Question 1

Taco Bell firm raises the price of its tacos.The price elasticity of demand for Taco Bell tacos equals 5.0.What happens to the Taco Bell's total revenue?

Accepted Answer

A) nothing 
B) It increases. 
C) It decreases. 
D) It becomes negative. 
E) It might change,but more information is needed to determine if it increases,decreases,or does not change. 
A) nothing 
B) It increases. 
C) It decreases. 
D) It becomes negative. 
E) It might change,but more information is needed to determine if it increases,decreases,or does not change.

Question 2

Which of the following explains why supply is more elastic as more time passes?

Accepted Answer

A) It is difficult or impossible to increase the quantity produced in a short period of time. 
B) Consumers have more time to search for substitutes. 
C) Sellers try to take advantage of a high price in the short term. 
D) The supply curve becomes generally steeper as more time passes. 
E) There is no explanation for this phenomenon. 
A) It is difficult or impossible to increase the quantity produced in a short period of time. 
B) Consumers have more time to search for substitutes. 
C) Sellers try to take advantage of a high price in the short term. 
D) The supply curve becomes generally steeper as more time passes. 
E) There is no explanation for this phenomenon.

Question 3

The price of coffee rose 40 percent and the quantity of coffee demanded fell by 20 percent.The quantity of doughnuts demanded also fell by 20 percent.From this information,we can conclude that

Accepted Answer

A) the demand for coffee is elastic. 
B) the demand for coffee is unit elastic. 
C) coffee is an inferior good. 
D) the cross elasticity demand between coffee and doughnuts is -0.5. 
E) the income elasticity of demand for coffee is 2. 
A) the demand for coffee is elastic. 
B) the demand for coffee is unit elastic. 
C) coffee is an inferior good. 
D) the cross elasticity demand between coffee and doughnuts is -0.5. 
E) the income elasticity of demand for coffee is 2.

Question 4

If we are trying to determine if two different products are substitutes,complements,or not related at all,we should find the value of the

Accepted Answer

A) price elasticity of demand for both goods. 
B) price elasticity of supply for both goods. 
C) income elasticity of demand for both goods. 
D) cross elasticity of demand. 
E) price elasticity of demand and the price elasticity of supply for both goods. 
A) price elasticity of demand for both goods. 
B) price elasticity of supply for both goods. 
C) income elasticity of demand for both goods. 
D) cross elasticity of demand. 
E) price elasticity of demand and the price elasticity of supply for both goods.

Question 5

Recently the governor of Vermont proposed that cigarette taxes in Vermont should be increased substantially,from 44 cents a pack to 66 cents a pack.He estimates that Vermont can raise $20 million in revenue from this tax hike.He also pointed out that the neighboring state of New Hampshire was considering an increase in cigarette taxes.
a.How can it be that an increase in cigarette taxes will increase tax revenue,because,after all,a higher tax will increase cigarette prices and thereby decrease the quantity demanded?
b.If New Hampshire chooses not to increase cigarette taxes,is it likely that Vermont can still raise $20 million in tax revenue? Why or why not? Explain

Accepted Answer

a.The governor knows that cigarettes hav

Question 6

The total revenue test says that if a price decrease leads to

Accepted Answer

A) an increase in total revenue,demand is income elastic. 
B) a decrease in total revenue,demand is income inelastic. 
C) a decrease in total revenue,demand is price inelastic. 
D) a decrease in total revenue,supply is price inelastic. 
E) a decrease in total revenue,supply is price elastic. 
A) an increase in total revenue,demand is income elastic. 
B) a decrease in total revenue,demand is income inelastic. 
C) a decrease in total revenue,demand is price inelastic. 
D) a decrease in total revenue,supply is price inelastic. 
E) a decrease in total revenue,supply is price elastic.

Question 7

"If the price falls and,as a result,the total revenue decreases,demand is elastic." Is the previous assertion correct?

Accepted Answer

No,the assertion is incorrect.

Question 8

-The data in the table above give two points on the demand curve for pizza.Using the midpoint method,when the price of a pizza falls from $10 to $9,what is the price elasticity of demand?

Accepted Answer

A) 0.5 
B) 0.6 
C) 0.9 
D) 2.1 
E) 8.6 
A) 0.5 
B) 0.6 
C) 0.9 
D) 2.1 
E) 8.6

Question 9

When the price of a burrito increases from $2 to $4,the quantity demanded decreases from 50 to 40.Using the midpoint method,the price elasticity of demand equals

Accepted Answer

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

Question 10

The total revenue test says
I.Demand is elastic if a decrease in price results in an increase in total revenue.
Ii.Total revenue is maximized when demand is elastic.
Iii.Total revenue is minimized when demand is unit elastic.

