Question 1

If a 6 percent increase in income leads to a 4 percent increase in quantity demanded for audio books,the income elasticity of demand is

Accepted Answer

A) -0.67. 
B) 0.67. 
C) 1.5. 
D) 2. 
A) -0.67. 
B) 0.67. 
C) 1.5. 
D) 2.

Question 2

If the quantity demanded for a good rises as income rises then the income elasticity of demand for this good is ________ than 0,and the good is ________ good.

Accepted Answer

A) greater;an inferior 
B) less;a normal 
C) less;an inferior 
D) greater;a normal 
A) greater;an inferior 
B) less;a normal 
C) less;an inferior 
D) greater;a normal

Question 3

If at a price of $50,Ghani sells 20 hand-made leather cell-phone covers but at a price of $60,zero units are sold.Based on this information,the demand for his cell-phone covers is

Accepted Answer

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

Question 4

The process involved in bringing oil to world markets can take years.Substitutes for oil-based products such as gasoline are limited.As a result

Accepted Answer

A) the supply of oil is very elastic and the demand for oil is very elastic over short periods of time. 
B) the supply of oil is very inelastic and the demand for gasoline is inelastic over short periods of time. 
C) the supply of oil and the demand for oil shift to the right over short periods of time. 
D) the supply of oil and the demand for oil are both perfectly elastic over short periods of time. 
A) the supply of oil is very elastic and the demand for oil is very elastic over short periods of time. 
B) the supply of oil is very inelastic and the demand for gasoline is inelastic over short periods of time. 
C) the supply of oil and the demand for oil shift to the right over short periods of time. 
D) the supply of oil and the demand for oil are both perfectly elastic over short periods of time.

Question 5

The price elasticity of the supply of teenage labor services is approximately 1.36.Suppose the minimum wage rises from $7.25 per hour to $8.75.Using the midpoint formula,what is the approximate change in the quantity of teenage labor supplied?

Accepted Answer

A) 7.3 percent 
B) 14.4 percent 
C) 25.5 percent 
D) There is insufficient information to answer the question. 
A) 7.3 percent 
B) 14.4 percent 
C) 25.5 percent 
D) There is insufficient information to answer the question.

Question 6

Suppose a decrease in the supply of wheat results in an increase in revenue.This indicates that

Accepted Answer

A) the decrease in quantity sold is proportionately larger than the resulting change in price. 
B) the resulting increase in price is proportionately greater than decrease in quantity sold. 
C) the demand curve for wheat must be vertical. 
D) the supply curve for wheat must be vertical. 
A) the decrease in quantity sold is proportionately larger than the resulting change in price. 
B) the resulting increase in price is proportionately greater than decrease in quantity sold. 
C) the demand curve for wheat must be vertical. 
D) the supply curve for wheat must be vertical.

Question 7

If at a price of $10,a vendor sells 5 units of a product and at a price of $8,6 units are sold,then,using the midpoint formula,the demand for this good is inelastic.

Accepted Answer

A) True 
 B)False

Question 8

Carrie Bradshaw claims that when it comes to buying shoes,"price is no object." If this is true,then her demand for shoes is

Accepted Answer

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

Question 9

Figure 6-4  
-Refer to Figure 6-4.Which of the following statements about price elasticity of demand is true?

Accepted Answer

A) The elasticity coefficient is constant along the demand curve. 
B) The elastic portion of a straight-line,downward-sloping demand curve corresponds to the segment above the midpoint. 
C) The inelastic portion of the demand curve corresponds to the segment above the midpoint. 
D) At the midpoint of the demand curve,the elasticity coefficient is zero. 
A) The elasticity coefficient is constant along the demand curve. 
B) The elastic portion of a straight-line,downward-sloping demand curve corresponds to the segment above the midpoint. 
C) The inelastic portion of the demand curve corresponds to the segment above the midpoint. 
D) At the midpoint of the demand curve,the elasticity coefficient is zero.

Question 10

Suppose the price elasticity of demand for cigarettes is -0.4.The FDA decides to regulate tobacco production,which increases the price of cigarettes and causes the quantity of cigarettes demanded to decrease by 25 percent.What is the percentage increase in price which would lead to the 25 percent decrease in quantity demanded? If the price elasticity was -4,what would be the percentage increase in price?

Accepted Answer

If price elasticity of demand is -0.4,a

Question 11

If the demand for a product is elastic,the quantity demanded changes by a larger percentage than the percentage change in price.

Accepted Answer

A) True 
 B)False

Question 12

Most food products have low income and price elasticities of demand.

Accepted Answer

A) True 
 B)False

Question 13

In December 2014,the average price of gasoline in the United States was $2.50 per gallon and consumers bought 7 percent more gasoline than they had during April 2014,when the average price was $3.60 per gallon.Based on these numbers,what was the price elasticity of demand for gasoline from April 2014 to December 2014?

Accepted Answer

A) -0.02 
B) -0.19 
C) -1.01 
D) -2.26 
A) -0.02 
B) -0.19 
C) -1.01 
D) -2.26

Question 14

The price elasticity of supply measures

Accepted Answer

A) the responsiveness of quantity supplied to changes in input prices. 
B) the responsiveness of quantity supplied to changes in technology. 
C) the responsiveness of quantity supplied to changes in price. 
D) a supplier's ability to produce a good in the face of scarcity. 
A) the responsiveness of quantity supplied to changes in input prices. 
B) the responsiveness of quantity supplied to changes in technology. 
C) the responsiveness of quantity supplied to changes in price. 
D) a supplier's ability to produce a good in the face of scarcity.

Question 15

The demand for gasoline is perfectly inelastic because most people need gasoline to drive their cars.

