Question 1

If the prices of computer tablets rise,we would expect the number of tablet covers purchased to

Accepted Answer

A) increase. 
B) decrease. 
C) be equal to ten. 
D) be equal to one. 
A) increase. 
B) decrease. 
C) be equal to ten. 
D) be equal to one.

Question 2

If a good has an absolute price elasticity of 0,the demand for the good is

Accepted Answer

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

Question 3

-In the above figure,over the price range P1P2,demand is

Accepted Answer

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

Question 4

If the price elasticity of supply of television sets is constant and equal to 3,a 10 percent increase in price will result in a change in quantity supplied equal to

Accepted Answer

A) 3 1/3 percent. 
B) 30 percent. 
C) 1/3 percent. 
D) -30 percent. 
A) 3 1/3 percent. 
B) 30 percent. 
C) 1/3 percent. 
D) -30 percent.

Question 5

If the cross price elasticity of demand between Los Angeles Lakers professional basketball tickets and Los Angeles Dodgers professional baseball tickets is positive,then the two goods are

Accepted Answer

A) substitutes. 
B) unrelated. 
C) complements. 
D) not related. 
A) substitutes. 
B) unrelated. 
C) complements. 
D) not related.

Question 6

A measure of the responsiveness of the demand for one good to the percentage change in the price of another good is

Accepted Answer

A) price elasticity of demand. 
B) price elasticity of supply. 
C) cross price elasticity of demand. 
D) income elasticity. 
A) price elasticity of demand. 
B) price elasticity of supply. 
C) cross price elasticity of demand. 
D) income elasticity.

Question 7

Graphically,what is the main difference between the measure of income elasticity of demand as opposed to the measure of price elasticity of demand?

Accepted Answer

Graphically,income elasticity of demand

Question 8

A value of the absolute price elasticity of demand equal to 2.5 indicates that

Accepted Answer

A) a 5% decrease in price leads to a 2% increase in quantity demanded. 
B) a 2% decrease in price leads to a 25% increase in quantity demanded. 
C) a 1% decrease in price leads to a 2.5% increase in quantity demanded. 
D) a 0.25% decrease in price leads to a 1% increase in quantity. 
A) a 5% decrease in price leads to a 2% increase in quantity demanded. 
B) a 2% decrease in price leads to a 25% increase in quantity demanded. 
C) a 1% decrease in price leads to a 2.5% increase in quantity demanded. 
D) a 0.25% decrease in price leads to a 1% increase in quantity.

Question 9

"The slope of the demand curve gives the elasticity of demand." Do you agree or disagree? Why?

Accepted Answer

Disagree.The slope gives absol

Question 10

Explain the three possible ranges for price elasticity of demand.

Accepted Answer

If the percentage change in quantity dem

Question 11

When the price of sausages is $2.00 per pound,consumers buy 50 pounds of hamburger.When the price of sausages rises to $3.00 per pound,60 pounds of hamburger are purchased.The cross price elasticity of demand between sausages and hamburger is approximately equal to

Accepted Answer

A) +0.04. 
B) -0.45. 
C) +2.20. 
D) +0.45. 
A) +0.04. 
B) -0.45. 
C) +2.20. 
D) +0.45.

Question 12

When demand is perfectly inelastic,an increase in price will

Accepted Answer

A) leave total revenue unchanged. 
B) increase total revenue. 
C) decrease total revenue. 
D) either increase total revenue or decrease total revenue,but it is impossible to tell which. 
A) leave total revenue unchanged. 
B) increase total revenue. 
C) decrease total revenue. 
D) either increase total revenue or decrease total revenue,but it is impossible to tell which.

Question 13

"Higher prices always yield higher revenues." Do you agree or disagree? Why?

Accepted Answer

Disagree.Higher prices generate higher r

Question 14

If the price of gasoline increases from $2.50 per gallon to $3.00 per gallon and the quantity demanded goes down from 120 million gallons per week to 115 million gallons per week,the absolute value of price elasticity of demand in that price range is approximately

Accepted Answer

A) 0.23. 
B) 4.35. 
C) 0.93. 
D) 2.34. 
A) 0.23. 
B) 4.35. 
C) 0.93. 
D) 2.34.

Question 15

If an individual's income rises 40 percent and his clothing purchases increase 50 percent in response,the income elasticity for clothing by the individual is

Accepted Answer

A) -0.8. 
B) 0.8. 
C) 1.25. 
D) -1.25. 
A) -0.8. 
B) 0.8. 
C) 1.25. 
D) -1.25.

