Question 1

If a good has an absolute price elasticity of 2,the demand for the good is

Accepted Answer

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

Question 2

A perfectly inelastic supply curve is

Accepted Answer

A) an upward sloping straight line that intersects the origin. 
B) horizontal. 
C) vertical. 
D) downward sloping. 
A) an upward sloping straight line that intersects the origin. 
B) horizontal. 
C) vertical. 
D) downward sloping.

Question 3

The word best associated with price elasticity of demand is

Accepted Answer

A) relative. 
B) total. 
C) absolute. 
D) cumulative. 
A) relative. 
B) total. 
C) absolute. 
D) cumulative.

Question 4

Total revenue is

Accepted Answer

A) price × quantity. 
B) change in price × change in quantity. 
C) change in price × quantity. 
D) price × change in quantity. 
A) price × quantity. 
B) change in price × change in quantity. 
C) change in price × quantity. 
D) price × change in quantity.

Question 5

A demand relationship that is a vertical line up from the quantity axis is

Accepted Answer

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

Question 6

The price elasticity of supply is higher when

Accepted Answer

A) the number of buyers in the market decreases. 
B) the product in question is an inferior good. 
C) the number of buyers in the market increases. 
D) producers have more time to adjust to price changes. 
A) the number of buyers in the market decreases. 
B) the product in question is an inferior good. 
C) the number of buyers in the market increases. 
D) producers have more time to adjust to price changes.

Question 7

$$\begin{array} { c c } 
\hline \begin{array} { c } 
\text { Price } \
\text { Per Unit }
\end{array} & \begin{array} { c } 
\text { Quantity Demanded } \
\text { Per Week }
\end{array} \
\hline \$ 10.00 & 25 \
9.50 & 30 \
9.00 & 35 \
8.50 & 40 \
8.00 & 45 \
7.50 & 50 \
7.00 & 55 \
6.50 & 60 \
6.00 & 65 \
5.50 & 70 \
5.00 & 75\\hline
\end{array}$$
-Refer to the above table.At a price below $5,the absolute price elasticity of demand is

Accepted Answer

A) 1.0. 
B) below 1. 
C) between 0.8 and 1.0. 
D) greater than 1. 
A) 1.0. 
B) below 1. 
C) between 0.8 and 1.0. 
D) greater than 1.

Question 8

Moving down a straight-line demand curve,the absolute price elasticity of demand

Accepted Answer

A) increases. 
B) is constant. 
C) decreases. 
D) varies in uncertain ways. 
A) increases. 
B) is constant. 
C) decreases. 
D) varies in uncertain ways.

Question 9

When demand is elastic,

Accepted Answer

A) quantity demanded is very responsive to a change in price. 
B) quantity demanded is not very responsive to a change in price. 
C) the proportional change in quantity demanded is equal to the proportional change in price. 
D) producers react quickly to price changes. 
A) quantity demanded is very responsive to a change in price. 
B) quantity demanded is not very responsive to a change in price. 
C) the proportional change in quantity demanded is equal to the proportional change in price. 
D) producers react quickly to price changes.

Question 10

-Refer to the above figure.The supply curve is

Accepted Answer

A) elastic at high prices and inelastic at low prices. 
B) unitary for all prices. 
C) perfectly elastic. 
D) perfectly inelastic. 
A) elastic at high prices and inelastic at low prices. 
B) unitary for all prices. 
C) perfectly elastic. 
D) perfectly inelastic.

Question 11

Wheat is sold in world markets,usually priced in terms of bushels.In the market for wheat,the price elasticity of demand for wheat would be expressed as

Accepted Answer

A) the number of bushels of wheat sold. 
B) the number of whatever currency is used in purchasing the wheat. 
C) the number of dollars spent on wheat. 
D) a unitless number. 
A) the number of bushels of wheat sold. 
B) the number of whatever currency is used in purchasing the wheat. 
C) the number of dollars spent on wheat. 
D) a unitless number.

Question 12

The absolute price elasticity of demand for a product for which annual expenditures make up a very small share of a typical consumer's budget is probably

Accepted Answer

A) less than 1. 
B) equal to 1. 
C) greater than 1. 
D) infinity. 
A) less than 1. 
B) equal to 1. 
C) greater than 1. 
D) infinity.

