Question 1

The result of the calculation of the price elasticity of demand is

Accepted Answer

A) always positive. 
B) always negative. 
C) sometimes positive,sometimes negative. 
D) always greater than one. 
A) always positive. 
B) always negative. 
C) sometimes positive,sometimes negative. 
D) always greater than one.

Question 2

The demand curve for petroleum should be

Accepted Answer

A) more elastic in the long run than in the short run. 
B) less elastic in the long run than in the short run. 
C) as elastic in the long run as it is in the short run. 
D) more or less elastic in the long run versus the short run depending upon supply conditions. 
A) more elastic in the long run than in the short run. 
B) less elastic in the long run than in the short run. 
C) as elastic in the long run as it is in the short run. 
D) more or less elastic in the long run versus the short run depending upon supply conditions.

Question 3

The greater is the absolute price elasticity of demand,the

Accepted Answer

A) larger is the responsiveness of quantity demanded to the price change. 
B) smaller is the responsiveness to a price change. 
C) larger is the income of the buyer. 
D) higher is the change in demand to an income change. 
A) larger is the responsiveness of quantity demanded to the price change. 
B) smaller is the responsiveness to a price change. 
C) larger is the income of the buyer. 
D) higher is the change in demand to an income change.

Question 4

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

Accepted Answer

A) In a range of prices below $6.00 
B) In a range of prices above $6.00 
C) In a range of prices between $5 and $1 
D) In a range of prices above $9.00 
A) In a range of prices below $6.00 
B) In a range of prices above $6.00 
C) In a range of prices between $5 and $1 
D) In a range of prices above $9.00

Question 5

If the market price of a product falls and as a result total revenue of firms falls,we can conclude that

Accepted Answer

A) demand is elastic in this price range. 
B) the product's price is above the midpoint of its demand curve. 
C) demand is inelastic in this price range. 
D) the demand curve is horizontal. 
A) demand is elastic in this price range. 
B) the product's price is above the midpoint of its demand curve. 
C) demand is inelastic in this price range. 
D) the demand curve is horizontal.

Question 6

If the cross price elasticity of demand between two goods is positive,then the two goods are

Accepted Answer

A) substitutes. 
B) complements. 
C) independent. 
D) unrelated. 
A) substitutes. 
B) complements. 
C) independent. 
D) unrelated.

Question 7

The price of X falls by ten percent,and the quantity demanded of X increases by ten percent.Meanwhile,the quantity demanded of Y increases by ten percent too.We would conclude that

Accepted Answer

A) demand for X is elastic,and X and Y are substitutes. 
B) demand for X is elastic,and X and Y are complements. 
C) demand for X is unit-elastic,and X and Y are complements. 
D) demand for X is inelastic,and X and Y are unrelated. 
A) demand for X is elastic,and X and Y are substitutes. 
B) demand for X is elastic,and X and Y are complements. 
C) demand for X is unit-elastic,and X and Y are complements. 
D) demand for X is inelastic,and X and Y are unrelated.

Question 8

An absolute price elasticity of demand equal to 0.4 indicates that a

Accepted Answer

A) 4 percent increase in price leads to a 10 percent decrease in quantity demanded. 
B) 1 percent increase in price leads to a 4 percent decrease in quantity demanded. 
C) 0.4 percent decrease in price leads to a 1 percent increase in quantity demanded. 
D) 10 percent decrease in price leads to a 4 percent increase in quantity demanded. 
A) 4 percent increase in price leads to a 10 percent decrease in quantity demanded. 
B) 1 percent increase in price leads to a 4 percent decrease in quantity demanded. 
C) 0.4 percent decrease in price leads to a 1 percent increase in quantity demanded. 
D) 10 percent decrease in price leads to a 4 percent increase in quantity demanded.

Question 9

Suppose the short-run supply curve is a straight line of slope +1 that intersects the origin.The long-run supply curve will be

Accepted Answer

A) horizontal. 
B) steeper. 
C) shallower. 
D) vertical. 
A) horizontal. 
B) steeper. 
C) shallower. 
D) vertical.

Question 10

$$\begin{array} { r r r r r r } 
\text { Px } & \text { Qx } & \text { Py } & \text { Qy } & \text { Pz } & \text { Qz } \
\hline 10 & 100 & \$ 20 & 50 & \$ 25 & 200 \
10 & 90 & 18 & 60 & 25 & 225 \
10 & 70 & 15 & 90 & 25 & 275 \
12 & 50 & 15 & 100 & 25 & 290 \
15 & 25 & 15 & 120 & 25 & 320\\hline
\end{array}$$
-Refer to the above table.The price of Y decreases from $18 to $15.What is the cross price elasticity of demand between Y and X?

Accepted Answer

A) -0.73 
B) -1.0 
C) +1.38 
D) +1.83 
A) -0.73 
B) -1.0 
C) +1.38 
D) +1.83

Question 11

-Use the above figure.Which graph depicts substitute goods?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 12

For a linear demand curve,where is the amount of total expenditures on a good maximized?

