Question 1

If the price elasticity of demand for gasoline equals 0.3,then an increase in the price of a gallon of gasoline from $3.70 to $3.90

Accepted Answer

A)  decreases total revenue. 
B)  increases total revenue. 
C)  leads to no change in total revenue. 
D)  makes the demand for gasoline elastic. 
E)  Both answers B and D are correct. 
A)  decreases total revenue. 
B)  increases total revenue. 
C)  leads to no change in total revenue. 
D)  makes the demand for gasoline elastic. 
E)  Both answers B and D are correct.

Question 2

If income increases from $50,000 to $60,000 while the demand for a good increases from 100 units to 125 units,what is the income elasticity of demand? Is the good a normal good or an inferior good?

Accepted Answer

The income elasticity equals 1

Question 3

-In the figure above,using the midpoint method,what is the price elasticity of demand when the price falls from $8 to $7?

Accepted Answer

A)  4.0 
B)  5.0 
C)  0.5 
D)  0.4 
E)  0.25 
A)  4.0 
B)  5.0 
C)  0.5 
D)  0.4 
E)  0.25

Question 4

If an Atlanta bakery raises the price of their rye bread by 11 percent and the quantity demanded decreases by 11 percent,then the demand for the rye bread is ________ and the bakery's total revenue ________.

Accepted Answer

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

Question 5

A 10 percent increase in income brings about a 15 percent decrease in the demand for a good.What is the income elasticity of demand and is the good a normal good or an inferior good?

Accepted Answer

The income elasticit

Question 6

The income elasticity of demand is the percentage change in the ________ divided by the percentage change in ________.

Accepted Answer

A)  quantity demanded; the price of a substitute or complement 
B)  quantity supplied; price 
C)  quantity demanded; price 
D)  quantity demanded; income 
E)  quantity demanded when income changes; the quantity supplied 
A)  quantity demanded; the price of a substitute or complement 
B)  quantity supplied; price 
C)  quantity demanded; price 
D)  quantity demanded; income 
E)  quantity demanded when income changes; the quantity supplied

Question 7

If the percentage change in quantity demanded is greater than the percentage change in price,can you determine if the demand is elastic,unit elastic,or inelastic? Explain your answer.

Accepted Answer

The demand is elastic.The formula for th

Question 8

-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 9

If beef and pork are substitutes for consumers,the cross elasticity of demand between the two products must be

Accepted Answer

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

Question 10

If the income elasticity of demand for a good is 2,then when income rises 10 percent,the quantity demanded

Accepted Answer

A)  increases 2 percent. 
B)  increases 20 percent. 
C)  decreases 2 percent. 
D)  decreases 20 percent. 
E)  increases 12 percent. 
A)  increases 2 percent. 
B)  increases 20 percent. 
C)  decreases 2 percent. 
D)  decreases 20 percent. 
E)  increases 12 percent.

Question 11

-In the figure above,if the price falls from $8 to $7,demand is

Accepted Answer

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

Question 12

As more time passes,the price elasticity of gasoline

Accepted Answer

A)  increases. 
B)  decreases. 
C)  stays the same. 
D)  becomes perfectly inelastic. 
E)  becomes perfectly elastic. 
A)  increases. 
B)  decreases. 
C)  stays the same. 
D)  becomes perfectly inelastic. 
E)  becomes perfectly elastic.

Question 13

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

Accepted Answer

A)  zero. 
B)  positive. 
C)  negative. 
D)  indeterminate. 
E)  undefined. 
A)  zero. 
B)  positive. 
C)  negative. 
D)  indeterminate. 
E)  undefined.

Question 14

If the price elasticity of supply of corn is 3.12,then is the supply of corn elastic or inelastic?

Accepted Answer

Because the price el

Question 15

Suppose the price of flour increases from $0.80 to $1.00 a pound and the quantity demanded decreases from 100 pounds to 95 pounds.Using the midpoint method,what is the price elasticity of demand for flour? Is the demand for flour elastic or inelastic?

Accepted Answer

The price elasticity of demand is 0.23.(

Question 16

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 17

Suppose a good can be produced using commonly available resources.The elasticity of supply is

Accepted Answer

A)  negative. 
B)  greater than zero but less than 1. 
C)  greater than 1. 
D)  zero. 
E)  More information is needed to make a determination about the size of the elasticity of supply. 
A)  negative. 
B)  greater than zero but less than 1. 
C)  greater than 1. 
D)  zero. 
E)  More information is needed to make a determination about the size of the elasticity of supply.

Question 18

If the percentage change in the price of a good exceeds the percentage change in the quantity supplied,then the supply 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 19

You own a small store.Your cashier thinks you should raise prices to increase your total revenue and your customer thinks you should lower prices to increase your total revenue.The cashier thinks the price elasticity of demand is ________ and the customer believes the price elasticity of demand is ________.

