Question 1

Refer to the graph shown. The approximate elasticity of segment AC is:

Accepted Answer

A) 1/3. 
B) 1/2. 
C) 2/3. 
D) 3/2. 
A) 1/3. 
B) 1/2. 
C) 2/3. 
D) 3/2.

Question 2

If the elasticity of demand for restaurant meals is 2.27, the demand for restaurant meals is:

Accepted Answer

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

Question 3

Measuring the price of gasoline in dollars per quart, an economist calculates the price elasticity of demand to be 1. What would the price elasticity of demand be if the economist had chosen to measure the price in dollars per gallon?

Accepted Answer

A) 1 
B) 4 
C) .25 
D) .5 
A) 1 
B) 4 
C) .25 
D) .5

Question 4

Price elasticity of demand is the percentage change in price divided by the percentage change in quantity demanded.

Accepted Answer

A) True 
 B)False

Question 5

An economist estimates the elasticity of demand for baseball tickets to be 0.23. Using this information, a club that wants to raise revenues should:

Accepted Answer

A) lower ticket prices. 
B) increase ticket prices. 
C) leave ticket prices unchanged, because it is maximizing revenue. 
D) raise the prices of other goods sold at games. 
A) lower ticket prices. 
B) increase ticket prices. 
C) leave ticket prices unchanged, because it is maximizing revenue. 
D) raise the prices of other goods sold at games.

Question 6

Refer to the graph shown. Which supply curve is elastic?

Accepted Answer

A) A 
B) B 
C) C 
D) None of the answers is correct. 
A) A 
B) B 
C) C 
D) None of the answers is correct.

Question 7

The elasticity of demand for fitbits is 3 and the elasticity of supply is 1.5.Suppose that a breakthrough in the technology used in the production of fitbits increased the supply of fitbits by 20%.Calculate the percentage change in the equilibrium price of fitbits.

Accepted Answer

Applying the formula:
Percentage change

Question 8

When the price of a good increases, what would we expect to see in the markets for its complements?

Accepted Answer

A) Higher prices and increased sales 
B) Higher prices and decreased sales 
C) Lower prices and decreased sales 
D) Lower prices and increased sales 
A) Higher prices and increased sales 
B) Higher prices and decreased sales 
C) Lower prices and decreased sales 
D) Lower prices and increased sales

Question 9

For normal goods, income elasticity is:

Accepted Answer

A) greater than 0. 
B) greater than 1. 
C) less than 0. 
D) equal to 1. 
A) greater than 0. 
B) greater than 1. 
C) less than 0. 
D) equal to 1.

Question 10

What happens to total revenue if a firm raises its price and its demand is elastic?

Accepted Answer

If demand is elastic,the percentage chan

Question 11

If the price of a good goes up by 20 percent and the quantity demanded falls by 40 percent, the price elasticity of demand is 2.

Accepted Answer

A) True 
 B)False

Question 12

If the amount of land supplied remains the same even when the price of land increases, the:

Accepted Answer

A) supply of land must be perfectly elastic. 
B) supply of land must be perfectly inelastic. 
C) demand for land must be perfectly elastic. 
D) demand for land must be perfectly inelastic. 
A) supply of land must be perfectly elastic. 
B) supply of land must be perfectly inelastic. 
C) demand for land must be perfectly elastic. 
D) demand for land must be perfectly inelastic.

Question 13

Suppose average attendance to Six Flags is 500,000 when prices are $40 a ticket and 450,000 when prices are $50 a ticket. Other things being equal, the data imply that the elasticity of demand for Six Flags is:

Accepted Answer

A) elastic, so the increase in price caused total revenue to rise. 
B) elastic, so the increase in price caused total revenue to fall. 
C) inelastic, so the increase in price caused total revenue to rise. 
D) inelastic, so the increase in price caused total revenue to fall. 
A) elastic, so the increase in price caused total revenue to rise. 
B) elastic, so the increase in price caused total revenue to fall. 
C) inelastic, so the increase in price caused total revenue to rise. 
D) inelastic, so the increase in price caused total revenue to fall.

