Question 1

When the calculated price elasticity of demand is -0.45,demand is

Accepted Answer

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

Question 2

$$\begin{array} { c c } 
\hline \begin{array} { c } 
\text { Price } \
\text { Per Unit }
\end{array} & \begin{array} { c } 
\text { Quantity Demanded } \
\text { Per Week }
\end{array} \
\hline \$ 10.00 & 25 \
9.50 & 30 \
9.00 & 35 \
8.50 & 40 \
8.00 & 45 \
7.50 & 50 \
7.00 & 55 \
6.50 & 60 \
6.00 & 65 \
5.50 & 70 \
5.00 & 75
\end{array}$$
-Refer to the above table.What is the absolute price elasticity of demand when price changes from $5.50 to $5.00?

Accepted Answer

A) 0.72 
B) 0.79 
C) 1.38 
D) 5.0 
A) 0.72 
B) 0.79 
C) 1.38 
D) 5.0

Question 3

If the price of a good increases and the total revenue also increases,the good has a(n)

Accepted Answer

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

Question 4

Janice earns an income of $2,000 a week and goes out to lunch 3 times a week.If her income increased to $2,100 she would go out to lunch 4 times a week.Compute Janice's income elasticity of demand.

Accepted Answer

A) 0.17 
B) 5.86 
C) 7 
D) 100 
A) 0.17 
B) 5.86 
C) 7 
D) 100

Question 5

Suppose the demand for rental apartments decreased substantially.We would expect to observe

Accepted Answer

A) no change in rent and a sharp reduction in quantity supplied in the short run,and an even larger decrease in quantity supplied in the long run. 
B) a large decrease in quantity supplied in the short run,followed by a counter-reaction and an increase in quantity supplied in the long run. 
C) a small decrease in quantity supplied and significantly lower rents in the short run,and quantity supplied to decrease much more in the long run. 
D) a large decrease in quantity supplied in the short run and the long run,but much larger reductions in rent in the long run. 
A) no change in rent and a sharp reduction in quantity supplied in the short run,and an even larger decrease in quantity supplied in the long run. 
B) a large decrease in quantity supplied in the short run,followed by a counter-reaction and an increase in quantity supplied in the long run. 
C) a small decrease in quantity supplied and significantly lower rents in the short run,and quantity supplied to decrease much more in the long run. 
D) a large decrease in quantity supplied in the short run and the long run,but much larger reductions in rent in the long run.

Question 6

Moving downward on a downward sloping linear demand curve,the absolute value of the price elasticity of demand

Accepted Answer

A) is constant. 
B) increases continuously. 
C) decreases continuously. 
D) may either increase or decrease. 
A) is constant. 
B) increases continuously. 
C) decreases continuously. 
D) may either increase or decrease.

Question 7

The local baseball stadium's concession stands previously sold hot dogs for 80 cents apiece.At that price,when a baseball fan went to watch a baseball game,he bought 2 hotdogs.But now that the stadium has a "dime-a-dog night," he has purchased 6 hot dogs.What is the approximate value of this individual's absolute price elasticity of demand for hot dogs?

Accepted Answer

A) 0.64 
B) 0.80 
C) 1.00 
D) 1.56 
A) 0.64 
B) 0.80 
C) 1.00 
D) 1.56

Question 8

Suppose that the value of the long-run absolute elasticity of demand for a good is 1.21.Then,we know the short-run absolute price elasticity of demand will be

Accepted Answer

A) inelastic. 
B) greater than 1.21. 
C) elastic. 
D) less than 1.21. 
A) inelastic. 
B) greater than 1.21. 
C) elastic. 
D) less than 1.21.

Question 9

Which of the following statements is correct?

Accepted Answer

A) Supply is more elastic in the short run than in long run. 
B) Supply is more elastic in the long run than in short run. 
C) Price elasticity of supply is constant along the supply curve. 
D) Price elasticity of supply is always a negative number. 
A) Supply is more elastic in the short run than in long run. 
B) Supply is more elastic in the long run than in short run. 
C) Price elasticity of supply is constant along the supply curve. 
D) Price elasticity of supply is always a negative number.

Question 10

We say that a good has elastic demand whenever the absolute value of the price elasticity of demand is greater than 1.A 1 percent change in price therefore causes

Accepted Answer

A) exactly a 1 percent change in the quantity demanded. 
B) a change of less than 1 percent in the quantity demanded. 
C) a greater than 1 percent change in quantity demanded. 
D) a change that cannot be determined based on 1 percent. 
A) exactly a 1 percent change in the quantity demanded. 
B) a change of less than 1 percent in the quantity demanded. 
C) a greater than 1 percent change in quantity demanded. 
D) a change that cannot be determined based on 1 percent.

