Question 1

-In the above table, the cross price elasticity of demand for good B with good A when PA rises from $10 to $12 is

Accepted Answer

A)  +0.29. 
B)  +1.83. 
C)  +0.58. 
D)  -0.58. 
A)  +0.29. 
B)  +1.83. 
C)  +0.58. 
D)  -0.58.

Question 2

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 3

When the price of a pound of oranges is $1.00, 7500 pounds of oranges are demanded. When the price of a pound of oranges decreases to $0.80, 10,000 pounds of oranges are demanded. In this price range the demand for oranges is

Accepted Answer

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

Question 4

-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 5

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

Accepted Answer

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

Question 6

Suppose that the demand for coffee is inelastic. If a coffee shop decided to lower the price of coffee, total revenue would

Accepted Answer

A)  increase. 
B)  decrease. 
C)  stay the same. 
D)  be maximized. 
A)  increase. 
B)  decrease. 
C)  stay the same. 
D)  be maximized.

Question 7

If the price elasticity of supply of tablets is constant and equal to 2.5, a 10 percent increase in price will result in a change in quantity supplied equal to

Accepted Answer

A)  2.5 percent. 
B)  25 percent. 
C)  20 percent. 
D)  -20 percent. 
A)  2.5 percent. 
B)  25 percent. 
C)  20 percent. 
D)  -20 percent.

Question 8

A 10 percent increase in the price of tablets leads to a 1 percent decrease in the quantity demanded of tablets. The absolute price elasticity of demand for tablets is

Accepted Answer

A)  9. 
B)  1. 
C)  0.1. 
D)  10. 
A)  9. 
B)  1. 
C)  0.1. 
D)  10.

Question 9

-In the above figure, the range of unit elasticity occurs

Accepted Answer

A)  on the vertical axis. 
B)  on the horizontal axis. 
C)  between point c and point d. 
D)  below point e. 
A)  on the vertical axis. 
B)  on the horizontal axis. 
C)  between point c and point d. 
D)  below point e.

Question 10

If the price elasticity of demand (Ep) equals one in the short run, then, other things being equal, in the long run Ep will be

Accepted Answer

A)  one. 
B)  less than one. 
C)  greater than one. 
D)  indeterminate without more information. 
A)  one. 
B)  less than one. 
C)  greater than one. 
D)  indeterminate without more information.

Question 11

Price elasticity of demand is measured using percentage changes. Why?

Accepted Answer

By using percentage changes, we are focu

Question 12

If a two percent increase in the price of bananas leads to a two percent decrease in the quantity of bananas demanded, then the demand for bananas is

Accepted Answer

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

Question 13

An 36 percent increase in the price of small cars results in a 20 percent increase in the quantity supplied. The supply elasticity in this range equals ________.

Accepted Answer

A)  9/5 
B)  5/9 
C)  7/10 
D)  4/10 
A)  9/5 
B)  5/9 
C)  7/10 
D)  4/10

Question 14

Which of the following would NOT affect a good's price elasticity of demand?

Accepted Answer

A)  the ease of substitution between goods 
B)  the cost of producing the good 
C)  the number of substitute goods available 
D)  the proportion of one's budget spent on an item 
A)  the ease of substitution between goods 
B)  the cost of producing the good 
C)  the number of substitute goods available 
D)  the proportion of one's budget spent on an item

Question 15

The formal definition of price elasticity of demand is

Accepted Answer

A)  change in quantity demanded divided by change in price. 
B)  quantity demanded divided by price. 
C)  percentage change in quantity demanded divided by percentage change in price. 
D)  quantity demanded multiplied by price and divided by 100. 
A)  change in quantity demanded divided by change in price. 
B)  quantity demanded divided by price. 
C)  percentage change in quantity demanded divided by percentage change in price. 
D)  quantity demanded multiplied by price and divided by 100.

Question 16

A perfectly inelastic 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 17

The price elasticity of demand measures

Accepted Answer

A)  the consumers' sensitivity to a price change. 
B)  the producers' sensitivity to a price change. 
C)  how much the market supply changes in response to a change in demand. 
D)  how much the demand changes in response to a change in income. 
A)  the consumers' sensitivity to a price change. 
B)  the producers' sensitivity to a price change. 
C)  how much the market supply changes in response to a change in demand. 
D)  how much the demand changes in response to a change in income.

Question 18

Demand is inelastic if

Accepted Answer

A)  a given percentage change in price will result in a less than proportionate percentage change in the quantity demanded. 
B)  demand exhibits zero responsiveness to price changes. 
C)  small price increases will lead to zero quantity demanded. 
D)  a given percentage change in price will result in a greater than proportionate percentage change in the quantity demanded. 
A)  a given percentage change in price will result in a less than proportionate percentage change in the quantity demanded. 
B)  demand exhibits zero responsiveness to price changes. 
C)  small price increases will lead to zero quantity demanded. 
D)  a given percentage change in price will result in a greater than proportionate percentage change in the quantity demanded.

Question 19

Consider the following data: Price of A Quantity Demanded of A
$5 6
$4 10
The absolute value of the price elasticity of demand for product A is

Accepted Answer

A)  0.44. 
B)  1.80. 
C)  0.56. 
D)  2.25. 
A)  0.44. 
B)  1.80. 
C)  0.56. 
D)  2.25.

Question 20

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.

Exam 19: Demand and Supply Elasticity

-In the above table, the cross price elasticity of demand for good B with good A when PA rises from $10 to $12 is

In the long run, the supply curve

When the price of a pound of oranges is $1.00, 7500 pounds of oranges are demanded. When the price of a pound of oranges decreases to $0.80, 10,000 pounds of oranges are demanded. In this price range the demand for oranges is

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

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

Suppose that the demand for coffee is inelastic. If a coffee shop decided to lower the price of coffee, total revenue would

If the price elasticity of supply of tablets is constant and equal to 2.5, a 10 percent increase in price will result in a change in quantity supplied equal to

A 10 percent increase in the price of tablets leads to a 1 percent decrease in the quantity demanded of tablets. The absolute price elasticity of demand for tablets is

-In the above figure, the range of unit elasticity occurs

If the price elasticity of demand (Ep) equals one in the short run, then, other things being equal, in the long run Ep will be

Price elasticity of demand is measured using percentage changes. Why?

If a two percent increase in the price of bananas leads to a two percent decrease in the quantity of bananas demanded, then the demand for bananas is

An 36 percent increase in the price of small cars results in a 20 percent increase in the quantity supplied. The supply elasticity in this range equals ________.

Which of the following would NOT affect a good's price elasticity of demand?

The formal definition of price elasticity of demand is

A perfectly inelastic supply curve is

The price elasticity of demand measures

Demand is inelastic if

Consider the following data: Price of A Quantity Demanded of A $5 6 $4 10 The absolute value of the price elasticity of demand for product A is

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

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

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