Question 1

The price elasticity of demand measures the ________ that results from a ________.

Accepted Answer

A) change in quantity demanded;change in price 
B) change in price;change in the quantity demanded 
C) percentage change in price;percentage change in the quantity demanded 
D) percentage change in the quantity demanded;percentage change in price 
E) percentage change in the quantity demanded;change in price 
A) change in quantity demanded;change in price 
B) change in price;change in the quantity demanded 
C) percentage change in price;percentage change in the quantity demanded 
D) percentage change in the quantity demanded;percentage change in price 
E) percentage change in the quantity demanded;change in price

Question 2

Suppose a 20 percent increase in the price of gasoline results in a 25 percent increase in the quantity supplied.This response means that gasoline has

Accepted Answer

A) an elastic supply. 
B) an inelastic supply. 
C) a unit elastic supply. 
D) an inelastic demand. 
E) an elastic demand. 
A) an elastic supply. 
B) an inelastic supply. 
C) a unit elastic supply. 
D) an inelastic demand. 
E) an elastic demand.

Question 3

When the percentage change in the quantity supplied is less than the percentage change in price,the supply is

Accepted Answer

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

Question 4

When the price of Cosmopolitan magazine decreases from $5 to $3,the quantity demanded increases from 600,000 to 1,000,000 copies each month.Using the midpoint method,the price elasticity of demand equals

Accepted Answer

A) 1. 
B) 3. 
C) 2. 
D) 1/3. 
E) 1/2. 
A) 1. 
B) 3. 
C) 2. 
D) 1/3. 
E) 1/2.

Question 5

Joe receives a 20 percent increase in his income from his part time job and as a consequence decreases his consumption of Ramen noodles by 10 percent.Hence to Joe,Ramen noodles are

Accepted Answer

A) a normal good with a price elasticity of demand of 0.5. 
B) a substitute good with a cross elasticity of 0.5. 
C) a good with a price elasticity of supply of -0.5. 
D) an inferior good with an income elasticity of -0.5. 
E) an inferior good with an income elasticity of -2.0. 
A) a normal good with a price elasticity of demand of 0.5. 
B) a substitute good with a cross elasticity of 0.5. 
C) a good with a price elasticity of supply of -0.5. 
D) an inferior good with an income elasticity of -0.5. 
E) an inferior good with an income elasticity of -2.0.

Question 6

If the cross elasticity of demand between Coke and Pepsi is 2.02,then Coke and Pepsi are

Accepted Answer

A) complements. 
B) substitutes. 
C) normal goods. 
D) inferior goods. 
E) Both answers B and C are correct. 
A) complements. 
B) substitutes. 
C) normal goods. 
D) inferior goods. 
E) Both answers B and C are correct.

Question 7

For a product with a rapidly increasing opportunity cost of producing additional units,

Accepted Answer

A) demand is price elastic. 
B) supply is price elastic. 
C) demand is price inelastic. 
D) supply is price inelastic. 
E) the demand curve is vertical. 
A) demand is price elastic. 
B) supply is price elastic. 
C) demand is price inelastic. 
D) supply is price inelastic. 
E) the demand curve is vertical.

Question 8

Suppose the price of a tie rises from $45 to $55.Using the midpoint method,what is the percentage change in price?

Accepted Answer

A) 10 percent 
B) -10 percent 
C) 20 percent 
D) -20 percent 
E) 100 percent 
A) 10 percent 
B) -10 percent 
C) 20 percent 
D) -20 percent 
E) 100 percent

Question 9

Which of the following statements is correct?

Accepted Answer

A) The income elasticity of demand for inferior goods is positive. 
B) The cross elasticity of demand for substitutes is negative. 
C) The income elasticity of demand for normal goods is positive. 
D) The cross elasticity of demand for complements is positive. 
E) The income elasticity of demand for inferior goods is zero. 
A) The income elasticity of demand for inferior goods is positive. 
B) The cross elasticity of demand for substitutes is negative. 
C) The income elasticity of demand for normal goods is positive. 
D) The cross elasticity of demand for complements is positive. 
E) The income elasticity of demand for inferior goods is zero.