Question 11

Why can cross price elasticity of demand be positive or negative,unlike the price elasticity of demand with respect to the item's own price?

Accepted Answer

Cross price elasticity of demand is the

Question 12

If goods X and Y are complements,then the cross price elasticity of demand will be

Accepted Answer

A) elastic. 
B) greater than zero but less than 1. 
C) negative. 
D) positive. 
A) elastic. 
B) greater than zero but less than 1. 
C) negative. 
D) positive.

Question 13

$$\begin{array} { c c c c } 
\text { Period } & \text { Income/Week } & \begin{array} { c } 
\text { Pounds of Artisan } \
\text { Bread Sold }
\end{array} & \begin{array} { l } 
\text { Jars of } \
\text { Jam Sold }
\end{array} \
\hline 1 & \$ 250 & 2 & 10 \
2 & \$ 500 & 5 & 8 \
\hline
\end{array}$$
-Use the above table.The income elasticity of artisan bread is

Accepted Answer

A) 1.285. 
B) 0.780. 
C) 0.012. 
D) 8.330. 
A) 1.285. 
B) 0.780. 
C) 0.012. 
D) 8.330.

Question 14

Chad's income went from $1000 per week to $1500 per week.As a result he increased his consumption of steak from 1 pound a week to 3 pounds a week.Based on his consumption patterns,the income elasticity of steak for Chad is

Accepted Answer

A) 2.50. 
B) -.50. 
C) .50. 
D) -1.50. 
A) 2.50. 
B) -.50. 
C) .50. 
D) -1.50.

Question 15

-Refer to the above figure.Demand will be unit-elastic when quantity is between

Accepted Answer

A) 0 and A. 
B) 0 and B. 
C) A and B. 
D) B and C. 
A) 0 and A. 
B) 0 and B. 
C) A and B. 
D) B and C.

Question 16

In which of the following situations is the absolute price elasticity of demand for an item most likely to exceed a value of 1?

Accepted Answer

A) when there are very few close substitutes for the item 
B) when there are very few producers of the item 
C) when the item's share of expenses in consumers' budgets is very small 
D) when there is considerable time to adjust to a change in the price of the item 
A) when there are very few close substitutes for the item 
B) when there are very few producers of the item 
C) when the item's share of expenses in consumers' budgets is very small 
D) when there is considerable time to adjust to a change in the price of the item

Question 17

$$\begin{array} { c c c c } 
\text { Period } & \text { Income/Week } & \begin{array} { c } 
\text { Pounds of Artisan } \
\text { Bread Sold }
\end{array} & \begin{array} { l } 
\text { Jars of } \
\text { Jam Sold }
\end{array} \
\hline 1 & \$ 250 & 2 & 10 \
2 & \$ 500 & 5 & 8 \
\hline
\end{array}$$
-Use the above table.Based on the information in the table,jam is a(n)

Accepted Answer

A) normal good. 
B) necessary good. 
C) inferior good. 
D) negative good. 
A) normal good. 
B) necessary good. 
C) inferior good. 
D) negative good.

Question 18

Suppose that the price of eggs increases from 75 cents to $1.00 per dozen and as a result a typical farmer experiences a decrease in egg sales from 300 to 200 dozen per week.Using the method of average values,the absolute price elasticity of demand is

Accepted Answer

A) 1.4. 
B) 0.8. 
C) 3.0. 
D) 1.75. 
A) 1.4. 
B) 0.8. 
C) 3.0. 
D) 1.75.

Question 19

If demand is unit elastic,then

Accepted Answer

A) a ten percent increase in price leads to a one percent decrease in quantity demanded. 
B) the percentage change in quantity demanded equals the percentage change in price. 
C) a two percent increase in price leads to a two percent decrease in quantity demanded. 
D) an increase in price of any amount leads to quantity demanded falling to zero. 
A) a ten percent increase in price leads to a one percent decrease in quantity demanded. 
B) the percentage change in quantity demanded equals the percentage change in price. 
C) a two percent increase in price leads to a two percent decrease in quantity demanded. 
D) an increase in price of any amount leads to quantity demanded falling to zero.

Question 20

An increase in total revenue will result if

Accepted Answer

A) demand is inelastic and price increases. 
B) demand is elastic and price increases. 
C) demand is inelastic and price decreases. 
D) demand is unitary elastic and price decreases. 
A) demand is inelastic and price increases. 
B) demand is elastic and price increases. 
C) demand is inelastic and price decreases. 
D) demand is unitary elastic and price decreases.

