Question 1

Which of the following is NOT a determinant of the price elasticity of demand?

Accepted Answer

A) the number of producers of the good 
B) the number of substitutes available to buyers 
C) the time consumers have to adjust to a price change 
D) expenditures on the item as a percentage of a consumer's total budget 
A) the number of producers of the good 
B) the number of substitutes available to buyers 
C) the time consumers have to adjust to a price change 
D) expenditures on the item as a percentage of a consumer's total budget

Question 2

Other things being equal,demand is less elastic

Accepted Answer

A) the more expensive the good is. 
B) the smaller the percentage of a total budget that a family spends on a good. 
C) the longer is the time period for adjustment. 
D) the more substitutes a good has. 
A) the more expensive the good is. 
B) the smaller the percentage of a total budget that a family spends on a good. 
C) the longer is the time period for adjustment. 
D) the more substitutes a good has.

Question 3

When the absolute price elasticity of demand equals 2.5,demand is

Accepted Answer

A) elastic. 
B) unit-elastic. 
C) inelastic. 
D) undetermined without more information. 
A) elastic. 
B) unit-elastic. 
C) inelastic. 
D) undetermined without more information.

Question 4

If total revenues rise when the market price increases,then we know that

Accepted Answer

A) demand is inelastic. 
B) demand is elastic. 
C) demand is unit-elastic. 
D) its demand has zero elasticity. 
A) demand is inelastic. 
B) demand is elastic. 
C) demand is unit-elastic. 
D) its demand has zero elasticity.

Question 5

$$\begin{array} { l r r r r r r } 
\text { Month } & \mathbf { P X } _ { \mathbf { X } } & \mathbf { Q X } & \mathbf { P } _ { \mathbf { Y } } & \mathbf { Q } & \mathbf { P } _ { \mathbf { Z } } & \mathbf { \text { QZ } } \
\hline \text { Jan } & \$ 10 & 100 & \$ 20 & 50 & \$ 25 & 200 \
\text { Feb } & 10 & 90 & 18 & 60 & 25 & 225 \
\text { Mar } & 10 & 70 & 15 & 90 & 25 & 275 \
\text { Apr } & 12 & 50 & 15 & 100 & 25 & 290 \
\text { May } & 15 & 25 & 15 & 120 & 25 & 320\\hline
\end{array}$$
-In the above table,the cross price elasticity of demand (using averages)for Z with good X,when PX increases from $12 to $15,is approximately equal to

Accepted Answer

A) +1.03 
B) +2.26. 
C) +0.44. 
D) -0.44. 
A) +1.03 
B) +2.26. 
C) +0.44. 
D) -0.44.

Question 6

An increase in total revenue will result if

Accepted Answer

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

Question 7

If demand is unit-elastic throughout the demand curve,then total revenues are

Accepted Answer

A) greater the higher the price. 
B) lower the higher the price. 
C) maximized at the midpoint of the demand curve. 
D) the same for any price the firm charges. 
A) greater the higher the price. 
B) lower the higher the price. 
C) maximized at the midpoint of the demand curve. 
D) the same for any price the firm charges.

Question 8

If a price decrease of a product significantly raises its revenues,then the absolute price elasticity of demand for that product must be

Accepted Answer

A) less than one. 
B) equal to one. 
C) greater than one. 
D) an example of unit elasticity. 
A) less than one. 
B) equal to one. 
C) greater than one. 
D) an example of unit elasticity.

Question 9

We generally expect the price elasticity of supply to be

Accepted Answer

A) zero. 
B) negative. 
C) positive. 
D) between -1 and +1. 
A) zero. 
B) negative. 
C) positive. 
D) between -1 and +1.

Question 10

The price elasticity of supply is higher when

Accepted Answer

A) the number of producers in the market increases over time. 
B) the product in question is a complementary good. 
C) the number of buyers in the market increases. 
D) producers have less time to adjust to price changes. 
A) the number of producers in the market increases over time. 
B) the product in question is a complementary good. 
C) the number of buyers in the market increases. 
D) producers have less time to adjust to price changes.

Question 11

The price elasticity of demand shows

Accepted Answer

A) the relationship between market price and household income. 
B) the proportionate amount by which the quantity demanded changes in response to a proportionate change in price. 
C) the quantity demanded at a given price. 
D) the proportionate amount by which the price changes in response to a proportionate change in quantity demanded. 
A) the relationship between market price and household income. 
B) the proportionate amount by which the quantity demanded changes in response to a proportionate change in price. 
C) the quantity demanded at a given price. 
D) the proportionate amount by which the price changes in response to a proportionate change in quantity demanded.