Question 10

The price of a bag of pretzels rises from $2 to $3 and the quantity demanded decreases from 100 to 60.What is the price elasticity of demand?

Accepted Answer

A) 1.0 
B) 1.25 
C) 40.0 
D) 20.0 
E) 0.80 
A) 1.0 
B) 1.25 
C) 40.0 
D) 20.0 
E) 0.80

Question 11

Explain why the number of substitutes influences the price elasticity of demand.

Accepted Answer

The price elasticity of demand is a meas

Question 12

If you spend a large portion of your income on a good,

Accepted Answer

A) supply of that good would be price elastic. 
B) demand for that good is more elastic than if you spent a smaller portion of your income on the good. 
C) supply of that good is price inelastic. 
D) demand for that good is less elastic than if you spent a smaller portion of your income on the good. 
E) the good must be able to be produced at a constant (or gently rising)opportunity cost. 
A) supply of that good would be price elastic. 
B) demand for that good is more elastic than if you spent a smaller portion of your income on the good. 
C) supply of that good is price inelastic. 
D) demand for that good is less elastic than if you spent a smaller portion of your income on the good. 
E) the good must be able to be produced at a constant (or gently rising)opportunity cost.

Question 13

Demand is elastic if

Accepted Answer

A) consumers respond strongly to changes in the product's price. 
B) a large percentage change in price brings about a small percentage change in quantity demanded. 
C) a small percentage change in price brings about a small percentage change in quantity demanded. 
D) the quantity demanded is not responsive to price changes. 
E) the demand curve is vertical. 
A) consumers respond strongly to changes in the product's price. 
B) a large percentage change in price brings about a small percentage change in quantity demanded. 
C) a small percentage change in price brings about a small percentage change in quantity demanded. 
D) the quantity demanded is not responsive to price changes. 
E) the demand curve is vertical.

Question 14

The price of beef increased by 20 percent and the quantity supplied increased by 10 percent.The supply of beef is

Accepted Answer

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

Question 15

If a 5 percent decrease in income leads to a 15 percent decrease in the demand for a good,the income elasticity of demand equals

Accepted Answer

A) -1/3 and the good is an inferior good. 
B) 1/3 and demand for the good is income elastic. 
C) 3 and the good is a normal good. 
D) -3 and the demand for the good is income inelastic. 
E) 3 and the good is an inferior good. 
A) -1/3 and the good is an inferior good. 
B) 1/3 and demand for the good is income elastic. 
C) 3 and the good is a normal good. 
D) -3 and the demand for the good is income inelastic. 
E) 3 and the good is an inferior good.

Question 16

If the price doubles and the quantity supplied also doubles,the price elasticity of supply for the good is

Accepted Answer

A) -1. 
B) 1. 
C) -2. 
D) 2. 
E) 100 percent. 
A) -1. 
B) 1. 
C) -2. 
D) 2. 
E) 100 percent.

Question 17

The figure above shows the demand curve for Starbucks latte.
-Using the figure above,suppose Starbucks charges $4.50 per cup for its latte.Which of the following is true?
I.At this price,the demand for Starbucks latte is elastic.
Ii.If Starbucks lowers the price of its latte,its revenue will decrease.
Iii.If Starbucks raises the price of its latte,the demand for it will become less elastic.

Accepted Answer

A) Only iii 
B) Only i 
C) Only ii 
D) i and ii 
E) i and iii 
A) Only iii 
B) Only i 
C) Only ii 
D) i and ii 
E) i and iii

Question 18

Suppose the price of a ticket to a Lenny Kravitz concert is $41 and at that price,the quantity of tickets demanded is 17,000 per concert.Using the midpoint method of calculating percentage changes,if
Mr.Kravitz raises the price to $48 and the quantity demanded decreases to 16,000,the price elasticity of demand for his concert tickets is

Accepted Answer

A) 15.73. 
B) 6.06. 
C) 1.00. 
D) 0.39. 
E) 0.93. 
A) 15.73. 
B) 6.06. 
C) 1.00. 
D) 0.39. 
E) 0.93.

