Question 1

The price elasticity of demand for Kellogg's Raisin Bran is larger in absolute value than the price elasticity for all breakfast cereals.

Accepted Answer

A) True 
 B)False

Question 2

Suppose Tinsel Town Videos lowers the price of its movie club membership by 10 percent and as a result,CineArts Videos experienced a 16 percent decline in its movie club membership.What is the value of the cross-price elasticity between the two movie club memberships?

Accepted Answer

A)  -1.6 
B)  -0.625 
C)  0.625 
D)  1.6 
A)  -1.6 
B)  -0.625 
C)  0.625 
D)  1.6

Question 3

The price elasticity of demand for beef is estimated to be 0.60 (in absolute value).This means that a 20 percent increase in the price of beef,holding every thing else constant,will cause the quantity of beef demanded to

Accepted Answer

A)  decrease by 12 percent. 
B)  decrease by 26 percent. 
C)  decrease by 32 percent. 
D)  decrease by 60 percent. 
A)  decrease by 12 percent. 
B)  decrease by 26 percent. 
C)  decrease by 32 percent. 
D)  decrease by 60 percent.

Question 4

Figure 6-12  
-Refer to Figure 6-12.The diagram shows two supply curves,SA and SB.As price rises from P0 to P1,which supply curve is more elastic?

Accepted Answer

A)  SA 
B)  SB 
C)  They are equally inelastic. 
D)  They are equally elastic. 
A)  SA 
B)  SB 
C)  They are equally inelastic. 
D)  They are equally elastic.

Question 5

Suppose a 4 percent increase in income results in a 2 percent decrease in the quantity demanded of a good.Calculate the income elasticity of demand for the good and determine what type of good it is.

Accepted Answer

Income elasticity of

Question 6

Suppose the current price of oil is $90 a barrel and the quantity supplied is 800 million barrels per day.If the price elasticity of supply for oil in the short run is estimated at 0.5,use the midpoint formula to calculate the percentage change in quantity supplied when the price of oil rises to $98 a barrel.

Accepted Answer

The percentage change in quant

Question 7

The cross-price elasticity between Gillette razors and a related good is -3.4.What happens to the demand for the related good if the price of Gillette razors falls by 10 percent?

Accepted Answer

A)  The quantity demanded of the related good rises by 3.4 percent. 
B)  The quantity demanded of the related good falls by 34 percent. 
C)  The quantity demanded of the related good rises by 34 percent. 
D)  The quantity demanded of the related good falls by 3.4 percent. 
A)  The quantity demanded of the related good rises by 3.4 percent. 
B)  The quantity demanded of the related good falls by 34 percent. 
C)  The quantity demanded of the related good rises by 34 percent. 
D)  The quantity demanded of the related good falls by 3.4 percent.

Question 8

Which of the following could explain why the demand for table salt is inelastic?

Accepted Answer

A)  Salt is a luxury good. 
B)  Salt is a rare commodity. 
C)  Households devote a very small portion of their income to salt purchases. 
D)  Salt is a luxury for high income consumers but a necessity for low income consumers. 
A)  Salt is a luxury good. 
B)  Salt is a rare commodity. 
C)  Households devote a very small portion of their income to salt purchases. 
D)  Salt is a luxury for high income consumers but a necessity for low income consumers.

Question 9

If a firm wanted to know whether the demand for its product was elastic,unit-elastic,or inelastic,then the firm could

Accepted Answer

A)  survey competitors and ask them what they think demand elasticity is for the product. 
B)  talk to its customers. 
C)  change price a little bit and observe what happens to total revenue. 
D)  not do anything as there is no way to find an elasticity value. 
A)  survey competitors and ask them what they think demand elasticity is for the product. 
B)  talk to its customers. 
C)  change price a little bit and observe what happens to total revenue. 
D)  not do anything as there is no way to find an elasticity value.

Question 10

In the alcohol industry,both wine and spirits are considered to be substitutes for beer.

