Question 1

When the percentage change in the quantity supplied is twice the percentage change in price,then supply 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 2

The cross elasticity of demand

Accepted Answer

A)  means that an increase in the demand for one good leads to a decrease in demand for another good. 
B)  measures how a change in the price of one good impacts the demand for another good. 
C)  measures how a change in supply impacts the demand for the good. 
D)  means that an increase in the price of one good leads to an increase in the price of another good. 
E)  measures how a change in income impacts the demand for the good. 
A)  means that an increase in the demand for one good leads to a decrease in demand for another good. 
B)  measures how a change in the price of one good impacts the demand for another good. 
C)  measures how a change in supply impacts the demand for the good. 
D)  means that an increase in the price of one good leads to an increase in the price of another good. 
E)  measures how a change in income impacts the demand for the good.

Question 3

When the percentage change in the quantity demanded is less than 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 cross elasticity of demand for butter and margarine 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)  positive because they are normal 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)  positive because they are normal goods.

Question 5

The lower the level of income in a country,the

Accepted Answer

A)  less income elastic is the demand for food. 
B)  more income elastic is the demand for food. 
C)  more negative the income elasticity of the demand for food. 
D)  Both answers A and C are correct. 
E)  None of the above is correct. 
A)  less income elastic is the demand for food. 
B)  more income elastic is the demand for food. 
C)  more negative the income elasticity of the demand for food. 
D)  Both answers A and C are correct. 
E)  None of the above is correct.

Question 6

If the quantity supplied and the price change by the same percentage,then 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 7

Because the price elasticity of supply for jumbo jets is 0.35,the supply of jumbo jets is

Accepted Answer

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

Question 8

Suppose the demand for rescue services in our national parks is perfectly inelastic.This fact would mean that a 31 percent increase in rescue fees leads to

Accepted Answer

A)  a 31 percent decrease in the quantity demanded. 
B)  a 31 percent increase in demand. 
C)  a 31 percent decrease in demand. 
D)  no change in the quantity demanded. 
E)  a decrease in the quantity demanded to 0 rescues. 
A)  a 31 percent decrease in the quantity demanded. 
B)  a 31 percent increase in demand. 
C)  a 31 percent decrease in demand. 
D)  no change in the quantity demanded. 
E)  a decrease in the quantity demanded to 0 rescues.

Question 9

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 10

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 11

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 12

Refer to the figure above.Suppose Starbucks charges $3.50 per cup for its latte.Which of the following is true?
i.At this price,the demand for Starbucks latte is inelastic.
ii.If Starbucks raises the price of its latte,its revenue will increase.
iii.If Starbucks lowers the price of its latte,it will increase its revenue.

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 13

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 14

The income elasticity of demand for skiing trips to Vermont is greater than one.Thus a trip to Vermont for skiing is ________ good.

Accepted Answer

A)  a normal 
B)  an inferior 
C)  a unit elastic 
D)  a price elastic 
E)  a price inelastic 
A)  a normal 
B)  an inferior 
C)  a unit elastic 
D)  a price elastic 
E)  a price inelastic

Question 15

If the price of corn increases by 20 percent and the quantity supplied of corn increases by 30 percent,then supply is

Accepted Answer

A)  elastic and the elasticity of supply equals 1.5. 
B)  inelastic and the elasticity of supply equals 1.5. 
C)  elastic and the elasticity of supply equals 0.66. 
D)  inelastic and the elasticity of supply equals 0.66. 
E)  either elastic or inelastic, but more information about the elasticity of demand is needed to determine which. 
A)  elastic and the elasticity of supply equals 1.5. 
B)  inelastic and the elasticity of supply equals 1.5. 
C)  elastic and the elasticity of supply equals 0.66. 
D)  inelastic and the elasticity of supply equals 0.66. 
E)  either elastic or inelastic, but more information about the elasticity of demand is needed to determine which.

Question 16

An inferior good has a ________ elasticity of demand.

Accepted Answer

A)  positive income 
B)  negative income 
C)  negative cross 
D)  positive cross 
E)  negative price 
A)  positive income 
B)  negative income 
C)  negative cross 
D)  positive cross 
E)  negative price

Question 17

If a 30 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

Accepted Answer

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

Question 18

Explain the total revenue test.

Accepted Answer

The total revenue test estimates whether

Question 19

Suppose the quantity supplied of computers increases from 2 million to 4 million units as the price of a computer increases from $600 to $700.What does the price elasticity of supply equal?

Accepted Answer

The price elasticity of supply = (percen

Question 20

Studies have shown that the price elasticity of demand for necessities,such as food,are higher in developing countries and lower in developed countries.What is the reason for this difference in elasticity?

Accepted Answer

One of the determinants of elasticity is

When the percentage change in the quantity supplied is twice the percentage change in price,then supply is

The cross elasticity of demand

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

The cross elasticity of demand for butter and margarine is likely to be

The lower the level of income in a country,the

If the quantity supplied and the price change by the same percentage,then supply is

Because the price elasticity of supply for jumbo jets is 0.35,the supply of jumbo jets is

Suppose the demand for rescue services in our national parks is perfectly inelastic.This fact would mean that a 31 percent increase in rescue fees leads to

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

Which of the following statements is correct?

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?

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

The income elasticity of demand for skiing trips to Vermont is greater than one.Thus a trip to Vermont for skiing is ________ good.

If the price of corn increases by 20 percent and the quantity supplied of corn increases by 30 percent,then supply is

An inferior good has a ________ elasticity of demand.

If a 30 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

Explain the total revenue test.

Suppose the quantity supplied of computers increases from 2 million to 4 million units as the price of a computer increases from $600 to $700.What does the price elasticity of supply equal?

Studies have shown that the price elasticity of demand for necessities,such as food,are higher in developing countries and lower in developed countries.What is the reason for this difference in elasticity?

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

When the percentage change in the quantity supplied is twice the percentage change in price,then supply is

The cross elasticity of demand

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

The cross elasticity of demand for butter and margarine is likely to be

The lower the level of income in a country,the

If the quantity supplied and the price change by the same percentage,then supply is

Because the price elasticity of supply for jumbo jets is 0.35,the supply of jumbo jets is

Suppose the demand for rescue services in our national parks is perfectly inelastic.This fact would mean that a 31 percent increase in rescue fees leads to

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

Which of the following statements is correct?

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?

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

The income elasticity of demand for skiing trips to Vermont is greater than one.Thus a trip to Vermont for skiing is ________ good.

If the price of corn increases by 20 percent and the quantity supplied of corn increases by 30 percent,then supply is

An inferior good has a ________ elasticity of demand.

If a 30 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

Explain the total revenue test.

Suppose the quantity supplied of computers increases from 2 million to 4 million units as the price of a computer increases from $600 to $700.What does the price elasticity of supply equal?

Studies have shown that the price elasticity of demand for necessities,such as food,are higher in developing countries and lower in developed countries.What is the reason for this difference in elasticity?

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