Question 1

The elasticity of supply is defined as the ____ change in quantity supplied divided by the ____ change in price.

Accepted Answer

A) ​total; percentage 
B) ​percentage; marginal 
C) ​marginal; percentage 
D) ​percentage; percentage 
A) ​total; percentage 
B) ​percentage; marginal 
C) ​marginal; percentage 
D) ​percentage; percentage

Question 2

Evaluate the following statements: 
I.The slope of the demand curve is always equal to the elasticity of demand.
II.Moving down along a downward-sloping, straight-line demand curve, the elasticity of demand falls.
​

Accepted Answer

A) ​(I) and (II) are both true. 
B) ​(I) is true and (II) is false. 
C) ​(I) is false and (II) is true. 
D) ​(I) and (II) are both false. 
A) ​(I) and (II) are both true. 
B) ​(I) is true and (II) is false. 
C) ​(I) is false and (II) is true. 
D) ​(I) and (II) are both false.

Question 3

The long run demand curve for wheat is likely to be:

Accepted Answer

A) ​more elastic than the short run demand curve for wheat. 
B) ​more inelastic the short run demand curve for wheat. 
C) ​the same as the short run demand curve for wheat. 
D) ​more inelastic than the short run supply of wheat. 
A) ​more elastic than the short run demand curve for wheat. 
B) ​more inelastic the short run demand curve for wheat. 
C) ​the same as the short run demand curve for wheat. 
D) ​more inelastic than the short run supply of wheat.

Question 4

The government proposes a tax on flowers in order to boost its revenue. If the elasticity of demand is 1.3 and the elasticity of supply is 0.7:

Accepted Answer

A) ​Consumers will bear the majority of the burden of the tax. 
B) ​Producers will bear the majority of the burden of the tax. 
C) ​Consumers and producers will bear equal shares of the burden of the tax. 
D) ​It does not tell us enough to reveal whether consumers or producers will bear most of the burden of the tax. 
A) ​Consumers will bear the majority of the burden of the tax. 
B) ​Producers will bear the majority of the burden of the tax. 
C) ​Consumers and producers will bear equal shares of the burden of the tax. 
D) ​It does not tell us enough to reveal whether consumers or producers will bear most of the burden of the tax.

Question 5

In the graph below, a tax increase would be paid:

Accepted Answer

A) ​largely by the sellers. 
B) ​largely by the buyers. 
C) ​equally by the sellers and buyers. 
D) ​by the government. 
A) ​largely by the sellers. 
B) ​largely by the buyers. 
C) ​equally by the sellers and buyers. 
D) ​by the government.

Question 6

Supply is said to be ____ when the quantity supplied is not very responsive to changes in price.

Accepted Answer

A) ​independent 
B) ​inelastic 
C) ​unit elastic 
D) ​elastic 
A) ​independent 
B) ​inelastic 
C) ​unit elastic 
D) ​elastic

Question 7

A subsidy to wheat farmers reduces the price of a bushel of wheat from $2.50 to $2 per bushel. The equilibrium quantity of wheat sold prior to the subsidy was equal to 200,000 bushels. Predict the new equilibrium quantity of wheat after the imposition of the subsidy given that the demand for wheat is known to be unit elastic.

Accepted Answer

A) ​100,000 bushels 
B) ​200,000 bushels 
C) ​250,000 bushels 
D) ​400,000 bushels 
A) ​100,000 bushels 
B) ​200,000 bushels 
C) ​250,000 bushels 
D) ​400,000 bushels

Question 8

A steel mill raises the price of steel by 7%, which results in a 20% reduction in the quantity of steel demanded. The demand curve facing this firm is:

Accepted Answer

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

Question 9

If two goods both had negative cross elasticities and negative income elasticities,

Accepted Answer

A) ​they are both normal and substitutes for one another. 
B) ​they are both normal and complements for one another. 
C) ​they are both inferior and substitutes for one another. 
D) ​they are both inferior and complements for one another. 
A) ​they are both normal and substitutes for one another. 
B) ​they are both normal and complements for one another. 
C) ​they are both inferior and substitutes for one another. 
D) ​they are both inferior and complements for one another.

Question 10

If the supply curve is perfectly elastic, then an increase in demand will:

Accepted Answer

A) ​increase both the price and the quantity exchanged. 
B) ​increase the price but result in no change in the quantity exchanged. 
C) ​increase the quantity exchanged but result in no change in the price. 
D) ​decrease the price but not change the quantity exchanged. 
A) ​increase both the price and the quantity exchanged. 
B) ​increase the price but result in no change in the quantity exchanged. 
C) ​increase the quantity exchanged but result in no change in the price. 
D) ​decrease the price but not change the quantity exchanged.

