Question 1

A vertical demand curve has

Accepted Answer

A)  infinite elasticity. 
B)  positive elasticity. 
C)  zero elasticity. 
D)  negative elasticity. 
A)  infinite elasticity. 
B)  positive elasticity. 
C)  zero elasticity. 
D)  negative elasticity.

Question 2

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

Accepted Answer

A)  existence of substitutes 
B)  expenditures on the good as a share of a consumer's budget 
C)  the amount of time allowed for adjustment to changes in the price of the commodity 
D)  the price level in a country 
A)  existence of substitutes 
B)  expenditures on the good as a share of a consumer's budget 
C)  the amount of time allowed for adjustment to changes in the price of the commodity 
D)  the price level in a country

Question 3

When demand is unit elastic, a 7 percent change in the price of the good

Accepted Answer

A)  will cause a change in quantity demanded of less than 7 percent. 
B)  will cause a change in quantity demanded equal to 7 percent. 
C)  will cause a change in quantity demanded greater than 7 percent. 
D)  will not cause any change in quantity demanded. 
A)  will cause a change in quantity demanded of less than 7 percent. 
B)  will cause a change in quantity demanded equal to 7 percent. 
C)  will cause a change in quantity demanded greater than 7 percent. 
D)  will not cause any change in quantity demanded.

Question 4

Even though price elasticity of demand is always ________, by convention its absolute value is always discussed as a ________.

Accepted Answer

A)  negative; prime number 
B)  positive; negative number 
C)  a fraction; whole number 
D)  negative; positive number 
A)  negative; prime number 
B)  positive; negative number 
C)  a fraction; whole number 
D)  negative; positive number

Question 5

When total revenue and price are directly related, demand is

Accepted Answer

A)  unit-elastic. 
B)  inelastic. 
C)  elastic. 
D)  not related. 
A)  unit-elastic. 
B)  inelastic. 
C)  elastic. 
D)  not related.

Question 6

A supply curve that is parallel to the quantity axis is

Accepted Answer

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

Question 7

When the Gizmo Company could sell a gizmo for $10, it produced 2,500 per month. More recently, the price of a gizmo has fallen to $9 and so Gizmo is only producing 2,000 units per month. What is the price elasticity of supply for gizmos?

Accepted Answer

A)  0.47 
B)  -0.47 
C)  -2.11 
D)  2.11 
A)  0.47 
B)  -0.47 
C)  -2.11 
D)  2.11

Question 8

In which of the following situations is the absolute price elasticity of demand for an item most likely to exceed a value of 1?

Accepted Answer

A)  when there are very few close substitutes for the item 
B)  when there are very few producers of the item 
C)  when the item's share of expenses in consumers' budgets is very small 
D)  when there is considerable time to adjust to a change in the price of the item 
A)  when there are very few close substitutes for the item 
B)  when there are very few producers of the item 
C)  when the item's share of expenses in consumers' budgets is very small 
D)  when there is considerable time to adjust to a change in the price of the item

Question 9

If two goods are complements,

Accepted Answer

A)  the demands for both goods will be elastic. 
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 elastic. 
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 10

The longer the time frame involved, the more likely it is that the demand will be relatively

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  steep. 
D)  flat. 
A)  elastic. 
B)  inelastic. 
C)  steep. 
D)  flat.

Question 11

The paintings of a world famous artist Vincent Van Gogh have a price elasticity of supply

Accepted Answer

A)  equal to 2.0. 
B)  equal to 1.0. 
C)  close to 0.0. 
D)  approaching infinity. 
A)  equal to 2.0. 
B)  equal to 1.0. 
C)  close to 0.0. 
D)  approaching infinity.

Question 12

When Frank's income was $100 per week, 10 units of good A were demanded. Now his income is $150 per week and 12 units of good A are demanded. Using the percentage change formula, the income elasticity of demand for good A equals

Accepted Answer

A)  0.45. 
B)  0.40. 
C)  2.20. 
D)  2.50. 
A)  0.45. 
B)  0.40. 
C)  2.20. 
D)  2.50.

