Question 1

Use the following for questions 163-168.
Exhibit: Johnson's Income and Expenditures
Quantity Purchased per Month
 
-(Exhibit: Johnson's Income and Expenditures) For Johnson, magazines are a(n):

Accepted Answer

A)  negative good. 
B)  inferior good. 
C)  normal good. 
D)  neutral good.

Question 2

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 total expenditures on ground beef in that period, all other things unchanged?

Accepted Answer

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

Question 3

Explain why there is a total revenue test for the price elasticity of demand, but there is no total revenue test for price elasticity of supply.

Accepted Answer

The answer of Explain why there is a total revenue...

Question 4

A curve whose price elasticity of demand is the same at every point is:

Accepted Answer

A)  a constant elasticity of demand curve. 
B)  a straight, negatively sloped line. 
C)  a straight, positively sloped line. 
D)  none of the above.

Question 5

If the price elasticity of supply is less than 1, then supply is:

Accepted Answer

A)  price elastic. 
B)  price inelastic. 
C)  unit price elastic. 
D)  very responsive to price changes.

Question 6

Suppose that the price elasticity of demand for grapefruit is -2.8.The introduction of a new variety that is cheaper to grow should cause consumer expenditures for grapefruit to:

Accepted Answer

A)  rise. 
B)  fall. 
C)  remain unchanged. 
D)  it is not possible to answer with the information given.

Question 7

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 increases if the price ________ from ________.

Accepted Answer

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

Question 8

Given an inelastic demand for agricultural output, a decrease in supply will lead to an increase in farm income (taken collectively).

Accepted Answer

A) True 
 B)False

Question 9

If the demand for golf is unit 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)  a decrease in the amount of golf played on the course. 
D)  no change in the amount of golf played on the course.

Question 10

If a 5 percent reduction in the price of a commodity results in a 3 percent increase in the quantity demanded, demand is said to be:

Accepted Answer

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

Question 11

If a decrease in the price of a good causes an increase in total revenue, the demand for the good is price inelastic.

Accepted Answer

A) True 
 B)False

Question 12

If income decreases and the consumption of a certain good increases, that good is considered a(n):

Accepted Answer

A)  substitute good. 
B)  complementary good. 
C)  normal good. 
D)  inferior good.

Question 13

Use the following for questions 128-130.
Exhibit: Nonlinear Demand Curve
 
-(Exhibit: Nonlinear Demand Curve) The values for quantity demanded along this nonlinear demand curve are given by the formula Q = 24/P.It:

Accepted Answer

A)  exhibits decreasing price elasticity as the price falls in $1 increments from a price of $12 to $2. 
B)  exhibits increasing price elasticity as the price falls in $1 increments from a price of $12 to $2. 
C)  exhibits unit price elasticity throughout. 
D)  does not fit with the law of demand.

Question 14

An important determinant of the price elasticity of demand is the:

Accepted Answer

A)  importance in household budgets. 
B)  level of technology. 
C)  quantity of the good supplied. 
D)  extent of government regulation.

Question 15

An important determinant of elasticity is the availability of substitutes.

Accepted Answer

A) True 
 B)False

Question 16

If the demand for a good is price elastic in comparison to one that is price inelastic, then:

Accepted Answer

A)  a higher per-unit sales tax will generate more tax revenue. 
B)  a higher per-unit sales tax will generate less tax revenue. 
C)  changes in total per-unit sales tax revenue brought about by a price change go in the same direction as the price change. 
D)  none of the above is true.

Question 17

If the price of chocolate-covered peanuts decreases from $1.05 to $0.95 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)  -0.5. 
B)  -1. 
C)  -2. 
D)  greater than 2 (absolute value).

Question 18

If the price elasticity of supply is greater than 1, then:

Accepted Answer

A)  supply is price elastic. 
B)  supply is price inelastic. 
C)  supply is unit price elastic. 
D)  quantity supplied is relatively unresponsive to price changes.