Question 11

The elasticity of supply coefficient for bicycles is estimated to be equal to 1.5. It is expected, therefore, that a 4% increase in price would lead to:

Accepted Answer

A) ​a 4% decrease in the quantity of bicycles supplied. 
B) ​a 4% increase in the quantity of bicycles supplied. 
C) ​a 6% decrease in the quantity of bicycles supplied. 
D) ​a 6% increase in the quantity of bicycles supplied. 
A) ​a 4% decrease in the quantity of bicycles supplied. 
B) ​a 4% increase in the quantity of bicycles supplied. 
C) ​a 6% decrease in the quantity of bicycles supplied. 
D) ​a 6% increase in the quantity of bicycles supplied.

Question 12

An increase in the price of good X due to a reduction in its supply will:

Accepted Answer

A) ​increase the total revenue of good X. 
B) ​decrease the total revenue of good X. 
C) ​increase the total revenue of goods that are substitutes for X. 
D) ​increase the total revenue of goods that are complements for X. 
A) ​increase the total revenue of good X. 
B) ​decrease the total revenue of good X. 
C) ​increase the total revenue of goods that are substitutes for X. 
D) ​increase the total revenue of goods that are complements for X.

Question 13

Suppose the demand for a good is currently unit elastic over the relevant range. Then a new substitute good is introduced to the market. As a result, demand over that range is now likely to be

Accepted Answer

A) ​Unit elastic. 
B) ​Relatively elastic. 
C) ​Relatively inelastic. 
D) ​Perfectly elastic. 
A) ​Unit elastic. 
B) ​Relatively elastic. 
C) ​Relatively inelastic. 
D) ​Perfectly elastic.

Question 14

Which of the following statements is correct regarding the imposition of a tax on gasoline?

Accepted Answer

A) ​The incidence of the tax always falls on the buyer. 
B) ​The incidence of the tax depends upon the price elasticities of demand and supply. 
C) ​The incidence of the tax always falls on the sellers. 
D) ​The oil company will ultimately pay. 
A) ​The incidence of the tax always falls on the buyer. 
B) ​The incidence of the tax depends upon the price elasticities of demand and supply. 
C) ​The incidence of the tax always falls on the sellers. 
D) ​The oil company will ultimately pay.

Question 15

Unlike its competitors, one glass producer can use its equipment to make either windows for houses or windows for cars. Other things equal, compared to its competitors, its supply curve of windows for cars would be:

Accepted Answer

A) ​more elastic than the supply curves of competitors. 
B) ​less elastic than the supply curves of competitors. 
C) ​greater than the supply curves of competitors. 
D) ​less than the supply curves of competitors. 
A) ​more elastic than the supply curves of competitors. 
B) ​less elastic than the supply curves of competitors. 
C) ​greater than the supply curves of competitors. 
D) ​less than the supply curves of competitors.

Question 16

The measure of the relationship between a change in income and the consequent relative change in quantity demanded at a given price is the:

Accepted Answer

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

Question 17

If the price elasticity of demand for a good is 0.25, then a 20 percent decrease in price results in a

Accepted Answer

A) ​0.0625 percent increase in the quantity demanded. 
B) ​4 percent increase in the quantity demanded. 
C) ​5 percent increase in the quantity demanded. 
D) ​80 percent increase in the quantity demanded. 
A) ​0.0625 percent increase in the quantity demanded. 
B) ​4 percent increase in the quantity demanded. 
C) ​5 percent increase in the quantity demanded. 
D) ​80 percent increase in the quantity demanded.

Question 18

If marijuana were legalized, it is likely that there would be an increase in the supply of marijuana. Those in favor of legalizing marijuana argue that this would generate less revenue to illegal suppliers. The legalize marijuana proponents must believe the:

Accepted Answer

A) ​demand for marijuana is elastic. 
B) ​demand for marijuana is inelastic. 
C) ​demand for for marijuana is unit elastic. 
D) ​none of the above. 
A) ​demand for marijuana is elastic. 
B) ​demand for marijuana is inelastic. 
C) ​demand for for marijuana is unit elastic. 
D) ​none of the above.

Question 19

Price elasticity of demand is a measure of the relative responsiveness of the change in price to a change in quantity demanded.​

Accepted Answer

A) True 
 B)False

Question 20

If the income elasticity of demand for good A was 3.9 and the income elasticity of demand for B was 0.2:

Accepted Answer

A) ​Both good A and good B are normal. 
B) ​Both good A and good B are inferior. 
C) ​Good A is normal and good B is inferior. 
D) ​Good A is inferior and good B is normal. 
A) ​Both good A and good B are normal. 
B) ​Both good A and good B are inferior. 
C) ​Good A is normal and good B is inferior. 
D) ​Good A is inferior and good B is normal.

