Question 1

If the demand for golf is price elastic and your local public golf course increases the greens fees for using the course, you would expect:

Accepted Answer

A)  a decrease in total revenue received by the course. 
B)  an increase in total revenue received by the course. 
C)  no change in total revenue received by the course. 
D)  an increase in the amount of golf played on the course.

Question 2

Price elasticity of demand measures the responsiveness of the change in:

Accepted Answer

A)  quantity demanded to a change in price. 
B)  price to a change in quantity demanded. 
C)  slope of the demand curve to a change in price. 
D)  slope of the demand curve to a change in quantity demanded.

Question 3

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded increases from 180 bags to 220 bags, this indicates that, if other things are unchanged, the price elasticity of demand is:

Accepted Answer

A)  0. 
B)  -0.5. 
C)  -1. 
D)  -2.

Question 4

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded increases from 0 bags to 400 bags, this indicates that, if other things are unchanged, the price elasticity of demand is:

Accepted Answer

A)  -0.5. 
B)  -1. 
C)  -2. 
D)  greater than 2 (absolute value).

Question 5

The income elasticity of demand for ground beef has been estimated to be -0.197.If income falls by 20 percent in a period, how will that affect demand for ground beef in that period, all other things unchanged?

Accepted Answer

A)  demand will increase by less than 1.97 percent 
B)  demand will increase by almost 4 percent 
C)  demand will decrease by almost 4 percent 
D)  demand won't change, but quantity demanded will increase.

Question 6

A price inelastic demand exists if a 10 percent change in the price of a good results in a percentage change (in absolute value terms) in quantity demanded that is:

Accepted Answer

A)  less than 0. 
B)  greater than 0 but less than 10. 
C)  equal to 10. 
D)  greater than 10.

Question 7

For an inferior good, income elasticity of demand will be:

Accepted Answer

A)  negative. 
B)  positive. 
C)  zero. 
D)  determined by the direction of the change in income.

Question 8

Use the following for questions 116-119.
Exhibit: The Demand for Macintosh Computers
 
-(Exhibit: Demand for Macintosh Computers) The change in the firm's total revenue resulting from a change in price from P to T suggests that demand is:

Accepted Answer

A)  nonelastic. 
B)  price elastic. 
C)  price inelastic. 
D)  unit price elastic.

Question 9

The slope of a line is another method of measuring elasticity.

Accepted Answer

A) True 
 B)False

Question 10

The percentage change in quantity demanded divided by the percentage change in income, all other things unchanged, is:

Accepted Answer

A)  price elasticity of demand. 
B)  quantity elasticity of demand. 
C)  income elasticity of demand. 
D)  cross price elasticity of demand.

Question 11

Use the following for questions 163-168.
Exhibit: Johnson's Income and Expenditures
Quantity Purchased per Month
 
-(Exhibit: Johnson's Income and Expenditures) Johnson's income elasticity of demand for steaks is:

Accepted Answer

A)  greater than 1. 
B)  1. 
C)  less than 1.0 but greater than 0. 
D)  0.

Question 12

If people purchase less of a good when they have an increase in income, the good in question is an inferior good.

Accepted Answer

A) True 
 B)False

Question 13

The pair of items that is likely to have the highest cross price elasticity of demand is:

Accepted Answer

A)  coffee and tea. 
B)  skis and ski boots. 
C)  pizza and pepperoni. 
D)  milk and cookies.

Question 14

Suppose that the cross price elasticity of demand for Mountain Dew with respect to the price of Coke is 0.7.This implies that the two goods are:

Accepted Answer

A)  substitutes. 
B)  complements. 
C)  inferior. 
D)  normal.

Question 15

Use the following for questions 108-115.
Exhibit: The Demand for Bungalow Bob's Bagels
 
-(Exhibit: The Demand for Bungalow Bob's Bagels) Total revenue decreases if the price ________ from ________.

Accepted Answer

A)  decreases; $0.60 to $0.50 
B)  decreases; $0.70 to $0.60 
C)  increases; $0.40 to $0.50 
D)  increases; $0.70 to $0.80

Question 16

The price elasticity of a demand curve with a constant slope:

Accepted Answer

A)  is equal to the slope. 
B)  is greater than the slope. 
C)  is less than the slope. 
D)  increases in absolute value as the price rises.

Question 17

Suppose that the cross price elasticity of demand for beer with respect to the price of wine is 1.2.This tells us that beer and wine are:

Accepted Answer

A)  substitutes. 
B)  complements. 
C)  elastic. 
D)  inelastic.

Question 18

The price elasticity of a good will tend to be greater:

Accepted Answer

A)  the longer the relevant time period. 
B)  the fewer number of substitute goods available. 
C)  if it is a staple or necessity with few substitutes. 
D)  All of the above are true.

Question 19

Suppose the price elasticity of demand for oranges is -1.8.If a fall frost destroys one-third of the nation's orange crop, how will that affect total expenditures on oranges, all other things unchanged?

Accepted Answer

A)  total expenditures will rise 
B)  total expenditures will fall 
C)  total expenditures will remain unchanged 
D)  not enough information is given to answer the question

Question 20

Which of the following is not true regarding a price elastic demand curve?

