Question 1

Which of the following would most likely be highly price-elastic?

Accepted Answer

A) The demand for milk by a household 
B) The demand for insulin by a diabetes patient 
C) The demand for water 
D) The demand for new houses 
E) The demand for coal over a period of one month 
A) The demand for milk by a household 
B) The demand for insulin by a diabetes patient 
C) The demand for water 
D) The demand for new houses 
E) The demand for coal over a period of one month

Question 2

If a 10 percent increase in price leads to a 20 percent increase in quantity supplied, then the elasticity of supply is 0.5.

Accepted Answer

A) True 
 B)False

Question 3

The table below shows the quantities of automobiles, margarine, and coffee purchased by Ted at different levels of income. Table 19.2
  Refer to Table 19.2.What is the income elasticity of demand for automobiles?

Accepted Answer

A) 0.5 
B) 0.35 
C) 2 
D) 0.2 
E) Zero 
A) 0.5 
B) 0.35 
C) 2 
D) 0.2 
E) Zero

Question 4

Acme Tools manufactures anvils, a forging tool.When the price of anvils was increased from $7 to $13, Acme Tools was willing and able to increase production from 1 to 4 units per day.Using the midpoint formula, what is Acme's price elasticity of supply for anvils?

Accepted Answer

A) 2 
B) 1 
C) 0.5 
D) 4 
E) 3.5 
A) 2 
B) 1 
C) 0.5 
D) 4 
E) 3.5

Question 5

If demand is unit-elastic, a 25 percent increase in price will result in:

Accepted Answer

A) a 25 percent change in total revenue. 
B) no change in quantity demanded. 
C) a 1 percent decrease in quantity demanded. 
D) a 25 percent decrease in quantity demanded. 
E) a 100 percent change in quantity demanded. 
A) a 25 percent change in total revenue. 
B) no change in quantity demanded. 
C) a 1 percent decrease in quantity demanded. 
D) a 25 percent decrease in quantity demanded. 
E) a 100 percent change in quantity demanded.

Question 6

Supply curves applicable to shorter periods of time tend to:

Accepted Answer

A) be represented by horizontal lines parallel to the quantity axis. 
B) be perfectly elastic. 
C) be more inelastic than supply curves that apply to longer periods of time. 
D) be more elastic than supply curves that apply to longer periods of time. 
E) have a price elasticity of supply that is approximately equal to 1. 
A) be represented by horizontal lines parallel to the quantity axis. 
B) be perfectly elastic. 
C) be more inelastic than supply curves that apply to longer periods of time. 
D) be more elastic than supply curves that apply to longer periods of time. 
E) have a price elasticity of supply that is approximately equal to 1.

Question 7

The coefficient of the price elasticity of demand is always negative.

Accepted Answer

A) True 
 B)False

Question 8

If consumer income increases, then the demand shifts right for an inferior good.

Accepted Answer

A) True 
 B)False

Question 9

Price elasticity of demand is a measure of the:

Accepted Answer

A) extent of competition in the market. 
B) change in the purchase of a product relative to a change in income. 
C) change in the quantity demanded due to factors other than price. 
D) degree of consumer responsiveness to changes in price. 
E) percentage change in the prices of two related products. 
A) extent of competition in the market. 
B) change in the purchase of a product relative to a change in income. 
C) change in the quantity demanded due to factors other than price. 
D) degree of consumer responsiveness to changes in price. 
E) percentage change in the prices of two related products.

Question 10

Price elasticity of demand measures the responsiveness of quantity demanded in a market to a change in price.

Accepted Answer

A) True 
 B)False

Question 11

Which of the following is an example of inelastic demand?

