Question 1

The initial price of picture frames is $6 and suppliers offer 20 frames. When the price falls to $4, suppliers offer only 10. The price elasticity of supply is:

Accepted Answer

A)  0.33. 
B)  0.67. 
C)  1.67. 
D)  0.60. 
E)  0.40. 
A)  0.33. 
B)  0.67. 
C)  1.67. 
D)  0.60. 
E)  0.40.

Question 2

Assume that the market for pencils is in equilibrium and that demand is very price elastic. The popularity of digital tablets and electronic pens increases and demand for pencils declines. The equilibrium change in quantity demanded is:

Accepted Answer

A)  0 (zero). 
B)  relatively small. 
C)  proportional to the shift in demand. 
D)  relatively large. 
E)  infinite. 
A)  0 (zero). 
B)  relatively small. 
C)  proportional to the shift in demand. 
D)  relatively large. 
E)  infinite.

Question 3

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

Accepted Answer

A)  purses and backpacks 
B)  sofas and dining room tables 
C)  manicures and pedicures 
D)  shoes and socks 
E)  trucks and sedans 
A)  purses and backpacks 
B)  sofas and dining room tables 
C)  manicures and pedicures 
D)  shoes and socks 
E)  trucks and sedans

Question 4

If the price elasticity of supply is 1.5, we know that supply is:

Accepted Answer

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

Question 5

If a business finds that demand for its good is very price elastic, it knows that:

Accepted Answer

A)  price is very important. 
B)  price is unimportant. 
C)  price is unrelated. 
D)  the effect of price is less important than the impact of the quantity consumers buy. 
E)  the quantity consumers buy is unimportant. 
A)  price is very important. 
B)  price is unimportant. 
C)  price is unrelated. 
D)  the effect of price is less important than the impact of the quantity consumers buy. 
E)  the quantity consumers buy is unimportant.

Question 6

Refer to the following graphs to answer the  questions.
Graph A
Graph B
Graph C
Graph D
Graph E
-Which of these graphs most likely depicts a price elasticity of demand of -5?

Accepted Answer

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

Question 7

If the cross-price elasticity of demand is -5, Good A and Good B are:

Accepted Answer

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

Question 8

There was a more than proportional decrease in quantity demanded for cupcakes when the local baker raised the price by 20%. The price elasticity of demand for cupcakes is:

Accepted Answer

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

Question 9

Graph and explain the appropriate shape of the supply or demand curve for Jimmy's Jammin Jelly Beans when:
a. there is a hurricane that destroys most sugarcane fields.
b. a new candy vendor opens a shop in town.
c. Jimmy's Jammin Jelly Beans become the hottest item to have at parties.

Accepted Answer

a.
Sugar, a key input into jelly beans,

Question 10

At a price of $2, the quantity demanded for pens is 12. When the price increases to $3, the quantity demanded for pens is 10. The price elasticity of demand for pens is:

Accepted Answer

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

Question 11

As you move left along the demand curve, the price elasticity of demand:

Accepted Answer

A)  becomes more inelastic. 
B)  becomes more elastic. 
C)  does not change. 
D)  becomes infinite. 
E)  moves closer to zero. 
A)  becomes more inelastic. 
B)  becomes more elastic. 
C)  does not change. 
D)  becomes infinite. 
E)  moves closer to zero.

Question 12

When the price of scooters drops by 5%, the quantity demanded changes by 20%. You know that the price elasticity of demand for scooters is:

Accepted Answer

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

Question 13

If the price elasticity of supply is 2.5, we know that it is:

Accepted Answer

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

Question 14

The price elasticity supply of doctors could be considered because it takes a minimum of four to six years of training to be able to work as a physician.

Accepted Answer

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

Question 15

Price elasticity of demand is measured as the:

Accepted Answer

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

Question 16

The makers of academic books find that, when they raise the price of the average book from $50 to $75, quantity demanded among students drops from 100 to 90. Among casual readers, quantity demanded drops from 80 to 40.
a. Calculate the price elasticity of demand for each group.
b. Is demand price elastic or price inelastic for each group?
c. Using the determinants of demand, explain why there is a difference in elasticity for each group.

Accepted Answer

a. Students:= percentage change in quant

Question 17

Refer to the information in the accompanying table. Without any calculations, you know that sushi is a(n): $$\begin{array} { | l | c | c | } 
\hline \begin{array} { l } 
\text { Price(per } \
\text { roll) }
\end{array} & \begin{array} { l } 
\text { Quantity } \
\text { Demanded } \
\text { (income } \
\$ 10,000 / \text { year) }
\end{array} & \begin{array} { l } 
\text { Quantity } \
\text { Demanded } \
\text { (income= } \
\$ 30,000 / \text { year) }
\end{array} \
\hline \$ 1 & 5 & 9 \
\hline \$ 2 & 4 & 8 \
\hline \$ 3 & 3 & 7 \
\hline \$ 4 & 2 & 6 \
\hline \$ 5 & 1 & 5 \
\hline
\end{array}$$

Accepted Answer

A)  necessity. 
B)  substitute for fish sticks. 
C)  normal good. 
D)  inferior good. 
E)  complement to sake. 
A)  necessity. 
B)  substitute for fish sticks. 
C)  normal good. 
D)  inferior good. 
E)  complement to sake.

