Question 1

If the cross-price elasticity of demand for goods A and B is zero,this means the two goods are unrelated.

Accepted Answer

A) True 
 B)False

Question 2

Explain the economic concept of price elasticity of supply.How is price elasticity of supply calculated?

Accepted Answer

Price elasticity of supply refers to the

Question 3

Between 1950 and 2013 the productivity of wheat farmers in the United States more than doubled.This means that

Accepted Answer

A)  the amount of land and other resources devoted to wheat production more than doubled. 
B)  the incomes of wheat farmers more than doubled. 
C)  the total amount of wheat produced more than doubled. 
D)  the amount of wheat produced by the average farmer more than doubled. 
A)  the amount of land and other resources devoted to wheat production more than doubled. 
B)  the incomes of wheat farmers more than doubled. 
C)  the total amount of wheat produced more than doubled. 
D)  the amount of wheat produced by the average farmer more than doubled.

Question 4

Income elasticity measures

Accepted Answer

A)  how a good's quantity demanded responds to change in the goods price. 
B)  how a good's quantity demanded responds to change in the price of another good. 
C)  how a good's quantity demanded responds to change in buyers' incomes. 
D)  how a good's quantity demanded responds to producers' incomes. 
A)  how a good's quantity demanded responds to change in the goods price. 
B)  how a good's quantity demanded responds to change in the price of another good. 
C)  how a good's quantity demanded responds to change in buyers' incomes. 
D)  how a good's quantity demanded responds to producers' incomes.

Question 5

If a good has a negative income elasticity of demand,this indicates that the good is

Accepted Answer

A)  a substitute with another good. 
B)  a complement with another good. 
C)  inferior. 
D)  normal. 
A)  a substitute with another good. 
B)  a complement with another good. 
C)  inferior. 
D)  normal.

Question 6

The price elasticity of the supply of teenage labor services is approximately 1.36.Suppose the minimum wage rises from $7.25 per hour to $8.75.Using the midpoint formula,calculate the approximately change in the quantity supplied of teenage labor.

Accepted Answer

A)  7.3 percent 
B)  14.4 percent 
C)  25.5 percent 
D)  There is insufficient information to answer the question. 
A)  7.3 percent 
B)  14.4 percent 
C)  25.5 percent 
D)  There is insufficient information to answer the question.

Question 7

What does price elasticity of demand measure? When is demand elastic? Inelastic? Unit elastic?

Accepted Answer

Price elasticity of demand measures the

Question 8

Figure 6-10  
-Refer to Figure 6-10.A perfectly elastic supply curve is shown in

Accepted Answer

A)  Panel A. 
B)  Panel B. 
C)  Panel C. 
D)  Panel D. 
A)  Panel A. 
B)  Panel B. 
C)  Panel C. 
D)  Panel D.

Question 9

If a firm raised its price and discovered that its total revenue fell,then the demand for its product is

Accepted Answer

A)  perfectly inelastic. 
B)  relatively inelastic. 
C)  perfectly elastic. 
D)  relatively elastic. 
A)  perfectly inelastic. 
B)  relatively inelastic. 
C)  perfectly elastic. 
D)  relatively elastic.

Question 10

Ali's Gyros operates near a college campus.Ali has been selling 120 gyros a day at $4.50 each and is considering a price cut.He estimates that he would be able to sell 200 gyros per day at $3.50 each.
a.Calculate the price elasticity of demand using the midpoint formula.
b.Calculate the change in revenue as a result of the price cut.

Accepted Answer

a. Price elasticity of demand

Question 11

Economist Jerry Hausman estimated the price elasticity of demand for "Post Raisin Bran" and "All types of breakfast cereals." He found that the price elasticity of demand for Post Raisin Bran was -2.5 and the price elasticity of demand for "All types of breakfast cereals" was -0.9.Which of the following can be implied from Hausman's estimates?

