Question 1

A 15% decrease in the price of sugar causes the quantity demanded to rise by 5%.The demand for sugar is

Accepted Answer

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

Question 2

Which statement is true about the demand curve in the graph?

Accepted Answer

A) Demand is perfectly elastic. 
B) Demand is perfectly inelastic. 
C) Demand is more elastic at point Q than at point T. 
D) Demand is more elastic at point T than at point Q.

Question 3

In the __________ (short run/long run)a steel manufacturer that has fixed productive capacity and is operating its plant with one eight-hour shift,can still increase output by adding a second or third shift.

Accepted Answer

The answer of In the __________ (short run/long run)a steel...

Question 4

An elasticity of 1 would be considered

Accepted Answer

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

Question 5

An elasticity of demand that would be considered very inelastic would be

Accepted Answer

A) 0.1. 
B) 0.9. 
C) 1.0. 
D) 1.1.

Question 6

If demand is __________ and price is _________,total revenue will ________.

Accepted Answer

A) inelastic;raised;increase 
B) elastic;raised;increase 
C) inelastic;lowered;increase 
D) elastic;lowered;decrease

Question 7

A tax increase is usually borne

Accepted Answer

A) entirely by the seller. 
B) entirely by the buyer. 
C) partially by the seller and partially by the buyer.

Question 8

When the inelasticities of demand and supply are equal,the tax burden will be borne

Accepted Answer

A) entirely by the seller. 
B) mostly by the seller. 
C) equally. 
D) mostly by the buyer. 
E) entirely by the buyer.

Question 9

If elasticity of demand is 4 and price is raised,

Accepted Answer

A) total revenue will fall. 
B) total revenue will rise. 
C) total revenue will remain constant. 
D) there is no way to determine whether total revenue will rise,fall,or remain constant.

Question 10

If the federal excise tax on cigarettes were raised by one dollar,the price of cigarettes would probably

Accepted Answer

A) rise by more than one dollar. 
B) rise by one dollar. 
C) rise by less than one dollar. 
D) not rise at all.

Question 11

If demand and supply have the same elasticity,the buyer will pay _____ of a tax.

Accepted Answer

The answer of If demand and supply have the same...

Question 12

If price were lowered from $10 to $8 and quantity demanded rose from 50 to 51,calculate elasticity;state whether demand is elastic,unit elastic,or inelastic;and find how much total revenue was when price was $10 and $8.

Accepted Answer

The answer of If price were lowered from $10 to...

Question 13

-About how much of the tax is paid by consumers in the form of higher prices?

Accepted Answer

A) 20 cents 
B) 50 cents 
C) $1 
D) $4.85 
E) $5

Question 14

A demand curve that is perfectly horizontal is

Accepted Answer

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

Question 15

Assume the Cookie Monster,who eats only cookies,has an income of $200 a week and that the price of a cookie is $2.If the price doubles,he cuts his consumption in half.How much is his elasticity of demand for cookies?

Accepted Answer

The answer of Assume the Cookie Monster,who eats only cookies,has...

Question 16

If the elasticity of demand for a service is 0.4 and price is raised,

Accepted Answer

A) total revenue will fall. 
B) total revenue will rise. 
C) total revenue will stay the same. 
D) there is no way to determine whether total revenue will rise,fall,or remain the same.

Question 17

If more substitutes become available demand tends to become ____ elastic,and over time demand tends to become ____ elastic.

Accepted Answer

A) more;more 
B) less;less 
C) more;less 
D) less;more

Question 18

If elasticity of demand is 10,a 1% increase in price will lower quantity demanded by

Accepted Answer

A) .1%. 
B) 1%. 
C) 10%. 
D) 100%.

Question 19

In general,the more unique an advertiser can make a product seem to the buyer

Accepted Answer

A) the more elastic the demand for the good. 
B) the more inelastic the demand for the good. 
C) the more sensitive the buyer is to the price of the good. 
D) the less demand for the good.

Question 20

As a result of the tax cigarette consumption declines by _____ million packs a week.

Accepted Answer

A) 5 
B) 10 
C) 40 
D) 50 
E) more than 60

Exam 18: The Price Elasticities of Demand and Supply