Question 1

Demand is more elastic

Accepted Answer

A)  in the short run than in the long run 
B)  for necessities than for luxuries 
C)  for food than for hamburgers 
D)  for goods with many substitutes than for goods with only a few 
E)  for broadly defined goods than for narrowly defined ones 
A)  in the short run than in the long run 
B)  for necessities than for luxuries 
C)  for food than for hamburgers 
D)  for goods with many substitutes than for goods with only a few 
E)  for broadly defined goods than for narrowly defined ones

Question 2

NARRBEGIN: Exhibit 5-15
Exhibit 5-15
  
-Which of the demand curves in Exhibit 5-15 is unit elastic?

Accepted Answer

A)  the curve in graph a 
B)  the curve in graph b 
C)  the curve in graph c 
D)  the curve in graph d 
E)  the curve in graph e 
A)  the curve in graph a 
B)  the curve in graph b 
C)  the curve in graph c 
D)  the curve in graph d 
E)  the curve in graph e

Question 3

If the demand for airline tickets to Fort Lauderdale is price elastic,

Accepted Answer

A)  airline revenue will increase if supply increases 
B)  airline revenue will increase if supply decreases 
C)  a small change in price will cause a large shift in the demand curve 
D)  a large change in price will cause a small shift in the demand curve 
E)  a large change in price will cause a large shift in the demand curve 
A)  airline revenue will increase if supply increases 
B)  airline revenue will increase if supply decreases 
C)  a small change in price will cause a large shift in the demand curve 
D)  a large change in price will cause a small shift in the demand curve 
E)  a large change in price will cause a large shift in the demand curve

Question 4

Along a downward-sloping linear demand curve, total revenue is greatest if demand is

Accepted Answer

A)  inelastic 
B)  elastic 
C)  inelastic when prices are high 
D)  elastic when prices are high 
E)  unit elastic 
A)  inelastic 
B)  elastic 
C)  inelastic when prices are high 
D)  elastic when prices are high 
E)  unit elastic

Question 5

Along a linear demand curve, total revenue is maximized when demand is

Accepted Answer

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

Question 6

If people have more time to adjust to a price change, the price elasticity of demand for that good is likely to

Accepted Answer

A)  increase 
B)  decrease 
C)  fall to zero 
D)  become equal to -1 
E)  remain unchanged 
A)  increase 
B)  decrease 
C)  fall to zero 
D)  become equal to -1 
E)  remain unchanged

Question 7

If an increase in price from $1 to $2 per unit leads to an increase in quantity supplied from 20 to 100 units, then the value of price elasticity of supply is

Accepted Answer

A)  0.38 
B)  2 
C)  2.67 
D)  4 
E)  8 
A)  0.38 
B)  2 
C)  2.67 
D)  4 
E)  8

Question 8

The midpoint price between $20 and $40 is

Accepted Answer

A)  $10 
B)  $20 
C)  $30 
D)  $15 
E)  $200 
A)  $10 
B)  $20 
C)  $30 
D)  $15 
E)  $200

Question 9

Cross-price elasticity of demand is used to determine whether

Accepted Answer

A)  a product is an inferior or normal good 
B)  a product is a necessity or a luxury 
C)  two products are substitutes or complements 
D)  price and total revenue are directly or inversely related 
E)  the product's demand curve is linear 
A)  a product is an inferior or normal good 
B)  a product is a necessity or a luxury 
C)  two products are substitutes or complements 
D)  price and total revenue are directly or inversely related 
E)  the product's demand curve is linear

Question 10

The availability of substitutes makes the demand for a good less elastic.

Accepted Answer

A) True 
 B)False

Question 11

NARRBEGIN: Exhibit 5-22
Exhibit 5-22
  
-Refer to Exhibit 5-22. Demand curve D is an example of a(n)

Accepted Answer

A)  curvilinear demand curve 
B)  linear demand curve 
C)  linear supply curve 
D)  unit-elastic demand curve 
E)  total revenue curve 
A)  curvilinear demand curve 
B)  linear demand curve 
C)  linear supply curve 
D)  unit-elastic demand curve 
E)  total revenue curve

Question 12

If the value of the price elasticity of demand is -0.2, this means that a

Accepted Answer

A)  20 percent decrease in price causes a 1 percent increase in quantity demanded 
B)  0.2 percent decrease in price causes a 1 percent increase in quantity demanded 
C)  5 percent decrease in price causes a 1 percent increase in quantity demanded 
D)  0.2 percent decrease in price causes a 0.2 percent increase in quantity demanded 
E)  100 percent decrease in price causes a 200 percent increase in quantity demanded 
A)  20 percent decrease in price causes a 1 percent increase in quantity demanded 
B)  0.2 percent decrease in price causes a 1 percent increase in quantity demanded 
C)  5 percent decrease in price causes a 1 percent increase in quantity demanded 
D)  0.2 percent decrease in price causes a 0.2 percent increase in quantity demanded 
E)  100 percent decrease in price causes a 200 percent increase in quantity demanded

Question 13

If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then the value of price elasticity of demand is

Accepted Answer

A)  elastic 
B)  inelastic 
C)  unit elastic 
D)  suggestive of an inferior good 
E)  equal to -20 
A)  elastic 
B)  inelastic 
C)  unit elastic 
D)  suggestive of an inferior good 
E)  equal to -20

Question 14

Price elasticity of demand is typically negative because

Accepted Answer

A)  as price decreases, quantity demanded decreases 
B)  as price decreases, quantity demanded increases 
C)  as price decreases, demand decreases 
D)  as price decreases, demand increases 
E)  consumers rarely respond to a change in price 
A)  as price decreases, quantity demanded decreases 
B)  as price decreases, quantity demanded increases 
C)  as price decreases, demand decreases 
D)  as price decreases, demand increases 
E)  consumers rarely respond to a change in price

Question 15

If demand is inelastic, the percentage change in price is greater than the resulting percentage change in quantity demanded.