Question 13

Use the above table. Based on the information in the table, artisan bread is a(n)
-Use the above table. Based on the information in the table, jam is a(n)

Accepted Answer

A)  normal good. 
B)  necessary good. 
C)  inferior good. 
D)  negative good. 
A)  normal good. 
B)  necessary good. 
C)  inferior good. 
D)  negative good.

Question 14

If the price of apples went down by 20 percent, which of the following values of the cross price elasticity for boats would be most reasonable to anticipate?

Accepted Answer

A)  0.0 
B)  2.0 
C)  -2.0 
D)  -20 
A)  0.0 
B)  2.0 
C)  -2.0 
D)  -20

Question 15

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

Accepted Answer

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

Question 16

Suppose that the absolute price elasticity of demand for hamburger is 1.5 and that the absolute price elasticity of demand for steak is 2.5. Then the absolute price elasticity of demand for beef will be

Accepted Answer

A)  less than 1.5. 
B)  more than 2.5. 
C)  between 1.5 and 2.5. 
D)  equal to 1.5. 
A)  less than 1.5. 
B)  more than 2.5. 
C)  between 1.5 and 2.5. 
D)  equal to 1.5.

Question 17

When quantity supplied is NOT very responsive to a change in price, supply is

Accepted Answer

A)  elastic. 
B)  unit-elastic. 
C)  inelastic. 
D)  income sensitive. 
A)  elastic. 
B)  unit-elastic. 
C)  inelastic. 
D)  income sensitive.

Question 18

The price elasticity of demand along a linear demand curve is

Accepted Answer

A)  more elastic at higher prices than at low prices. 
B)  infinite. 
C)  one. 
D)  constant. 
A)  more elastic at higher prices than at low prices. 
B)  infinite. 
C)  one. 
D)  constant.

Question 19

The range to the right of the midpoint on a linear demand curve is

Accepted Answer

A)  elastic. 
B)  infinite. 
C)  one. 
D)  inelastic. 
A)  elastic. 
B)  infinite. 
C)  one. 
D)  inelastic.

Question 20

Moving upward along a downward sloping straight-line demand curve, as the price of the product goes up

Accepted Answer

A)  the price elasticity of demand does not change. 
B)  the price elasticity of demand goes from being inelastic to being elastic. 
C)  the price elasticity of demand goes from being elastic to being inelastic. 
D)  the price elasticity of demand goes from negative to positive. 
A)  the price elasticity of demand does not change. 
B)  the price elasticity of demand goes from being inelastic to being elastic. 
C)  the price elasticity of demand goes from being elastic to being inelastic. 
D)  the price elasticity of demand goes from negative to positive.

Exam 19: Demand and Supply Elasticity

A vertical demand curve has

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

When demand is unit elastic, a 7 percent change in the price of the good

Even though price elasticity of demand is always ________, by convention its absolute value is always discussed as a ________.

When total revenue and price are directly related, demand is

A supply curve that is parallel to the quantity axis is

When the Gizmo Company could sell a gizmo for $10, it produced 2,500 per month. More recently, the price of a gizmo has fallen to $9 and so Gizmo is only producing 2,000 units per month. What is the price elasticity of supply for gizmos?

In which of the following situations is the absolute price elasticity of demand for an item most likely to exceed a value of 1?

If two goods are complements,

The longer the time frame involved, the more likely it is that the demand will be relatively

The paintings of a world famous artist Vincent Van Gogh have a price elasticity of supply

When Frank's income was $100 per week, 10 units of good A were demanded. Now his income is $150 per week and 12 units of good A are demanded. Using the percentage change formula, the income elasticity of demand for good A equals

Use the above table. Based on the information in the table, artisan bread is a(n) -Use the above table. Based on the information in the table, jam is a(n)

If the price of apples went down by 20 percent, which of the following values of the cross price elasticity for boats would be most reasonable to anticipate?

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

Suppose that the absolute price elasticity of demand for hamburger is 1.5 and that the absolute price elasticity of demand for steak is 2.5. Then the absolute price elasticity of demand for beef will be

When quantity supplied is NOT very responsive to a change in price, supply is

The price elasticity of demand along a linear demand curve is

The range to the right of the midpoint on a linear demand curve is

Moving upward along a downward sloping straight-line demand curve, as the price of the product goes up

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

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

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

Even though price elasticity of demand is always , by convention its absolute value is always discussed as a .