Question 1

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

Accepted Answer

A) quantity demanded is not very sensitive to price changes. 
B) demand is elastic. 
C) demand is unit-elastic. 
D) demand is inelastic. 
A) quantity demanded is not very sensitive to price changes. 
B) demand is elastic. 
C) demand is unit-elastic. 
D) demand is inelastic.

Question 2

Demand is said to be inelastic when

Accepted Answer

A) a given percentage change in price will result in a less than proportionate percentage change in the quantity demanded. 
B) demand exhibits zero responsiveness to price changes. 
C) small price increases will lead to zero quantity demanded. 
D) a given percentage change in price will result in a greater than proportionate percentage change in the quantity demanded. 
A) a given percentage change in price will result in a less than proportionate percentage change in the quantity demanded. 
B) demand exhibits zero responsiveness to price changes. 
C) small price increases will lead to zero quantity demanded. 
D) a given percentage change in price will result in a greater than proportionate percentage change in the quantity demanded.

Question 3

When demand is unit elastic,a change in price will cause

Accepted Answer

A) a change in total revenue in the same direction. 
B) a change in total revenue in the opposite direction. 
C) no change in total revenue. 
D) a change in total revenue in either direction depending on whether the price is increasing or decreasing. 
A) a change in total revenue in the same direction. 
B) a change in total revenue in the opposite direction. 
C) no change in total revenue. 
D) a change in total revenue in either direction depending on whether the price is increasing or decreasing.

Question 4

A 3 percent increase in the price of cotton leads to a 6 percent decrease in the quantity demanded of cotton.The absolute price elasticity of demand is

Accepted Answer

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

Question 5

When the consumer spends less than 3% of his income on a good,demand will be

Accepted Answer

A) elastic. 
B) unit-elastic. 
C) inelastic. 
D) elastic,unit-elastic or inelastic depending upon supply. 
A) elastic. 
B) unit-elastic. 
C) inelastic. 
D) elastic,unit-elastic or inelastic depending upon supply.

Question 6

Income elasticity relates to

Accepted Answer

A) a movement down a demand curve. 
B) a movement up a demand curve. 
C) a horizontal shift in a demand curve. 
D) the percentage change in quantity demanded divided by the percentage change in the price. 
A) a movement down a demand curve. 
B) a movement up a demand curve. 
C) a horizontal shift in a demand curve. 
D) the percentage change in quantity demanded divided by the percentage change in the price.

Question 7

Suppose the absolute price elasticity of demand for newsletter subscriptions is 1.3.In order to increase the total revenues from subscriptions,the publishers should

Accepted Answer

A) increase the price of the newsletters. 
B) reduce the price of the newsletters. 
C) sell the newsletters on the inelastic portion of its demand curve. 
D) keep the price the same. 
A) increase the price of the newsletters. 
B) reduce the price of the newsletters. 
C) sell the newsletters on the inelastic portion of its demand curve. 
D) keep the price the same.

Question 8

A perfectly inelastic demand curve is

Accepted Answer

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

Question 9

Inelastic demand implies

Accepted Answer

A) that a one percent increase in price results in a smaller than one percent decrease in quantity demanded. 
B) that a one percent increase in price results in a larger than one percent decrease in quantity demanded. 
C) that a one percent cut in price results in a larger than one percent increase in quantity demanded. 
D) that a one percent decrease or increase in price induces no change in total revenue. 
A) that a one percent increase in price results in a smaller than one percent decrease in quantity demanded. 
B) that a one percent increase in price results in a larger than one percent decrease in quantity demanded. 
C) that a one percent cut in price results in a larger than one percent increase in quantity demanded. 
D) that a one percent decrease or increase in price induces no change in total revenue.

Question 10

Changes in technology over time will result in

Accepted Answer

A) a more inelastic supply curve. 
B) a more elastic supply curve. 
C) a unitary elastic supply curve. 
D) no change in the elasticity of supply. 
A) a more inelastic supply curve. 
B) a more elastic supply curve. 
C) a unitary elastic supply curve. 
D) no change in the elasticity of supply.

Question 11

Why is the price elasticity of supply greater if there is more time for adjustment to an increase in the price of an item?

Accepted Answer

If more time is available for adjustment

Question 12

"Unit elasticity of demand can be found everywhere along a straight-line demand curve with a slope of -1." Do you agree or disagree? Explain.

Accepted Answer

Disagree.A vertical demand curve implies

Question 13

The price elasticity of demand measures

Accepted Answer

A) the responsiveness of quantity demanded to a change in price. 
B) the responsiveness of price to a change in competition. 
C) the change in quantity demanded due to a change in price of a substitute good. 
D) the change in price due to a change in demand. 
A) the responsiveness of quantity demanded to a change in price. 
B) the responsiveness of price to a change in competition. 
C) the change in quantity demanded due to a change in price of a substitute good. 
D) the change in price due to a change in demand.

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

Demand is said to be inelastic when

When demand is unit elastic,a change in price will cause

A 3 percent increase in the price of cotton leads to a 6 percent decrease in the quantity demanded of cotton.The absolute price elasticity of demand is

When the consumer spends less than 3% of his income on a good,demand will be

Income elasticity relates to

Suppose the absolute price elasticity of demand for newsletter subscriptions is 1.3.In order to increase the total revenues from subscriptions,the publishers should

A perfectly inelastic demand curve is

Inelastic demand implies

Changes in technology over time will result in

Why is the price elasticity of supply greater if there is more time for adjustment to an increase in the price of an item?

"Unit elasticity of demand can be found everywhere along a straight-line demand curve with a slope of -1." Do you agree or disagree? Explain.

The price elasticity of demand measures

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

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

Demand is said to be inelastic when

When demand is unit elastic,a change in price will cause

A 3 percent increase in the price of cotton leads to a 6 percent decrease in the quantity demanded of cotton.The absolute price elasticity of demand is

When the consumer spends less than 3% of his income on a good,demand will be

Income elasticity relates to

Suppose the absolute price elasticity of demand for newsletter subscriptions is 1.3.In order to increase the total revenues from subscriptions,the publishers should

A perfectly inelastic demand curve is

Inelastic demand implies

Changes in technology over time will result in

Why is the price elasticity of supply greater if there is more time for adjustment to an increase in the price of an item?

"Unit elasticity of demand can be found everywhere along a straight-line demand curve with a slope of -1." Do you agree or disagree? Explain.

The price elasticity of demand measures

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