Accepted Answer

A)  The demand for "All types of breakfast cereals" is elastic. 
B)  A 1 percent increase in the price of Post Raisin Bran will lead to a 25 percent decrease in the quantity demanded of Post Raisin Bran. 
C)  The demand for Post Raisin Bran is more elastic than the demand for "All types of breakfast cereals." 
D)  A 1 percent decrease in the price of breakfast cereals will lead to a 2.5 percent increase in the quantity demanded of Post Raisin Bran. 
A)  The demand for "All types of breakfast cereals" is elastic. 
B)  A 1 percent increase in the price of Post Raisin Bran will lead to a 25 percent decrease in the quantity demanded of Post Raisin Bran. 
C)  The demand for Post Raisin Bran is more elastic than the demand for "All types of breakfast cereals." 
D)  A 1 percent decrease in the price of breakfast cereals will lead to a 2.5 percent increase in the quantity demanded of Post Raisin Bran.

Question 12

A newspaper story on the effect of higher milk prices on the market for ice cream contained the following:
"As a result [of the increase in milk prices],retail prices for ice cream are up 4 percent from last year....And ice cream consumption is down 3 percent."
Source: John Curran,"Ice Cream,They Scream: Milk Fat Costs Drive Up Ice Cream Prices," Associated Press,July 23,2001.
Based on the information given,what is the price elasticity of demand for ice cream?

Accepted Answer

A)  0.75 (in absolute value) 
B)  1.33 (in absolute value) 
C)  12% 
D)  We do not have enough information to calculate the elasticity. 
A)  0.75 (in absolute value) 
B)  1.33 (in absolute value) 
C)  12% 
D)  We do not have enough information to calculate the elasticity.

Question 13

Economists use the concept of ________ to measure how one economic variable,such as quantity,responds to a change in another economic variable,such as price.

Accepted Answer

A)  slope 
B)  efficiency 
C)  relativity 
D)  elasticity 
A)  slope 
B)  efficiency 
C)  relativity 
D)  elasticity

Question 14

Carrie Bradshaw claims that when it comes to buying shoes,"price is no object." If this is true,then her demand for shoes is

Accepted Answer

A)  perfectly elastic. 
B)  perfectly inelastic. 
C)  unit-elastic. 
D)  horizontal. 
A)  perfectly elastic. 
B)  perfectly inelastic. 
C)  unit-elastic. 
D)  horizontal.

Question 15

The price elasticity of supply is usually a positive number because

Accepted Answer

A)  quantity supplied increases in response to income increases. 
B)  quantity supplied increases in response to price increases. 
C)  the quantity demanded usually rises when price falls and therefore suppliers would want to capitalize on this increase in demand. 
D)  price rises when supply increases. 
A)  quantity supplied increases in response to income increases. 
B)  quantity supplied increases in response to price increases. 
C)  the quantity demanded usually rises when price falls and therefore suppliers would want to capitalize on this increase in demand. 
D)  price rises when supply increases.

Question 16

Most people buy salt infrequently and in small quantities.Even a doubling of the price of salt is likely to result in a small decline in the quantity of salt demanded.Therefore

Accepted Answer

A)  the demand for salt will be perfectly inelastic. 
B)  salt is a normal good. 
C)  the demand for salt is relatively inelastic. 
D)  the price elasticity of demand for salt is greater than 1 (in absolute value). 
A)  the demand for salt will be perfectly inelastic. 
B)  salt is a normal good. 
C)  the demand for salt is relatively inelastic. 
D)  the price elasticity of demand for salt is greater than 1 (in absolute value).

Question 17

Which of the following items is likely to have the highest income elasticity of demand?

Accepted Answer

A)  a luxury cruise to several European countries 
B)  water 
C)  breakfast cereal 
D)  a hamburger 
A)  a luxury cruise to several European countries 
B)  water 
C)  breakfast cereal 
D)  a hamburger

Question 18

Suppose you have surveyed a few industries and obtained information about the income elasticity of demand for their products.If you expect that the economy is headed for a long recession,you would advise people to look for jobs in an industry with

Accepted Answer

A)  a high positive income elasticity coefficient such as 5. 
B)  a low positive income elasticity coefficient such as 0.8. 
C)  a "high" negative income elasticity coefficient such as -4. 
D)  a "low" negative income elasticity coefficient such as -0.2. 
A)  a high positive income elasticity coefficient such as 5. 
B)  a low positive income elasticity coefficient such as 0.8. 
C)  a "high" negative income elasticity coefficient such as -4. 
D)  a "low" negative income elasticity coefficient such as -0.2.