Accepted Answer

A)  Total revenue increases when price falls. 
B)  The absolute value of price elasticity is a fraction less than 1. 
C)  The absolute value of price elasticity is greater than 1. 
D)  The percentage changes in quantity exceed the percentage changes in price for any small change in price.

Exam 5: Elasticity: a Measure of Response

If the demand for golf is price elastic and your local public golf course increases the greens fees for using the course, you would expect:

Price elasticity of demand measures the responsiveness of the change in:

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded increases from 180 bags to 220 bags, this indicates that, if other things are unchanged, the price elasticity of demand is:

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded increases from 0 bags to 400 bags, this indicates that, if other things are unchanged, the price elasticity of demand is:

The income elasticity of demand for ground beef has been estimated to be -0.197.If income falls by 20 percent in a period, how will that affect demand for ground beef in that period, all other things unchanged?

A price inelastic demand exists if a 10 percent change in the price of a good results in a percentage change (in absolute value terms) in quantity demanded that is:

For an inferior good, income elasticity of demand will be:

Use the following for questions 116-119. Exhibit: The Demand for Macintosh Computers -(Exhibit: Demand for Macintosh Computers) The change in the firm's total revenue resulting from a change in price from P to T suggests that demand is:

The slope of a line is another method of measuring elasticity.

The percentage change in quantity demanded divided by the percentage change in income, all other things unchanged, is:

Use the following for questions 163-168. Exhibit: Johnson's Income and Expenditures Quantity Purchased per Month -(Exhibit: Johnson's Income and Expenditures) Johnson's income elasticity of demand for steaks is:

If people purchase less of a good when they have an increase in income, the good in question is an inferior good.

The pair of items that is likely to have the highest cross price elasticity of demand is:

Suppose that the cross price elasticity of demand for Mountain Dew with respect to the price of Coke is 0.7.This implies that the two goods are:

Use the following for questions 108-115. Exhibit: The Demand for Bungalow Bob's Bagels -(Exhibit: The Demand for Bungalow Bob's Bagels) Total revenue decreases if the price from .

The price elasticity of a demand curve with a constant slope:

Suppose that the cross price elasticity of demand for beer with respect to the price of wine is 1.2.This tells us that beer and wine are:

The price elasticity of a good will tend to be greater:

Suppose the price elasticity of demand for oranges is -1.8.If a fall frost destroys one-third of the nation's orange crop, how will that affect total expenditures on oranges, all other things unchanged?

Which of the following is not true regarding a price elastic demand curve?

Exam 5: Elasticity: a Measure of Response

If the demand for golf is price elastic and your local public golf course increases the greens fees for using the course, you would expect:

Price elasticity of demand measures the responsiveness of the change in:

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded increases from 180 bags to 220 bags, this indicates that, if other things are unchanged, the price elasticity of demand is:

If the price of chocolate-covered peanuts decreases from $1.10 to $0.90 and the quantity demanded increases from 0 bags to 400 bags, this indicates that, if other things are unchanged, the price elasticity of demand is:

The income elasticity of demand for ground beef has been estimated to be -0.197.If income falls by 20 percent in a period, how will that affect demand for ground beef in that period, all other things unchanged?

A price inelastic demand exists if a 10 percent change in the price of a good results in a percentage change (in absolute value terms) in quantity demanded that is:

For an inferior good, income elasticity of demand will be:

Use the following for questions 116-119. Exhibit: The Demand for Macintosh Computers -(Exhibit: Demand for Macintosh Computers) The change in the firm's total revenue resulting from a change in price from P to T suggests that demand is:

The slope of a line is another method of measuring elasticity.

The percentage change in quantity demanded divided by the percentage change in income, all other things unchanged, is:

Use the following for questions 163-168. Exhibit: Johnson's Income and Expenditures Quantity Purchased per Month -(Exhibit: Johnson's Income and Expenditures) Johnson's income elasticity of demand for steaks is:

If people purchase less of a good when they have an increase in income, the good in question is an inferior good.

The pair of items that is likely to have the highest cross price elasticity of demand is:

Suppose that the cross price elasticity of demand for Mountain Dew with respect to the price of Coke is 0.7.This implies that the two goods are:

Use the following for questions 108-115. Exhibit: The Demand for Bungalow Bob's Bagels -(Exhibit: The Demand for Bungalow Bob's Bagels) Total revenue decreases if the price ________ from ________.

The price elasticity of a demand curve with a constant slope:

Suppose that the cross price elasticity of demand for beer with respect to the price of wine is 1.2.This tells us that beer and wine are:

The price elasticity of a good will tend to be greater:

Suppose the price elasticity of demand for oranges is -1.8.If a fall frost destroys one-third of the nation's orange crop, how will that affect total expenditures on oranges, all other things unchanged?

Which of the following is not true regarding a price elastic demand curve?

Use the following for questions 108-115. Exhibit: The Demand for Bungalow Bob's Bagels -(Exhibit: The Demand for Bungalow Bob's Bagels) Total revenue decreases if the price from .