Accepted Answer

A) True 
 B)False

Question 16

Suppose the demand curve for a product is represented by a typical downward-sloping curve.Now suppose the demand for this product decreases.Which of the following statements accurately predicts the resulting decrease in price?

Accepted Answer

A) The more elastic the supply curve,the greater the price increase. 
B) The more elastic the supply curve,the smaller the price decrease. 
C) The increase in price is not affected by the elasticity of the supply curve. 
D) The decrease in price will always be proportional to the magnitude of the demand shift. 
A) The more elastic the supply curve,the greater the price increase. 
B) The more elastic the supply curve,the smaller the price decrease. 
C) The increase in price is not affected by the elasticity of the supply curve. 
D) The decrease in price will always be proportional to the magnitude of the demand shift.

Question 17

Suppose that when the price per ream of recycled printer paper rises from $4 to $4.50,the quantity demanded falls from 800 to 600 reams per day.Using the midpoint formula,what is the price elasticity of demand (in absolute value)over this range?

Accepted Answer

A) 0.003 
B) 0.41 
C) 2.43 
D) 4 
A) 0.003 
B) 0.41 
C) 2.43 
D) 4

Question 18

The price elasticity of supply is usually a positive number because

Accepted Answer

A) quantity supplied increases in response to income increases. 
B) quantity supplied increases in response to price increases. 
C) the quantity demanded usually rises when price falls and therefore suppliers would want to capitalize on this increase in demand. 
D) price rises when supply increases. 
A) quantity supplied increases in response to income increases. 
B) quantity supplied increases in response to price increases. 
C) the quantity demanded usually rises when price falls and therefore suppliers would want to capitalize on this increase in demand. 
D) price rises when supply increases.

Question 19

The price of wheat has fallen since 1950.Which of the following explains this price decline?

Accepted Answer

A) The price elasticity of demand is less than 1 (in absolute value)and the income elasticity of demand for wheat is low. 
B) The price elasticity of demand is greater than 1 (in absolute value)and the income elasticity of demand for wheat is low. 
C) The price elasticity of demand is less than 1 (in absolute value)and wheat is an inferior good. 
D) The price elasticity of demand is greater than 1 (in absolute value)and the income elasticity of demand for wheat is greater than 1. 
A) The price elasticity of demand is less than 1 (in absolute value)and the income elasticity of demand for wheat is low. 
B) The price elasticity of demand is greater than 1 (in absolute value)and the income elasticity of demand for wheat is low. 
C) The price elasticity of demand is less than 1 (in absolute value)and wheat is an inferior good. 
D) The price elasticity of demand is greater than 1 (in absolute value)and the income elasticity of demand for wheat is greater than 1.

Question 20

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

Accepted Answer

A) The value of the price elasticity of demand is the reciprocal of the value of the demand curve's slope. 
B) If quantity demanded changes by a larger percentage than the percentage change in price,demand is elastic. 
C) The value of the price elasticity of demand along a downward-sloping demand curve is always negative. 
D) A linear downward-sloping demand curve has a varying price elasticity coefficient. 
A) The value of the price elasticity of demand is the reciprocal of the value of the demand curve's slope. 
B) If quantity demanded changes by a larger percentage than the percentage change in price,demand is elastic. 
C) The value of the price elasticity of demand along a downward-sloping demand curve is always negative. 
D) A linear downward-sloping demand curve has a varying price elasticity coefficient.

Exam 6: Elasticity: the Responsiveness of Demand and Supply

If a 6 percent increase in income leads to a 4 percent increase in quantity demanded for audio books,the income elasticity of demand is

If the quantity demanded for a good rises as income rises then the income elasticity of demand for this good is ________ than 0,and the good is ________ good.

If at a price of $50,Ghani sells 20 hand-made leather cell-phone covers but at a price of $60,zero units are sold.Based on this information,the demand for his cell-phone covers is

The process involved in bringing oil to world markets can take years.Substitutes for oil-based products such as gasoline are limited.As a result

The price elasticity of the supply of teenage labor services is approximately 1.36.Suppose the minimum wage rises from $7.25 per hour to $8.75.Using the midpoint formula,what is the approximate change in the quantity of teenage labor supplied?

Suppose a decrease in the supply of wheat results in an increase in revenue.This indicates that

If at a price of $10,a vendor sells 5 units of a product and at a price of $8,6 units are sold,then,using the midpoint formula,the demand for this good is inelastic.

Carrie Bradshaw claims that when it comes to buying shoes,"price is no object." If this is true,then her demand for shoes is

Figure 6-4 -Refer to Figure 6-4.Which of the following statements about price elasticity of demand is true?

If the demand for a product is elastic,the quantity demanded changes by a larger percentage than the percentage change in price.

Most food products have low income and price elasticities of demand.

The price elasticity of supply measures

The demand for gasoline is perfectly inelastic because most people need gasoline to drive their cars.

Suppose the demand curve for a product is represented by a typical downward-sloping curve.Now suppose the demand for this product decreases.Which of the following statements accurately predicts the resulting decrease in price?

Suppose that when the price per ream of recycled printer paper rises from $4 to $4.50,the quantity demanded falls from 800 to 600 reams per day.Using the midpoint formula,what is the price elasticity of demand (in absolute value)over this range?

The price elasticity of supply is usually a positive number because

The price of wheat has fallen since 1950.Which of the following explains this price decline?

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

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

Externalities, environmental Policy, and Public Goods

The Economics of Health Care

Firms,the Stock Market,and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology,production,and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a More Realistic Setting

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

Pricing Strategy

The Markets for Labor and Other Factors of Production

Public Choice, taxes, and the Distribution of Income

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money,banks,and the Federal Reserve System

Monetary Policy

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

If the quantity demanded for a good rises as income rises then the income elasticity of demand for this good is than 0,and the good is good.