Question 1

Suppose that the cross-price elasticity between two goods is 1.5.If the price of one good increases by 10%,then the quantity demanded of the other good will:

Accepted Answer

A)  decrease by 15%. 
B)  increase by 15%. 
C)  decrease by 1.5%. 
D)  increase by 1.5%. 
A)  decrease by 15%. 
B)  increase by 15%. 
C)  decrease by 1.5%. 
D)  increase by 1.5%.

Question 2

The ratio of the percentage change in quantity demanded to the percentage change in price is the _____ elasticity of demand.

Accepted Answer

A)  price 
B)  quantity 
C)  income 
D)  cross-price 
A)  price 
B)  quantity 
C)  income 
D)  cross-price

Question 3

Suppose that the price of e-books is initially $20 but decreases to $15.The absolute value of the percentage change in price (by the midpoint method)is approximately _____%.

Accepted Answer

A)  28 
B)  10 
C)  5 
D)  15 
A)  28 
B)  10 
C)  5 
D)  15

Question 4

Assume that the price elasticity of demand for corn has been estimated to be 2.33.Flash floods destroy 10% of Canada's crop of corn.Which statement BEST describes how this will affect total expenditures on corn,all other things equal?

Accepted Answer

A)  Total expenditures will remain unchanged. 
B)  Total expenditures will fall. 
C)  Total expenditures will rise. 
D)  The information is insufficient to answer the question. 
A)  Total expenditures will remain unchanged. 
B)  Total expenditures will fall. 
C)  Total expenditures will rise. 
D)  The information is insufficient to answer the question.

Question 5

Given a price increase for any good,the price effect on revenue is always larger than the quantity effect on revenue.

Accepted Answer

A) True 
 B)False

Question 6

The price elasticity of demand for gasoline is likely to be higher in the long run than in the short run.

Accepted Answer

A) True 
 B)False

Question 7

The price elasticity of demand for gasoline in the long run has been estimated to be 1.5.If an extended war in the Middle East caused the price of oil (from which gasoline is made)to increase and remain high for a decade,how would that affect total expenditures on gasoline in the long run,all other things equal?

Accepted Answer

A)  Total expenditures would rise. 
B)  Total expenditures would fall. 
C)  Total expenditures would remain unchanged. 
D)  The information is insufficient to answer the question. 
A)  Total expenditures would rise. 
B)  Total expenditures would fall. 
C)  Total expenditures would remain unchanged. 
D)  The information is insufficient to answer the question.

Question 8

For a normal demand curve,the price elasticity of demand will:

Accepted Answer

A)  always be positive. 
B)  always be greater than 1. 
C)  usually be equal to 1. 
D)  always be negative. 
A)  always be positive. 
B)  always be greater than 1. 
C)  usually be equal to 1. 
D)  always be negative.

Suppose that the cross-price elasticity between two goods is 1.5.If the price of one good increases by 10%,then the quantity demanded of the other good will:

The ratio of the percentage change in quantity demanded to the percentage change in price is the _____ elasticity of demand.

Suppose that the price of e-books is initially $20 but decreases to $15.The absolute value of the percentage change in price (by the midpoint method)is approximately _____%.

Assume that the price elasticity of demand for corn has been estimated to be 2.33.Flash floods destroy 10% of Canada's crop of corn.Which statement BEST describes how this will affect total expenditures on corn,all other things equal?

Given a price increase for any good,the price effect on revenue is always larger than the quantity effect on revenue.

The price elasticity of demand for gasoline is likely to be higher in the long run than in the short run.

For a normal demand curve,the price elasticity of demand will:

First Principles

Economic Models

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve- Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Indifference Curve Analysis

Filters

Exam 6: Elasticity

Suppose that the cross-price elasticity between two goods is 1.5.If the price of one good increases by 10%,then the quantity demanded of the other good will:

The ratio of the percentage change in quantity demanded to the percentage change in price is the _____ elasticity of demand.

Suppose that the price of e-books is initially $20 but decreases to $15.The absolute value of the percentage change in price (by the midpoint method)is approximately _____%.

Assume that the price elasticity of demand for corn has been estimated to be 2.33.Flash floods destroy 10% of Canada's crop of corn.Which statement BEST describes how this will affect total expenditures on corn,all other things equal?

Given a price increase for any good,the price effect on revenue is always larger than the quantity effect on revenue.

The price elasticity of demand for gasoline is likely to be higher in the long run than in the short run.

For a normal demand curve,the price elasticity of demand will:

First Principles

Economic Models

Supply and Demand

Consumer and Producer Surplus

Price Controls and Quotas

Taxes

International Trade

Decision Making by Individuals and Firms

The Rational Consumer

Behind the Supply Curve- Inputs and Costs

Perfect Competition and the Supply Curve

Monopoly

Oligopoly

Monopolistic Competition

Externalities

Public Goods and Common Resources

The Economics of the Welfare State

Factor Markets and the Distribution of Income

Uncertainty, risk, and Private Information

Graphs in Economics

Consumer Preferences

Indifference Curve Analysis

Filters