Accepted Answer

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

Question 20

Tennis balls and tennis rackets are complements.If a 3 percent change in the price of a tennis racket leads to a 9 change in the quantity of tennis balls demanded,the cross elasticity of demand equals

Accepted Answer

A)  3. 
B)  -3. 
C)  1/3. 
D)  -1/3. 
E)  9. 
A)  3. 
B)  -3. 
C)  1/3. 
D)  -1/3. 
E)  9.

If the price elasticity of demand for gasoline equals 0.3,then an increase in the price of a gallon of gasoline from $3.70 to $3.90

If income increases from $50,000 to $60,000 while the demand for a good increases from 100 units to 125 units,what is the income elasticity of demand? Is the good a normal good or an inferior good?

-In the figure above,using the midpoint method,what is the price elasticity of demand when the price falls from $8 to $7?

If an Atlanta bakery raises the price of their rye bread by 11 percent and the quantity demanded decreases by 11 percent,then the demand for the rye bread is and the bakery's total revenue .

A 10 percent increase in income brings about a 15 percent decrease in the demand for a good.What is the income elasticity of demand and is the good a normal good or an inferior good?

The income elasticity of demand is the percentage change in the divided by the percentage change in .

If the percentage change in quantity demanded is greater than the percentage change in price,can you determine if the demand is elastic,unit elastic,or inelastic? Explain your answer.

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

If beef and pork are substitutes for consumers,the cross elasticity of demand between the two products must be

If the income elasticity of demand for a good is 2,then when income rises 10 percent,the quantity demanded

-In the figure above,if the price falls from $8 to $7,demand is

As more time passes,the price elasticity of gasoline

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

If the price elasticity of supply of corn is 3.12,then is the supply of corn elastic or inelastic?

Suppose the price of flour increases from $0.80 to $1.00 a pound and the quantity demanded decreases from 100 pounds to 95 pounds.Using the midpoint method,what is the price elasticity of demand for flour? Is the demand for flour elastic or inelastic?

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

Suppose a good can be produced using commonly available resources.The elasticity of supply is

If the percentage change in the price of a good exceeds the percentage change in the quantity supplied,then the supply is

You own a small store.Your cashier thinks you should raise prices to increase your total revenue and your customer thinks you should lower prices to increase your total revenue.The cashier thinks the price elasticity of demand is and the customer believes the price elasticity of demand is .

Tennis balls and tennis rackets are complements.If a 3 percent change in the price of a tennis racket leads to a 9 change in the quantity of tennis balls demanded,the cross elasticity of demand equals

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 the price elasticity of demand for gasoline equals 0.3,then an increase in the price of a gallon of gasoline from $3.70 to $3.90

If income increases from $50,000 to $60,000 while the demand for a good increases from 100 units to 125 units,what is the income elasticity of demand? Is the good a normal good or an inferior good?

-In the figure above,using the midpoint method,what is the price elasticity of demand when the price falls from $8 to $7?

If an Atlanta bakery raises the price of their rye bread by 11 percent and the quantity demanded decreases by 11 percent,then the demand for the rye bread is ________ and the bakery's total revenue ________.

A 10 percent increase in income brings about a 15 percent decrease in the demand for a good.What is the income elasticity of demand and is the good a normal good or an inferior good?

The income elasticity of demand is the percentage change in the ________ divided by the percentage change in ________.

If the percentage change in quantity demanded is greater than the percentage change in price,can you determine if the demand is elastic,unit elastic,or inelastic? Explain your answer.

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

If beef and pork are substitutes for consumers,the cross elasticity of demand between the two products must be

If the income elasticity of demand for a good is 2,then when income rises 10 percent,the quantity demanded

-In the figure above,if the price falls from $8 to $7,demand is

As more time passes,the price elasticity of gasoline

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

If the price elasticity of supply of corn is 3.12,then is the supply of corn elastic or inelastic?

Suppose the price of flour increases from $0.80 to $1.00 a pound and the quantity demanded decreases from 100 pounds to 95 pounds.Using the midpoint method,what is the price elasticity of demand for flour? Is the demand for flour elastic or inelastic?

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

Suppose a good can be produced using commonly available resources.The elasticity of supply is

If the percentage change in the price of a good exceeds the percentage change in the quantity supplied,then the supply is

Tennis balls and tennis rackets are complements.If a 3 percent change in the price of a tennis racket leads to a 9 change in the quantity of tennis balls demanded,the cross elasticity of demand equals

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 an Atlanta bakery raises the price of their rye bread by 11 percent and the quantity demanded decreases by 11 percent,then the demand for the rye bread is and the bakery's total revenue .

The income elasticity of demand is the percentage change in the divided by the percentage change in .