Question 1

A local sandwich shop can quickly place an order for food with its local vendors if it uses up its existing resources quickly. This indicates that the price elasticity of supply is:

Accepted Answer

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

Question 2

Pepsi vendors who raise their price at professional sporting events increase total revenue because the price elasticity of demand is . When they raise their prices at gas stations, they decrease total revenue because the price elasticity of demand is .

Accepted Answer

A)  elastic; inelastic 
B)  unitary elastic; elastic 
C)  elastic; elastic 
D)  inelastic; elastic 
E)  elastic; unitary elastic 
A)  elastic; inelastic 
B)  unitary elastic; elastic 
C)  elastic; elastic 
D)  inelastic; elastic 
E)  elastic; unitary elastic

Question 3

If the cross-price elasticity of demand between Good A and Good B is 2 and the percentage change in price of Good A is 5%, what is the percentage change in quantity demanded of Good B?

Accepted Answer

A)  3% 
B)  10% 
C)  -1.25% 
D)  1.50% 
E)  -3% 
A)  3% 
B)  10% 
C)  -1.25% 
D)  1.50% 
E)  -3%

Question 4

If the cross-price elasticity between Good A and Good B is -1.5 and the percentage change in quantity demanded of Good B is 15%, what is the percentage change in the price of Good A?

Accepted Answer

A)  -10% 
B)  -0.10% 
C)  -11.50% 
D)  -1% 
E)  11.50% 
A)  -10% 
B)  -0.10% 
C)  -11.50% 
D)  -1% 
E)  11.50%

Question 5

When the price of erasers increases from $1.50 to $2.50, the quantity demanded of pencils is unchanged. The cross-price elasticity of demand between erasers and pencils is because erasers and pencils .

Accepted Answer

A)  1; are substitutes 
B)  ½; are complements 
C)  0; are normal goods 
D)  0; are unrelated 
E)  -½; are complements 
A)  1; are substitutes 
B)  ½; are complements 
C)  0; are normal goods 
D)  0; are unrelated 
E)  -½; are complements

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 -0.2?

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

Zumba classes sell all 20 participant spots at a price of $4.50 each. When the instructor raised the prices to $5.50, 10 people attended the class. From the midpoint method, the price elasticity of demand for Zumba is:

Accepted Answer

A)  -0.50. 
B)  -3.33. 
C)  -2.50. 
D)  0.20. 
E)  -0.20. 
A)  -0.50. 
B)  -3.33. 
C)  -2.50. 
D)  0.20. 
E)  -0.20.

Question 8

If the income elasticity of demand for laptops is 3.5, you know that laptops are a(n):

Accepted Answer

A)  substitute good. 
B)  inferior good. 
C)  luxury good. 
D)  necessity good. 
E)  complement good. 
A)  substitute good. 
B)  inferior good. 
C)  luxury good. 
D)  necessity good. 
E)  complement good.

Question 9

Refer to the accompanying table. $$\begin{array} { | l | c | c | } 
\hline \text { Price } & \begin{array} { l } 
\text { Quantity of } \
\text { Televisions } ( \mathbf { Y } \
= \mathbf { 2 0 , 0 0 0 } )
\end{array} & \begin{array} { l } 
\text { Quantity of } \
\text { Televisions } ( \mathbf { Y } \
\mathbf { = 3 0 , 0 0 0 0 ) }
\end{array} \
\hline \$ 350 & 250 & 375 \
\hline \$ 450 & 200 & 325 \
\hline \$ 550 & 150 & 275 \
\hline \$ 650 & 100 & 225 \
\hline \$ 750 & 50 & 175 \
\hline
\end{array}$$ 
a. Calculate the price elasticity of demand when the price rises from $450 to $550 for an individual income of $20,000.
b. Is demand elastic or inelastic? Explain your answer to the elasticity of demand you calculated in part (a) and include the mathematical equation used to find it.

Accepted Answer

a. Price elasticity of demand = percenta

Question 10

In the accompanying table, assume that the price of ice skates increases from $10 to $20 per pair. Using the midpoint method, calculate the price elasticity of demand for ice skates for hockey players. $$\begin{array} { | l | c | c | } 
\hline \begin{array} { l } 
\text { Price of Ice } \
\text { Skates }
\end{array} & \begin{array} { l } 
\text { Quantity Demanded } \
\text { (hockey players) }
\end{array} & \begin{array} { l } 
\text { Quantity } \
\text { Demanded } \
\text { (recreational } \
\text { skaters) }
\end{array} \
\hline \$ 10 & 95 & 70 \
\hline \$ 20 & 85 & 60 \
\hline \$ 40 & 75 & 45 \
\hline \$ 50 & 65 & 25 \
\hline \$ 60 & 60 & 10 \
\hline
\end{array}$$

Accepted Answer

A)  -6.00 
B)  0.67 
C)  0.11 
D)  -0.16 
E)  3.00 
A)  -6.00 
B)  0.67 
C)  0.11 
D)  -0.16 
E)  3.00

Question 11

If the cross-price elasticity of demand between Good A and Good B is Ð2, the price of Good B increases, and the price elasticity of demand for Good B is elastic, we can expect to see a change in the quantity demanded for Good A.

Accepted Answer

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

Question 12

Howard buys 5 suits a year when he earns $70,000. When his income increases to $200,000, he buys 15 suits a year. From the midpoint method, his income elasticity of demand for suits is:

Accepted Answer

A)  1.04 
B)  0.96 
C)  -1.04 
D)  -0.96 
E)  0.08 
A)  1.04 
B)  0.96 
C)  -1.04 
D)  -0.96 
E)  0.08

Question 13

You are given a list of income elasticity of demand values. Which one represents a necessity?

Accepted Answer

A)  -5 
B)  -0.5 
C)  0 
D)  5 
E)  0.5 
A)  -5 
B)  -0.5 
C)  0 
D)  5 
E)  0.5

Question 14

A 15% increase in the price of cookies results in a 9% decrease in the quantity of cookies sold. The revenue received by cookie suppliers will because the price elasticity of demand for cookies is .

Accepted Answer

A)  decrease; inelastic 
B)  increase; elastic 
C)  decrease; elastic 
D)  not change; unitary elastic 
E)  increase; inelastic 
A)  decrease; inelastic 
B)  increase; elastic 
C)  decrease; elastic 
D)  not change; unitary elastic 
E)  increase; inelastic

Question 15

When the price elasticity of demand is elastic, a consumer is:

Accepted Answer

A)  completely unresponsive to a change in price. 
B)  relatively unresponsive to a change in price. 
C)  unaffected by a change in price. 
D)  relatively responsive to a change in price. 
E)  completely responsive to a change in price. 
A)  completely unresponsive to a change in price. 
B)  relatively unresponsive to a change in price. 
C)  unaffected by a change in price. 
D)  relatively responsive to a change in price. 
E)  completely responsive to a change in price.

Question 16

Demand for which of the following goods/services is likely to be the LEAST elastic in a Minnesota winter?

Accepted Answer

A)  a blue hooded sweatshirt with fur-lined pockets 
B)  a blue hooded sweatshirt 
C)  a hooded crew-neck sweatshirt 
D)  a blue sweatshirt 
E)  a sweatshirt 
A)  a blue hooded sweatshirt with fur-lined pockets 
B)  a blue hooded sweatshirt 
C)  a hooded crew-neck sweatshirt 
D)  a blue sweatshirt 
E)  a sweatshirt

Question 17

Refer to the accompanying table. When the price drops from $5 to $3, price elasticity of demand for sushi (using the midpoint method) at an income of $30,000 is: $$\begin{array} { | l | l | l | } 
\hline \begin{array} { l } 
\text { Price } \
\text { (per roll) }
\end{array} & \begin{array} { l } 
\text { Quantity Demanded } \
\text { (income } \
\$ 10,000 / \text { year) }
\end{array} & \begin{array} { l } 
\text { Quantity Demanded } \
\text { (income = } \
\$ 30,000 / \text { year) }
\end{array} \
\hline \$ 1 & 5 & 9 \
\hline \$ 2 & 4 & 8 \
\hline \$ 3 & 3 & 7 \
\hline \$ 4 & 2 & 6 \
\hline \$ 5 & 1 & 5 \
\hline
\end{array}$$

Accepted Answer

A)  0.71. 
B)  0.67. 
C)  0.10. 
D)  0.33. 
E)  -0.67. 
A)  0.71. 
B)  0.67. 
C)  0.10. 
D)  0.33. 
E)  -0.67.

Question 18

What good is most likely to have an income elasticity of demand equal to 8?

Accepted Answer

A)  a doctor's visit 
B)  toilet paper 
C)  used clothing 
D)  a five-star hotel 
E)  college coursework 
A)  a doctor's visit 
B)  toilet paper 
C)  used clothing 
D)  a five-star hotel 
E)  college coursework

Question 19

As price elasticity of supply becomes more elastic over time, the overall shape of the supply curve:

Accepted Answer

A)  becomes more vertical. 
B)  remains unchanged. 
C)  becomes closer to 45 degrees from the origin. 
D)  becomes completely vertical. 
E)  becomes more horizontal. 
A)  becomes more vertical. 
B)  remains unchanged. 
C)  becomes closer to 45 degrees from the origin. 
D)  becomes completely vertical. 
E)  becomes more horizontal.

