Question 1

If the price of a good rises,then moving along a demand curve the percentage change in the quantity demanded will be

Accepted Answer

A)  positive. 
B)  negative. 
C)  zero. 
D)  either positive, negative, or zero depending on how the demand curve shifted. 
E)  undefined. 
A)  positive. 
B)  negative. 
C)  zero. 
D)  either positive, negative, or zero depending on how the demand curve shifted. 
E)  undefined. B

Question 2

People take fewer trips by airplane when their incomes fall because of a recession.Trips by airplane must be

Accepted Answer

A)  a normal good. 
B)  an inferior good. 
C)  a substitute for other goods. 
D)  a complement to other goods. 
E)  an inelastic good. 
A)  a normal good. 
B)  an inferior good. 
C)  a substitute for other goods. 
D)  a complement to other goods. 
E)  an inelastic good. A

Question 3

Suppose the price of a movie falls from $9 to $7.Using the midpoint method,what is the percentage change in price?

Accepted Answer

A)  33 percent 
B)  -33 percent 
C)  25 percent 
D)  -25 percent 
E)  -97 percent 
A)  33 percent 
B)  -33 percent 
C)  25 percent 
D)  -25 percent 
E)  -97 percent D

Question 4

The demand for luxury suites at basketball games is more elastic if

Accepted Answer

A)  these suites are a necessity. 
B)  these suites are a luxury item. 
C)  few close substitutes exist for these suites. 
D)  basketball fans have little time to look for alternative suites. 
E)  poorer fans cannot afford luxury suites. 
A)  these suites are a necessity. 
B)  these suites are a luxury item. 
C)  few close substitutes exist for these suites. 
D)  basketball fans have little time to look for alternative suites. 
E)  poorer fans cannot afford luxury suites.

Question 5

When we use the midpoint method to compute the price elasticity of demand we use

Accepted Answer

A)  the original quantity and the average price. 
B)  the original price and the average quantity. 
C)  the average price and the average quantity. 
D)  either the original or new price, and the average quantity. 
E)  the average price and the original quantity. 
A)  the original quantity and the average price. 
B)  the original price and the average quantity. 
C)  the average price and the average quantity. 
D)  either the original or new price, and the average quantity. 
E)  the average price and the original quantity.

Question 6

The price elasticity of demand for an agricultural product is 0.4.This value means that,when the quantity decreases 1 percent,the price

Accepted Answer

A)  falls 4 percent. 
B)  rises 4 percent. 
C)  falls 2.5 percent. 
D)  rises 2.5 percent. 
E)  rises 0.25 percent. 
A)  falls 4 percent. 
B)  rises 4 percent. 
C)  falls 2.5 percent. 
D)  rises 2.5 percent. 
E)  rises 0.25 percent.

Question 7

If a 10 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

Accepted Answer

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

Question 8

-In the figure above,using the midpoint method,the price elasticity of demand when the price falls from $7 to $6 is equal to

Accepted Answer

A)  2.50. 
B)  1.63. 
C)  0.40. 
D)  0.62. 
E)  1.00. 
A)  2.50. 
B)  1.63. 
C)  0.40. 
D)  0.62. 
E)  1.00.

Question 9

-In the figure above,when the price falls from $8 to $7,total revenue

Accepted Answer

A)  increases from $120 to $210 so demand is elastic. 
B)  decreases from $210 to $120 so demand is inelastic. 
C)  increases from $120 to $210 so demand is inelastic. 
D)  decreases from $210 to $120 so demand is elastic. 
E)  increases from $120 to $210, but more information is needed to determine whether demand is elastic, inelastic, or unit elastic. 
A)  increases from $120 to $210 so demand is elastic. 
B)  decreases from $210 to $120 so demand is inelastic. 
C)  increases from $120 to $210 so demand is inelastic. 
D)  decreases from $210 to $120 so demand is elastic. 
E)  increases from $120 to $210, but more information is needed to determine whether demand is elastic, inelastic, or unit elastic.

Question 10

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 11

KFC raises the price of its grilled chicken.The price elasticity of demand for KFC grilled chicken is 0.8.What happens to the KFC'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 12

The cross elasticity of demand for blank DVDs and DVD burners is likely to be

Accepted Answer

A)  positive because they are substitutes. 
B)  positive because they are complements. 
C)  negative because they are substitutes. 
D)  negative because they are complements. 
E)  negative because with the advent of digital cameras, film and film cameras are inferior goods. 
A)  positive because they are substitutes. 
B)  positive because they are complements. 
C)  negative because they are substitutes. 
D)  negative because they are complements. 
E)  negative because with the advent of digital cameras, film and film cameras are inferior goods.

Question 13

A ________ curve means that ________.

