Question 1

If a one percent increase in the price of bananas leads to a one percent decrease in the quantity of bananas demanded,then the demand for bananas is

Accepted Answer

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

Question 2

If the absolute price elasticity of demand for a product is less than 1,then

Accepted Answer

A) consumers are relatively insensitive to price changes. 
B) consumers are relatively sensitive to price changes. 
C) there is a positive relationship between price changes and total revenue. 
D) producers are relatively insensitive to price changes. 
A) consumers are relatively insensitive to price changes. 
B) consumers are relatively sensitive to price changes. 
C) there is a positive relationship between price changes and total revenue. 
D) producers are relatively insensitive to price changes.

Question 3

Color television prices rise by 10 percent,and in response the quantity of those TVs supplied increases by 6 percent.The supply elasticity for color television sets in that price range is

Accepted Answer

A) 0.6. 
B) 1.66. 
C) 6.0. 
D) -1.66. 
A) 0.6. 
B) 1.66. 
C) 6.0. 
D) -1.66.

Question 4

Consider the following data:
Price of A Quantity Demanded of A
$5 6
$4 10
The absolute value of the price elasticity of demand for product A is

Accepted Answer

A) 0.44. 
B) 1.80. 
C) 0.56. 
D) 2.25. 
A) 0.44. 
B) 1.80. 
C) 0.56. 
D) 2.25.

Question 5

Which of the following statements is FALSE?

Accepted Answer

A) A perfectly inelastic supply curve is a vertical line. 
B) Time is an important consideration in determining supply elasticity. 
C) Price elasticity of supply can never equal 1. 
D) A horizontal supply curve is possible. 
A) A perfectly inelastic supply curve is a vertical line. 
B) Time is an important consideration in determining supply elasticity. 
C) Price elasticity of supply can never equal 1. 
D) A horizontal supply curve is possible.

Question 6

Which of the following is NOT characteristic of a good with elastic demand?

Accepted Answer

A) The absolute price elasticity of demand is less than 1. 
B) Total revenue decreases if price is increased. 
C) Buyers are relatively sensitive to price changes. 
D) The percentage change in quantity demanded is greater than the percentage change in price. 
A) The absolute price elasticity of demand is less than 1. 
B) Total revenue decreases if price is increased. 
C) Buyers are relatively sensitive to price changes. 
D) The percentage change in quantity demanded is greater than the percentage change in price.

Question 7

Owners of a coffee shop finds that they can sell 150 donuts a day when the price of a donut is $1.20.When they price donuts at $1,they sell 170 donuts.The absolute value of the price elasticity of demand for donuts is

Accepted Answer

A) 0.69. 
B) 1.45. 
C) 1.00. 
D) infinity. 
A) 0.69. 
B) 1.45. 
C) 1.00. 
D) infinity.

Question 8

A demand relationship in which the quantity demanded changes exactly in proportion to the change in price is

Accepted Answer

A) elastic. 
B) unit-elastic. 
C) inelastic. 
D) consistent with zero elasticity. 
A) elastic. 
B) unit-elastic. 
C) inelastic. 
D) consistent with zero elasticity.

Question 9

If the price of apples went up by 25 percent,which of the following values of the cross price elasticity for cars would be most reasonable to anticipate?

Accepted Answer

A) 0.0 
B) 1.2 
C) -2.5 
D) -1.0 
A) 0.0 
B) 1.2 
C) -2.5 
D) -1.0

Question 10

When two goods are substitutes for each other,the cross price elasticity of demand

Accepted Answer

A) will be negative. 
B) will be zero. 
C) may be either positive or negative. 
D) will be positive. 
A) will be negative. 
B) will be zero. 
C) may be either positive or negative. 
D) will be positive.

Question 11

An elastic response in the quantity of a good demanded would be caused by

Accepted Answer

A) the availability of many substitutes. 
B) a lack of substitutes. 
C) a lack of sensitivity to the good's price. 
D) the good representing a small portion of a person's budget. 
A) the availability of many substitutes. 
B) a lack of substitutes. 
C) a lack of sensitivity to the good's price. 
D) the good representing a small portion of a person's budget.

Question 12

What would you expect the cross price elasticity of iPods and online music downloads? Explain your answer.

Accepted Answer

The cross price elasticity of iPods and

Question 13

Which of the following is a determinant of the price elasticity of demand for a product?
I.The existence of substitute goods
II.The percentage of a consumer's total budget devoted to purchases of that commodity

Accepted Answer

A) I only 
B) II only 
C) Both I and II 
D) Neither I nor II 
A) I only 
B) II only 
C) Both I and II 
D) Neither I nor II

Question 14

The price elasticity of demand can be computed as

Accepted Answer

A) change in total utility/change in quantity. 
B) change in price/change in quantity demanded. 
C) percentage change in quantity demanded/percentage change in price. 
D) change in quantity demanded/change in price. 
A) change in total utility/change in quantity. 
B) change in price/change in quantity demanded. 
C) percentage change in quantity demanded/percentage change in price. 
D) change in quantity demanded/change in price.