When the calculated price elasticity of demand is -0.45,demand is

Price Per Unit Quantity Demanded Per Week \ 10.00 25 9.50 30 9.00 35 8.50 40 8.00 45 7.50 50 7.00 55 6.50 60 6.00 65 5.50 70 5.00 75 -Refer to the above table.What is the absolute price elasticity of demand when price changes from $5.50 to $5.00?

If the price of a good increases and the total revenue also increases,the good has a(n)

Janice earns an income of $2,000 a week and goes out to lunch 3 times a week.If her income increased to $2,100 she would go out to lunch 4 times a week.Compute Janice's income elasticity of demand.

Suppose the demand for rental apartments decreased substantially.We would expect to observe

Moving downward on a downward sloping linear demand curve,the absolute value of the price elasticity of demand

Suppose that the value of the long-run absolute elasticity of demand for a good is 1.21.Then,we know the short-run absolute price elasticity of demand will be

Which of the following statements is correct?

We say that a good has elastic demand whenever the absolute value of the price elasticity of demand is greater than 1.A 1 percent change in price therefore causes

Why can cross price elasticity of demand be positive or negative,unlike the price elasticity of demand with respect to the item's own price?

If goods X and Y are complements,then the cross price elasticity of demand will be

Period Income/Week Pounds of Artisan Bread Sold Jars of Jam Sold 1 \ 250 2 10 2 \ 500 5 8 -Use the above table.The income elasticity of artisan bread is

Chad's income went from $1000 per week to $1500 per week.As a result he increased his consumption of steak from 1 pound a week to 3 pounds a week.Based on his consumption patterns,the income elasticity of steak for Chad is

-Refer to the above figure.Demand will be unit-elastic when quantity is between

In which of the following situations is the absolute price elasticity of demand for an item most likely to exceed a value of 1?

Period Income/Week Pounds of Artisan Bread Sold Jars of Jam Sold 1 \ 250 2 10 2 \ 500 5 8 -Use the above table.Based on the information in the table,jam is a(n)

Suppose that the price of eggs increases from 75 cents to $1.00 per dozen and as a result a typical farmer experiences a decrease in egg sales from 300 to 200 dozen per week.Using the method of average values,the absolute price elasticity of demand is

If demand is unit elastic,then

An increase in total revenue will result if

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 6: Demand and Supply Elasticity

When the calculated price elasticity of demand is -0.45,demand is

Price Per Unit Quantity Demanded Per Week \ 10.00 25 9.50 30 9.00 35 8.50 40 8.00 45 7.50 50 7.00 55 6.50 60 6.00 65 5.50 70 5.00 75 -Refer to the above table.What is the absolute price elasticity of demand when price changes from $5.50 to $5.00?

If the price of a good increases and the total revenue also increases,the good has a(n)

Janice earns an income of $2,000 a week and goes out to lunch 3 times a week.If her income increased to $2,100 she would go out to lunch 4 times a week.Compute Janice's income elasticity of demand.

Suppose the demand for rental apartments decreased substantially.We would expect to observe

Moving downward on a downward sloping linear demand curve,the absolute value of the price elasticity of demand

Suppose that the value of the long-run absolute elasticity of demand for a good is 1.21.Then,we know the short-run absolute price elasticity of demand will be

Which of the following statements is correct?

We say that a good has elastic demand whenever the absolute value of the price elasticity of demand is greater than 1.A 1 percent change in price therefore causes

Why can cross price elasticity of demand be positive or negative,unlike the price elasticity of demand with respect to the item's own price?

If goods X and Y are complements,then the cross price elasticity of demand will be

Period Income/Week Pounds of Artisan Bread Sold Jars of Jam Sold 1 \ 250 2 10 2 \ 500 5 8 -Use the above table.The income elasticity of artisan bread is

Chad's income went from $1000 per week to $1500 per week.As a result he increased his consumption of steak from 1 pound a week to 3 pounds a week.Based on his consumption patterns,the income elasticity of steak for Chad is

-Refer to the above figure.Demand will be unit-elastic when quantity is between

In which of the following situations is the absolute price elasticity of demand for an item most likely to exceed a value of 1?

Period Income/Week Pounds of Artisan Bread Sold Jars of Jam Sold 1 \ 250 2 10 2 \ 500 5 8 -Use the above table.Based on the information in the table,jam is a(n)

Suppose that the price of eggs increases from 75 cents to $1.00 per dozen and as a result a typical farmer experiences a decrease in egg sales from 300 to 200 dozen per week.Using the method of average values,the absolute price elasticity of demand is

If demand is unit elastic,then

An increase in total revenue will result if

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

Consumer Choice

Rents, profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters