Question 1

If a product is a normal good,then its income elasticity of demand is

Accepted Answer

A)  zero. 
B)  positive. 
C)  negative. 
D)  indeterminate. 
E)  greater than 1. 
A)  zero. 
B)  positive. 
C)  negative. 
D)  indeterminate. 
E)  greater than 1.

Question 2

List factors that increase the price elasticity of supply.

Accepted Answer

Factors that increase the price elastici

Question 3

When the percentage change in the quantity demanded equals the percentage change in price,then demand is

Accepted Answer

A)  inelastic. 
B)  unit elastic. 
C)  elastic. 
D)  irrelevant. 
E)  undefined. 
A)  inelastic. 
B)  unit elastic. 
C)  elastic. 
D)  irrelevant. 
E)  undefined.

Question 4

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 5

Suppose a decrease in demand causes the price to decrease from $4 to $3 and the quantity to decrease from 1,000 to 700.Using the midpoint method,the elasticity of supply equals

Accepted Answer

A)  0.81. 
B)  1.24. 
C)  2.83. 
D)  0.18. 
E)  None of the above answers is correct. 
A)  0.81. 
B)  1.24. 
C)  2.83. 
D)  0.18. 
E)  None of the above answers is correct.

Question 6

Total revenue increases if the price of the good

Accepted Answer

A)  rises and demand is elastic. 
B)  rises and demand is inelastic. 
C)  rises and demand is unit elastic. 
D)  falls and supply is inelastic. 
E)  falls and demand is unit elastic. 
A)  rises and demand is elastic. 
B)  rises and demand is inelastic. 
C)  rises and demand is unit elastic. 
D)  falls and supply is inelastic. 
E)  falls and demand is unit elastic.

Question 7

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 8

-Based on data in the table above,use the midpoint method to determine the cross elasticity of demand for ice cream and cake.

Accepted Answer

A)  The cross elasticity is -0.75. 
B)  The cross elasticity is -1.75. 
C)  The cross elasticity is -0.83. 
D)  The cross elasticity is -4.0. 
E)  The cross elasticity is -1.33. 
A)  The cross elasticity is -0.75. 
B)  The cross elasticity is -1.75. 
C)  The cross elasticity is -0.83. 
D)  The cross elasticity is -4.0. 
E)  The cross elasticity is -1.33.

Question 9

If the price of a magazine increases from $5 to $7 and the quantity demanded of the magazines decreases from 10 million per month to 8 million per month,using the midpoint method,what is the price elasticity of demand? Show your work.Is the demand elastic,inelastic,or unit elastic?

Accepted Answer

The price elasticity of demand = (percen

Question 10

If a 2 percent change in price leads to a ________ percent change in the quantity demanded,then demand is ________.

Accepted Answer

A)  2; elastic 
B)  1; unit elastic 
C)  3; inelastic 
D)  1; inelastic 
E)  0; perfectly elastic 
A)  2; elastic 
B)  1; unit elastic 
C)  3; inelastic 
D)  1; inelastic 
E)  0; perfectly elastic

Question 11

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 12

Products X,Y,and Z have price elasticities of 3.0,0.80,and 1.0 respectively.Total revenue decreases if the price of

Accepted Answer

A)  product X falls. 
B)  product Y falls. 
C)  product Z falls. 
D)  product X or product Z falls. 
E)  product Y or product Z falls. 
A)  product X falls. 
B)  product Y falls. 
C)  product Z falls. 
D)  product X or product Z falls. 
E)  product Y or product Z falls.

Question 13

The greater the amount of time that passes after a price change,the

Accepted Answer

A)  less elastic supply becomes. 
B)  more elastic supply becomes. 
C)  more negative supply becomes. 
D)  steeper the supply curve becomes. 
E)  None of the above answers is correct. 
A)  less elastic supply becomes. 
B)  more elastic supply becomes. 
C)  more negative supply becomes. 
D)  steeper the supply curve becomes. 
E)  None of the above answers is correct.

Question 14

The extent to which the demand for a good changes when the price of a substitute or complement changes,other things remaining the same,is measured as the

Accepted Answer

A)  income elasticity of demand. 
B)  cross elasticity of demand. 
C)  price elasticity of demand. 
D)  price elasticity of supply. 
E)  cross income elasticity of demand. 
A)  income elasticity of demand. 
B)  cross elasticity of demand. 
C)  price elasticity of demand. 
D)  price elasticity of supply. 
E)  cross income elasticity of demand.

Question 15

If the percentage change in price is 10 percent and the demand is elastic,then the percentage change in the quantity demanded

Accepted Answer

A)  is greater than 0 percent but less than 10 percent. 
B)  is larger than 10 percent. 
C)  equals 0 percent. 
D)  equals 10 percent. 
E)  More information is needed to determine the magnitude of the change in the quantity demanded. 
A)  is greater than 0 percent but less than 10 percent. 
B)  is larger than 10 percent. 
C)  equals 0 percent. 
D)  equals 10 percent. 
E)  More information is needed to determine the magnitude of the change in the quantity demanded.

Question 16

Assume that it is predicted that for the years after you graduate from college,the entire economy will experience a long period of recession during which people's incomes decrease.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

Accepted Answer

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

Question 17

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 18

If demand is price inelastic and the price is lowered,which of the following occurs?

Accepted Answer

A)  The quantity sold decreases. 
B)  The total expenditure increases and the total revenue decreases. 
C)  The total revenue of the firms selling the product is unchanged. 
D)  The total revenue of the firms selling the product decreases. 
E)  The total expenditure decreases and the total revenue increases. 
A)  The quantity sold decreases. 
B)  The total expenditure increases and the total revenue decreases. 
C)  The total revenue of the firms selling the product is unchanged. 
D)  The total revenue of the firms selling the product decreases. 
E)  The total expenditure decreases and the total revenue increases.

Question 19

Alan purchases 10 percent fewer bags of chips when his income decreases by 5 percent.Based on only this information,we know that for Alan

Accepted Answer

A)  chips are a normal good. 
B)  chips are a complement to salsa. 
C)  chips are a substitute for pretzels. 
D)  chips are an inferior good. 
E)  the price of chips fell. 
A)  chips are a normal good. 
B)  chips are a complement to salsa. 
C)  chips are a substitute for pretzels. 
D)  chips are an inferior good. 
E)  the price of chips fell.

Question 20

-The demand curve shown in the figure above is ________ over the price range from $0.90 to $1.10 per pack.

Accepted Answer

A)  perfectly elastic 
B)  perfectly inelastic 
C)  unit elastic 
D)  elastic but not perfectly elastic 
E)  inelastic but not perfectly inelastic 
A)  perfectly elastic 
B)  perfectly inelastic 
C)  unit elastic 
D)  elastic but not perfectly elastic 
E)  inelastic but not perfectly inelastic

If a product is a normal good,then its income elasticity of demand is

List factors that increase the price elasticity of supply.

When the percentage change in the quantity demanded equals the percentage change in price,then demand is

Suppose a decrease in demand causes the price to decrease from $4 to $3 and the quantity to decrease from 1,000 to 700.Using the midpoint method,the elasticity of supply equals

Total revenue increases if the price of the good

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

-Based on data in the table above,use the midpoint method to determine the cross elasticity of demand for ice cream and cake.

If the price of a magazine increases from $5 to $7 and the quantity demanded of the magazines decreases from 10 million per month to 8 million per month,using the midpoint method,what is the price elasticity of demand? Show your work.Is the demand elastic,inelastic,or unit elastic?

If a 2 percent change in price leads to a percent change in the quantity demanded,then demand is .

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

Products X,Y,and Z have price elasticities of 3.0,0.80,and 1.0 respectively.Total revenue decreases if the price of

The greater the amount of time that passes after a price change,the

The extent to which the demand for a good changes when the price of a substitute or complement changes,other things remaining the same,is measured as the

If the percentage change in price is 10 percent and the demand is elastic,then the percentage change in the quantity demanded

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

If demand is price inelastic and the price is lowered,which of the following occurs?

Alan purchases 10 percent fewer bags of chips when his income decreases by 5 percent.Based on only this information,we know that for Alan

-The demand curve shown in the figure above is ________ over the price range from $0.90 to $1.10 per pack.

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

Exam 5: Elasticities of Demand and Supply

If a product is a normal good,then its income elasticity of demand is

List factors that increase the price elasticity of supply.

When the percentage change in the quantity demanded equals the percentage change in price,then demand is

Suppose a decrease in demand causes the price to decrease from $4 to $3 and the quantity to decrease from 1,000 to 700.Using the midpoint method,the elasticity of supply equals

Total revenue increases if the price of the good

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

-Based on data in the table above,use the midpoint method to determine the cross elasticity of demand for ice cream and cake.

If the price of a magazine increases from $5 to $7 and the quantity demanded of the magazines decreases from 10 million per month to 8 million per month,using the midpoint method,what is the price elasticity of demand? Show your work.Is the demand elastic,inelastic,or unit elastic?

If a 2 percent change in price leads to a ________ percent change in the quantity demanded,then demand is ________.

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

Products X,Y,and Z have price elasticities of 3.0,0.80,and 1.0 respectively.Total revenue decreases if the price of

The greater the amount of time that passes after a price change,the

The extent to which the demand for a good changes when the price of a substitute or complement changes,other things remaining the same,is measured as the

If the percentage change in price is 10 percent and the demand is elastic,then the percentage change in the quantity demanded

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

If demand is price inelastic and the price is lowered,which of the following occurs?

Alan purchases 10 percent fewer bags of chips when his income decreases by 5 percent.Based on only this information,we know that for Alan

-The demand curve shown in the figure above is ________ over the price range from $0.90 to $1.10 per pack.

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

If a 2 percent change in price leads to a percent change in the quantity demanded,then demand is .