Accepted Answer

A)  horizontal demand; a change in price does not change total revenue 
B)  horizontal demand; the elasticity of demand is less than 1 
C)  horizontal supply; the elasticity of supply is infinite 
D)  horizontal supply; the elasticity of demand is infinite 
E)  vertical demand; a change in price does not change total revenue 
A)  horizontal demand; a change in price does not change total revenue 
B)  horizontal demand; the elasticity of demand is less than 1 
C)  horizontal supply; the elasticity of supply is infinite 
D)  horizontal supply; the elasticity of demand is infinite 
E)  vertical demand; a change in price does not change total revenue

Question 14

In the figure above,at the point where the price is $4 per cup the price elasticity of demand is

Accepted Answer

A)  2. 
B)  0.5. 
C)  1. 
D)  1.5. 
E)  0. 
A)  2. 
B)  0.5. 
C)  1. 
D)  1.5. 
E)  0.

Question 15

If the price of suntan lotion increases from $6 to $8 per bottle and quantity demanded decreases from 900,000 bottles to 845,000 bottles,using the midpoint method,what is the price elasticity of demand for suntan lotion?

Accepted Answer

The price elasticity of demand = (percen

Question 16

Suppose the price of a box of cereal rises from $4 to $6.Using the midpoint method,what is the percentage change in price?

Accepted Answer

A)  50 percent 
B)  40 percent 
C)  33 percent 
D)  67 percent 
E)  None of the above answers is correct. 
A)  50 percent 
B)  40 percent 
C)  33 percent 
D)  67 percent 
E)  None of the above answers is correct.

Question 17

If wheat can be produced at a constant opportunity cost,then the supply of wheat is

Accepted Answer

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

Question 18

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 19

-Using the table above,what is the elasticity of demand between the prices of $9 and $7?

Accepted Answer

A)  1/4 
B)  1 
C)  2 
D)  4 
E)  6 
A)  1/4 
B)  1 
C)  2 
D)  4 
E)  6

Question 20

-The figure above shows the supply curve for a good with

Accepted Answer

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

If the price of a good rises,then moving along a demand curve the percentage change in the quantity demanded will be

People take fewer trips by airplane when their incomes fall because of a recession.Trips by airplane must be

Suppose the price of a movie falls from $9 to $7.Using the midpoint method,what is the percentage change in price?

The demand for luxury suites at basketball games is more elastic if

When we use the midpoint method to compute the price elasticity of demand we use

The price elasticity of demand for an agricultural product is 0.4.This value means that,when the quantity decreases 1 percent,the price

If a 10 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

-In the figure above,using the midpoint method,the price elasticity of demand when the price falls from $7 to $6 is equal to

-In the figure above,when the price falls from $8 to $7,total revenue

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

KFC raises the price of its grilled chicken.The price elasticity of demand for KFC grilled chicken is 0.8.What happens to the KFC's total revenue?

The cross elasticity of demand for blank DVDs and DVD burners is likely to be

A curve means that .

In the figure above,at the point where the price is $4 per cup the price elasticity of demand is

If the price of suntan lotion increases from $6 to $8 per bottle and quantity demanded decreases from 900,000 bottles to 845,000 bottles,using the midpoint method,what is the price elasticity of demand for suntan lotion?

Suppose the price of a box of cereal rises from $4 to $6.Using the midpoint method,what is the percentage change in price?

If wheat can be produced at a constant opportunity cost,then the supply of wheat 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

-Using the table above,what is the elasticity of demand between the prices of $9 and $7?

-The figure above shows the supply curve for a good with

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

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Consumer Choice and Demand

Production and Cost

Perfect Competition

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Exam 5: Elasticities of Demand and Supply

If the price of a good rises,then moving along a demand curve the percentage change in the quantity demanded will be

People take fewer trips by airplane when their incomes fall because of a recession.Trips by airplane must be

Suppose the price of a movie falls from $9 to $7.Using the midpoint method,what is the percentage change in price?

The demand for luxury suites at basketball games is more elastic if

When we use the midpoint method to compute the price elasticity of demand we use

The price elasticity of demand for an agricultural product is 0.4.This value means that,when the quantity decreases 1 percent,the price

If a 10 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

-In the figure above,using the midpoint method,the price elasticity of demand when the price falls from $7 to $6 is equal to

-In the figure above,when the price falls from $8 to $7,total revenue

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

KFC raises the price of its grilled chicken.The price elasticity of demand for KFC grilled chicken is 0.8.What happens to the KFC's total revenue?

The cross elasticity of demand for blank DVDs and DVD burners is likely to be

A ________ curve means that ________.

In the figure above,at the point where the price is $4 per cup the price elasticity of demand is

If the price of suntan lotion increases from $6 to $8 per bottle and quantity demanded decreases from 900,000 bottles to 845,000 bottles,using the midpoint method,what is the price elasticity of demand for suntan lotion?

Suppose the price of a box of cereal rises from $4 to $6.Using the midpoint method,what is the percentage change in price?

If wheat can be produced at a constant opportunity cost,then the supply of wheat 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

-Using the table above,what is the elasticity of demand between the prices of $9 and $7?

-The figure above shows the supply curve for a good with

Getting Started

The U.S.and Global Economies

The Economic Problem

Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets with Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

A curve means that .