Accepted Answer

A) A 10 percent increase in the price of milk leads to a 20 percent decrease in the quantity demanded of milk. 
B) A 10 percent increase in the price of milk leads to a 10 percent decrease in the quantity demanded of milk. 
C) A 10 percent increase in the price of milk leads to a 5 percent decrease in the quantity demanded of milk. 
D) A 10 percent increase in the price of milk leads to no change in the quantity demanded of milk. 
E) A 10 percent increase in the price of milk leads to a 5 percent increase in the quantity demanded of milk. 
A) A 10 percent increase in the price of milk leads to a 20 percent decrease in the quantity demanded of milk. 
B) A 10 percent increase in the price of milk leads to a 10 percent decrease in the quantity demanded of milk. 
C) A 10 percent increase in the price of milk leads to a 5 percent decrease in the quantity demanded of milk. 
D) A 10 percent increase in the price of milk leads to no change in the quantity demanded of milk. 
E) A 10 percent increase in the price of milk leads to a 5 percent increase in the quantity demanded of milk.

Question 12

Ceteris paribus, if a 20 percent increase in the price of shoes leads to a 10 percent increase in the quantity supplied of shoes, then the price elasticity of supply is equal to _____.

Accepted Answer

A) 2 
B) 20 
C) 10 
D) 0.5 
E) 0.2 
A) 2 
B) 20 
C) 10 
D) 0.5 
E) 0.2

Question 13

When the price of hot dogs at the supermarket increases, the quantity demanded of hot dog buns declines.This situation describes:

Accepted Answer

A) the income elasticity of demand for hot dogs. 
B) the income elasticity of demand for hot dog buns. 
C) the price elasticity of supply for hot dogs. 
D) the cross-price elasticity of demand for hot dogs and hot dog buns. 
E) the cross-price elasticity of supply for hot dogs and hot dog buns. 
A) the income elasticity of demand for hot dogs. 
B) the income elasticity of demand for hot dog buns. 
C) the price elasticity of supply for hot dogs. 
D) the cross-price elasticity of demand for hot dogs and hot dog buns. 
E) the cross-price elasticity of supply for hot dogs and hot dog buns.

Question 14

Which of the following statements correctly describe the elasticities of demand for gasoline and automobiles?

Accepted Answer

A) The income elasticity of demand for gasoline and automobiles is negative. 
B) The price elasticity of demand for gasoline is elastic and the cross-price elasticity between gasoline and SUVs is positive. 
C) The price elasticity of demand for gasoline is inelastic and the cross-price elasticity between gasoline and SUVs is negative. 
D) The price elasticity of demand for gasoline is inelastic and the income elasticity between gasoline and SUVs is positive. 
E) The price elasticity of demand for gasoline is elastic and the income elasticity between gasoline and SUVs is negative. 
A) The income elasticity of demand for gasoline and automobiles is negative. 
B) The price elasticity of demand for gasoline is elastic and the cross-price elasticity between gasoline and SUVs is positive. 
C) The price elasticity of demand for gasoline is inelastic and the cross-price elasticity between gasoline and SUVs is negative. 
D) The price elasticity of demand for gasoline is inelastic and the income elasticity between gasoline and SUVs is positive. 
E) The price elasticity of demand for gasoline is elastic and the income elasticity between gasoline and SUVs is negative.

Question 15

The table below shows the quantities of automobiles, margarine, and coffee purchased by Ted at different levels of income. Table 19.2
  Based on the information given in Table 19.2, coffee would be considered:

Accepted Answer

A) an inferior good. 
B) a necessity. 
C) a normal good. 
D) a negative good. 
E) a luxury good. 
A) an inferior good. 
B) a necessity. 
C) a normal good. 
D) a negative good. 
E) a luxury good.

Question 16

Which of the following items is likely to have the highest positive income elasticity of demand?

Accepted Answer

A) Bread 
B) Jewelry 
C) Soap 
D) A plumber's service 
E) Table salt 
A) Bread 
B) Jewelry 
C) Soap 
D) A plumber's service 
E) Table salt

Question 17

If the demand for beans tends to decline as incomes rise, everything else held constant, beans are _____.

Accepted Answer

A) a luxury good 
B) a normal good 
C) price sensitive 
D) not price sensitive 
E) an inferior good 
A) a luxury good 
B) a normal good 
C) price sensitive 
D) not price sensitive 
E) an inferior good

Question 18

If a price increase from $20 to $40 causes quantity demanded to decrease from 100 units to 50 units, one can conclude that demand for the product is _____.