Accepted Answer

A) True 
 B)False

Question 16

If the demand for a product is price inelastic,

Accepted Answer

A)  producers' revenues will increase if supply increases 
B)  producers' revenues will increase if supply decreases 
C)  a small change in price will cause a large shift in the demand curve 
D)  a large change in price will cause a small shift in the demand curve 
E)  a small change in price will cause a small shift in the demand curve 
A)  producers' revenues will increase if supply increases 
B)  producers' revenues will increase if supply decreases 
C)  a small change in price will cause a large shift in the demand curve 
D)  a large change in price will cause a small shift in the demand curve 
E)  a small change in price will cause a small shift in the demand curve

Question 17

NARRBEGIN: Exhibit 5-2-1
Exhibit 5-2
  
-Based on the information in Exhibit 5-2, the demand for the good is __________ and an increase in price from $40 to $60 per unit will __________ total revenue.

Accepted Answer

A)  unit elastic; increase 
B)  elastic; decrease. 
C)  unit elastic; not change 
D)  inelastic; increase, 
E)  elastic; decrease 
A)  unit elastic; increase 
B)  elastic; decrease. 
C)  unit elastic; not change 
D)  inelastic; increase, 
E)  elastic; decrease

Question 18

If the price of Pepsi-Cola increases from 40 cents to 50 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then, according to the midpoint formula, the value of price elasticity of demand for Pepsi-Cola is

Accepted Answer

A)  -0.5 
B)  -0.25 
C)  -1 
D)  -3 
E)  -2 
A)  -0.5 
B)  -0.25 
C)  -1 
D)  -3 
E)  -2

Question 19

NARRBEGIN: Exhibit 5-20
Exhibit 5-20
  
-What is the price elasticity of supply between $10 and $20 on supply curve S in Exhibit 5-20?

Accepted Answer

A)  0 
B)  infinity 
C)  1 
D)  2 
E)  10 
A)  0 
B)  infinity 
C)  1 
D)  2 
E)  10

Question 20

NARRBEGIN: Exhibit 5-23
Exhibit 5-23
  
-Refer to Exhibit 5-23. The demand curve that best illustrates how consumers will respond to a change in price over a very long time period is:

Accepted Answer

A)  curve D(1) 
B)  curve D(2) 
C)  curve D(4) 
D)  curve D(3) 
E)  either curve D(1) or D(4) 
A)  curve D(1) 
B)  curve D(2) 
C)  curve D(4) 
D)  curve D(3) 
E)  either curve D(1) or D(4)

Exam 5: Elasticity of Demand and Supply

Demand is more elastic

NARRBEGIN: Exhibit 5-15 Exhibit 5-15 -Which of the demand curves in Exhibit 5-15 is unit elastic?

If the demand for airline tickets to Fort Lauderdale is price elastic,

Along a downward-sloping linear demand curve, total revenue is greatest if demand is

Along a linear demand curve, total revenue is maximized when demand is

If people have more time to adjust to a price change, the price elasticity of demand for that good is likely to

If an increase in price from $1 to $2 per unit leads to an increase in quantity supplied from 20 to 100 units, then the value of price elasticity of supply is

The midpoint price between $20 and $40 is

Cross-price elasticity of demand is used to determine whether

The availability of substitutes makes the demand for a good less elastic.

NARRBEGIN: Exhibit 5-22 Exhibit 5-22 -Refer to Exhibit 5-22. Demand curve D is an example of a(n)

If the value of the price elasticity of demand is -0.2, this means that a

If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then the value of price elasticity of demand is

Price elasticity of demand is typically negative because

If demand is inelastic, the percentage change in price is greater than the resulting percentage change in quantity demanded.

If the demand for a product is price inelastic,

NARRBEGIN: Exhibit 5-2-1 Exhibit 5-2 -Based on the information in Exhibit 5-2, the demand for the good is __________ and an increase in price from $40 to $60 per unit will __________ total revenue.

If the price of Pepsi-Cola increases from 40 cents to 50 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then, according to the midpoint formula, the value of price elasticity of demand for Pepsi-Cola is

NARRBEGIN: Exhibit 5-20 Exhibit 5-20 -What is the price elasticity of supply between $10 and $20 on supply curve S in Exhibit 5-20?

NARRBEGIN: Exhibit 5-23 Exhibit 5-23 -Refer to Exhibit 5-23. The demand curve that best illustrates how consumers will respond to a change in price over a very long time period is:

The Art and Science of Economic Analysis

Appendix: Understanding Graphs

Economic Tools and Economics Systems

Economic Decision Makers

Demand, Supply, and Markets

Consumer Choice and Demand

Production and Cost in the Firm

A: Perfect Competition

B: Perfect Competition

A: Monopoly

B: Monopoly

Monopolistic Competition and Oligopoly

Resource Markets

Labor Markets and Labor Unions

Capital, Interest, and Corporate Finance

Transaction Costs, Imperfect Information, and Behavioral Economics

Economic Regulation and Antitrust Policy

Public Goods and Public Choice

Externalities and the Environment

Income Distribution and Poverty

International Trade

International Finance

Economic Development

Filters

NARRBEGIN: Exhibit 5-2-1 Exhibit 5-2 -Based on the information in Exhibit 5-2, the demand for the good is and an increase in price from $40 to $60 per unit will total revenue.