Question 19

If demand is price elastic, it is certain that:

Accepted Answer

A)  any change in price will decrease total revenue. 
B)  a decrease in price will lower total revenue. 
C)  an increase in price will lower total revenue. 
D)  total revenue is at a maximum.

Question 20

A constant price elasticity of demand curve is one whose:

Accepted Answer

A)  slope is the same at every point on the curve. 
B)  price elasticity of demand is the same at every point on the curve. 
C)  quantity is the same at every point on the curve. 
D)  price elasticity of demand and slope are the same at every point on the curve.

Exam 5: Elasticity: a Measure of Response

Use the following for questions 163-168. Exhibit: Johnson's Income and Expenditures Quantity Purchased per Month -(Exhibit: Johnson's Income and Expenditures) For Johnson, magazines are a(n) :

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 total expenditures on ground beef in that period, all other things unchanged?

Explain why there is a total revenue test for the price elasticity of demand, but there is no total revenue test for price elasticity of supply.

A curve whose price elasticity of demand is the same at every point is:

If the price elasticity of supply is less than 1, then supply is:

Suppose that the price elasticity of demand for grapefruit is -2.8.The introduction of a new variety that is cheaper to grow should cause consumer expenditures for grapefruit to:

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 increases if the price from .

Given an inelastic demand for agricultural output, a decrease in supply will lead to an increase in farm income (taken collectively).

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

If a 5 percent reduction in the price of a commodity results in a 3 percent increase in the quantity demanded, demand is said to be:

If a decrease in the price of a good causes an increase in total revenue, the demand for the good is price inelastic.

If income decreases and the consumption of a certain good increases, that good is considered a(n) :

Use the following for questions 128-130. Exhibit: Nonlinear Demand Curve -(Exhibit: Nonlinear Demand Curve) The values for quantity demanded along this nonlinear demand curve are given by the formula Q = 24/P.It:

An important determinant of the price elasticity of demand is the:

An important determinant of elasticity is the availability of substitutes.

If the demand for a good is price elastic in comparison to one that is price inelastic, then:

If the price of chocolate-covered peanuts decreases from $1.05 to $0.95 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 elasticity of supply is greater than 1, then:

If demand is price elastic, it is certain that:

A constant price elasticity of demand curve is one whose:

Exam 5: Elasticity: a Measure of Response

Use the following for questions 163-168. Exhibit: Johnson's Income and Expenditures Quantity Purchased per Month -(Exhibit: Johnson's Income and Expenditures) For Johnson, magazines are a(n) :

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 total expenditures on ground beef in that period, all other things unchanged?

Explain why there is a total revenue test for the price elasticity of demand, but there is no total revenue test for price elasticity of supply.

A curve whose price elasticity of demand is the same at every point is:

If the price elasticity of supply is less than 1, then supply is:

Suppose that the price elasticity of demand for grapefruit is -2.8.The introduction of a new variety that is cheaper to grow should cause consumer expenditures for grapefruit to:

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 increases if the price ________ from ________.

Given an inelastic demand for agricultural output, a decrease in supply will lead to an increase in farm income (taken collectively).

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

If a 5 percent reduction in the price of a commodity results in a 3 percent increase in the quantity demanded, demand is said to be:

If a decrease in the price of a good causes an increase in total revenue, the demand for the good is price inelastic.

If income decreases and the consumption of a certain good increases, that good is considered a(n) :

Use the following for questions 128-130. Exhibit: Nonlinear Demand Curve -(Exhibit: Nonlinear Demand Curve) The values for quantity demanded along this nonlinear demand curve are given by the formula Q = 24/P.It:

An important determinant of the price elasticity of demand is the:

An important determinant of elasticity is the availability of substitutes.

If the demand for a good is price elastic in comparison to one that is price inelastic, then:

If the price of chocolate-covered peanuts decreases from $1.05 to $0.95 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 elasticity of supply is greater than 1, then:

If demand is price elastic, it is certain that:

A constant price elasticity of demand curve is one whose:

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 increases if the price from .