Accepted Answer

A) True 
 B)False

Question 11

If demand is perfectly inelastic,the absolute value of the price elasticity of demand is

Accepted Answer

A)  zero. 
B)  less than one. 
C)  more than one. 
D)  equal to the absolute value of the slope of the demand curve. 
A)  zero. 
B)  less than one. 
C)  more than one. 
D)  equal to the absolute value of the slope of the demand curve.

Question 12

If the cross-price elasticity of demand between beer and wine is 0.31,then beer and wine are

Accepted Answer

A)  complements. 
B)  price inelastic goods. 
C)  substitutes. 
D)  necessities. 
A)  complements. 
B)  price inelastic goods. 
C)  substitutes. 
D)  necessities.

Question 13

If demand for a product is perfectly inelastic a change in price will not change total revenue.

Accepted Answer

A) True 
 B)False

Question 14

What factors would make you more sensitive or less sensitive to price when purchasing gasoline?

Accepted Answer

A number of factors are likely to affect

Question 15

The price elasticity of supply is calculated as the change in supply divided by the change in price.

Accepted Answer

A) True 
 B)False

Question 16

Consider the following pairs of items: 
a.shampoo and conditioner
b.iPhones and earbuds
c.a laptop computer and a desktop computer
d.beef and pork
e.air-travel and weed killer
Which of the pairs listed will have cross-price elasticity of zero?

Accepted Answer

A)  a and b only 
B)  c only since most people cannot do without computers 
C)  e only 
D)  none of the pairs listed 
A)  a and b only 
B)  c only since most people cannot do without computers 
C)  e only 
D)  none of the pairs listed

Question 17

For each pair of items below determine which product would have the higher price elasticity of demand (in absolute value).
a.Insulin for a diabetic or aspirin for someone suffering a headache.
b.A new Whirlpool 27 cu.ft.side-by-side refrigerator or electricity to power your all-electric home.
c.A can of Red Bull or soft drinks in general.

Accepted Answer

a.The demand for aspirin is more price e

Question 18

Which of the following products comes closest to having a perfectly inelastic demand?

Accepted Answer

A)  gasoline 
B)  cholesterol medication in general 
C)  iPhones 
D)  bus rides 
A)  gasoline 
B)  cholesterol medication in general 
C)  iPhones 
D)  bus rides

Question 19

Assume that you own a small boutique hotel.In an attempt to raise revenue you reduce your rates by 20 percent.However,your revenue falls.What does this indicate about the demand for your boutique hotel rooms?

Accepted Answer

A)  Boutique hotel rooms are inferior goods. 
B)  Demand is inelastic. 
C)  The demand curve for your hotel rooms is vertical. 
D)  Demand is elastic. 
A)  Boutique hotel rooms are inferior goods. 
B)  Demand is inelastic. 
C)  The demand curve for your hotel rooms is vertical. 
D)  Demand is elastic.

Question 20

Figure 6-4  
-Refer to Figure 6-4.At the midpoint of the demand curve,in absolute value

Accepted Answer

A)  the price elasticity coefficient is at a maximum. 
B)  the price elasticity coefficient is at a minimum. 
C)  the price elasticity coefficient is zero. 
D)  the price elasticity coefficient is one. 
A)  the price elasticity coefficient is at a maximum. 
B)  the price elasticity coefficient is at a minimum. 
C)  the price elasticity coefficient is zero. 
D)  the price elasticity coefficient is one.

The price elasticity of demand for Kellogg's Raisin Bran is larger in absolute value than the price elasticity for all breakfast cereals.

Suppose Tinsel Town Videos lowers the price of its movie club membership by 10 percent and as a result,CineArts Videos experienced a 16 percent decline in its movie club membership.What is the value of the cross-price elasticity between the two movie club memberships?

The price elasticity of demand for beef is estimated to be 0.60 (in absolute value).This means that a 20 percent increase in the price of beef,holding every thing else constant,will cause the quantity of beef demanded to

Figure 6-12 -Refer to Figure 6-12.The diagram shows two supply curves,S_A and S_B.As price rises from P₀ to P₁,which supply curve is more elastic?