Question 16

Suppose that the income elasticity of demand for peanut butter is 0.75.Which of the following is true?

Accepted Answer

A) Peanut butter is a normal good,because income elasticity is positive. 
B) Peanut butter is an inferior good,because income elasticity is positive. 
C) Peanut butter is a normal good,because income elasticity is less than 1. 
D) Peanut butter is an inferior good,because income elasticity is less than 1. 
A) Peanut butter is a normal good,because income elasticity is positive. 
B) Peanut butter is an inferior good,because income elasticity is positive. 
C) Peanut butter is a normal good,because income elasticity is less than 1. 
D) Peanut butter is an inferior good,because income elasticity is less than 1.

Question 17

Suppose that when the price of milk rises 20%,the quantity demanded of milk falls 10%.Based on this information,what is the approximate absolute price elasticity of demand for milk?

Accepted Answer

A) 0.05 
B) 0.2 
C) 0.5 
D) 2.0 
A) 0.05 
B) 0.2 
C) 0.5 
D) 2.0

Question 18

When two goods are unrelated,

Accepted Answer

A) the demands for both goods will be inelastic. 
B) cross price elasticity of demand will be 0. 
C) cross price elasticity of demand will be negative. 
D) cross price elasticity of demand will be positive. 
A) the demands for both goods will be inelastic. 
B) cross price elasticity of demand will be 0. 
C) cross price elasticity of demand will be negative. 
D) cross price elasticity of demand will be positive.

Question 19

Which of the following is NOT a factor that determines the price elasticity of demand?

Accepted Answer

A) The amount that suppliers have made available 
B) The percentage of a consumer's total budget spent on the good 
C) The existence of substitutes 
D) The length of time allowed for adjustments to change in the price of the commodities 
A) The amount that suppliers have made available 
B) The percentage of a consumer's total budget spent on the good 
C) The existence of substitutes 
D) The length of time allowed for adjustments to change in the price of the commodities

Question 20

The slope of the perfectly inelastic demand curve is ________,the slope of the perfectly elastic demand curve is ________.

Accepted Answer

A) undefined,zero 
B) one,one 
C) zero,undefined 
D) one,zero 
A) undefined,zero 
B) one,one 
C) zero,undefined 
D) one,zero

Exam 6: Demand and Supply Elasticity

If the prices of computer tablets rise,we would expect the number of tablet covers purchased to

If a good has an absolute price elasticity of 0,the demand for the good is

-In the above figure,over the price range P1P2,demand is

If the price elasticity of supply of television sets is constant and equal to 3,a 10 percent increase in price will result in a change in quantity supplied equal to

If the cross price elasticity of demand between Los Angeles Lakers professional basketball tickets and Los Angeles Dodgers professional baseball tickets is positive,then the two goods are

A measure of the responsiveness of the demand for one good to the percentage change in the price of another good is

Graphically,what is the main difference between the measure of income elasticity of demand as opposed to the measure of price elasticity of demand?

A value of the absolute price elasticity of demand equal to 2.5 indicates that

"The slope of the demand curve gives the elasticity of demand." Do you agree or disagree? Why?

Explain the three possible ranges for price elasticity of demand.

When the price of sausages is $2.00 per pound,consumers buy 50 pounds of hamburger.When the price of sausages rises to $3.00 per pound,60 pounds of hamburger are purchased.The cross price elasticity of demand between sausages and hamburger is approximately equal to

When demand is perfectly inelastic,an increase in price will

"Higher prices always yield higher revenues." Do you agree or disagree? Why?

If the price of gasoline increases from $2.50 per gallon to $3.00 per gallon and the quantity demanded goes down from 120 million gallons per week to 115 million gallons per week,the absolute value of price elasticity of demand in that price range is approximately

If an individual's income rises 40 percent and his clothing purchases increase 50 percent in response,the income elasticity for clothing by the individual is

Suppose that the income elasticity of demand for peanut butter is 0.75.Which of the following is true?

Suppose that when the price of milk rises 20%,the quantity demanded of milk falls 10%.Based on this information,what is the approximate absolute price elasticity of demand for milk?

When two goods are unrelated,

Which of the following is NOT a factor that determines the price elasticity of demand?

The slope of the perfectly inelastic demand curve is ________,the slope of the perfectly elastic demand curve 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

Filters

-In the above figure,over the price range P₁P₂,demand is

The slope of the perfectly inelastic demand curve is ,the slope of the perfectly elastic demand curve is .