Question 14

Refer to the graph shown. The approximate elasticity of segment AD is:

Accepted Answer

A) 3/4. 
B) 3. 
C) 4/3. 
D) 4. 
A) 3/4. 
B) 3. 
C) 4/3. 
D) 4.

Question 15

An economist estimates that with every 20 percent increase in income, the quantity of grapes purchased rises by 11.2 percent. From this information one would conclude that grapes are:

Accepted Answer

A) a luxury. 
B) not demanded. 
C) an inferior good. 
D) a normal good. 
A) a luxury. 
B) not demanded. 
C) an inferior good. 
D) a normal good.

Question 16

Compute the approximate elasticity of supply from the following data:

Accepted Answer

A) .2. 
B) .5. 
C) 2.1. 
D) 5.0. 
A) .2. 
B) .5. 
C) 2.1. 
D) 5.0.

Question 17

If the percentage increase in the quantity supplied is greater than the percentage increase in the price, the supply:

Accepted Answer

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

Question 18

Demand is said to be elastic when the:

Accepted Answer

A) percentage change in quantity demanded is less than the percentage change in price. 
B) percentage change in quantity demanded is greater than the percentage change in price. 
C) change in quantity demanded is less than the change in price. 
D) change in quantity demanded is greater than the change in price. 
A) percentage change in quantity demanded is less than the percentage change in price. 
B) percentage change in quantity demanded is greater than the percentage change in price. 
C) change in quantity demanded is less than the change in price. 
D) change in quantity demanded is greater than the change in price.

Question 19

The demand for a good is inelastic. Which of the following would be an explanation for this?

Accepted Answer

A) The good is a necessity. 
B) The good is specifically defined. 
C) The good costs a large portion of one's total income. 
D) The time interval considered is long. 
A) The good is a necessity. 
B) The good is specifically defined. 
C) The good costs a large portion of one's total income. 
D) The time interval considered is long.

Question 20

For which of the following goods is the demand curve likely to be most inelastic?

Accepted Answer

A) Hershey's Symphony chocolate bar 
B) Chocolate bars with nuts 
C) Candy 
D) Chocolate bars 
A) Hershey's Symphony chocolate bar 
B) Chocolate bars with nuts 
C) Candy 
D) Chocolate bars

Exam 6: Describing Supply and Demand: Elasticities

Refer to the graph shown. The approximate elasticity of segment AC is:

If the elasticity of demand for restaurant meals is 2.27, the demand for restaurant meals is:

Measuring the price of gasoline in dollars per quart, an economist calculates the price elasticity of demand to be 1. What would the price elasticity of demand be if the economist had chosen to measure the price in dollars per gallon?

Price elasticity of demand is the percentage change in price divided by the percentage change in quantity demanded.

An economist estimates the elasticity of demand for baseball tickets to be 0.23. Using this information, a club that wants to raise revenues should:

Refer to the graph shown. Which supply curve is elastic?

The elasticity of demand for fitbits is 3 and the elasticity of supply is 1.5.Suppose that a breakthrough in the technology used in the production of fitbits increased the supply of fitbits by 20%.Calculate the percentage change in the equilibrium price of fitbits.

When the price of a good increases, what would we expect to see in the markets for its complements?

For normal goods, income elasticity is:

What happens to total revenue if a firm raises its price and its demand is elastic?

If the price of a good goes up by 20 percent and the quantity demanded falls by 40 percent, the price elasticity of demand is 2.

If the amount of land supplied remains the same even when the price of land increases, the:

Suppose average attendance to Six Flags is 500,000 when prices are $40 a ticket and 450,000 when prices are $50 a ticket. Other things being equal, the data imply that the elasticity of demand for Six Flags is:

Refer to the graph shown. The approximate elasticity of segment AD is:

An economist estimates that with every 20 percent increase in income, the quantity of grapes purchased rises by 11.2 percent. From this information one would conclude that grapes are:

Compute the approximate elasticity of supply from the following data:

If the percentage increase in the quantity supplied is greater than the percentage increase in the price, the supply:

Demand is said to be elastic when the:

The demand for a good is inelastic. Which of the following would be an explanation for this?

For which of the following goods is the demand curve likely to be most inelastic?

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