Question 15

When demand is elastic,

Accepted Answer

A) changes in price and changes in total revenue move in the same direction. 
B) there is no relationship between changes in price and changes in total revenue. 
C) changes in price and changes in total revenue move in opposite directions. 
D) for any change in price,total revenue will not change. 
A) changes in price and changes in total revenue move in the same direction. 
B) there is no relationship between changes in price and changes in total revenue. 
C) changes in price and changes in total revenue move in opposite directions. 
D) for any change in price,total revenue will not change.

Question 16

-In the above figure,the range of unit elasticity occurs

Accepted Answer

A) on the vertical axis. 
B) on the horizontal axis. 
C) between point c and point d. 
D) below point e. 
A) on the vertical axis. 
B) on the horizontal axis. 
C) between point c and point d. 
D) below point e.

Question 17

When numerous but imperfect substitutes exist for a good,the demand for the good will tend to be

Accepted Answer

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

Question 18

The range to the left of the midpoint on a linear demand curve is

Accepted Answer

A) elastic. 
B) infinite. 
C) one. 
D) inelastic. 
A) elastic. 
B) infinite. 
C) one. 
D) inelastic.

Question 19

While the slope of the perfectly inelastic supply curve ________,the slope of the perfectly elastic supply curve ________.

Accepted Answer

A) is zero,approaches infinity 
B) approaches infinity,is zero 
C) is zero,is zero 
D) approaches infinity,approaches infinity 
A) is zero,approaches infinity 
B) approaches infinity,is zero 
C) is zero,is zero 
D) approaches infinity,approaches infinity

Question 20

$$\begin{array} { c c } 
\hline \begin{array} { c } 
\text { Price } \
\text { Per Unit }
\end{array} & \begin{array} { c } 
\text { Quantity Demanded } \
\text { Per Week }
\end{array} \
\hline \$ 10.00 & 25 \
9.50 & 30 \
9.00 & 35 \
8.50 & 40 \
8.00 & 45 \
7.50 & 50 \
7.00 & 55 \
6.50 & 60 \
6.00 & 65 \
5.50 & 70 \
5.00 & 75
\end{array}$$
-Refer to the above table.What is the absolute price elasticity of demand when a price rises from $9 to $9.50?

Accepted Answer

A) 0.35 
B) 0.55 
C) 2.57 
D) 2.85 
A) 0.35 
B) 0.55 
C) 2.57 
D) 2.85

Exam 6: Demand and Supply Elasticity

If a one percent increase in the price of bananas leads to a one percent decrease in the quantity of bananas demanded,then the demand for bananas is

If the absolute price elasticity of demand for a product is less than 1,then

Color television prices rise by 10 percent,and in response the quantity of those TVs supplied increases by 6 percent.The supply elasticity for color television sets in that price range is

Consider the following data: Price of A Quantity Demanded of A $5 6 $4 10 The absolute value of the price elasticity of demand for product A is

Which of the following statements is FALSE?

Which of the following is NOT characteristic of a good with elastic demand?

Owners of a coffee shop finds that they can sell 150 donuts a day when the price of a donut is $1.20.When they price donuts at $1,they sell 170 donuts.The absolute value of the price elasticity of demand for donuts is

A demand relationship in which the quantity demanded changes exactly in proportion to the change in price is

If the price of apples went up by 25 percent,which of the following values of the cross price elasticity for cars would be most reasonable to anticipate?

When two goods are substitutes for each other,the cross price elasticity of demand

An elastic response in the quantity of a good demanded would be caused by

What would you expect the cross price elasticity of iPods and online music downloads? Explain your answer.

Which of the following is a determinant of the price elasticity of demand for a product? I.The existence of substitute goods II.The percentage of a consumer's total budget devoted to purchases of that commodity

The price elasticity of demand can be computed as

When demand is elastic,

-In the above figure,the range of unit elasticity occurs

When numerous but imperfect substitutes exist for a good,the demand for the good will tend to be

The range to the left of the midpoint on a linear demand curve is

While the slope of the perfectly inelastic supply curve ________,the slope of the perfectly elastic supply curve ________.

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 a price rises from $9 to $9.50?

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

While the slope of the perfectly inelastic supply curve ,the slope of the perfectly elastic supply curve .