Question 1

If your friend says, "I am never going to buy another Avicii remix again!" his price elasticity of demand for Avicii remixes is:

Accepted Answer

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

Question 2

Refer to the following graphs to answer the  questions.
Graph A
Graph B
Graph C
Graph D
Graph E
-Graph most likely shows the price elasticity of demand for the following situation: Bob's Boots can sell out its entire stock of shoe polish at $2.50 but can sell none if it raises the price to $2.55.

Accepted Answer

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

Question 3

For each of the following situations, explain whether the demand for Gatorade would become more elastic or less elastic and why.
a. Competitors introduce new brands of sports drinks into the market.
b. A study finds that Gatorade consumption improves player performance.
c. Consumer spending studies show that people spend a small proportion of their budget on Gatorade.

Accepted Answer

a. There are more substitutes available,

Question 4

Jill has a fixed budget and buys all of the items listed below. When will a 20% reduction in price cause her to change the amount she buys the most?

Accepted Answer

A)  scented candles, regular price is $25 
B)  jasmine rice, regular price is $4/lb 
C)  GAP jeans, regular price is $75 
D)  flat-screen LCD TV, regular price is $400 
E)  living room couch, regular price is $300 
A)  scented candles, regular price is $25 
B)  jasmine rice, regular price is $4/lb 
C)  GAP jeans, regular price is $75 
D)  flat-screen LCD TV, regular price is $400 
E)  living room couch, regular price is $300

Question 5

From the accompanying table, we can see that the demand curve for ice skates by hockey players will be the demand curve for recreational skaters. $$\begin{array} { | l | c | c | } 
\hline \begin{array} { l } 
\text { Price of Ice } \
\text { Skates }
\end{array} & \begin{array} { l } 
\text { Quantity } \
\text { Demanded } \
\text { (hockey } \
\text { players) }
\end{array} & \begin{array} { l } 
\text { Quantity } \
\text { Demanded } \
\text { (recreational } \
\text { skaters) }
\end{array} \
\hline \$ 10 & 95 & 70 \
\hline \$ 20 & 85 & 60 \
\hline \$ 40 & 75 & 45 \
\hline \$ 50 & 65 & 25 \
\hline \$ 60 & 60 & 5 \
\hline
\end{array}$$

Accepted Answer

A)  steeper than 
B)  flatter than 
C)  unrelated to 
D)  the same as 
E)  the inverse of 
A)  steeper than 
B)  flatter than 
C)  unrelated to 
D)  the same as 
E)  the inverse of

Question 6

The local National Hockey League (NHL) team decides to lower its ticket prices in order to attract more fans. They are hoping that the:

Accepted Answer

A)  price elasticity of demand is perfectly inelastic. 
B)  price decrease matters more than the quantity increase to total revenue. 
C)  quantity increase matters more than the price decrease to total revenue. 
D)  price elasticity of demand is unitary elastic. 
E)  price elasticity of demand is perfectly elastic. 
A)  price elasticity of demand is perfectly inelastic. 
B)  price decrease matters more than the quantity increase to total revenue. 
C)  quantity increase matters more than the price decrease to total revenue. 
D)  price elasticity of demand is unitary elastic. 
E)  price elasticity of demand is perfectly elastic.

Question 7

A professional hockey arena has a maximum seating capacity of 20,000 people. The price elasticity of supply is:

Accepted Answer

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

Question 8

If the price elasticity of demand for Good A is -0.2 and the price increases from $2.25 to $2.75, the percentage change in the quantity demanded of Good A is:

Accepted Answer

A)  -100%. 
B)  100%. 
C)  4.0% 
D)  -4.0%. 
E)  unknown because not enough information is provided. 
A)  -100%. 
B)  100%. 
C)  4.0% 
D)  -4.0%. 
E)  unknown because not enough information is provided.