Accepted Answer

A) i only 
B) i and ii 
C) ii and iii 
D) i,ii and iii 
E) ii only 
A) i only 
B) i and ii 
C) ii and iii 
D) i,ii and iii 
E) ii only

Question 11

A firm lowers the price it charges.The firm's total revenue decreases.What can we conclude about the price elasticity of demand?

Accepted Answer

A) Demand is elastic. 
B) Demand is unit elastic. 
C) Demand is inelastic. 
D) Demand is perfectly elastic. 
E) Not enough information is given to conclude anything about price elasticity of demand. 
A) Demand is elastic. 
B) Demand is unit elastic. 
C) Demand is inelastic. 
D) Demand is perfectly elastic. 
E) Not enough information is given to conclude anything about price elasticity of demand.

Question 12

-The table above gives the demand schedule for a good.What is the total revenue at point A? At point B? At point C? At point D? At point E?

Accepted Answer

The total revenue is the price multiplie

Question 13

-The table above gives the demand schedule for a good.Using the midpoint method,find the price elasticity of demand between points A and B,between B and C,between C and D,and between D and E.

Accepted Answer

The price elasticity of demand between p

Question 14

Which of the following does NOT influence the price elasticity of demand?

Accepted Answer

A) the amount by which the demand curve shifts when the price of another good changes 
B) the number of substitutes available to consumers 
C) the price of the good relative to total income 
D) the time period buyers have to respond to a price change 
E) whether the good is a necessity or a luxury 
A) the amount by which the demand curve shifts when the price of another good changes 
B) the number of substitutes available to consumers 
C) the price of the good relative to total income 
D) the time period buyers have to respond to a price change 
E) whether the good is a necessity or a luxury

Question 15

If the price elasticity of demand for a good is 2,then a 10 percent increase in the price of that good ________ the quantity demanded by ________ percent.

Accepted Answer

A) increases;20 
B) decreases;2 
C) decreases;10 
D) decreases;20 
E) increases;8 
A) increases;20 
B) decreases;2 
C) decreases;10 
D) decreases;20 
E) increases;8

Question 16

Natural gas is difficult to store.What implication does this fact have for the elasticity of supply of natural gas?

Accepted Answer

Because natural gas is difficult to stor

Question 17

For a product with a constant or gently increasing opportunity cost of producing additional units,as more is produced,we expect that

Accepted Answer

A) demand is price elastic. 
B) supply is price elastic. 
C) demand is price inelastic. 
D) supply is price inelastic. 
E) demand is unit elastic. 
A) demand is price elastic. 
B) supply is price elastic. 
C) demand is price inelastic. 
D) supply is price inelastic. 
E) demand is unit elastic.

Question 18

If a Pizza Hut raises the price of a slice of pizza from $3.00 to $3.25,the quantity demanded decreases from 1,500 slices per week to 1,300 slices per week.The demand for slices of pizza is ________ and the total revenue received by this Pizza Hut ________.

Accepted Answer

A) elastic;decreases 
B) inelastic;decreases 
C) elastic;increases 
D) inelastic;increases 
E) unit elastic;does not change 
A) elastic;decreases 
B) inelastic;decreases 
C) elastic;increases 
D) inelastic;increases 
E) unit elastic;does not change

Question 19

The income elasticity of demand for used cars is less than zero,so used cars are

Accepted Answer

A) an inferior good. 
B) a normal good. 
C) an inelastic good. 
D) a perfectly inelastic good. 
E) a substitute good. 
A) an inferior good. 
B) a normal good. 
C) an inelastic good. 
D) a perfectly inelastic good. 
E) a substitute good.

Question 20

Explain why the cross elasticity of demand for substitute goods is positive and the cross elasticity of demand for complements is negative.

Accepted Answer

The formula for the cross elasticity of

Taco Bell firm raises the price of its tacos.The price elasticity of demand for Taco Bell tacos equals 5.0.What happens to the Taco Bell's total revenue?

Which of the following explains why supply is more elastic as more time passes?

