Question 1

If the price of a Brita water filtration system increases and the quantity demanded of bottled water increases,then these two goods are

Accepted Answer

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

Question 2

The income elasticity of demand is a measure of

Accepted Answer

A)  how demand for a product changes when the price of a substitute or complement product changes. 
B)  how responsive consumers are to changes in the price of a product. 
C)  how responsive suppliers are to changes in the price of a product. 
D)  the extent to which the demand for a good changes when income changes. 
E)  the extent to which the supply of a good changes when the demand changes as a result of a change in income. 
A)  how demand for a product changes when the price of a substitute or complement product changes. 
B)  how responsive consumers are to changes in the price of a product. 
C)  how responsive suppliers are to changes in the price of a product. 
D)  the extent to which the demand for a good changes when income changes. 
E)  the extent to which the supply of a good changes when the demand changes as a result of a change in income.

Question 3

What is an inferior good?

Accepted Answer

A)  a product of low quality that we do not want to purchase 
B)  a product for which demand increases when income increases, and demand decreases when income decreases 
C)  a product for which demand increases when income decreases, and demand decreases when income increases 
D)  a product that is complementary 
E)  a product that is a substitute for another, better good 
A)  a product of low quality that we do not want to purchase 
B)  a product for which demand increases when income increases, and demand decreases when income decreases 
C)  a product for which demand increases when income decreases, and demand decreases when income increases 
D)  a product that is complementary 
E)  a product that is a substitute for another, better good

Question 4

During last year the price of regular unleaded gasoline in Oakland,California increased 11.0 percent.If the price elasticity of demand for gasoline was 0.13,the price hike means that the quantity demanded decreased by

Accepted Answer

A)  1.43 percent. 
B)  8.46 percent. 
C)  0.16 percent. 
D)  4.31 percent. 
E)  6.46 percent. 
A)  1.43 percent. 
B)  8.46 percent. 
C)  0.16 percent. 
D)  4.31 percent. 
E)  6.46 percent.

Question 5

The price elasticity of demand is always positive,as is the price elasticity of supply.Is the cross elasticity of demand always positive? Explain your answer.

Accepted Answer

No,the cross elasticity of demand is not

Question 6

The price elasticity of supply measures

Accepted Answer

A)  the percentage change in supply from a percentage change in demand. 
B)  the extent to which the quantity supplied of a good changes when the price of a good changes, other things remaining the same. 
C)  the slope of the supply curve. 
D)  how the equilibrium price changes in response to a change in the equilibrium quantity supplied. 
E)  Both answers B and C are correct. 
A)  the percentage change in supply from a percentage change in demand. 
B)  the extent to which the quantity supplied of a good changes when the price of a good changes, other things remaining the same. 
C)  the slope of the supply curve. 
D)  how the equilibrium price changes in response to a change in the equilibrium quantity supplied. 
E)  Both answers B and C are correct.

Question 7

A product that has a negative income elasticity of demand is ________ good.

Accepted Answer

A)  a complementary 
B)  a substitute 
C)  a normal 
D)  an inferior 
E)  a negative 
A)  a complementary 
B)  a substitute 
C)  a normal 
D)  an inferior 
E)  a negative

Question 8

Water is considered a necessity.So,is the demand for water elastic or inelastic?

Accepted Answer

The demand for neces

Question 9

When income increases from $30,000 a year to $40,000 a year,the quantity demanded of weekend vacations by Sara increases from 2 a year to 5 a year.For Sara,the income elasticity of demand of weekend vacations is ________ and weekend vacations are ________ good.

Accepted Answer

A)  3; a normal 
B)  4.5 a normal 
C)  1/3; an inferior 
D)  -4.5; an inferior 
E)  1/3; a normal 
A)  3; a normal 
B)  4.5 a normal 
C)  1/3; an inferior 
D)  -4.5; an inferior 
E)  1/3; a normal

Question 10

The price of furnace filters increased by 5 percent and the quantity demanded did not change.The price elasticity of demand for furnace filters is

Accepted Answer

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

Question 11

A Minnesota snowmobile dealer lowers its prices in February by 16 percent and the quantity demanded increases by 2 percent.Thus the demand for snowmobiles from this dealer is ________ and the dealer's total revenue will ________.

