Question 1

A perfectly elastic 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 2

A product that has an elastic demand curve has all of the following characteristics EXCEPT

Accepted Answer

A) it has many substitutes. 
B) a consumer can wait to buy the product. 
C) it has few or no substitutes. 
D) it is a large part of a consumer's income. 
A) it has many substitutes. 
B) a consumer can wait to buy the product. 
C) it has few or no substitutes. 
D) it is a large part of a consumer's income.

Question 3

The income elasticity of demand is

Accepted Answer

A) the percentage change in demand divided by the percentage change in income. 
B) the change in income divided by the percentage change in price. 
C) the change in quantity demanded divided by the change in price. 
D) the percentage change in income divided by the percentage change in quantity demanded. 
A) the percentage change in demand divided by the percentage change in income. 
B) the change in income divided by the percentage change in price. 
C) the change in quantity demanded divided by the change in price. 
D) the percentage change in income divided by the percentage change in quantity demanded.

Question 4

$$\begin{array} { c c } 
\hline \begin{array} { c } 
\text { Price } \
\text { Per Unit }
\end{array} & \begin{array} { c } 
\text { Quantity Demanded } \
\text { Per Week }
\end{array} \
\hline \$ 10.00 & 25 \
9.50 & 30 \
9.00 & 35 \
8.50 & 40 \
8.00 & 45 \
7.50 & 50 \
7.00 & 55 \
6.50 & 60 \
6.00 & 65 \
5.50 & 70 \
5.00 & 75
\end{array}$$
-Refer to the above table.What is the absolute price elasticity of demand if a price falls from $7.50 to $7?

Accepted Answer

A) 10 
B) 1.38 
C) 0.724 
D) 0.1 
A) 10 
B) 1.38 
C) 0.724 
D) 0.1

Question 5

When the consumer spends a large portion of her 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

The absolute price elasticity of demand for a product that has many good substitutes is probably

Accepted Answer

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

Question 7

Suppose the quantity demanded of ice cream cones increases from 400 to 425 cones a day when the price is reduced from $1.50 to $1.25.In this situation,the elasticity of demand,calculated using the average method,is

Accepted Answer

A) 3. 
B) 1. 
C) 0.33. 
D) 1.33. 
A) 3. 
B) 1. 
C) 0.33. 
D) 1.33.

Question 8

When many substitutes exist for a good,demand will be

Accepted Answer

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

Question 9

If the absolute price elasticity of demand is 2,a 10 percent increase in the price will cause

Accepted Answer

A) the quantity demanded to decrease by 2 percent. 
B) the quantity demanded to decrease by 20 percent. 
C) the quantity demanded to decrease by 5 percent. 
D) the quantity demanded to decrease by 0.2 percent. 
A) the quantity demanded to decrease by 2 percent. 
B) the quantity demanded to decrease by 20 percent. 
C) the quantity demanded to decrease by 5 percent. 
D) the quantity demanded to decrease by 0.2 percent.

Question 10

If the supply curve is vertical,then supply is

Accepted Answer

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

Question 11

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

Accepted Answer

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

Question 12

The longer the time period that suppliers have to adjust to price changes,the

Accepted Answer

A) greater will be the price elasticity of supply. 
B) lower will be the price elasticity of supply. 
C) lower will be the price elasticity of demand. 
D) greater will be the price elasticity of demand. 
A) greater will be the price elasticity of supply. 
B) lower will be the price elasticity of supply. 
C) lower will be the price elasticity of demand. 
D) greater will be the price elasticity of demand.

Question 13

"Price elasticity measures how many more units of a good that consumers will buy given a decrease in price." Do you agree or disagree? Explain.

Accepted Answer

Disagree.Price elasticity meas

Question 14

When Mary earned $3,200 per month,she bought 2 concert tickets each month.Now her monthly income is $5,600,and the number of concert tickets she purchases has risen to 3 per month.Mary's income elasticity of demand for concert tickets equals ________ and the tickets are a(n)________ good for Mary.

Accepted Answer

A) -1.36; normal 
B) -0.21; inferior 
C) +0.21; complementary 
D) +0.73; normal 
A) -1.36; normal 
B) -0.21; inferior 
C) +0.21; complementary 
D) +0.73; normal

Question 15

An inferior good has an income elasticity of demand that is

Accepted Answer

A) positive. 
B) negative. 
C) positive but less than 1. 
D) zero. 
A) positive. 
B) negative. 
C) positive but less than 1. 
D) zero.

Question 16

Explain why an increase in price can raise total revenues if the price elasticity of demand is inelastic.

Accepted Answer

Total revenues equal price times quantit

Question 17

In the long run,the supply curve

Accepted Answer

A) is more elastic than it is in the short run. 
B) is less elastic than it is in the short run. 
C) exhibits no systematic sequence of changes in elasticity. 
D) exhibits no change in elasticity at all. 
A) is more elastic than it is in the short run. 
B) is less elastic than it is in the short run. 
C) exhibits no systematic sequence of changes in elasticity. 
D) exhibits no change in elasticity at all.

Question 18

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

Accepted Answer

A) $10.00. 
B) $7.50. 
C) $7.00. 
D) $5.00. 
A) $10.00. 
B) $7.50. 
C) $7.00. 
D) $5.00.

Question 19

When there are very few substitutes 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 20

The quantity of raspberries sold at a local store increases from 100 pints to 1,500 pints when the price is reduced from $4.00 to $1.00.In this situation,the absolute price elasticity of demand for raspberries is approximately

Accepted Answer

A) 0.69. 
B) 6.7. 
C) 1.46. 
D) 4.3. 
A) 0.69. 
B) 6.7. 
C) 1.46. 
D) 4.3.

Exam 6: Demand and Supply Elasticity

A perfectly elastic supply curve is

A product that has an elastic demand curve has all of the following characteristics EXCEPT

The income elasticity of demand is

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 if a price falls from $7.50 to $7?

When the consumer spends a large portion of her income on a good,demand will be

The absolute price elasticity of demand for a product that has many good substitutes is probably

Suppose the quantity demanded of ice cream cones increases from 400 to 425 cones a day when the price is reduced from $1.50 to $1.25.In this situation,the elasticity of demand,calculated using the average method,is

When many substitutes exist for a good,demand will be

If the absolute price elasticity of demand is 2,a 10 percent increase in the price will cause

If the supply curve is vertical,then supply is

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

The longer the time period that suppliers have to adjust to price changes,the

"Price elasticity measures how many more units of a good that consumers will buy given a decrease in price." Do you agree or disagree? Explain.

When Mary earned $3,200 per month,she bought 2 concert tickets each month.Now her monthly income is $5,600,and the number of concert tickets she purchases has risen to 3 per month.Mary's income elasticity of demand for concert tickets equals ________ and the tickets are a(n)________ good for Mary.

An inferior good has an income elasticity of demand that is

Explain why an increase in price can raise total revenues if the price elasticity of demand is inelastic.

In the long run,the 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.Demand is least price elastic at a price of

When there are very few substitutes for a good,the demand for the good will tend to be

The quantity of raspberries sold at a local store increases from 100 pints to 1,500 pints when the price is reduced from $4.00 to $1.00.In this situation,the absolute price elasticity of demand for raspberries is approximately

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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When Mary earned $3,200 per month,she bought 2 concert tickets each month.Now her monthly income is $5,600,and the number of concert tickets she purchases has risen to 3 per month.Mary's income elasticity of demand for concert tickets equals and the tickets are a(n) good for Mary.