The price of coffee rose 40 percent and the quantity of coffee demanded fell by 20 percent.The quantity of doughnuts demanded also fell by 20 percent.From this information,we can conclude that

If we are trying to determine if two different products are substitutes,complements,or not related at all,we should find the value of the

The total revenue test says that if a price decrease leads to

"If the price falls and,as a result,the total revenue decreases,demand is elastic." Is the previous assertion correct?

-The data in the table above give two points on the demand curve for pizza.Using the midpoint method,when the price of a pizza falls from $10 to $9,what is the price elasticity of demand?

When the price of a burrito increases from $2 to $4,the quantity demanded decreases from 50 to 40.Using the midpoint method,the price elasticity of demand equals

The total revenue test says I.Demand is elastic if a decrease in price results in an increase in total revenue. Ii.Total revenue is maximized when demand is elastic. Iii.Total revenue is minimized when demand is unit elastic.

A firm lowers the price it charges.The firm's total revenue decreases.What can we conclude about the price elasticity of demand?

-The table above gives the demand schedule for a good.What is the total revenue at point A? At point B? At point C? At point D? At point E?

-The table above gives the demand schedule for a good.Using the midpoint method,find the price elasticity of demand between points A and B,between B and C,between C and D,and between D and E.

Which of the following does NOT influence the price elasticity of demand?

If the price elasticity of demand for a good is 2,then a 10 percent increase in the price of that good the quantity demanded by percent.

Natural gas is difficult to store.What implication does this fact have for the elasticity of supply of natural gas?

For a product with a constant or gently increasing opportunity cost of producing additional units,as more is produced,we expect that

If a Pizza Hut raises the price of a slice of pizza from $3.00 to $3.25,the quantity demanded decreases from 1,500 slices per week to 1,300 slices per week.The demand for slices of pizza is and the total revenue received by this Pizza Hut .

The income elasticity of demand for used cars is less than zero,so used cars are

Explain why the cross elasticity of demand for substitute goods is positive and the cross elasticity of demand for complements is negative.

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

Taco Bell firm raises the price of its tacos.The price elasticity of demand for Taco Bell tacos equals 5.0.What happens to the Taco Bell's total revenue?

Which of the following explains why supply is more elastic as more time passes?

The price of coffee rose 40 percent and the quantity of coffee demanded fell by 20 percent.The quantity of doughnuts demanded also fell by 20 percent.From this information,we can conclude that

If we are trying to determine if two different products are substitutes,complements,or not related at all,we should find the value of the

The total revenue test says that if a price decrease leads to

"If the price falls and,as a result,the total revenue decreases,demand is elastic." Is the previous assertion correct?

-The data in the table above give two points on the demand curve for pizza.Using the midpoint method,when the price of a pizza falls from $10 to $9,what is the price elasticity of demand?

When the price of a burrito increases from $2 to $4,the quantity demanded decreases from 50 to 40.Using the midpoint method,the price elasticity of demand equals

The total revenue test says I.Demand is elastic if a decrease in price results in an increase in total revenue. Ii.Total revenue is maximized when demand is elastic. Iii.Total revenue is minimized when demand is unit elastic.

A firm lowers the price it charges.The firm's total revenue decreases.What can we conclude about the price elasticity of demand?

-The table above gives the demand schedule for a good.What is the total revenue at point A? At point B? At point C? At point D? At point E?

-The table above gives the demand schedule for a good.Using the midpoint method,find the price elasticity of demand between points A and B,between B and C,between C and D,and between D and E.

Which of the following does NOT influence the price elasticity of demand?

If the price elasticity of demand for a good is 2,then a 10 percent increase in the price of that good ________ the quantity demanded by ________ percent.

Natural gas is difficult to store.What implication does this fact have for the elasticity of supply of natural gas?

For a product with a constant or gently increasing opportunity cost of producing additional units,as more is produced,we expect that

If a Pizza Hut raises the price of a slice of pizza from $3.00 to $3.25,the quantity demanded decreases from 1,500 slices per week to 1,300 slices per week.The demand for slices of pizza is ________ and the total revenue received by this Pizza Hut ________.

The income elasticity of demand for used cars is less than zero,so used cars are

Explain why the cross elasticity of demand for substitute goods is positive and the cross elasticity of demand for complements is negative.

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

If the price elasticity of demand for a good is 2,then a 10 percent increase in the price of that good the quantity demanded by percent.

If a Pizza Hut raises the price of a slice of pizza from $3.00 to $3.25,the quantity demanded decreases from 1,500 slices per week to 1,300 slices per week.The demand for slices of pizza is and the total revenue received by this Pizza Hut .