 5.8

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Consumer Choice and Demand

Production and Cost in the Firm

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Monopolistic Competition and Oligopoly

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Capital, Interest, Entrepreneurship, and Corporate Finance

Transaction Costs, Asymmetric Information, and Behavioral Economics

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Externalities and the Environment

Poverty and Redistribution

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Filters

If supply is perfectly elastic, the supply curve is:

The supply curve for dorm rooms on a university campus is likely to be:

Figure 5.6 shows a vertical demand curve. The price elasticity of demand in the figure below is _____. Figure 5.6

The demand for firewood is likely to be more elastic in the summer than in the winter.

If an increase in price from $1 to $2 per unit leads to an increase in quantity supplied from 20 to 100 units, then the value of the price elasticity of supply is:

A 10 percent increase in the price of root beer causes a 5 percent increase in the quantity demanded of orange soda. This means that:

The demand for a good is elastic if:

A good that is defined broadly has:

Which of the following statements is not true?

Figure 5.5 shows the total revenue curve for a firm. Which of the following statements is true at a quantity of 10? Figure 5.5

Which of the following goods will have a higher price elasticity of demand?

The availability of substitutes makes the demand for a good less elastic.

If demand is inelastic, the percentage change in price is greater than the resulting percentage change in quantity demanded.

The value of the cross-price elasticity of demand between golf balls and golf clubs is:

For which of the following goods is the value of income elasticity most likely to be negative?

If the price of Pepsi-Cola increases from 40 cents to 50 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the value of the price elasticity of demand for Pepsi-Cola is:

Suppose consumers spent $42 million on Christmas trees last year, when the average tree cost was $30. This year they spend $42 million, when the average tree costs $25. Assume that everything else remains constant. This data suggests that:

A good that takes up a very large percentage of a consumer's budget will tend to have:

The supply of paintings by Van Gogh is most likely to be:

Figure 5.8 shows a horizontal line. The curve shown in the figure below could represent a: Figure 5.8