Question 1

If the price elasticity of demand is 5.3,demand is said to be

Accepted Answer

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

Question 2

Price elasticity of supply is 1 minus the price elasticity of demand.

Accepted Answer

A) True 
 B)False

Question 3

The minimum wage is an example of a

Accepted Answer

A) price floor. 
B) price ceiling. 
C) market equilibrium. 
D) restriction on quantity. 
E) price elasticity. 
A) price floor. 
B) price ceiling. 
C) market equilibrium. 
D) restriction on quantity. 
E) price elasticity.

Question 4

The price elasticity of demand is expressed as the

Accepted Answer

A) percentage change in the quantity demanded divided by the percentage change in income. 
B) percentage change in the price divided by the percentage change in the quantity demanded. 
C) percentage change in the quantity demanded divided by the percentage change in the price. 
D) percentage change in supply divided by the percentage change in demand. 
E) absolute change in the quantity demanded divided by the absolute change in the price. 
A) percentage change in the quantity demanded divided by the percentage change in income. 
B) percentage change in the price divided by the percentage change in the quantity demanded. 
C) percentage change in the quantity demanded divided by the percentage change in the price. 
D) percentage change in supply divided by the percentage change in demand. 
E) absolute change in the quantity demanded divided by the absolute change in the price.

Question 5

Calculate the price elasticity of demand if a .8 percent change in the price of a product results in a .25 percent change in quantity demanded,and indicate whether demand is elastic,inelastic,or unit elastic.

Accepted Answer

0.25/.8 =

Question 6

If the cross-price elasticity between two goods is positive,then it is most likely that the two goods are

Accepted Answer

A) both inferior goods. 
B) both luxury goods. 
C) complements. 
D) substitutes. 
E) necessities. 
A) both inferior goods. 
B) both luxury goods. 
C) complements. 
D) substitutes. 
E) necessities.

Question 7

Which of the following is the equation for price elasticity of supply?

Accepted Answer

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

Question 8

The price elasticity of demand is the same as the slope of the demand curve.

Accepted Answer

A) True 
 B)False

Question 9

A horizontal demand curve is

Accepted Answer

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

Question 10

Rent control for apartments in New York City is an example of a

Accepted Answer

A) price floor. 
B) price ceiling. 
C) market equilibrium. 
D) restriction on quantity. 
E) price elasticity. 
A) price floor. 
B) price ceiling. 
C) market equilibrium. 
D) restriction on quantity. 
E) price elasticity.

Question 11

Income elasticity of demand is the percentage change in

Accepted Answer

A) demand divided by the percentage change in the price of the product. 
B) demand divided by the percentage change in the price of different products. 
C) quantity demanded divided by the absolute price of the product. 
D) quantity demanded of a product divided by the percentage change in income. 
E) income divided by the percentage change in quantity demanded. 
A) demand divided by the percentage change in the price of the product. 
B) demand divided by the percentage change in the price of different products. 
C) quantity demanded divided by the absolute price of the product. 
D) quantity demanded of a product divided by the percentage change in income. 
E) income divided by the percentage change in quantity demanded.

Question 12

If price gouging is prohibited by the government so that sellers cannot suddenly raise prices,then a sudden drop in gasoline supply due to bad weather will most likely result in

Accepted Answer

A) an equilibrium in the gasoline market. 
B) a surplus in the gasoline market. 
C) a shortage in the gasoline market. 
D) high profits for sellers. 
E) a sudden increase in the gasoline supply. 
A) an equilibrium in the gasoline market. 
B) a surplus in the gasoline market. 
C) a shortage in the gasoline market. 
D) high profits for sellers. 
E) a sudden increase in the gasoline supply.

Question 13

The price elasticity of demand is measured by the percentage change in quantity demanded divided by the percentage change in price.

Accepted Answer

A) True 
 B)False

Question 14

When the demand curve is a vertical line,demand is

Accepted Answer

A) relatively elastic. 
B) perfectly inelastic. 
C) unit elastic. 
D) infinitely elastic. 
E) cross-elastic. 
A) relatively elastic. 
B) perfectly inelastic. 
C) unit elastic. 
D) infinitely elastic. 
E) cross-elastic.

Question 15

Which of the following statements about the price elasticity of demand is true?

