Question 1

Refer to the graph shown. Which supply curve is perfectly inelastic?

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 2

What happens to total revenue if a firm lowers its price and its demand is inelastic?

Accepted Answer

If demand is inelastic,the percentage ch

Question 3

Refer to the graph shown. When price increases from $4 to $6, total revenue:

Accepted Answer

A) increases from $200 to $250. 
B) increases from $150 to $200. 
C) decreases from $200 to $150. 
D) decreases from $250 to $200. 
A) increases from $200 to $250. 
B) increases from $150 to $200. 
C) decreases from $200 to $150. 
D) decreases from $250 to $200.

Question 4

In Massachusetts, the price elasticity of license plates is 3.5 and their price is $50. Massachusetts is:

Accepted Answer

A) maximizing revenue since elasticity is greater than 1 and revenue will increase after a price decrease when demand is elastic. 
B) not maximizing revenue since elasticity is greater than 1 and revenue will increase after a price decrease when demand is elastic. 
C) maximizing revenue since elasticity is greater than 1 and revenue will decrease after a price decrease when demand is elastic. 
D) not maximizing revenue since elasticity is greater than 1 and revenue will decrease after a price decrease when demand is elastic. 
A) maximizing revenue since elasticity is greater than 1 and revenue will increase after a price decrease when demand is elastic. 
B) not maximizing revenue since elasticity is greater than 1 and revenue will increase after a price decrease when demand is elastic. 
C) maximizing revenue since elasticity is greater than 1 and revenue will decrease after a price decrease when demand is elastic. 
D) not maximizing revenue since elasticity is greater than 1 and revenue will decrease after a price decrease when demand is elastic.

Question 5

Refer to the graph shown. Which of the following curves demonstrates a perfectly elastic demand curve?

Accepted Answer

A) A 
B) B 
C) C 
D) None of the curves 
A) A 
B) B 
C) C 
D) None of the curves

Question 6

GreenTree Corporation sells live Christmas trees. It observes that when it increases the price of Christmas trees by 10 percent, revenue rises by 25 percent. The demand for Christmas trees is:

Accepted Answer

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

Question 7

Richard Voith estimated the price elasticity of demand for round-trip rail fare to be 0.62. If fares rose by 30 percent, one would expect the quantity of round-trip tickets purchased to:

Accepted Answer

A) rise by 18.6 percent. 
B) fall by 18.6 percent. 
C) rise by 48.4 percent. 
D) fall by 48.4 percent. 
A) rise by 18.6 percent. 
B) fall by 18.6 percent. 
C) rise by 48.4 percent. 
D) fall by 48.4 percent.

Question 8

If supply is highly inelastic and demand shifts to the left:

Accepted Answer

A) price will fall significantly; quantity hardly changes at all. 
B) price will hardly change at all; quantity will fall significantly. 
C) price will fall significantly as will quantity. 
D) price and quantity will hardly change at all. 
A) price will fall significantly; quantity hardly changes at all. 
B) price will hardly change at all; quantity will fall significantly. 
C) price will fall significantly as will quantity. 
D) price and quantity will hardly change at all.

Question 9

If the quantity of Arizona green teas demanded falls from 4.0 million to 3.0 million as the price of Lipton green teas falls from $2.70 to $2.50, Arizona's teas and Lipton's teas are:

Accepted Answer

A) substitutes. 
B) complements. 
C) luxuries. 
D) inferior goods. 
A) substitutes. 
B) complements. 
C) luxuries. 
D) inferior goods.

Question 10

Refer to the graph shown. Between points A and B, demand is:

Accepted Answer

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

Question 11

If the percentage increase in the quantity supplied equals the percentage increase in the price, the supply:

Accepted Answer

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

Question 12

Refer to the graph shown. Total revenue is at a maximum when price is:

Accepted Answer

A) $2. 
B) $4. 
C) $6. 
D) $8. 
A) $2. 
B) $4. 
C) $6. 
D) $8.

Question 13

A supply curve that intersects the horizontal (quantity)axis is:

Accepted Answer

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

Question 14

For luxuries, 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 15

If supply is highly inelastic and demand shifts to the right:

Accepted Answer

A) price probably will rise significantly; quantity hardly changes at all. 
B) price will hardly change at all; quantity will rise significantly. 
C) price will rise significantly as will quantity. 
D) price and quantity will hardly change at all. 
A) price probably will rise significantly; quantity hardly changes at all. 
B) price will hardly change at all; quantity will rise significantly. 
C) price will rise significantly as will quantity. 
D) price and quantity will hardly change at all.

Question 16

The demand for a good is elastic. Which of the following would be the most likely explanation for this?

Accepted Answer

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

Question 17

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

Accepted Answer

A) A 
B) B 
C) C 
D) D 
A) A 
B) B 
C) C 
D) D

Question 18

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

Accepted Answer

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

Question 19

If elasticity of demand is greater than 1:

Accepted Answer

A) a rise in price lowers total revenue. 
B) a decline in price will not change total revenue. 
C) a rise in price increases total revenue. 
D) a decline in price lowers total revenue. 
A) a rise in price lowers total revenue. 
B) a decline in price will not change total revenue. 
C) a rise in price increases total revenue. 
D) a decline in price lowers total revenue.

Question 20

Which of the following most likely correctly orders goods from most to least demand elastic?

Accepted Answer

A) Cars, motor transportation, transportation 
B) Transportation, bicycles, non-motor transportation 
C) Brand-name Advil, pain-relieving medicine, aspirin 
D) Pain-relieving medicine, brand-name Advil, aspirin 
A) Cars, motor transportation, transportation 
B) Transportation, bicycles, non-motor transportation 
C) Brand-name Advil, pain-relieving medicine, aspirin 
D) Pain-relieving medicine, brand-name Advil, aspirin

Exam 6: Describing Supply and Demand: Elasticities

Refer to the graph shown. Which supply curve is perfectly inelastic?

What happens to total revenue if a firm lowers its price and its demand is inelastic?

Refer to the graph shown. When price increases from $4 to $6, total revenue:

In Massachusetts, the price elasticity of license plates is 3.5 and their price is $50. Massachusetts is:

Refer to the graph shown. Which of the following curves demonstrates a perfectly elastic demand curve?

GreenTree Corporation sells live Christmas trees. It observes that when it increases the price of Christmas trees by 10 percent, revenue rises by 25 percent. The demand for Christmas trees is:

Richard Voith estimated the price elasticity of demand for round-trip rail fare to be 0.62. If fares rose by 30 percent, one would expect the quantity of round-trip tickets purchased to:

If supply is highly inelastic and demand shifts to the left:

If the quantity of Arizona green teas demanded falls from 4.0 million to 3.0 million as the price of Lipton green teas falls from $2.70 to $2.50, Arizona's teas and Lipton's teas are:

Refer to the graph shown. Between points A and B, demand is:

If the percentage increase in the quantity supplied equals the percentage increase in the price, the supply:

Refer to the graph shown. Total revenue is at a maximum when price is:

A supply curve that intersects the horizontal (quantity)axis is:

For luxuries, income elasticity is:

If supply is highly inelastic and demand shifts to the right:

The demand for a good is elastic. Which of the following would be the most likely explanation for this?

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

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

If elasticity of demand is greater than 1:

Which of the following most likely correctly orders goods from most to least demand elastic?

Economics and Economic Reasoning

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Economic Institutions

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