Question 19

Suppose the absolute value of the price elasticity of demand for basketball game tickets on your campus is greater than 1.Increasing ticket prices will increase the total revenue from ticket sales.

Accepted Answer

A) True 
 B)False

Question 20

Suppose the price elasticity of demand for methamphetamine is -0.35.If decriminalization caused the price of methamphetamine to fall by 75 percent,what will be the percentage increase in the quantity of methamphetamine demanded? If the price elasticity is -3.5,what will be the percentage increase in quantity demanded?

Accepted Answer

If price elasticity of demand is -0.35,a

If the cross-price elasticity of demand for goods A and B is zero,this means the two goods are unrelated.

Explain the economic concept of price elasticity of supply.How is price elasticity of supply calculated?

Between 1950 and 2013 the productivity of wheat farmers in the United States more than doubled.This means that

Income elasticity measures

If a good has a negative income elasticity of demand,this indicates that the good is

The price elasticity of the supply of teenage labor services is approximately 1.36.Suppose the minimum wage rises from $7.25 per hour to $8.75.Using the midpoint formula,calculate the approximately change in the quantity supplied of teenage labor.

What does price elasticity of demand measure? When is demand elastic? Inelastic? Unit elastic?

Figure 6-10 -Refer to Figure 6-10.A perfectly elastic supply curve is shown in

If a firm raised its price and discovered that its total revenue fell,then the demand for its product is

Economists use the concept of ________ to measure how one economic variable,such as quantity,responds to a change in another economic variable,such as price.

Carrie Bradshaw claims that when it comes to buying shoes,"price is no object." If this is true,then her demand for shoes is

The price elasticity of supply is usually a positive number because

Most people buy salt infrequently and in small quantities.Even a doubling of the price of salt is likely to result in a small decline in the quantity of salt demanded.Therefore

Which of the following items is likely to have the highest income elasticity of demand?

Suppose you have surveyed a few industries and obtained information about the income elasticity of demand for their products.If you expect that the economy is headed for a long recession,you would advise people to look for jobs in an industry with

Suppose the absolute value of the price elasticity of demand for basketball game tickets on your campus is greater than 1.Increasing ticket prices will increase the total revenue from ticket sales.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice,taxes,and the Distribution of Income

Filters

Exam 6: Elasticity: The Responsiveness of Demand and Supply

If the cross-price elasticity of demand for goods A and B is zero,this means the two goods are unrelated.

Explain the economic concept of price elasticity of supply.How is price elasticity of supply calculated?

Between 1950 and 2013 the productivity of wheat farmers in the United States more than doubled.This means that

Income elasticity measures

If a good has a negative income elasticity of demand,this indicates that the good is

The price elasticity of the supply of teenage labor services is approximately 1.36.Suppose the minimum wage rises from $7.25 per hour to $8.75.Using the midpoint formula,calculate the approximately change in the quantity supplied of teenage labor.

What does price elasticity of demand measure? When is demand elastic? Inelastic? Unit elastic?

Figure 6-10 -Refer to Figure 6-10.A perfectly elastic supply curve is shown in

If a firm raised its price and discovered that its total revenue fell,then the demand for its product is

Economists use the concept of ________ to measure how one economic variable,such as quantity,responds to a change in another economic variable,such as price.

Carrie Bradshaw claims that when it comes to buying shoes,"price is no object." If this is true,then her demand for shoes is

The price elasticity of supply is usually a positive number because

Most people buy salt infrequently and in small quantities.Even a doubling of the price of salt is likely to result in a small decline in the quantity of salt demanded.Therefore

Which of the following items is likely to have the highest income elasticity of demand?

Suppose you have surveyed a few industries and obtained information about the income elasticity of demand for their products.If you expect that the economy is headed for a long recession,you would advise people to look for jobs in an industry with

Suppose the absolute value of the price elasticity of demand for basketball game tickets on your campus is greater than 1.Increasing ticket prices will increase the total revenue from ticket sales.

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice,taxes,and the Distribution of Income

Filters