Question 1

The following graph depicts demand. 
Refer to the figure above.At point D,demand is:

Accepted Answer

A)  price inelastic. 
B)  price elastic. 
C)  unitary elastic. 
D)  perfectly price elastic.

Question 2

If the price elasticity of demand for a good is greater than one,then the demand for that good,with respect to price,is:

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  unitary elastic. 
D)  perfectly elastic.

Question 3

At the midpoint of a straight-line demand curve,the price elasticity of demand is always:

Accepted Answer

A)  greater than one. 
B)  less than one. 
C)  unitary. 
D)  zero.

Question 4

The demand for a good is elastic with respect to price if the price elasticity of demand is:

Accepted Answer

A)  equal to one. 
B)  greater than one. 
C)  less than one. 
D)  equal to zero.

Question 5

Which determines whether a company will earn higher revenues when it raises its price?

Accepted Answer

A)  The cost of the inputs. 
B)  Government regulation of the industry. 
C)  Consumer demand. 
D)  Companies always earn higher revenues when they increase price.

Question 6

Suppose that there is only one small clothing store in the remote village of Green Acres,and until recently all of the townspeople bought most of their shirts there.As more people in Green Acres become connected to the Internet,the price elasticity of demand for shirts at the Green Acres store will:

Accepted Answer

A)  increase because the Internet offers more substitutes. 
B)  decrease because the Internet offers more substitutes. 
C)  remain the same,but the quantity demanded will decrease as more people shop online. 
D)  remain the same,but the quantity will decrease as more people shop online.

Question 7

If consumers completely cease purchasing a product when its price increases by any amount,demand is classified as:

Accepted Answer

A)  elastic. 
B)  perfectly inelastic. 
C)  unitary elastic. 
D)  perfectly elastic.

Question 8

If you consume less of a good as your income increases:

Accepted Answer

A)  your demand curve is not downward sloping for that good. 
B)  the good must be an inferior good. 
C)  the good must not have any close substitutes. 
D)  your quantity demanded changed by a movement along the demand function.

Question 9

When Taylor raised the price of earrings at Taylor's Boutique,total revenue from earrings increased.This suggests that:

Accepted Answer

A)  the demand for Taylor's earrings at the original price must be elastic. 
B)  there are too many other boutiques competing with Taylor. 
C)  there was excess demand for earrings at the original price. 
D)  the demand for Taylor's earrings at the original price was inelastic.

Question 10

If the slope of the demand curve is zero,the price elasticity of demand is:

Accepted Answer

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

Question 11

If the price of cheese falls by one percent and the quantity demanded rises by 3 percent,then the price elasticity of demand for cheese has a value of:

Accepted Answer

A)  30. 
B)  0.30. 
C)  0.333. 
D)  3.

Question 12

Firms that produce goods with many substitutes will find that:

Accepted Answer

A)  lowering price increases total revenues. 
B)  lowering price decreases total revenues. 
C)  raising price increases total revenues. 
D)  lowering price leaves total revenues unchanged.

Question 13

On a given linear demand curve,demand is ______ at high prices than at low prices.

Accepted Answer

A)  more price elastic. 
B)  more price inelastic. 
C)  more negative. 
D)  more volatile.

Question 14

A demand curve that is drawn as a vertical line illustrates price elasticity equal to:

Accepted Answer

A)  0. 
B)  1. 
C)  infinity. 
D)  the quantity.

Question 15

Assume the price of gasoline doubles tonight and remains at that price for the next two years.The short-term price elasticity of demand for gasoline will be ______ when compared with the long-term price elasticity of demand for gasoline.

Accepted Answer

A)  more elastic 
B)  larger in absolute value 
C)  the same 
D)  more inelastic

Question 16

When the price of insulin was $10,consumers demanded 100 units;when the price was $15,consumers demanded 100 units;and when the price was $20,consumers demanded 100 units.Based on this information,insulin must have a(n)_______ demand curve.

Accepted Answer

A)  unitary elastic 
B)  perfectly elastic 
C)  perfectly inelastic 
D)  elastic

Question 17

Suppose that total expenditures for coffee reach a maximum at a price of $5 per pound.At this price,the demand for coffee is:

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  unitary elastic. 
D)  perfectly inelastic.

Question 18

If the price elasticity of demand for a good equals one,then the demand for that good with respect to price,is:

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  unitary elastic. 
D)  perfectly elastic.

Question 19

The cross-price elasticity for bread and potatoes is estimated to be 0.5.This implies bread and potatoes are:

Accepted Answer

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

Question 20

If the consumers cannot switch to a close substitute when the price of a good increases,the demand for that good is likely to be:

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  unitary elastic. 
D)  perfectly elastic.

Exam 4: Elasticity

The following graph depicts demand. Refer to the figure above.At point D,demand is:

If the price elasticity of demand for a good is greater than one,then the demand for that good,with respect to price,is:

At the midpoint of a straight-line demand curve,the price elasticity of demand is always:

The demand for a good is elastic with respect to price if the price elasticity of demand is:

Which determines whether a company will earn higher revenues when it raises its price?

Suppose that there is only one small clothing store in the remote village of Green Acres,and until recently all of the townspeople bought most of their shirts there.As more people in Green Acres become connected to the Internet,the price elasticity of demand for shirts at the Green Acres store will:

If consumers completely cease purchasing a product when its price increases by any amount,demand is classified as:

If you consume less of a good as your income increases:

When Taylor raised the price of earrings at Taylor's Boutique,total revenue from earrings increased.This suggests that:

If the slope of the demand curve is zero,the price elasticity of demand is:

If the price of cheese falls by one percent and the quantity demanded rises by 3 percent,then the price elasticity of demand for cheese has a value of:

Firms that produce goods with many substitutes will find that:

On a given linear demand curve,demand is ______ at high prices than at low prices.

A demand curve that is drawn as a vertical line illustrates price elasticity equal to:

Assume the price of gasoline doubles tonight and remains at that price for the next two years.The short-term price elasticity of demand for gasoline will be ______ when compared with the long-term price elasticity of demand for gasoline.

When the price of insulin was $10,consumers demanded 100 units;when the price was $15,consumers demanded 100 units;and when the price was $20,consumers demanded 100 units.Based on this information,insulin must have a(n) _______ demand curve.

Suppose that total expenditures for coffee reach a maximum at a price of $5 per pound.At this price,the demand for coffee is:

If the price elasticity of demand for a good equals one,then the demand for that good with respect to price,is:

The cross-price elasticity for bread and potatoes is estimated to be 0.5.This implies bread and potatoes are:

If the consumers cannot switch to a close substitute when the price of a good increases,the demand for that good is likely to be: