Question 1

You are more sensitive to a change in price if you

Accepted Answer

A)  spend a lot of your income on the good. 
B)  spend a small percentage of your income on the good. 
C)  buy very little of the good. 
D)  do not buy the good regularly. 
E)  have a very inelastic demand for the good. 
A)  spend a lot of your income on the good. 
B)  spend a small percentage of your income on the good. 
C)  buy very little of the good. 
D)  do not buy the good regularly. 
E)  have a very inelastic demand for the good.

Question 2

What effect does a price hike have on the total revenue of the producers?

Accepted Answer

The effect of a price hike on total reve

Question 3

-A firm raises the price it charges.The firm's total revenue does not change.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 4

If a decrease in price increases total revenue,what can you determine about the elasticity of demand for the good?

Accepted Answer

If a decrease in price increas

Question 5

When supply is perfectly inelastic,the supply curve is

Accepted Answer

A)  upward sloping but not a straight line. 
B)  vertical. 
C)  downward sloping. 
D)  horizontal. 
E)  a straight line with a 45 degree slope that goes through the origin. 
A)  upward sloping but not a straight line. 
B)  vertical. 
C)  downward sloping. 
D)  horizontal. 
E)  a straight line with a 45 degree slope that goes through the origin.

Question 6

When the percentage change in the quantity demanded exceeds 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 7

-In the figure above,what happens to total revenue as we move from point A to point B?

Accepted Answer

A)  It increases. 
B)  It decreases. 
C)  It remains constant. 
D)  It becomes negative. 
E)  More information about the elasticity of demand is needed to determine if it increases, decreases, or does not change. 
A)  It increases. 
B)  It decreases. 
C)  It remains constant. 
D)  It becomes negative. 
E)  More information about the elasticity of demand is needed to determine if it increases, decreases, or does not change.

Question 8

For a good such as a large screen HD television set,the income elasticity would likely be

Accepted Answer

A)  negative. 
B)  equal to zero. 
C)  positive and less than one. 
D)  positive and greater than one. 
E)  undefined because large screen, HD TVs are bought by many consumers. 
A)  negative. 
B)  equal to zero. 
C)  positive and less than one. 
D)  positive and greater than one. 
E)  undefined because large screen, HD TVs are bought by many consumers.

Question 9

The opportunity cost of producing a good rises only slightly as the quantity produced increases.This good has

Accepted Answer

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

Question 10

It is very difficult for Gourmet Chocolatier to find inexpensive and available inputs for the business.Because of this,we predict that Gourmet Chocolatier's supply to be

Accepted Answer

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

Question 11

When the price of a cup of coffee falls from $3.00 to $2.50,the quantity demanded increases from 1,000 per month to 1,150 per month.Using the midpoint method,the price elasticity of demand is

Accepted Answer

A)  0.77. 
B)  1.30. 
C)  0.07. 
D)  3.00. 
E)  2.50. 
A)  0.77. 
B)  1.30. 
C)  0.07. 
D)  3.00. 
E)  2.50.

Question 12

As you move up along a straight-line demand curve,

Accepted Answer

A)  the price elasticity of demand decreases in size. 
B)  the price elasticity of demand increases in size. 
C)  total revenue always decreases. 
D)  total revenue always increases. 
E)  total revenue never changes. 
A)  the price elasticity of demand decreases in size. 
B)  the price elasticity of demand increases in size. 
C)  total revenue always decreases. 
D)  total revenue always increases. 
E)  total revenue never changes.

Question 13

When two goods are related such that an increase in the price of one good decreases the quantity demanded of the other good,these goods are definitely

Accepted Answer

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

Question 14

Suppose the current price of barley is $7 per bushel and at that price 100,000 bushels are grown by a Colorado farmer.If the price of barley rises to $8 and quantity supplied increases to 130,000 bushels,then using the midpoint method,the price elasticity of supply for barley equals

Accepted Answer

A)  13.33. 
B)  26.78. 
C)  1.96. 
D)  0.51. 
E)  zero. 
A)  13.33. 
B)  26.78. 
C)  1.96. 
D)  0.51. 
E)  zero.

Question 15

Which of the following is correct?

Accepted Answer

A)  The cross elasticity of demand for substitute goods is positive. 
B)  The cross elasticity of demand for substitute goods is negative. 
C)  The cross elasticity of demand equals the percentage change in demand divided by the percentage change in income. 
D)  The income elasticity of demand for a normal good is negative. 
E)  The cross elasticity of demand for normal goods is positive. 
A)  The cross elasticity of demand for substitute goods is positive. 
B)  The cross elasticity of demand for substitute goods is negative. 
C)  The cross elasticity of demand equals the percentage change in demand divided by the percentage change in income. 
D)  The income elasticity of demand for a normal good is negative. 
E)  The cross elasticity of demand for normal goods is positive.

Question 16

If a product is narrowly defined,it is likely to

Accepted Answer

A)  have many substitutes and therefore its demand is elastic. 
B)  have few substitutes, and therefore its demand is less elastic. 
C)  be unique, and therefore its demand is inelastic. 
D)  be unique and have many substitutes. 
E)  have a larger proportion of income spent on it. 
A)  have many substitutes and therefore its demand is elastic. 
B)  have few substitutes, and therefore its demand is less elastic. 
C)  be unique, and therefore its demand is inelastic. 
D)  be unique and have many substitutes. 
E)  have a larger proportion of income spent on it.

