Question 1

The price elasticity of demand for fresh zucchini has been estimated to be 2.25.A new irrigation system yields a 25% increase in the nation's crop of fresh zucchini.Which statement BEST describes how this will affect total expenditures on zucchini,all other things equal?

Accepted Answer

A)  Total expenditures will remain unchanged. 
B)  Total expenditures will fall. 
C)  Total expenditures will rise. 
D)  The information is insufficient to answer the question.

Question 2

Use the following to answer questions :
Figure: The Demand Curve 
-(Figure: The Demand Curve)Use Figure: The Demand Curve.If the price is $8,total revenue is _____.If the price is $7,total revenue is _____.

Accepted Answer

A)  $24;$16 
B)  $14;$21 
C)  $16;$21 
D)  $10;$10

Question 3

Which characteristic is NOT true of a good with elastic demand?

Accepted Answer

A)  There is only a short time to adjust to price changes. 
B)  There are a large number of substitutes. 
C)  It is a luxury good. 
D)  It is a specific brand.

Question 4

Use the following to answer questions :
Figure: The Linear Demand Curve 
-(Figure: The Linear Demand Curve II)Use Figure: Linear Demand Curve II.At prices greater than $7,demand is _____;at prices below $7,demand is _____;and at $7,demand is _____.

Accepted Answer

A)  elastic;inelastic;unit-elastic 
B)  inelastic;elastic;unit-elastic 
C)  unit-elastic;inelastic;elastic 
D)  equal to 0;elastic;inelastic

Question 5

If the price elasticity of demand for tobacco is 0.5 and the income elasticity of demand for tobacco is 0.4:

Accepted Answer

A)  an increase in the price of tobacco will decrease total revenue from sales of tobacco. 
B)  a 20% increase in the price of tobacco will decrease the quantity demanded of tobacco by 8%. 
C)  tobacco is an inferior good. 
D)  a 50% increase in income will increase the quantity demanded of tobacco by 20%.

Question 6

Suppose that the price elasticity of demand for blueberries in the Saguenay is 1.5.If climate change destroys one-fourth of the blueberry crop in this area,how will that affect total revenue for blueberry producers,all other things unchanged?

Accepted Answer

A)  Total revenue will rise. 
B)  Total revenue will fall. 
C)  Total revenue will remain unchanged. 
D)  The information is insufficient to answer the question.

Question 7

If funeral homes discover that the price elasticity of demand for caskets equals 0.55 at the current price,funeral homes could increase revenue by increasing the price.

Accepted Answer

A) True 
 B)False

Question 8

A price ceiling below equilibrium will cause a larger shortage when demand is _____ and supply is _____.

Accepted Answer

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

Question 9

The price elasticity of demand can be found by:

Accepted Answer

A)  examining only the slope of the demand curve. 
B)  measuring absolute changes in price and quantity demanded. 
C)  comparing the percentage change in quantity demanded to the percentage change in price. 
D)  knowing that when price changes,quantity demanded goes in the opposite direction.

Question 10

Use the following to answer question 329: $$\begin{array}{l}
\text { Table: Prices, Quantity Demanded, and Income for Jeremy }\
\begin{array} { l l c c c } 
\hline \text { Year } & \text { Good } & \text { Price } & \text { Quantity Demanded } & \text { Income } \
\hline 2008 & \text { Coffee } & \$ 4 & 12 & \
2008 & \text { Donuts } & \$ 2 & 20 & \$ 100 \
2008 & & & 13 & \
2009 & \text { Coffee } & \$ 4 & 18 & \$ 150 \
2009 & \text { Donuts } & \$ 2 & & \
2009 & & & & \
\hline
\end{array}
\end{array}$$
-(Table: Prices,Quantity Demanded,and Income for Jeremy)Use Table: Prices,Quantity Demanded,and Income for Jeremy.Between the 2 years listed,by the midpoint method,Jeremy's income elasticity of demand for coffee equals _____ and doughnuts are a(n)_____ good.