Question 12

For most goods and services the income elasticity of demand is

Accepted Answer

A) negative. 
B) positive. 
C) invisible. 
D) inverse. 
A) negative. 
B) positive. 
C) invisible. 
D) inverse.

Question 13

We expect the price elasticity of supply to be

Accepted Answer

A) negative. 
B) positive. 
C) between -1 and +1. 
D) zero. 
A) negative. 
B) positive. 
C) between -1 and +1. 
D) zero.

Question 14

Compared to the long-run absolute elasticity of demand,the short-run absolute elasticity of demand is

Accepted Answer

A) smaller. 
B) the same. 
C) larger. 
D) either smaller or larger,depending on other factors. 
A) smaller. 
B) the same. 
C) larger. 
D) either smaller or larger,depending on other factors.

Question 15

If the slope of a demand curve is constant,then we know that

Accepted Answer

A) elasticity of demand is also elastic everywhere. 
B) elasticity of demand is constant and elastic. 
C) elasticity of demand is inelastic everywhere. 
D) elasticity of demand varies along the demand curve. 
A) elasticity of demand is also elastic everywhere. 
B) elasticity of demand is constant and elastic. 
C) elasticity of demand is inelastic everywhere. 
D) elasticity of demand varies along the demand curve.

Question 16

If the price elasticity of demand for good A is -1,then a 1% increase in

Accepted Answer

A) consumer income will result in a 1% decrease in the demand for good A. 
B) consumer income will result in a 1% increase in the demand for good A. 
C) the market price of good A will result in a 1% increase in the quantity demanded of good A . 
D) the market price of good A will result in a 1% decrease in the quantity demanded of good A . 
A) consumer income will result in a 1% decrease in the demand for good A. 
B) consumer income will result in a 1% increase in the demand for good A. 
C) the market price of good A will result in a 1% increase in the quantity demanded of good A . 
D) the market price of good A will result in a 1% decrease in the quantity demanded of good A .

Question 17

When the absolute percentage change in quantity demanded is just equal to the percentage change in price,demand is

Accepted Answer

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

Question 18

At a price of $10,quantity demanded is 30 units.When the price rises to $11,quantity demanded is 24 units.What is the absolute price elasticity of demand?

Accepted Answer

A) 0.5 
B) 0.43 
C) 2.33 
D) 6.0 
A) 0.5 
B) 0.43 
C) 2.33 
D) 6.0

Question 19

The cross-price elasticity of demand of products "M" and "N" is zero.This implies that "M" and "N" are

Accepted Answer

A) substitute products. 
B) complementary products. 
C) independent products. 
D) unique goods,as the price elasticity of demand for one of them is zero. 
A) substitute products. 
B) complementary products. 
C) independent products. 
D) unique goods,as the price elasticity of demand for one of them is zero.

Question 20

-Use the above figure.When the price increases from $2 to $10,the absolute price elasticity of demand is

Accepted Answer

A) 0.67. 
B) 1.50. 
C) 0.25. 
D) 1.00. 
A) 0.67. 
B) 1.50. 
C) 0.25. 
D) 1.00.

Exam 6: Demand and Supply Elasticity

Which of the following is NOT a determinant of the price elasticity of demand?

Other things being equal,demand is less elastic

When the absolute price elasticity of demand equals 2.5,demand is

If total revenues rise when the market price increases,then we know that

Month Jan \ 10 100 \ 20 50 \ 25 200 Feb 10 90 18 60 25 225 Mar 10 70 15 90 25 275 Apr 12 50 15 100 25 290 May 15 25 15 120 25 320 -In the above table,the cross price elasticity of demand (using averages)for Z with good X,when PX increases from $12 to $15,is approximately equal to

An increase in total revenue will result if

If demand is unit-elastic throughout the demand curve,then total revenues are

If a price decrease of a product significantly raises its revenues,then the absolute price elasticity of demand for that product must be

We generally expect the price elasticity of supply to be

The price elasticity of supply is higher when

The price elasticity of demand shows

For most goods and services the income elasticity of demand is

We expect the price elasticity of supply to be

Compared to the long-run absolute elasticity of demand,the short-run absolute elasticity of demand is

If the slope of a demand curve is constant,then we know that

If the price elasticity of demand for good A is -1,then a 1% increase in

When the absolute percentage change in quantity demanded is just equal to the percentage change in price,demand is

At a price of $10,quantity demanded is 30 units.When the price rises to $11,quantity demanded is 24 units.What is the absolute price elasticity of demand?

The cross-price elasticity of demand of products "M" and "N" is zero.This implies that "M" and "N" are

-Use the above figure.When the price increases from $2 to $10,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

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