Question 13

Which of the following would NOT affect a good's price elasticity of demand?

Accepted Answer

A) The ease of substitution between goods 
B) The cost of producing the good 
C) The number of substitute goods available 
D) The proportion of one's budget spent on an item 
A) The ease of substitution between goods 
B) The cost of producing the good 
C) The number of substitute goods available 
D) The proportion of one's budget spent on an item

Question 14

The actual value of the price elasticity of demand is always

Accepted Answer

A) positive because of the law of demand. 
B) negative because of the law of demand. 
C) positive because of diminishing marginal utility. 
D) negative because percentages can only be negative. 
A) positive because of the law of demand. 
B) negative because of the law of demand. 
C) positive because of diminishing marginal utility. 
D) negative because percentages can only be negative.

Question 15

When economists want to obtain a measure of the responsiveness of quantity demanded to changes in price,they use

Accepted Answer

A) the slope of the demand curve. 
B) the price elasticity of demand. 
C) only the percentage change in quantity demanded. 
D) the cross-price elasticity of demand. 
A) the slope of the demand curve. 
B) the price elasticity of demand. 
C) only the percentage change in quantity demanded. 
D) the cross-price elasticity of demand.

Question 16

The price elasticity of demand would most likely be the lowest for

Accepted Answer

A) a McDonald's hamburger. 
B) salt. 
C) a Toyota sport utility vehicle. 
D) Shell gasoline. 
A) a McDonald's hamburger. 
B) salt. 
C) a Toyota sport utility vehicle. 
D) Shell gasoline.

Question 17

-In the above figure,over the price range P5 P6,demand is

Accepted Answer

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

Question 18

A 10 percent increase in the price of smartphones leads to a 10 percent decrease in the quantity demanded of smartphones.The absolute price elasticity of demand is

Accepted Answer

A) 3. 
B) 0.3. 
C) 1.0. 
D) 0.01. 
A) 3. 
B) 0.3. 
C) 1.0. 
D) 0.01.

Question 19

When demand is elastic,a decrease in price will

Accepted Answer

A) decrease total revenue. 
B) not change total revenue. 
C) increase total revenue. 
D) reduce quantity demanded. 
A) decrease total revenue. 
B) not change total revenue. 
C) increase total revenue. 
D) reduce quantity demanded.

Question 20

A 10 percent increase in the price of neckties leads to a 5 percent decrease in the quantity demanded of neckties.The absolute price elasticity of demand is

Accepted Answer

A) 3. 
B) 0.33. 
C) 0.5. 
D) 2. 
A) 3. 
B) 0.33. 
C) 0.5. 
D) 2.

Exam 6: Demand and Supply Elasticity

If a good has an absolute price elasticity of 2,the demand for the good is

A perfectly inelastic supply curve is

The word best associated with price elasticity of demand is

Total revenue is

A demand relationship that is a vertical line up from the quantity axis is

The price elasticity of supply is higher when

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.At a price below $5,the absolute price elasticity of demand is

Moving down a straight-line demand curve,the absolute price elasticity of demand

When demand is elastic,

-Refer to the above figure.The supply curve is

Wheat is sold in world markets,usually priced in terms of bushels.In the market for wheat,the price elasticity of demand for wheat would be expressed as

The absolute price elasticity of demand for a product for which annual expenditures make up a very small share of a typical consumer's budget is probably

Which of the following would NOT affect a good's price elasticity of demand?

The actual value of the price elasticity of demand is always

When economists want to obtain a measure of the responsiveness of quantity demanded to changes in price,they use

The price elasticity of demand would most likely be the lowest for

-In the above figure,over the price range P5 P6,demand is

A 10 percent increase in the price of smartphones leads to a 10 percent decrease in the quantity demanded of smartphones.The absolute price elasticity of demand is

When demand is elastic,a decrease in price will

A 10 percent increase in the price of neckties leads to a 5 percent decrease in the quantity demanded of neckties.The absolute price elasticity of demand is

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

-In the above figure,over the price range P₅ P₆,demand is