Accepted Answer

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

Question 19

When the income elasticity of demand for a good is negative, the good is called a luxury good.

Accepted Answer

A) True 
 B)False

Question 20

If a 50 percent increase in the price of pizza results in a 25 percent decrease in the quantity demanded of pizza, then the elasticity of demand for pizza:

Accepted Answer

A) is equal to 0.5 and demand is inelastic. 
B) is equal to 0.5 and demand is elastic. 
C) is equal to 2 and is elastic. 
D) is equal to 2 and is inelastic. 
E) cannot be determined from the information provided. 
A) is equal to 0.5 and demand is inelastic. 
B) is equal to 0.5 and demand is elastic. 
C) is equal to 2 and is elastic. 
D) is equal to 2 and is inelastic. 
E) cannot be determined from the information provided.

Exam 33: Elasticity: Demand and Supply

Which of the following would most likely be highly price-elastic?

If a 10 percent increase in price leads to a 20 percent increase in quantity supplied, then the elasticity of supply is 0.5.

The table below shows the quantities of automobiles, margarine, and coffee purchased by Ted at different levels of income. Table 19.2 Refer to Table 19.2.What is the income elasticity of demand for automobiles?

Acme Tools manufactures anvils, a forging tool.When the price of anvils was increased from $7 to $13, Acme Tools was willing and able to increase production from 1 to 4 units per day.Using the midpoint formula, what is Acme's price elasticity of supply for anvils?

If demand is unit-elastic, a 25 percent increase in price will result in:

Supply curves applicable to shorter periods of time tend to:

The coefficient of the price elasticity of demand is always negative.

If consumer income increases, then the demand shifts right for an inferior good.

Price elasticity of demand is a measure of the:

Price elasticity of demand measures the responsiveness of quantity demanded in a market to a change in price.

Which of the following is an example of inelastic demand?

Ceteris paribus, if a 20 percent increase in the price of shoes leads to a 10 percent increase in the quantity supplied of shoes, then the price elasticity of supply is equal to _____.

When the price of hot dogs at the supermarket increases, the quantity demanded of hot dog buns declines.This situation describes:

Which of the following statements correctly describe the elasticities of demand for gasoline and automobiles?

The table below shows the quantities of automobiles, margarine, and coffee purchased by Ted at different levels of income. Table 19.2 Based on the information given in Table 19.2, coffee would be considered:

Which of the following items is likely to have the highest positive income elasticity of demand?

If the demand for beans tends to decline as incomes rise, everything else held constant, beans are _____.

If a price increase from $20 to $40 causes quantity demanded to decrease from 100 units to 50 units, one can conclude that demand for the product is _____.

When the income elasticity of demand for a good is negative, the good is called a luxury good.

If a 50 percent increase in the price of pizza results in a 25 percent decrease in the quantity demanded of pizza, then the elasticity of demand for pizza:

Economics: The World Around You

Choice, Opportunity Costs, and Specialization

Markets, Demand and Supply, and the Price System

The Market System and the Private and Public Sector

Elasticity: Demand and Supply

National Income Accounting

an Introduction to the Foreign Exchange Market and the Balance of Payments

Consumer Choice

Supply: The Costs of Doing Business

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Profit Maximization

Aggregate Expenditures

Perfect Competition

Income and Expenditures Equilibrium

Monopoly

Fiscal Policy

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Money and Banking

Market Failures, Government Failures, and Rent Seeking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Resource Markets

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

The Labor Market

Capital Markets

Economic Growth

Development Economics

the Land Market and Natural Resources

Aging, Social Security and Health Care

Globalization

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

Consumer Choice

International Trade Restrictions

World Trade Equilibrium

Exchange Rates and Financial Links Between Countries

International Trade Restrictions

Supply: the Costs of Doing Business

Exchange Rates and Financial Links Between Countries

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Antitrust and Regulation

Market Failures, Government Failures, and Rent Seeking

Resource Markets

The Labor Market

Capital Markets

The Land Market and Natural Resources

Aging, Social Security and Health Care

Income Distribution, Poverty and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

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