Question 9

If the cross-price elasticity of demand between Good A and Good B is 3, the price of Good B increases, and the price elasticity of demand for Good B is inelastic, we can expect to see a(n) change in the quantity demanded for Good A.

Accepted Answer

A)  zero 
B)  small 
C)  infinite 
D)  one-for-one 
E)  large 
A)  zero 
B)  small 
C)  infinite 
D)  one-for-one 
E)  large

Question 10

Refer to the accompanying table. The price elasticity of demand of erasers is when the price is lowered from $1.50 to $1.00. Sellers of erasers will their total revenue from this price change. $$\begin{array} { | l | c | c | } 
\hline \begin{array} { l } 
\text { Price of } \
\text { Erasers }
\end{array} & \begin{array} { l } 
\text { Quantity } \
\text { Demanded of } \
\text { Erasers }
\end{array} & \begin{array} { l } 
\text { Quantity } \
\text { Demanded of } \
\text { Pencils }
\end{array} \
\hline \$ 0.50 & 10 & 12 \
\hline \$ 1.00 & 8 & 11 \
\hline \$ 1.50 & 7 & 10 \
\hline \$ 2.00 & 6 & 9 \
\hline \$ 2.50 & 5 & 8 \
\hline
\end{array}$$

Accepted Answer

A)  perfectly elastic; not change 
B)  elastic; raise 
C)  elastic; lower 
D)  inelastic; lower 
E)  inelastic; raise 
A)  perfectly elastic; not change 
B)  elastic; raise 
C)  elastic; lower 
D)  inelastic; lower 
E)  inelastic; raise

Question 11

Chris runs a sporting goods store and knows that the price elasticity of demand for his sports clothing line is -1.5. He is planning to lower prices by 10%. The percentage change in quantity demanded will be:

Accepted Answer

A)  15%. 
B)  0.15%. 
C)  6.66%. 
D)  0.06%. 
E)  8.50%. 
A)  15%. 
B)  0.15%. 
C)  6.66%. 
D)  0.06%. 
E)  8.50%.

Question 12

If the elasticity of demand for Good A is -3, a 33% decrease in quantity demanded of Good A results from a(n):

Accepted Answer

A)  99% decrease in the price of Good A. 
B)  99% increase in the price of Good A. 
C)  11% decrease in the price of Good A. 
D)  11% increase in the price of Good A. 
E)  33% decrease in the price of Good A. 
A)  99% decrease in the price of Good A. 
B)  99% increase in the price of Good A. 
C)  11% decrease in the price of Good A. 
D)  11% increase in the price of Good A. 
E)  33% decrease in the price of Good A.

Question 13

When Heavenly Cookies prices its sugar cookies at $1.00, they sell 75 cookies. They lowered the price to $0.50 and sold 200 cookies. Their total revenue because the price elasticity of demand for sugar cookies is .

Accepted Answer

A)  rose; elastic 
B)  rose; inelastic 
C)  fell; elastic 
D)  fell; inelastic 
E)  stayed the same; unitary elastic 
A)  rose; elastic 
B)  rose; inelastic 
C)  fell; elastic 
D)  fell; inelastic 
E)  stayed the same; unitary elastic

Question 14

The Sunny Softball league found that, when it changed its ticket prices from $10 to $5, there was a more than proportional but not infinite increase in attendance. The price elasticity of demand is:

Accepted Answer

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

Question 15

Suppose that the supply curve for televisions is linear and has a slope of 1. Graph the effect of the following on the supply curve and explain each:
a. The availability of inputs (LED screens and wires) for increases for televisions.
b. The time period of supply under consideration shortens to the upcoming week.

Accepted Answer

a.
The increased availability of inputs

Question 16

Firms supplying twisty-ties decrease the quantity supplied of inputs by 10% when the price decreases by 5%. The price elasticity of supply for twisty-ties is:

Accepted Answer

A)  4.0. 
B)  0.4. 
C)  2.0. 
D)  0.2. 
E)  1.0. 
A)  4.0. 
B)  0.4. 
C)  2.0. 
D)  0.2. 
E)  1.0.