Question 18

As you move right along a demand curve, the price elasticity of demand:

Accepted Answer

A)  becomes more inelastic. 
B)  becomes more elastic. 
C)  does not change. 
D)  becomes infinite. 
E)  moves closer to zero. 
A)  becomes more inelastic. 
B)  becomes more elastic. 
C)  does not change. 
D)  becomes infinite. 
E)  moves closer to zero.

Question 19

Cross-price elasticity measures the relationship between:

Accepted Answer

A)  normal goods and inferior goods. 
B)  complements and inferior goods. 
C)  necessities and luxuries. 
D)  two goods and services. 
E)  income and substitute goods. 
A)  normal goods and inferior goods. 
B)  complements and inferior goods. 
C)  necessities and luxuries. 
D)  two goods and services. 
E)  income and substitute goods.

Question 20

Price elasticity of demand measures the change in:

Accepted Answer

A)  quantity demanded due to the change in price. 
B)  demand due to the change in price. 
C)  quantity demanded due to the change in price of another good/service. 
D)  price due to a change in quantity demanded. 
E)  price due to the change in demand. 
A)  quantity demanded due to the change in price. 
B)  demand due to the change in price. 
C)  quantity demanded due to the change in price of another good/service. 
D)  price due to a change in quantity demanded. 
E)  price due to the change in demand.

The initial price of picture frames is $6 and suppliers offer 20 frames. When the price falls to $4, suppliers offer only 10. The price elasticity of supply is:

Assume that the market for pencils is in equilibrium and that demand is very price elastic. The popularity of digital tablets and electronic pens increases and demand for pencils declines. The equilibrium change in quantity demanded is:

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

If the price elasticity of supply is 1.5, we know that supply is:

If a business finds that demand for its good is very price elastic, it knows that:

Refer to the following graphs to answer the questions. Graph A Graph B Graph C Graph D Graph E -Which of these graphs most likely depicts a price elasticity of demand of -5?

If the cross-price elasticity of demand is -5, Good A and Good B are:

There was a more than proportional decrease in quantity demanded for cupcakes when the local baker raised the price by 20%. The price elasticity of demand for cupcakes is:

Graph and explain the appropriate shape of the supply or demand curve for Jimmy's Jammin Jelly Beans when: a. there is a hurricane that destroys most sugarcane fields. b. a new candy vendor opens a shop in town. c. Jimmy's Jammin Jelly Beans become the hottest item to have at parties.

At a price of $2, the quantity demanded for pens is 12. When the price increases to $3, the quantity demanded for pens is 10. The price elasticity of demand for pens is:

As you move left along the demand curve, the price elasticity of demand:

When the price of scooters drops by 5%, the quantity demanded changes by 20%. You know that the price elasticity of demand for scooters is:

If the price elasticity of supply is 2.5, we know that it is:

The price elasticity supply of doctors could be considered because it takes a minimum of four to six years of training to be able to work as a physician.

Price elasticity of demand is measured as the:

Refer to the information in the accompanying table. Without any calculations, you know that sushi is a(n): Price(per roll) Quantity Demanded (income \ 10,000/ year) Quantity Demanded (income= \ 30,000/ year) \ 1 5 9 \ 2 4 8 \ 3 3 7 \ 4 2 6 \ 5 1 5

As you move right along a demand curve, the price elasticity of demand:

Cross-price elasticity measures the relationship between:

Price elasticity of demand measures the change in:

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

The initial price of picture frames is $6 and suppliers offer 20 frames. When the price falls to $4, suppliers offer only 10. The price elasticity of supply is:

Assume that the market for pencils is in equilibrium and that demand is very price elastic. The popularity of digital tablets and electronic pens increases and demand for pencils declines. The equilibrium change in quantity demanded is:

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

If the price elasticity of supply is 1.5, we know that supply is:

If a business finds that demand for its good is very price elastic, it knows that:

Refer to the following graphs to answer the questions. Graph A Graph B Graph C Graph D Graph E -Which of these graphs most likely depicts a price elasticity of demand of -5?

If the cross-price elasticity of demand is -5, Good A and Good B are:

There was a more than proportional decrease in quantity demanded for cupcakes when the local baker raised the price by 20%. The price elasticity of demand for cupcakes is:

Graph and explain the appropriate shape of the supply or demand curve for Jimmy's Jammin Jelly Beans when: a. there is a hurricane that destroys most sugarcane fields. b. a new candy vendor opens a shop in town. c. Jimmy's Jammin Jelly Beans become the hottest item to have at parties.

At a price of $2, the quantity demanded for pens is 12. When the price increases to $3, the quantity demanded for pens is 10. The price elasticity of demand for pens is:

As you move left along the demand curve, the price elasticity of demand:

When the price of scooters drops by 5%, the quantity demanded changes by 20%. You know that the price elasticity of demand for scooters is:

If the price elasticity of supply is 2.5, we know that it is:

The price elasticity supply of doctors could be considered because it takes a minimum of four to six years of training to be able to work as a physician.

Price elasticity of demand is measured as the:

Refer to the information in the accompanying table. Without any calculations, you know that sushi is a(n): Price(per roll) Quantity Demanded (income \ 10,000/ year) Quantity Demanded (income= \ 30,000/ year) \ 1 5 9 \ 2 4 8 \ 3 3 7 \ 4 2 6 \ 5 1 5

As you move right along a demand curve, the price elasticity of demand:

Cross-price elasticity measures the relationship between:

Price elasticity of demand measures the change in:

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