Question 1

The demand curve for a good is also referred to as the:

Accepted Answer

A) marginal benefit curve. 
B) consumption possibility frontier. 
C) derived demand curve. 
D) indifference curve. 
E) isoquant curve. 
A) marginal benefit curve. 
B) consumption possibility frontier. 
C) derived demand curve. 
D) indifference curve. 
E) isoquant curve. A

Question 2

When the price of ulcer medication increased by $20, the revenue of a drug company selling the medication increased by $10 million. Thus, it can be said that the company's elasticity of demand is:

Accepted Answer

A) equal to zero. 
B) greater than one. 
C) less than one. 
D) infinitely large. 
E) equal to one. 
A) equal to zero. 
B) greater than one. 
C) less than one. 
D) infinitely large. 
E) equal to one. C

Question 3

The long-run demand curve for wheat is likely to be:

Accepted Answer

A) more elastic than the short-run demand curve for wheat. 
B) more inelastic than the short-run demand curve for wheat. 
C) the same as the short-run demand curve for wheat. 
D) more inelastic than the short-run supply of wheat. 
E) perfectly inelastic. 
A) more elastic than the short-run demand curve for wheat. 
B) more inelastic than the short-run demand curve for wheat. 
C) the same as the short-run demand curve for wheat. 
D) more inelastic than the short-run supply of wheat. 
E) perfectly inelastic. A

Question 4

If the demand for a good is price inelastic, a decrease in the price of the good will result in a decrease in the total revenue of a firm producing the good.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following goods is likely to have a more elastic demand curve?

Accepted Answer

A) A good without close substitutes 
B) A nondurable good 
C) A necessary good 
D) A good with complements 
E) A luxury good 
A) A good without close substitutes 
B) A nondurable good 
C) A necessary good 
D) A good with complements 
E) A luxury good

Question 6

If the supply curve of a good is horizontal, then the elasticity of supply is:

Accepted Answer

A) equal to zero. 
B) equal to one. 
C) greater than one but less than infinity. 
D) equal to infinity. 
E) less than one. 
A) equal to zero. 
B) equal to one. 
C) greater than one but less than infinity. 
D) equal to infinity. 
E) less than one.

Question 7

When the Blue Ocean Surfboard Company lowered the price of surfboards by 20 percent, it sold 10 percent more surfboards. The price elasticity coefficient for surfboards is _____.

Accepted Answer

A) 2 
B) 0.5​ 
C) 1 
D) 20 
E) 10 
A) 2 
B) 0.5​ 
C) 1 
D) 20 
E) 10

Question 8

Phil and Lasca have always wanted to take a cruise. Although willing to pay $5,000 for a Caribbean cruise for two, they bought two tickets for the cruise vacation for $3,500. Their total consumer surplus amounted to _____.

Accepted Answer

A) $750 
B) $5,000 
C) $1,500 
D) $3,500 
E) $500 
A) $750 
B) $5,000 
C) $1,500 
D) $3,500 
E) $500

Question 9

The supply of a good is said to be _____ when a small percentage increase in the price of the good leads to a proportionally larger change in the quantity supplied.

Accepted Answer

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

Question 10

Other things being equal, the greater the price elasticity of demand for a good, the _____.

Accepted Answer

A) shorter the period of time consumers have to adjust to price changes 
B) larger the proportion of income spent on the good 
C) fewer the available substitutes of the good 
D) smaller the proportion of income spent on the good 
E) fewer the available complements of the good 
A) shorter the period of time consumers have to adjust to price changes 
B) larger the proportion of income spent on the good 
C) fewer the available substitutes of the good 
D) smaller the proportion of income spent on the good 
E) fewer the available complements of the good

Question 11

If James is willing to sell an extra concert ticket for $40 but actually sells it for $100, his consumer surplus is $60.

Accepted Answer

A) True 
 B)False

Question 12

The demand for a good is said to be _____ when quantity demanded changes proportionately to price changes.

Accepted Answer

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

Question 13

A steel mill raises the price of steel by 7 percent, which results in a 20 percent reduction in the quantity of steel demanded. The price elasticity of demand is _____.

Accepted Answer

A) 2.9 
B) 5.5 
C) 6.5 
D) 10.5 
E) 15.5 
A) 2.9 
B) 5.5 
C) 6.5 
D) 10.5 
E) 15.5

Question 14

If the supply curve of a good is vertical, then the elasticity of supply is:

Accepted Answer

A) equal to zero. 
B) equal to one. 
C) greater than one but less than infinity. 
D) equal to infinity. 
E) less than one. 
A) equal to zero. 
B) equal to one. 
C) greater than one but less than infinity. 
D) equal to infinity. 
E) less than one.

Question 15

The main purpose of government price controls is to keep prices from rising above their equilibrium levels.

Accepted Answer

A) True 
 B)False

Question 16

Graph A below shows an elastic demand curve, and Graph B shows an inelastic demand curve. With reference to Graph A, at a price of $20, total revenue equals _____.Figure 4.1:

Accepted Answer

A) $400 
B) $200 
C) $500 
D) $1,000 
E) $100 
A) $400 
B) $200 
C) $500 
D) $1,000 
E) $100

Question 17

The long-run demand curve for air travel is likely to be:

Accepted Answer

A) more elastic than the short-run demand curve for air travel. 
B) more inelastic than the short-run demand curve for air travel. 
C) the same as the short-run demand curve for air travel. 
D) more inelastic than the short-run supply curve of air travel. 
E) perfectly elastic. 
A) more elastic than the short-run demand curve for air travel. 
B) more inelastic than the short-run demand curve for air travel. 
C) the same as the short-run demand curve for air travel. 
D) more inelastic than the short-run supply curve of air travel. 
E) perfectly elastic.

