Question 1

A firm can sell 10 units if the price is $100 and can sell 8 units if the price is $125.Using the midpoint method,what is the price elasticity of demand?

Accepted Answer

A)  0.75 
B)  1.00 
C)  1.25 
D)  0.50 
E)  0.0 
A)  0.75 
B)  1.00 
C)  1.25 
D)  0.50 
E)  0.0

Question 2

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 3

For a product with a rapidly increasing opportunity cost of producing additional units,

Accepted Answer

A)  demand is price elastic. 
B)  supply is price elastic. 
C)  demand is price inelastic. 
D)  supply is price inelastic. 
E)  the demand curve is vertical. 
A)  demand is price elastic. 
B)  supply is price elastic. 
C)  demand is price inelastic. 
D)  supply is price inelastic. 
E)  the demand curve is vertical.

Question 4

If the cross elasticity of demand for DVD players and DVDs equals -2,then the products are

Accepted Answer

A)  unrelated. 
B)  complements. 
C)  inferior goods. 
D)  substitutes. 
E)  normal goods. 
A)  unrelated. 
B)  complements. 
C)  inferior goods. 
D)  substitutes. 
E)  normal goods.

Question 5

If the price doubles and the quantity supplied also doubles,the price elasticity of supply for the good is

Accepted Answer

A)  -1. 
B)  1. 
C)  -2. 
D)  2. 
E)  100 percent. 
A)  -1. 
B)  1. 
C)  -2. 
D)  2. 
E)  100 percent.

Question 6

If a 5 percent increase in income brings about a 10 percent decrease in the demand for a good,then the

Accepted Answer

A)  good is a normal good. 
B)  good is an inferior good. 
C)  income elasticity of demand is 0.5. 
D)  income elasticity of demand is 2.0. 
E)  income elasticity of demand is 5.0. 
A)  good is a normal good. 
B)  good is an inferior good. 
C)  income elasticity of demand is 0.5. 
D)  income elasticity of demand is 2.0. 
E)  income elasticity of demand is 5.0.

Question 7

If the price elasticity of demand for moose hunting lessons is 4.23,then the demand for moose hunting lessons is

Accepted Answer

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

Question 8

One reason why the demand for gasoline is inelastic is because

Accepted Answer

A)  substitutes for gas abound. 
B)  substitutes for gas are hard to find. 
C)  gasoline is a luxury item. 
D)  people have a long time to shop around for automobiles that use less gas. 
E)  buses run on diesel fuel rather than gasoline. 
A)  substitutes for gas abound. 
B)  substitutes for gas are hard to find. 
C)  gasoline is a luxury item. 
D)  people have a long time to shop around for automobiles that use less gas. 
E)  buses run on diesel fuel rather than gasoline.

Question 9

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 10

The demand for necessities generally is ________ the demand for luxury goods.

Accepted Answer

A)  as elastic as 
B)  more elastic than 
C)  less elastic than 
D)  flatter than 
E)  not comparable to 
A)  as elastic as 
B)  more elastic than 
C)  less elastic than 
D)  flatter than 
E)  not comparable to

Question 11

What happens to the price elasticity of demand moving down along a downward-sloping,linear demand curve?

Accepted Answer

Moving down along a downward-sloping,lin

Question 12

If the cross elasticity of demand between peanut butter and milk is -1.11,then are peanut butter and milk substitutes or complements?

Accepted Answer

Because the cross el

Question 13

What factors determine the size of the price elasticity of demand?

Accepted Answer

The factors that determine the size of t

Question 14

What is the formula for the cross elasticity of demand? The percentage change in the

Accepted Answer

A)  quantity demanded divided by the percentage change in the price of a substitute or complement. 
B)  quantity supplied divided by the percentage change in price. 
C)  quantity demanded divided by the percentage change in price. 
D)  quantity demanded divided by the percentage change in income. 
E)  equilibrium quantity demanded divided by the equilibrium quantity supplied. 
A)  quantity demanded divided by the percentage change in the price of a substitute or complement. 
B)  quantity supplied divided by the percentage change in price. 
C)  quantity demanded divided by the percentage change in price. 
D)  quantity demanded divided by the percentage change in income. 
E)  equilibrium quantity demanded divided by the equilibrium quantity supplied.

Question 15

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 16

If two goods have a cross elasticity of demand of -2,then when the price of one good increases,the demand curve of the other good

Accepted Answer

A)  shifts rightward. 
B)  shifts leftward. 
C)  remains unchanged and the supply curve also remains unchanged. 
D)  might shift rightward, leftward, or remain unchanged. 
E)  remains unchanged but the supply curve shifts leftward. 
A)  shifts rightward. 
B)  shifts leftward. 
C)  remains unchanged and the supply curve also remains unchanged. 
D)  might shift rightward, leftward, or remain unchanged. 
E)  remains unchanged but the supply curve shifts leftward.

Question 17

One reason why the price elasticity of supply for DVD players is greater than one is that

Accepted Answer

A)  the cost of producing DVD players is small. 
B)  the storage of DVD players is not possible. 
C)  DVD players can be easily stored. 
D)  the demand for DVD players is fairly large. 
E)  DVD players require relatively advanced technology for their production. 
A)  the cost of producing DVD players is small. 
B)  the storage of DVD players is not possible. 
C)  DVD players can be easily stored. 
D)  the demand for DVD players is fairly large. 
E)  DVD players require relatively advanced technology for their production.

Question 18

Sergio's rentals of Blu-ray movies increase by 10 percent when her income increases by 30 percent.Based on this information,we know that for Sergio Blu-ray movies

Accepted Answer

A)  are complements. 
B)  are substitutes. 
C)  are inferior goods. 
D)  have an inelastic demand. 
E)  are normal goods. 
A)  are complements. 
B)  are substitutes. 
C)  are inferior goods. 
D)  have an inelastic demand. 
E)  are normal goods.

Question 19

If the cross elasticity of demand between good A and good B is negative,then a decrease in the price of good A results in

Accepted Answer

A)  an increase in the demand for good B. 
B)  a decrease in the demand for good B. 
C)  a movement downward along the demand curve for good B. 
D)  an increase in the supply of good B. 
E)  a decrease in the supply of good B. 
A)  an increase in the demand for good B. 
B)  a decrease in the demand for good B. 
C)  a movement downward along the demand curve for good B. 
D)  an increase in the supply of good B. 
E)  a decrease in the supply of good B.

Question 20

Which of the following statements is correct for the price elasticity of demand along a linear,downward-sloping demand curve?

Accepted Answer

A)  The price elasticity of demand is constant because the slope is constant. 
B)  At low prices, demand is elastic but at high prices demand is inelastic. 
C)  At high prices, demand is elastic but at low prices demand is inelastic. 
D)  The price elasticity of demand is not defined for a linear demand curve because the slope is constant. 
E)  None of the above answers is correct. 
A)  The price elasticity of demand is constant because the slope is constant. 
B)  At low prices, demand is elastic but at high prices demand is inelastic. 
C)  At high prices, demand is elastic but at low prices demand is inelastic. 
D)  The price elasticity of demand is not defined for a linear demand curve because the slope is constant. 
E)  None of the above answers is correct.

A firm can sell 10 units if the price is $100 and can sell 8 units if the price is $125.Using the midpoint method,what is the price elasticity of demand?

For a product with a rapidly increasing opportunity cost of producing additional units,

If the cross elasticity of demand for DVD players and DVDs equals -2,then the products are

If the price doubles and the quantity supplied also doubles,the price elasticity of supply for the good is

If a 5 percent increase in income brings about a 10 percent decrease in the demand for a good,then the

If the price elasticity of demand for moose hunting lessons is 4.23,then the demand for moose hunting lessons is

One reason why the demand for gasoline is inelastic is because

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

The demand for necessities generally is ________ the demand for luxury goods.

What happens to the price elasticity of demand moving down along a downward-sloping,linear demand curve?

If the cross elasticity of demand between peanut butter and milk is -1.11,then are peanut butter and milk substitutes or complements?

What factors determine the size of the price elasticity of demand?

What is the formula for the cross elasticity of demand? The percentage change in the

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 .

If two goods have a cross elasticity of demand of -2,then when the price of one good increases,the demand curve of the other good

One reason why the price elasticity of supply for DVD players is greater than one is that

Sergio's rentals of Blu-ray movies increase by 10 percent when her income increases by 30 percent.Based on this information,we know that for Sergio Blu-ray movies

If the cross elasticity of demand between good A and good B is negative,then a decrease in the price of good A results in

Which of the following statements is correct for the price elasticity of demand along a linear,downward-sloping demand curve?

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

A firm can sell 10 units if the price is $100 and can sell 8 units if the price is $125.Using the midpoint method,what is the price elasticity of demand?

For a product with a rapidly increasing opportunity cost of producing additional units,

If the cross elasticity of demand for DVD players and DVDs equals -2,then the products are

If the price doubles and the quantity supplied also doubles,the price elasticity of supply for the good is

If a 5 percent increase in income brings about a 10 percent decrease in the demand for a good,then the

If the price elasticity of demand for moose hunting lessons is 4.23,then the demand for moose hunting lessons is

One reason why the demand for gasoline is inelastic is because

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

The demand for necessities generally is ________ the demand for luxury goods.

What happens to the price elasticity of demand moving down along a downward-sloping,linear demand curve?

If the cross elasticity of demand between peanut butter and milk is -1.11,then are peanut butter and milk substitutes or complements?

What factors determine the size of the price elasticity of demand?

What is the formula for the cross elasticity of demand? The percentage change in the

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 ________.

If two goods have a cross elasticity of demand of -2,then when the price of one good increases,the demand curve of the other good

One reason why the price elasticity of supply for DVD players is greater than one is that

Sergio's rentals of Blu-ray movies increase by 10 percent when her income increases by 30 percent.Based on this information,we know that for Sergio Blu-ray movies

If the cross elasticity of demand between good A and good B is negative,then a decrease in the price of good A results in

Which of the following statements is correct for the price elasticity of demand along a linear,downward-sloping demand curve?

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 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 .