Suppose a 4 percent increase in income results in a 2 percent decrease in the quantity demanded of a good.Calculate the income elasticity of demand for the good and determine what type of good it is.

The cross-price elasticity between Gillette razors and a related good is -3.4.What happens to the demand for the related good if the price of Gillette razors falls by 10 percent?

Which of the following could explain why the demand for table salt is inelastic?

If a firm wanted to know whether the demand for its product was elastic,unit-elastic,or inelastic,then the firm could

In the alcohol industry,both wine and spirits are considered to be substitutes for beer.

If demand is perfectly inelastic,the absolute value of the price elasticity of demand is

If the cross-price elasticity of demand between beer and wine is 0.31,then beer and wine are

If demand for a product is perfectly inelastic a change in price will not change total revenue.

What factors would make you more sensitive or less sensitive to price when purchasing gasoline?

The price elasticity of supply is calculated as the change in supply divided by the change in price.

Consider the following pairs of items: a.shampoo and conditioner b.iPhones and earbuds c.a laptop computer and a desktop computer d.beef and pork e.air-travel and weed killer Which of the pairs listed will have cross-price elasticity of zero?

Which of the following products comes closest to having a perfectly inelastic demand?

Assume that you own a small boutique hotel.In an attempt to raise revenue you reduce your rates by 20 percent.However,your revenue falls.What does this indicate about the demand for your boutique hotel rooms?

Figure 6-4 -Refer to Figure 6-4.At the midpoint of the demand curve,in absolute value

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

The price elasticity of demand for Kellogg's Raisin Bran is larger in absolute value than the price elasticity for all breakfast cereals.

Suppose Tinsel Town Videos lowers the price of its movie club membership by 10 percent and as a result,CineArts Videos experienced a 16 percent decline in its movie club membership.What is the value of the cross-price elasticity between the two movie club memberships?

The price elasticity of demand for beef is estimated to be 0.60 (in absolute value).This means that a 20 percent increase in the price of beef,holding every thing else constant,will cause the quantity of beef demanded to

Figure 6-12 -Refer to Figure 6-12.The diagram shows two supply curves,SA and SB.As price rises from P0 to P1,which supply curve is more elastic?

Suppose a 4 percent increase in income results in a 2 percent decrease in the quantity demanded of a good.Calculate the income elasticity of demand for the good and determine what type of good it is.

The cross-price elasticity between Gillette razors and a related good is -3.4.What happens to the demand for the related good if the price of Gillette razors falls by 10 percent?

Which of the following could explain why the demand for table salt is inelastic?

If a firm wanted to know whether the demand for its product was elastic,unit-elastic,or inelastic,then the firm could

In the alcohol industry,both wine and spirits are considered to be substitutes for beer.

If demand is perfectly inelastic,the absolute value of the price elasticity of demand is

If the cross-price elasticity of demand between beer and wine is 0.31,then beer and wine are

If demand for a product is perfectly inelastic a change in price will not change total revenue.

What factors would make you more sensitive or less sensitive to price when purchasing gasoline?

The price elasticity of supply is calculated as the change in supply divided by the change in price.

Consider the following pairs of items: a.shampoo and conditioner b.iPhones and earbuds c.a laptop computer and a desktop computer d.beef and pork e.air-travel and weed killer Which of the pairs listed will have cross-price elasticity of zero?

Which of the following products comes closest to having a perfectly inelastic demand?

Assume that you own a small boutique hotel.In an attempt to raise revenue you reduce your rates by 20 percent.However,your revenue falls.What does this indicate about the demand for your boutique hotel rooms?

Figure 6-4 -Refer to Figure 6-4.At the midpoint of the demand curve,in absolute value

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

Figure 6-12 -Refer to Figure 6-12.The diagram shows two supply curves,S_A and S_B.As price rises from P₀ to P₁,which supply curve is more elastic?