Question 17

Refer to the accompanying table to answer the  questions. $$\begin{array} { | l | c | c | } 
\hline \begin{array} { l } 
\text { Price of } \
\text { Erasers }
\end{array} & \begin{array} { l } 
\text { Quantity } \
\text { Demanded of } \
\text { Erasers }
\end{array} & \begin{array} { l } 
\text { Quantity } \
\text { Demanded of } \
\text { Pencils }
\end{array} \
\hline \$ .50 & 10 & 12 \
\hline \$ 1.00 & 8 & 11 \
\hline \$ 1.50 & 7 & 10 \
\hline \$ 2.00 & 6 & 9 \
\hline \$ 2.50 & 5 & 8 \
\hline
\end{array}$$
-The price of erasers increases from $0.50 to $1.00 per eraser. Use the midpoint method to calculate the cross-price elasticity of demand between pencils and erasers.

Accepted Answer

A)  -0.13 
B)  7.67 
C)  -7.67 
D)  0.13 
E)  -3 
A)  -0.13 
B)  7.67 
C)  -7.67 
D)  0.13 
E)  -3

Question 18

When the price increases by 30% and the quantity demanded drops by 30%, the price elasticity of demand is:

Accepted Answer

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

Question 19

"No matter the price, I will always buy five gallons of ice cream a week. I love ice cream!" This statement reflects a price elasticity of demand that is:

Accepted Answer

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

Question 20

Which one of the following pairs of goods is likely to have a positive cross-price elasticity of demand?

Accepted Answer

A)  chocolate ice cream and sprinkles 
B)  ice cream shakes and hamburgers 
C)  fries and ketchup 
D)  Pepsi and Coke 
E)  onion rings and chicken strips 
A)  chocolate ice cream and sprinkles 
B)  ice cream shakes and hamburgers 
C)  fries and ketchup 
D)  Pepsi and Coke 
E)  onion rings and chicken strips

If your friend says, "I am never going to buy another Avicii remix again!" his price elasticity of demand for Avicii remixes is:

Refer to the following graphs to answer the questions. Graph A Graph B Graph C Graph D Graph E -Graph most likely shows the price elasticity of demand for the following situation: Bob's Boots can sell out its entire stock of shoe polish at $2.50 but can sell none if it raises the price to $2.55.

Jill has a fixed budget and buys all of the items listed below. When will a 20% reduction in price cause her to change the amount she buys the most?

From the accompanying table, we can see that the demand curve for ice skates by hockey players will be the demand curve for recreational skaters. Price of Ice Skates Quantity Demanded (hockey players) Quantity Demanded (recreational skaters) \ 10 95 70 \ 20 85 60 \ 40 75 45 \ 50 65 25 \ 60 60 5

The local National Hockey League (NHL) team decides to lower its ticket prices in order to attract more fans. They are hoping that the:

A professional hockey arena has a maximum seating capacity of 20,000 people. The price elasticity of supply is:

If the price elasticity of demand for Good A is -0.2 and the price increases from $2.25 to $2.75, the percentage change in the quantity demanded of Good A is:

If the cross-price elasticity of demand between Good A and Good B is 3, the price of Good B increases, and the price elasticity of demand for Good B is inelastic, we can expect to see a(n) change in the quantity demanded for Good A.

Chris runs a sporting goods store and knows that the price elasticity of demand for his sports clothing line is -1.5. He is planning to lower prices by 10%. The percentage change in quantity demanded will be:

If the elasticity of demand for Good A is -3, a 33% decrease in quantity demanded of Good A results from a(n):

When Heavenly Cookies prices its sugar cookies at $1.00, they sell 75 cookies. They lowered the price to $0.50 and sold 200 cookies. Their total revenue because the price elasticity of demand for sugar cookies is .