Question 17

Tacos and pizza are substitutes.If a 2 percent change in the price of a taco leads to a 4 percent change in the demand for pizza,the cross elasticity of demand equals

Accepted Answer

A)  -1/2. 
B)  1/2. 
C)  2. 
D)  -2. 
E)  4. 
A)  -1/2. 
B)  1/2. 
C)  2. 
D)  -2. 
E)  4.

Question 18

When the price of a product increases from $35 to $45,the quantity supplied increases from 30 units to 40 units per week.Using the midpoint method,the price elasticity of supply is

Accepted Answer

A)  0.00. 
B)  -1.1. 
C)  1.14. 
D)  1.35. 
E)  0.88. 
A)  0.00. 
B)  -1.1. 
C)  1.14. 
D)  1.35. 
E)  0.88.

Question 19

The price elasticity of supply equals 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)  supply divided by the percentage change in the demand. 
E)  quantity supplied divided by the percentage change in the quantity demanded. 
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)  supply divided by the percentage change in the demand. 
E)  quantity supplied divided by the percentage change in the quantity demanded.

Question 20

When does a decrease in supply raise the price more: When demand is elastic or when demand is inelastic? When OPEC decreases the supply of oil,the price of gasoline skyrockets.Hence is the demand for gasoline elastic or inelastic?

Accepted Answer

A decrease in supply raises th

You are more sensitive to a change in price if you

What effect does a price hike have on the total revenue of the producers?

-A firm raises the price it charges.The firm's total revenue does not change.What can we conclude about the price elasticity of demand?

If a decrease in price increases total revenue,what can you determine about the elasticity of demand for the good?

When supply is perfectly inelastic,the supply curve is

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

-In the figure above,what happens to total revenue as we move from point A to point B?

For a good such as a large screen HD television set,the income elasticity would likely be

The opportunity cost of producing a good rises only slightly as the quantity produced increases.This good has

It is very difficult for Gourmet Chocolatier to find inexpensive and available inputs for the business.Because of this,we predict that Gourmet Chocolatier's supply to be

When the price of a cup of coffee falls from $3.00 to $2.50,the quantity demanded increases from 1,000 per month to 1,150 per month.Using the midpoint method,the price elasticity of demand is

As you move up along a straight-line demand curve,

When two goods are related such that an increase in the price of one good decreases the quantity demanded of the other good,these goods are definitely

Suppose the current price of barley is $7 per bushel and at that price 100,000 bushels are grown by a Colorado farmer.If the price of barley rises to $8 and quantity supplied increases to 130,000 bushels,then using the midpoint method,the price elasticity of supply for barley equals

Which of the following is correct?

If a product is narrowly defined,it is likely to

Tacos and pizza are substitutes.If a 2 percent change in the price of a taco leads to a 4 percent change in the demand for pizza,the cross elasticity of demand equals

When the price of a product increases from $35 to $45,the quantity supplied increases from 30 units to 40 units per week.Using the midpoint method,the price elasticity of supply is

The price elasticity of supply equals the percentage change in the

When does a decrease in supply raise the price more: When demand is elastic or when demand is inelastic? When OPEC decreases the supply of oil,the price of gasoline skyrockets.Hence is the demand for gasoline elastic or inelastic?

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

You are more sensitive to a change in price if you

What effect does a price hike have on the total revenue of the producers?

-A firm raises the price it charges.The firm's total revenue does not change.What can we conclude about the price elasticity of demand?

If a decrease in price increases total revenue,what can you determine about the elasticity of demand for the good?

When supply is perfectly inelastic,the supply curve is

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

-In the figure above,what happens to total revenue as we move from point A to point B?

For a good such as a large screen HD television set,the income elasticity would likely be

The opportunity cost of producing a good rises only slightly as the quantity produced increases.This good has

It is very difficult for Gourmet Chocolatier to find inexpensive and available inputs for the business.Because of this,we predict that Gourmet Chocolatier's supply to be

When the price of a cup of coffee falls from $3.00 to $2.50,the quantity demanded increases from 1,000 per month to 1,150 per month.Using the midpoint method,the price elasticity of demand is

As you move up along a straight-line demand curve,

When two goods are related such that an increase in the price of one good decreases the quantity demanded of the other good,these goods are definitely

Suppose the current price of barley is $7 per bushel and at that price 100,000 bushels are grown by a Colorado farmer.If the price of barley rises to $8 and quantity supplied increases to 130,000 bushels,then using the midpoint method,the price elasticity of supply for barley equals

Which of the following is correct?

If a product is narrowly defined,it is likely to

Tacos and pizza are substitutes.If a 2 percent change in the price of a taco leads to a 4 percent change in the demand for pizza,the cross elasticity of demand equals

When the price of a product increases from $35 to $45,the quantity supplied increases from 30 units to 40 units per week.Using the midpoint method,the price elasticity of supply is

The price elasticity of supply equals the percentage change in the

When does a decrease in supply raise the price more: When demand is elastic or when demand is inelastic? When OPEC decreases the supply of oil,the price of gasoline skyrockets.Hence is the demand for gasoline elastic or inelastic?

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