Accepted Answer

For a linear demand curve,total expendit

Question 13

If a 5 percent change in the price of a good elicited a 5 percent change in the quantity demanded of the good,we would say that over this range of prices the good has a(n)

Accepted Answer

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

Question 14

When the price of a soft drink from the campus vending machine was $0.60 per can,100 cans were sold each day.After the price increased to $0.75 per can,sales dropped to 85 cans per day.Over this range,the absolute price elasticity of demand for soft drinks was approximately equal to

Accepted Answer

A) 0.15. 
B) 0.60. 
C) 0.73. 
D) 1.67. 
A) 0.15. 
B) 0.60. 
C) 0.73. 
D) 1.67.

Question 15

If the price of one good increases,and as a result the demand for another good increases,the goods are

Accepted Answer

A) substitutes. 
B) normal goods. 
C) complements. 
D) inferior goods. 
A) substitutes. 
B) normal goods. 
C) complements. 
D) inferior goods.

Question 16

If your income rises by 25 percent and,as a result,you buy fewer packages of Ramen Noodles,then Ramen Noodles are a(n)

Accepted Answer

A) substitute. 
B) normal good. 
C) complement. 
D) inferior good. 
A) substitute. 
B) normal good. 
C) complement. 
D) inferior good.

Question 17

After full adjustment to a price change has occurred,the absolute price elasticity of demand for an item is equal to 1.In the short run,the absolute price elasticity of demand for the item was probably

Accepted Answer

A) less than 0. 
B) greater than 0. 
C) less than 1. 
D) greater than 1. 
A) less than 0. 
B) greater than 0. 
C) less than 1. 
D) greater than 1.

Question 18

Two items which have a negative cross price elasticity of demand are referred to as

Accepted Answer

A) luxury goods. 
B) inferior goods. 
C) substitutes. 
D) complements. 
A) luxury goods. 
B) inferior goods. 
C) substitutes. 
D) complements.

Question 19

If the quantity supplied of candy increases by 10% when the price of candy increases by 20%,which of the following is true?

Accepted Answer

A) Supply for candy is elastic,and price elasticity of supply = 2.0. 
B) Supply for candy is inelastic,and price elasticity of supply = 2.0. 
C) Supply for candy is elastic,and price elasticity of supply = 0.5. 
D) Supply for candy is inelastic,and price elasticity of supply = 0.5. 
A) Supply for candy is elastic,and price elasticity of supply = 2.0. 
B) Supply for candy is inelastic,and price elasticity of supply = 2.0. 
C) Supply for candy is elastic,and price elasticity of supply = 0.5. 
D) Supply for candy is inelastic,and price elasticity of supply = 0.5.

Question 20

Income elasticity of demand reflects

Accepted Answer

A) the change in total quantity demanded divided by the total change in income. 
B) the responsiveness of the quantity demanded to changes in income,adjusting its relative price so real income does not change. 
C) the responsiveness of income of producers to a change in quantity sold of the good. 
D) the responsiveness of demand to changes in income. 
A) the change in total quantity demanded divided by the total change in income. 
B) the responsiveness of the quantity demanded to changes in income,adjusting its relative price so real income does not change. 
C) the responsiveness of income of producers to a change in quantity sold of the good. 
D) the responsiveness of demand to changes in income.

Exam 6: Demand and Supply Elasticity

The result of the calculation of the price elasticity of demand is

The demand curve for petroleum should be

The greater is the absolute price elasticity of demand,the

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.For which prices is demand inelastic?

If the market price of a product falls and as a result total revenue of firms falls,we can conclude that

If the cross price elasticity of demand between two goods is positive,then the two goods are

The price of X falls by ten percent,and the quantity demanded of X increases by ten percent.Meanwhile,the quantity demanded of Y increases by ten percent too.We would conclude that

An absolute price elasticity of demand equal to 0.4 indicates that a

Suppose the short-run supply curve is a straight line of slope +1 that intersects the origin.The long-run supply curve will be

Px Qx Py Qy Pz Qz 10 100 \ 20 50 \ 25 200 10 90 18 60 25 225 10 70 15 90 25 275 12 50 15 100 25 290 15 25 15 120 25 320 -Refer to the above table.The price of Y decreases from $18 to $15.What is the cross price elasticity of demand between Y and X?

-Use the above figure.Which graph depicts substitute goods?

For a linear demand curve,where is the amount of total expenditures on a good maximized?

If a 5 percent change in the price of a good elicited a 5 percent change in the quantity demanded of the good,we would say that over this range of prices the good has a(n)

When the price of a soft drink from the campus vending machine was $0.60 per can,100 cans were sold each day.After the price increased to $0.75 per can,sales dropped to 85 cans per day.Over this range,the absolute price elasticity of demand for soft drinks was approximately equal to

If the price of one good increases,and as a result the demand for another good increases,the goods are

If your income rises by 25 percent and,as a result,you buy fewer packages of Ramen Noodles,then Ramen Noodles are a(n)

After full adjustment to a price change has occurred,the absolute price elasticity of demand for an item is equal to 1.In the short run,the absolute price elasticity of demand for the item was probably

Two items which have a negative cross price elasticity of demand are referred to as

If the quantity supplied of candy increases by 10% when the price of candy increases by 20%,which of the following is true?

Income elasticity of demand reflects

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

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