Accepted Answer

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

Question 12

Suppose Starbucks currently charges $3.25 per cup for its latte.If Starbucks lowers the price to $3.00 per cup,based on the demand curve in the figure above,its total revenue will ________ because the demand for Starbucks latte is ________ over this price range.

Accepted Answer

A)  increase; elastic 
B)  decrease; elastic 
C)  increase; inelastic 
D)  increase; unit elastic 
E)  not change; unit elastic 
A)  increase; elastic 
B)  decrease; elastic 
C)  increase; inelastic 
D)  increase; unit elastic 
E)  not change; unit elastic

Question 13

Goods are ________ when the income elasticity of demand is less than zero.

Accepted Answer

A)  substitutes 
B)  complements 
C)  inferior 
D)  elastic 
E)  normal 
A)  substitutes 
B)  complements 
C)  inferior 
D)  elastic 
E)  normal

Question 14

A product's price elasticity of demand is likely to be greater

Accepted Answer

A)  if it only has a few substitutes. 
B)  if consumers spend a small proportion of income on the product. 
C)  the less time consumers have to adjust to price changes. 
D)  if the product is a luxury good rather than a necessity. 
E)  Both answers C and D are correct. 
A)  if it only has a few substitutes. 
B)  if consumers spend a small proportion of income on the product. 
C)  the less time consumers have to adjust to price changes. 
D)  if the product is a luxury good rather than a necessity. 
E)  Both answers C and D are correct.

Question 15

The income elasticity of demand for foreign travel

Accepted Answer

A)  is likely to be smaller than the income elasticity of demand for food. 
B)  is likely to be larger than the income elasticity of demand for food. 
C)  cannot be compared to the income elasticity of demand for food. 
D)  is likely to be inelastic. 
E)  is likely to be negative. 
A)  is likely to be smaller than the income elasticity of demand for food. 
B)  is likely to be larger than the income elasticity of demand for food. 
C)  cannot be compared to the income elasticity of demand for food. 
D)  is likely to be inelastic. 
E)  is likely to be negative.

Question 16

The price of a bag of pretzels rises from $2 to $3 and the quantity demanded decreases from 100 to 60.What is the price elasticity of demand?

Accepted Answer

A)  1.0 
B)  1.25 
C)  40.0 
D)  20.0 
E)  0.80 
A)  1.0 
B)  1.25 
C)  40.0 
D)  20.0 
E)  0.80

Question 17

If the price increases by 20 percent and the quantity supplied increases by 40 percent,what does the elasticity of supply equal?

Accepted Answer

The price elasticity of supply

Question 18

The supply of beach front property on St.Simon's Island is

Accepted Answer

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

Question 19

-If the supply curve is ________,the elasticity of supply is ________.

Accepted Answer

A)  vertical; infinite 
B)  vertical; 0 
C)  horizontal; 1 
D)  horizontal; 0 
E)  a straight, upward sloping line through the origin; 0 
A)  vertical; infinite 
B)  vertical; 0 
C)  horizontal; 1 
D)  horizontal; 0 
E)  a straight, upward sloping line through the origin; 0

Question 20

Demand is price inelastic if ________ percentage change in the price leads to a ________ percentage change in the quantity demanded.

Accepted Answer

A)  a small; large 
B)  a large; small 
C)  any; large 
D)  Both answers A and B are correct. 
E)  None of the above answers is correct. 
A)  a small; large 
B)  a large; small 
C)  any; large 
D)  Both answers A and B are correct. 
E)  None of the above answers is correct.

If the price of a Brita water filtration system increases and the quantity demanded of bottled water increases,then these two goods are

The income elasticity of demand is a measure of

What is an inferior good?

During last year the price of regular unleaded gasoline in Oakland,California increased 11.0 percent.If the price elasticity of demand for gasoline was 0.13,the price hike means that the quantity demanded decreased by

The price elasticity of demand is always positive,as is the price elasticity of supply.Is the cross elasticity of demand always positive? Explain your answer.

The price elasticity of supply measures

A product that has a negative income elasticity of demand is ________ good.