Accepted Answer

A)  0.20;inferior 
B)  2;normal 
C)  2;inferior 
D)  0.20;normal

Question 11

A perfectly inelastic demand curve for insulin would mean that the quantity demanded does NOT respond at all to changes in the price of insulin.

Accepted Answer

A) True 
 B)False

Question 12

When the price goes down,the quantity demanded goes up.The price elasticity of demand measures:

Accepted Answer

A)  how much the price goes down. 
B)  how much the equilibrium price goes up. 
C)  the responsiveness of the price change to an income change. 
D)  the responsiveness of the quantity change to the price change.

Question 13

Use the following to answer questions :
Figure: The Demand for eBooks 
-(Figure: The Demand for e-Books)If the price of e-Books increases from $6 to $8,total revenue _____,which means that demand is _____.

Accepted Answer

A)  increases;elastic 
B)  decreases;inelastic 
C)  remains constant;elastic 
D)  decreases;elastic

Question 14

Use the following to answer questions :
Figure: The Demand Curve 
-(Figure: The Demand Curve)Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $3 and $4 is approximately:

Accepted Answer

A)  0.19. 
B)  0.54. 
C)  1.00. 
D)  1.86.

Question 15

If the cross-price elasticity of demand between hamburgers and cheese is positive,these two goods must be complements.

Accepted Answer

A) True 
 B)False

Question 16

If the percentage change in the quantity demanded of a good is greater than the percentage change in income and in the same direction,then this good will have an income elasticity ,and it is a(n)_____ good.

Accepted Answer

A)  greater than;normal 
B)  less than;normal 
C)  equal to;normal 
D)  greater than;inferior

Question 17

If the absolute value of the price elasticity of demand is greater than 1:

Accepted Answer

A)  small percentage changes in the price will lead to much larger percentage changes in the quantity demanded. 
B)  small percentage changes in the price will lead to even smaller changes in the percentage change in the quantity demanded. 
C)  percentage changes in the price will lead to equal percentage changes in the quantity demanded. 
D)  changes in the price will have no impact on changes in the quantity demanded.

Question 18

The director of OC Transpo,in Ottawa (their public transit authority)recently stated,"The last seven times we increased bus fares,revenues dropped." This remark suggests that the demand for bus service is elastic.

Accepted Answer

A) True 
 B)False

Question 19

If demand is perfectly inelastic,changes in price leave total revenue unchanged.

Accepted Answer

A) True 
 B)False

Question 20

Egg producers know that the price elasticity of demand for eggs is 0.1.If they want to increase sales by 5%,they will have to lower price by:

Accepted Answer

A)  0.1%. 
B)  1%. 
C)  5%. 
D)  50%.

Exam 6: Elasticity

The price elasticity of demand for fresh zucchini has been estimated to be 2.25.A new irrigation system yields a 25% increase in the nation's crop of fresh zucchini.Which statement BEST describes how this will affect total expenditures on zucchini,all other things equal?

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.If the price is $8,total revenue is _.If the price is $7,total revenue is _.

Which characteristic is NOT true of a good with elastic demand?

Use the following to answer questions : Figure: The Linear Demand Curve -(Figure: The Linear Demand Curve II) Use Figure: Linear Demand Curve II.At prices greater than $7,demand is ___;at prices below $7,demand is _;and at $7,demand is ___.

If the price elasticity of demand for tobacco is 0.5 and the income elasticity of demand for tobacco is 0.4:

Suppose that the price elasticity of demand for blueberries in the Saguenay is 1.5.If climate change destroys one-fourth of the blueberry crop in this area,how will that affect total revenue for blueberry producers,all other things unchanged?

If funeral homes discover that the price elasticity of demand for caskets equals 0.55 at the current price,funeral homes could increase revenue by increasing the price.

A price ceiling below equilibrium will cause a larger shortage when demand is _ and supply is _.

The price elasticity of demand can be found by:

A perfectly inelastic demand curve for insulin would mean that the quantity demanded does NOT respond at all to changes in the price of insulin.

When the price goes down,the quantity demanded goes up.The price elasticity of demand measures:

Use the following to answer questions : Figure: The Demand for eBooks -(Figure: The Demand for e-Books) If the price of e-Books increases from $6 to $8,total revenue _,which means that demand is _.