Question 20

Henry raised his quantity demanded of hockey pucks from 100 to 150 when the price fell from $5 to $3 per puck. Using the midpoint method, his price elasticity of demand is:

Accepted Answer

A)  0.80 
B)  -1.25 
C)  -1.00 
D)  0.40 
E)  -0.80 
A)  0.80 
B)  -1.25 
C)  -1.00 
D)  0.40 
E)  -0.80

A local sandwich shop can quickly place an order for food with its local vendors if it uses up its existing resources quickly. This indicates that the price elasticity of supply is:

Pepsi vendors who raise their price at professional sporting events increase total revenue because the price elasticity of demand is . When they raise their prices at gas stations, they decrease total revenue because the price elasticity of demand is .

If the cross-price elasticity of demand between Good A and Good B is 2 and the percentage change in price of Good A is 5%, what is the percentage change in quantity demanded of Good B?

If the cross-price elasticity between Good A and Good B is -1.5 and the percentage change in quantity demanded of Good B is 15%, what is the percentage change in the price of Good A?

When the price of erasers increases from $1.50 to $2.50, the quantity demanded of pencils is unchanged. The cross-price elasticity of demand between erasers and pencils is because erasers and pencils .

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 -0.2?

Zumba classes sell all 20 participant spots at a price of $4.50 each. When the instructor raised the prices to $5.50, 10 people attended the class. From the midpoint method, the price elasticity of demand for Zumba is:

If the income elasticity of demand for laptops is 3.5, you know that laptops are a(n):

If the cross-price elasticity of demand between Good A and Good B is Ð2, the price of Good B increases, and the price elasticity of demand for Good B is elastic, we can expect to see a change in the quantity demanded for Good A.

Howard buys 5 suits a year when he earns $70,000. When his income increases to $200,000, he buys 15 suits a year. From the midpoint method, his income elasticity of demand for suits is:

You are given a list of income elasticity of demand values. Which one represents a necessity?

A 15% increase in the price of cookies results in a 9% decrease in the quantity of cookies sold. The revenue received by cookie suppliers will because the price elasticity of demand for cookies is .

When the price elasticity of demand is elastic, a consumer is:

Demand for which of the following goods/services is likely to be the LEAST elastic in a Minnesota winter?

What good is most likely to have an income elasticity of demand equal to 8?

As price elasticity of supply becomes more elastic over time, the overall shape of the supply curve:

Henry raised his quantity demanded of hockey pucks from 100 to 150 when the price fell from $5 to $3 per puck. Using the midpoint method, his price elasticity of demand is:

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

A local sandwich shop can quickly place an order for food with its local vendors if it uses up its existing resources quickly. This indicates that the price elasticity of supply is:

Pepsi vendors who raise their price at professional sporting events increase total revenue because the price elasticity of demand is . When they raise their prices at gas stations, they decrease total revenue because the price elasticity of demand is .

If the cross-price elasticity of demand between Good A and Good B is 2 and the percentage change in price of Good A is 5%, what is the percentage change in quantity demanded of Good B?

If the cross-price elasticity between Good A and Good B is -1.5 and the percentage change in quantity demanded of Good B is 15%, what is the percentage change in the price of Good A?

When the price of erasers increases from $1.50 to $2.50, the quantity demanded of pencils is unchanged. The cross-price elasticity of demand between erasers and pencils is because erasers and pencils .

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 -0.2?

Zumba classes sell all 20 participant spots at a price of $4.50 each. When the instructor raised the prices to $5.50, 10 people attended the class. From the midpoint method, the price elasticity of demand for Zumba is:

If the income elasticity of demand for laptops is 3.5, you know that laptops are a(n):

If the cross-price elasticity of demand between Good A and Good B is Ð2, the price of Good B increases, and the price elasticity of demand for Good B is elastic, we can expect to see a change in the quantity demanded for Good A.

Howard buys 5 suits a year when he earns $70,000. When his income increases to $200,000, he buys 15 suits a year. From the midpoint method, his income elasticity of demand for suits is:

You are given a list of income elasticity of demand values. Which one represents a necessity?

A 15% increase in the price of cookies results in a 9% decrease in the quantity of cookies sold. The revenue received by cookie suppliers will because the price elasticity of demand for cookies is .

When the price elasticity of demand is elastic, a consumer is:

Demand for which of the following goods/services is likely to be the LEAST elastic in a Minnesota winter?

What good is most likely to have an income elasticity of demand equal to 8?

As price elasticity of supply becomes more elastic over time, the overall shape of the supply curve:

Henry raised his quantity demanded of hockey pucks from 100 to 150 when the price fell from $5 to $3 per puck. Using the midpoint method, his price elasticity of demand is:

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