Water is considered a necessity.So,is the demand for water elastic or inelastic?

When income increases from $30,000 a year to $40,000 a year,the quantity demanded of weekend vacations by Sara increases from 2 a year to 5 a year.For Sara,the income elasticity of demand of weekend vacations is and weekend vacations are good.

The price of furnace filters increased by 5 percent and the quantity demanded did not change.The price elasticity of demand for furnace filters is

A Minnesota snowmobile dealer lowers its prices in February by 16 percent and the quantity demanded increases by 2 percent.Thus the demand for snowmobiles from this dealer is and the dealer's total revenue will .

Suppose Starbucks currently charges $3.25 per cup for its latte.If Starbucks lowers the price to $3.00 per cup,based on the demand curve in the figure above,its total revenue will because the demand for Starbucks latte is over this price range.

Goods are ________ when the income elasticity of demand is less than zero.

A product's price elasticity of demand is likely to be greater

The income elasticity of demand for foreign travel

The price of a bag of pretzels rises from $2 to $3 and the quantity demanded decreases from 100 to 60.What is the price elasticity of demand?

If the price increases by 20 percent and the quantity supplied increases by 40 percent,what does the elasticity of supply equal?

The supply of beach front property on St.Simon's Island is

-If the supply curve is ,the elasticity of supply is .

Demand is price inelastic if percentage change in the price leads to a percentage change in the quantity demanded.

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 of a Brita water filtration system increases and the quantity demanded of bottled water increases,then these two goods are

The income elasticity of demand is a measure of

What is an inferior good?

During last year the price of regular unleaded gasoline in Oakland,California increased 11.0 percent.If the price elasticity of demand for gasoline was 0.13,the price hike means that the quantity demanded decreased by

The price elasticity of demand is always positive,as is the price elasticity of supply.Is the cross elasticity of demand always positive? Explain your answer.

The price elasticity of supply measures

A product that has a negative income elasticity of demand is ________ good.

Water is considered a necessity.So,is the demand for water elastic or inelastic?

When income increases from $30,000 a year to $40,000 a year,the quantity demanded of weekend vacations by Sara increases from 2 a year to 5 a year.For Sara,the income elasticity of demand of weekend vacations is ________ and weekend vacations are ________ good.

The price of furnace filters increased by 5 percent and the quantity demanded did not change.The price elasticity of demand for furnace filters is

A Minnesota snowmobile dealer lowers its prices in February by 16 percent and the quantity demanded increases by 2 percent.Thus the demand for snowmobiles from this dealer is ________ and the dealer's total revenue will ________.

Suppose Starbucks currently charges $3.25 per cup for its latte.If Starbucks lowers the price to $3.00 per cup,based on the demand curve in the figure above,its total revenue will ________ because the demand for Starbucks latte is ________ over this price range.

Goods are ________ when the income elasticity of demand is less than zero.

A product's price elasticity of demand is likely to be greater

The income elasticity of demand for foreign travel

The price of a bag of pretzels rises from $2 to $3 and the quantity demanded decreases from 100 to 60.What is the price elasticity of demand?

If the price increases by 20 percent and the quantity supplied increases by 40 percent,what does the elasticity of supply equal?

The supply of beach front property on St.Simon's Island is

-If the supply curve is ________,the elasticity of supply is ________.

Demand is price inelastic if ________ percentage change in the price leads to a ________ percentage change in the quantity demanded.

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

When income increases from $30,000 a year to $40,000 a year,the quantity demanded of weekend vacations by Sara increases from 2 a year to 5 a year.For Sara,the income elasticity of demand of weekend vacations is and weekend vacations are good.

A Minnesota snowmobile dealer lowers its prices in February by 16 percent and the quantity demanded increases by 2 percent.Thus the demand for snowmobiles from this dealer is and the dealer's total revenue will .

Suppose Starbucks currently charges $3.25 per cup for its latte.If Starbucks lowers the price to $3.00 per cup,based on the demand curve in the figure above,its total revenue will because the demand for Starbucks latte is over this price range.

-If the supply curve is ,the elasticity of supply is .

Demand is price inelastic if percentage change in the price leads to a percentage change in the quantity demanded.