Accepted Answer

A) Slope and elasticity measure the same things. 
B) Price elasticity of demand varies depending on how price and quantity are measured. 
C) It is important to know whether the price elasticity of demand is a positive or negative number. 
D) The slope of a demand curve does not tell us the price elasticity of demand. 
E) Price elasticity is the same everywhere along a demand curve of any shape. 
A) Slope and elasticity measure the same things. 
B) Price elasticity of demand varies depending on how price and quantity are measured. 
C) It is important to know whether the price elasticity of demand is a positive or negative number. 
D) The slope of a demand curve does not tell us the price elasticity of demand. 
E) Price elasticity is the same everywhere along a demand curve of any shape.

Question 16

Suppose the price of a good falls from $200 to $150,and the quantity demanded changes from 45,000 units to 50,500 units.Calculate the price elasticity of demand using the midpoint formula,and indicate whether demand is elastic,inelastic,or unit elastic.

Accepted Answer

The answer of Suppose the price of a good falls...

Question 17

Which of the following is not a likely result of a price floor?

Accepted Answer

A) Excess supply of a good 
B) A persistent shortage 
C) A market price higher than equilibrium 
D) The quantity supplied exceeds the quantity demanded. 
E) Resources are diverted away from other activities to deal with the extra output. 
A) Excess supply of a good 
B) A persistent shortage 
C) A market price higher than equilibrium 
D) The quantity supplied exceeds the quantity demanded. 
E) Resources are diverted away from other activities to deal with the extra output.

Question 18

Consider two demand curves with different slopes.It is possible to predict ranges on each demand curve where the price elasticities of demand will be different.

Accepted Answer

A) True 
 B)False

Question 19

Given the following income elasticities of demand,would you classify the good as a luxury,necessity,or inferior good?
(A)Salt: elasticity = .3.
(B)Potatoes: elasticity = -.1.
(C)Frozen dinners: elasticity = .9.
(D)Restaurant meals: elasticity = 1.4

Accepted Answer

(A) Necessity 
(B) I

Question 20

If the quantity supplied of a product stays the same no matter what its price,then the elasticity of supply of the product is

Accepted Answer

A) perfectly elastic. 
B) unit elastic. 
C) zero. 
D) perfectly inelastic. 
E) infinity. 
A) perfectly elastic. 
B) unit elastic. 
C) zero. 
D) perfectly inelastic. 
E) infinity.

Exam 4: Subtleties of the Supply and Demand Model: Price Floors,price Ceilings,and Elasticity

If the price elasticity of demand is 5.3,demand is said to be

Price elasticity of supply is 1 minus the price elasticity of demand.

The minimum wage is an example of a

The price elasticity of demand is expressed as the

Calculate the price elasticity of demand if a .8 percent change in the price of a product results in a .25 percent change in quantity demanded,and indicate whether demand is elastic,inelastic,or unit elastic.

If the cross-price elasticity between two goods is positive,then it is most likely that the two goods are

Which of the following is the equation for price elasticity of supply?

The price elasticity of demand is the same as the slope of the demand curve.

A horizontal demand curve is

Rent control for apartments in New York City is an example of a

Income elasticity of demand is the percentage change in

If price gouging is prohibited by the government so that sellers cannot suddenly raise prices,then a sudden drop in gasoline supply due to bad weather will most likely result in

The price elasticity of demand is measured by the percentage change in quantity demanded divided by the percentage change in price.

When the demand curve is a vertical line,demand is

Which of the following statements about the price elasticity of demand is true?

Suppose the price of a good falls from $200 to $150,and the quantity demanded changes from 45,000 units to 50,500 units.Calculate the price elasticity of demand using the midpoint formula,and indicate whether demand is elastic,inelastic,or unit elastic.

Which of the following is not a likely result of a price floor?

Consider two demand curves with different slopes.It is possible to predict ranges on each demand curve where the price elasticities of demand will be different.

Given the following income elasticities of demand,would you classify the good as a luxury,necessity,or inferior good? (A)Salt: elasticity = .3. (B)Potatoes: elasticity = -.1. (C)Frozen dinners: elasticity = .9. (D)Restaurant meals: elasticity = 1.4

If the quantity supplied of a product stays the same no matter what its price,then the elasticity of supply of the product is

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, transfers, and Income Distribution

Public Goods, externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Productivity and Economic Growth

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth and Globalization

International Trade

International Finance

Reading,understanding,and Creating Graphs

Consumer Theory With Indifference Curves

Producer Theory With Isoquants

Present Discounted Value

The Miracle of Compound Growth

Deriving the Growth Accounting Formula

Deriving the Formula for the Keynesian Multiplier and the Forward-Looking Consumption Model

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