Question 1

Suppose that the government imposes a sales tax on the consumption of natural gas,which of the following would have the least impact on the producers of natural gas?

Accepted Answer

A) Perfectly elastic demand 
B) Perfectly inelastic demand 
C) Unitary elastic demand 
D) Zero demand 
E) Plastic is an inferior good.

Question 2

If demand for a product is unit elastic,then increasing the price of the product leaves total revenue unchanged.

Accepted Answer

A) True 
 B)False

Question 3

When supply shifts,supply elasticity affects the changes in equilibrium price and quantity.

Accepted Answer

A) True 
 B)False

Question 4

If the price of a product increases by 10 percent and the quantity demanded decreases by 15 percent,then the

Accepted Answer

A) product has an elastic demand. 
B) product has an inelastic demand. 
C) product has an elastic supply. 
D) product has a unit-elastic demand. 
E) producer should raise the price further to increase total revenue.

Question 5

If the demand for bananas has a high price elasticity,then a 5 percent decrease in the price of bananas will result in

Accepted Answer

A) a more than 5 percent increase in the quantity demanded. 
B) a less than 5 percent increase in the quantity demanded. 
C) no change in the quantity demanded. 
D) a more than 5 percent decrease in the quantity demanded. 
E) a less than 5 percent decrease in the quantity demanded.

Question 6

Suppose the price elasticity of demand for apples is 2.3 and the price elasticity of demand for housing is .65.In comparing price elasticities of demand,it is proper to say that the demand for apples is

Accepted Answer

A) inelastic; for housing it is elastic. 
B) more elastic than the demand for housing. 
C) more inelastic than the demand for housing. 
D) more than three times as inelastic as the demand for housing. 
E) less elastic than the demand for housing.

Question 7

Suppose demand is a straight line as follows: Q_d = 100 - 2P.Calculate the price elasticity of demand between the prices of $41 and $43.

Accepted Answer

The answer of Suppose demand is a straight line as...

Question 8

The elasticity of demand is lower for European vehicles than for U.S.vehicles.Why do auto dealers offer substantially fewer discounts for European vehicles than for U.S.vehicles?

Accepted Answer

The answer of The elasticity of demand is lower for...

Question 9

For demand to be unit elastic,

Accepted Answer

A) the percentage change in quantity demanded must be equal to the associated percentage change in price. 
B) the percentage change in quantity demanded must be less than the associated percentage change in price. 
C) quantity demanded must change with a change in price. 
D) demand must change with a change in price. 
E) the percentage change in quantity demanded must be greater than the associated percentage change in price.

Question 10

Suppose the price of a good rises from $2.25 to $3.15,and the quantity demanded changes from 2,360 units to 1,250 units.Calculate the price elasticity of demand using the midpoint formula,and indicate whether demand is elastic,inelastic,or unit elastic.

Accepted Answer

The answer of Suppose the price of a good rises...

Question 11

A product with an inelastic demand means that

Accepted Answer

A) consumers are relatively insensitive to a change in the price of the product. 
B) producers are relatively sensitive to a change in the quantity demanded. 
C) consumers are relatively sensitive to a change in the price of the product. 
D) producers are relatively insensitive to a change in the quantity demanded. 
E) consumers are relatively insensitive to a change in the quantity demanded.

Question 12

If the price elasticity of demand for apples is higher than the price elasticity of demand for oranges,then a given percentage increase in the price of apples and oranges will result in more percentage decrease in the quantity demanded for apples than for oranges.

Accepted Answer

A) True 
 B)False

Question 13

Which of the following correctly represents the midpoint formula?

Accepted Answer

A)   
B)   
C)   
D)   
E)

Question 14

The price elasticity of demand is expressed in dollar changes in price and quantity demanded.

Accepted Answer

A) True 
 B)False

Question 15

Demand is inelastic if the price elasticity of demand is greater than 1.

Accepted Answer

A) True 
 B)False

Question 16

If a good has negative income elasticity,then it is an inferior good.

Accepted Answer

A) True 
 B)False

Question 17

Supply is elastic if the quantity supplied responds substantially to a change in price,and supply is inelastic if the quantity supplied responds only slightly to a change in price.

Accepted Answer

A) True 
 B)False

Question 18

The price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price.

Accepted Answer

A) True 
 B)False

Question 19

Suppose that the revenue of a product increases when its price decreases.Then demand for the product must

Accepted Answer

A) be inelastic. 
B) be elastic. 
C) be unit elastic. 
D) be perfectly inelastic 
E) have an elasticity equal to 0.

Question 20

The concept that explains to what degree price changes when there is a shift in demand,other things being equal,is

Accepted Answer

A) income elasticity of demand. 
B) price elasticity of demand. 
C) price elasticity of supply. 
D) cost elasticity of supply. 
E) cross-price elasticity of demand.

Exam 4: Subtleties of the Supply and Demand Model: Price Floors,price Ceilings,and Elasticity

Suppose that the government imposes a sales tax on the consumption of natural gas,which of the following would have the least impact on the producers of natural gas?

If demand for a product is unit elastic,then increasing the price of the product leaves total revenue unchanged.

When supply shifts,supply elasticity affects the changes in equilibrium price and quantity.

If the price of a product increases by 10 percent and the quantity demanded decreases by 15 percent,then the

If the demand for bananas has a high price elasticity,then a 5 percent decrease in the price of bananas will result in

Suppose the price elasticity of demand for apples is 2.3 and the price elasticity of demand for housing is .65.In comparing price elasticities of demand,it is proper to say that the demand for apples is

Suppose demand is a straight line as follows: Qd = 100 - 2P.Calculate the price elasticity of demand between the prices of $41 and $43.

The elasticity of demand is lower for European vehicles than for U.S.vehicles.Why do auto dealers offer substantially fewer discounts for European vehicles than for U.S.vehicles?

For demand to be unit elastic,

Suppose the price of a good rises from $2.25 to $3.15,and the quantity demanded changes from 2,360 units to 1,250 units.Calculate the price elasticity of demand using the midpoint formula,and indicate whether demand is elastic,inelastic,or unit elastic.

A product with an inelastic demand means that

If the price elasticity of demand for apples is higher than the price elasticity of demand for oranges,then a given percentage increase in the price of apples and oranges will result in more percentage decrease in the quantity demanded for apples than for oranges.

Which of the following correctly represents the midpoint formula?

The price elasticity of demand is expressed in dollar changes in price and quantity demanded.

Demand is inelastic if the price elasticity of demand is greater than 1.

If a good has negative income elasticity,then it is an inferior good.

Supply is elastic if the quantity supplied responds substantially to a change in price,and supply is inelastic if the quantity supplied responds only slightly to a change in price.

The price elasticity of supply is the percentage change in quantity supplied divided by the percentage change in price.

Suppose that the revenue of a product increases when its price decreases.Then demand for the product must

The concept that explains to what degree price changes when there is a shift in demand,other things being equal,is

Suppose demand is a straight line as follows: Q_d = 100 - 2P.Calculate the price elasticity of demand between the prices of $41 and $43.