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $3 and $4 is approximately:

If the cross-price elasticity of demand between hamburgers and cheese is positive,these two goods must be complements.

If the percentage change in the quantity demanded of a good is greater than the percentage change in income and in the same direction,then this good will have an income elasticity _1,and it is a(n) _ good.

If the absolute value of the price elasticity of demand is greater than 1:

The director of OC Transpo,in Ottawa (their public transit authority)recently stated,"The last seven times we increased bus fares,revenues dropped." This remark suggests that the demand for bus service is elastic.

If demand is perfectly inelastic,changes in price leave total revenue unchanged.

Egg producers know that the price elasticity of demand for eggs is 0.1.If they want to increase sales by 5%,they will have to lower price by:

Exam 6: Elasticity

The price elasticity of demand for fresh zucchini has been estimated to be 2.25.A new irrigation system yields a 25% increase in the nation's crop of fresh zucchini.Which statement BEST describes how this will affect total expenditures on zucchini,all other things equal?

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.If the price is $8,total revenue is _____.If the price is $7,total revenue is _____.

Which characteristic is NOT true of a good with elastic demand?

Use the following to answer questions : Figure: The Linear Demand Curve -(Figure: The Linear Demand Curve II) Use Figure: Linear Demand Curve II.At prices greater than $7,demand is _____;at prices below $7,demand is _____;and at $7,demand is _____.

If the price elasticity of demand for tobacco is 0.5 and the income elasticity of demand for tobacco is 0.4:

Suppose that the price elasticity of demand for blueberries in the Saguenay is 1.5.If climate change destroys one-fourth of the blueberry crop in this area,how will that affect total revenue for blueberry producers,all other things unchanged?

If funeral homes discover that the price elasticity of demand for caskets equals 0.55 at the current price,funeral homes could increase revenue by increasing the price.

A price ceiling below equilibrium will cause a larger shortage when demand is _____ and supply is _____.

The price elasticity of demand can be found by:

A perfectly inelastic demand curve for insulin would mean that the quantity demanded does NOT respond at all to changes in the price of insulin.

When the price goes down,the quantity demanded goes up.The price elasticity of demand measures:

Use the following to answer questions : Figure: The Demand for eBooks -(Figure: The Demand for e-Books) If the price of e-Books increases from $6 to $8,total revenue _____,which means that demand is _____.

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.By the midpoint method,the price elasticity of demand between $3 and $4 is approximately:

If the cross-price elasticity of demand between hamburgers and cheese is positive,these two goods must be complements.

If the percentage change in the quantity demanded of a good is greater than the percentage change in income and in the same direction,then this good will have an income elasticity _____1,and it is a(n) _____ good.

If the absolute value of the price elasticity of demand is greater than 1:

The director of OC Transpo,in Ottawa (their public transit authority)recently stated,"The last seven times we increased bus fares,revenues dropped." This remark suggests that the demand for bus service is elastic.

If demand is perfectly inelastic,changes in price leave total revenue unchanged.

Egg producers know that the price elasticity of demand for eggs is 0.1.If they want to increase sales by 5%,they will have to lower price by:

Use the following to answer questions : Figure: The Demand Curve -(Figure: The Demand Curve) Use Figure: The Demand Curve.If the price is $8,total revenue is _.If the price is $7,total revenue is _.

Use the following to answer questions : Figure: The Linear Demand Curve -(Figure: The Linear Demand Curve II) Use Figure: Linear Demand Curve II.At prices greater than $7,demand is ___;at prices below $7,demand is _;and at $7,demand is ___.

A price ceiling below equilibrium will cause a larger shortage when demand is _ and supply is _.

Use the following to answer questions : Figure: The Demand for eBooks -(Figure: The Demand for e-Books) If the price of e-Books increases from $6 to $8,total revenue _,which means that demand is _.

If the percentage change in the quantity demanded of a good is greater than the percentage change in income and in the same direction,then this good will have an income elasticity _1,and it is a(n) _ good.