The elasticity of supply is defined as the change in quantity supplied divided by the change in price.

Evaluate the following statements: I.The slope of the demand curve is always equal to the elasticity of demand. II.Moving down along a downward-sloping, straight-line demand curve, the elasticity of demand falls.

The long run demand curve for wheat is likely to be:

The government proposes a tax on flowers in order to boost its revenue. If the elasticity of demand is 1.3 and the elasticity of supply is 0.7:

In the graph below, a tax increase would be paid:

Supply is said to be ____ when the quantity supplied is not very responsive to changes in price.

A steel mill raises the price of steel by 7%, which results in a 20% reduction in the quantity of steel demanded. The demand curve facing this firm is:

If two goods both had negative cross elasticities and negative income elasticities,

If the supply curve is perfectly elastic, then an increase in demand will:

The elasticity of supply coefficient for bicycles is estimated to be equal to 1.5. It is expected, therefore, that a 4% increase in price would lead to:

An increase in the price of good X due to a reduction in its supply will:

Suppose the demand for a good is currently unit elastic over the relevant range. Then a new substitute good is introduced to the market. As a result, demand over that range is now likely to be

Which of the following statements is correct regarding the imposition of a tax on gasoline?

Unlike its competitors, one glass producer can use its equipment to make either windows for houses or windows for cars. Other things equal, compared to its competitors, its supply curve of windows for cars would be:

The measure of the relationship between a change in income and the consequent relative change in quantity demanded at a given price is the:

If the price elasticity of demand for a good is 0.25, then a 20 percent decrease in price results in a

If marijuana were legalized, it is likely that there would be an increase in the supply of marijuana. Those in favor of legalizing marijuana argue that this would generate less revenue to illegal suppliers. The legalize marijuana proponents must believe the:

Price elasticity of demand is a measure of the relative responsiveness of the change in price to a change in quantity demanded.

If the income elasticity of demand for good A was 3.9 and the income elasticity of demand for B was 0.2:

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

Exam 6: Elasticities

The elasticity of supply is defined as the ____ change in quantity supplied divided by the ____ change in price.

Evaluate the following statements: I.The slope of the demand curve is always equal to the elasticity of demand. II.Moving down along a downward-sloping, straight-line demand curve, the elasticity of demand falls. ​

The long run demand curve for wheat is likely to be:

The government proposes a tax on flowers in order to boost its revenue. If the elasticity of demand is 1.3 and the elasticity of supply is 0.7:

In the graph below, a tax increase would be paid:

Supply is said to be ____ when the quantity supplied is not very responsive to changes in price.

A steel mill raises the price of steel by 7%, which results in a 20% reduction in the quantity of steel demanded. The demand curve facing this firm is:

If two goods both had negative cross elasticities and negative income elasticities,

If the supply curve is perfectly elastic, then an increase in demand will:

The elasticity of supply coefficient for bicycles is estimated to be equal to 1.5. It is expected, therefore, that a 4% increase in price would lead to:

An increase in the price of good X due to a reduction in its supply will:

Suppose the demand for a good is currently unit elastic over the relevant range. Then a new substitute good is introduced to the market. As a result, demand over that range is now likely to be

Which of the following statements is correct regarding the imposition of a tax on gasoline?

Unlike its competitors, one glass producer can use its equipment to make either windows for houses or windows for cars. Other things equal, compared to its competitors, its supply curve of windows for cars would be:

The measure of the relationship between a change in income and the consequent relative change in quantity demanded at a given price is the:

If the price elasticity of demand for a good is 0.25, then a 20 percent decrease in price results in a

If marijuana were legalized, it is likely that there would be an increase in the supply of marijuana. Those in favor of legalizing marijuana argue that this would generate less revenue to illegal suppliers. The legalize marijuana proponents must believe the:

Price elasticity of demand is a measure of the relative responsiveness of the change in price to a change in quantity demanded.​

If the income elasticity of demand for good A was 3.9 and the income elasticity of demand for B was 0.2:

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

The elasticity of supply is defined as the change in quantity supplied divided by the change in price.

Evaluate the following statements: I.The slope of the demand curve is always equal to the elasticity of demand. II.Moving down along a downward-sloping, straight-line demand curve, the elasticity of demand falls.

Price elasticity of demand is a measure of the relative responsiveness of the change in price to a change in quantity demanded.