Question 19

If two goods are ________,then an increase in the price of one leads to ________ in the quantity demanded of the other.

Accepted Answer

A) complements;a decrease 
B) complements;no change 
C) substitutes;a decrease 
D) substitutes;no change 
E) normal;an increase 
A) complements;a decrease 
B) complements;no change 
C) substitutes;a decrease 
D) substitutes;no change 
E) normal;an increase

Question 20

Assume that it is predicted that for the years after you graduate from college,the entire economy will experience a long period of prosperity when incomes grow rapidly.What type of industry would be the best for you to find employment if this prediction is correct? An industry that produces a product that is

Accepted Answer

A) income elastic. 
B) income inelastic. 
C) inferior. 
D) a substitute good. 
E) none of these industries 
A) income elastic. 
B) income inelastic. 
C) inferior. 
D) a substitute good. 
E) none of these industries

The price elasticity of demand measures the that results from a .

Suppose a 20 percent increase in the price of gasoline results in a 25 percent increase in the quantity supplied.This response means that gasoline has

When the percentage change in the quantity supplied is less than the percentage change in price,the supply is

When the price of Cosmopolitan magazine decreases from $5 to $3,the quantity demanded increases from 600,000 to 1,000,000 copies each month.Using the midpoint method,the price elasticity of demand equals

Joe receives a 20 percent increase in his income from his part time job and as a consequence decreases his consumption of Ramen noodles by 10 percent.Hence to Joe,Ramen noodles are

If the cross elasticity of demand between Coke and Pepsi is 2.02,then Coke and Pepsi are

For a product with a rapidly increasing opportunity cost of producing additional units,

Suppose the price of a tie rises from $45 to $55.Using the midpoint method,what is the percentage change in price?

Which of the following statements is correct?

The price of a bag of pretzels rises from $2 to $3 and the quantity demanded decreases from 100 to 60.What is the price elasticity of demand?

Explain why the number of substitutes influences the price elasticity of demand.

If you spend a large portion of your income on a good,

Demand is elastic if

The price of beef increased by 20 percent and the quantity supplied increased by 10 percent.The supply of beef is

If a 5 percent decrease in income leads to a 15 percent decrease in the demand for a good,the income elasticity of demand equals

If the price doubles and the quantity supplied also doubles,the price elasticity of supply for the good is

If two goods are ,then an increase in the price of one leads to in the quantity demanded of the other.

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 5: Elasticities of Demand and Supply

The price elasticity of demand measures the ________ that results from a ________.

Suppose a 20 percent increase in the price of gasoline results in a 25 percent increase in the quantity supplied.This response means that gasoline has

When the percentage change in the quantity supplied is less than the percentage change in price,the supply is

When the price of Cosmopolitan magazine decreases from $5 to $3,the quantity demanded increases from 600,000 to 1,000,000 copies each month.Using the midpoint method,the price elasticity of demand equals

Joe receives a 20 percent increase in his income from his part time job and as a consequence decreases his consumption of Ramen noodles by 10 percent.Hence to Joe,Ramen noodles are

If the cross elasticity of demand between Coke and Pepsi is 2.02,then Coke and Pepsi are

For a product with a rapidly increasing opportunity cost of producing additional units,

Suppose the price of a tie rises from $45 to $55.Using the midpoint method,what is the percentage change in price?

Which of the following statements is correct?

The price of a bag of pretzels rises from $2 to $3 and the quantity demanded decreases from 100 to 60.What is the price elasticity of demand?

Explain why the number of substitutes influences the price elasticity of demand.

If you spend a large portion of your income on a good,

Demand is elastic if

The price of beef increased by 20 percent and the quantity supplied increased by 10 percent.The supply of beef is

If a 5 percent decrease in income leads to a 15 percent decrease in the demand for a good,the income elasticity of demand equals

If the price doubles and the quantity supplied also doubles,the price elasticity of supply for the good is

If two goods are ________,then an increase in the price of one leads to ________ in the quantity demanded of the other.

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

The Cpi and the Cost of Living

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

The price elasticity of demand measures the that results from a .

If two goods are ,then an increase in the price of one leads to in the quantity demanded of the other.