Question 18

Which of the following is an example of an unintended consequence of price controls?

Accepted Answer

A) First time tax credits that cause more home sales 
B) A price ceiling on gasoline that causes a gas shortage 
C) Increased parking fines that lead to fewer violators 
D) Higher minimum wages resulting in an increase in employment among teenagers 
E) Subsidies resulting in a decrease in the cost of taxpayers 
A) First time tax credits that cause more home sales 
B) A price ceiling on gasoline that causes a gas shortage 
C) Increased parking fines that lead to fewer violators 
D) Higher minimum wages resulting in an increase in employment among teenagers 
E) Subsidies resulting in a decrease in the cost of taxpayers

Question 19

If the elasticity of supply coefficient equals 0.6, then the supply of the good is said to be:

Accepted Answer

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

Question 20

A price floor set above the equilibrium price is not binding.

Accepted Answer

A) True 
 B)False

The demand curve for a good is also referred to as the:

When the price of ulcer medication increased by $20, the revenue of a drug company selling the medication increased by $10 million. Thus, it can be said that the company's elasticity of demand is:

The long-run demand curve for wheat is likely to be:

If the demand for a good is price inelastic, a decrease in the price of the good will result in a decrease in the total revenue of a firm producing the good.

Which of the following goods is likely to have a more elastic demand curve?

If the supply curve of a good is horizontal, then the elasticity of supply is:

When the Blue Ocean Surfboard Company lowered the price of surfboards by 20 percent, it sold 10 percent more surfboards. The price elasticity coefficient for surfboards is _____.

Phil and Lasca have always wanted to take a cruise. Although willing to pay $5,000 for a Caribbean cruise for two, they bought two tickets for the cruise vacation for $3,500. Their total consumer surplus amounted to _____.

The supply of a good is said to be _____ when a small percentage increase in the price of the good leads to a proportionally larger change in the quantity supplied.

Other things being equal, the greater the price elasticity of demand for a good, the _____.

If James is willing to sell an extra concert ticket for $40 but actually sells it for $100, his consumer surplus is $60.

The demand for a good is said to be _____ when quantity demanded changes proportionately to price changes.

A steel mill raises the price of steel by 7 percent, which results in a 20 percent reduction in the quantity of steel demanded. The price elasticity of demand is _____.

If the supply curve of a good is vertical, then the elasticity of supply is:

The main purpose of government price controls is to keep prices from rising above their equilibrium levels.

Graph A below shows an elastic demand curve, and Graph B shows an inelastic demand curve. With reference to Graph A, at a price of $20, total revenue equals _____.Figure 4.1:

The long-run demand curve for air travel is likely to be:

Which of the following is an example of an unintended consequence of price controls?

If the elasticity of supply coefficient equals 0.6, then the supply of the good is said to be:

A price floor set above the equilibrium price is not binding.

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Perfectly Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters

Exam 4: Using Supply and Demand

The demand curve for a good is also referred to as the:

When the price of ulcer medication increased by $20, the revenue of a drug company selling the medication increased by $10 million. Thus, it can be said that the company's elasticity of demand is:

The long-run demand curve for wheat is likely to be:

If the demand for a good is price inelastic, a decrease in the price of the good will result in a decrease in the total revenue of a firm producing the good.

Which of the following goods is likely to have a more elastic demand curve?

If the supply curve of a good is horizontal, then the elasticity of supply is:

When the Blue Ocean Surfboard Company lowered the price of surfboards by 20 percent, it sold 10 percent more surfboards. The price elasticity coefficient for surfboards is _____.

Phil and Lasca have always wanted to take a cruise. Although willing to pay $5,000 for a Caribbean cruise for two, they bought two tickets for the cruise vacation for $3,500. Their total consumer surplus amounted to _____.

The supply of a good is said to be _____ when a small percentage increase in the price of the good leads to a proportionally larger change in the quantity supplied.

Other things being equal, the greater the price elasticity of demand for a good, the _____.

If James is willing to sell an extra concert ticket for $40 but actually sells it for $100, his consumer surplus is $60.

The demand for a good is said to be _____ when quantity demanded changes proportionately to price changes.

A steel mill raises the price of steel by 7 percent, which results in a 20 percent reduction in the quantity of steel demanded. The price elasticity of demand is _____.

If the supply curve of a good is vertical, then the elasticity of supply is:

The main purpose of government price controls is to keep prices from rising above their equilibrium levels.

Graph A below shows an elastic demand curve, and Graph B shows an inelastic demand curve. With reference to Graph A, at a price of $20, total revenue equals _____.Figure 4.1:

The long-run demand curve for air travel is likely to be:

Which of the following is an example of an unintended consequence of price controls?

If the elasticity of supply coefficient equals 0.6, then the supply of the good is said to be:

A price floor set above the equilibrium price is not binding.

The Role and Method of Economics

The Economic Way of Thinking

Supply and Demand

Market Failure and Public Choice

Production and Costs

Firms in Perfectly Competitive Markets

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets, Income Distribution, and Poverty

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Economic Growth

Aggregate Demand and Aggregate Supply

Fiscal Policy

Monetary Institutions

The Federal Reserve and Monetary Policy

Issues in Macroeconomic Theory and Policy

International Economics

Filters