The Sunny Softball league found that, when it changed its ticket prices from $10 to $5, there was a more than proportional but not infinite increase in attendance. The price elasticity of demand is:

Firms supplying twisty-ties decrease the quantity supplied of inputs by 10% when the price decreases by 5%. The price elasticity of supply for twisty-ties is:

When the price increases by 30% and the quantity demanded drops by 30%, the price elasticity of demand is:

"No matter the price, I will always buy five gallons of ice cream a week. I love ice cream!" This statement reflects a price elasticity of demand that is:

Which one of the following pairs of goods is likely to have a positive cross-price elasticity of demand?

The Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Price Controls

The Efficiency of Markets and the Costs of Taxation

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Understanding Monopoly

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

The Demand and Supply of Resources

Income, Inequality, and Poverty

Consumer Choice

Behavioral Economics and Risk Taking

Health Insurance and Health Care

Filters

Exam 4: Elasticity

If your friend says, "I am never going to buy another Avicii remix again!" his price elasticity of demand for Avicii remixes is:

Refer to the following graphs to answer the questions. Graph A Graph B Graph C Graph D Graph E -Graph most likely shows the price elasticity of demand for the following situation: Bob's Boots can sell out its entire stock of shoe polish at $2.50 but can sell none if it raises the price to $2.55.

Jill has a fixed budget and buys all of the items listed below. When will a 20% reduction in price cause her to change the amount she buys the most?

From the accompanying table, we can see that the demand curve for ice skates by hockey players will be the demand curve for recreational skaters. Price of Ice Skates Quantity Demanded (hockey players) Quantity Demanded (recreational skaters) \ 10 95 70 \ 20 85 60 \ 40 75 45 \ 50 65 25 \ 60 60 5

The local National Hockey League (NHL) team decides to lower its ticket prices in order to attract more fans. They are hoping that the:

A professional hockey arena has a maximum seating capacity of 20,000 people. The price elasticity of supply is:

If the price elasticity of demand for Good A is -0.2 and the price increases from $2.25 to $2.75, the percentage change in the quantity demanded of Good A is:

If the cross-price elasticity of demand between Good A and Good B is 3, the price of Good B increases, and the price elasticity of demand for Good B is inelastic, we can expect to see a(n) change in the quantity demanded for Good A.

Chris runs a sporting goods store and knows that the price elasticity of demand for his sports clothing line is -1.5. He is planning to lower prices by 10%. The percentage change in quantity demanded will be:

If the elasticity of demand for Good A is -3, a 33% decrease in quantity demanded of Good A results from a(n):

When Heavenly Cookies prices its sugar cookies at $1.00, they sell 75 cookies. They lowered the price to $0.50 and sold 200 cookies. Their total revenue because the price elasticity of demand for sugar cookies is .

The Sunny Softball league found that, when it changed its ticket prices from $10 to $5, there was a more than proportional but not infinite increase in attendance. The price elasticity of demand is:

Firms supplying twisty-ties decrease the quantity supplied of inputs by 10% when the price decreases by 5%. The price elasticity of supply for twisty-ties is:

When the price increases by 30% and the quantity demanded drops by 30%, the price elasticity of demand is:

"No matter the price, I will always buy five gallons of ice cream a week. I love ice cream!" This statement reflects a price elasticity of demand that is:

Which one of the following pairs of goods is likely to have a positive cross-price elasticity of demand?

The Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Price Controls

The Efficiency of Markets and the Costs of Taxation

Market Inefficiencies: Externalities and Public Goods

Business Costs and Production

Firms in a Competitive Market

Understanding Monopoly

Price Discrimination

Monopolistic Competition and Advertising

Oligopoly and Strategic Behavior

The Demand and Supply of Resources

Income, Inequality, and Poverty

Consumer Choice

Behavioral Economics and Risk Taking

Health Insurance and Health Care

Filters