Question 1

When the price of a product increases, the passage of time usually causes the price elasticity of demand for the product to become

Accepted Answer

A)  less elastic. 
B)  more elastic. 
C)  smaller and smaller in an absolute value. 
D)  approximately equal to zero in the long run because of scarcity. 
A)  less elastic. 
B)  more elastic. 
C)  smaller and smaller in an absolute value. 
D)  approximately equal to zero in the long run because of scarcity.

Question 2

Figure 7-12  
-Refer to Figure 7-12. An increase in price from $30 to $35 would

Accepted Answer

A)  increase total revenue by $250 
B)  decrease total revenue by $250. 
C)  increase total revenue by $500. 
D)  decrease total revenue by $500. 
A)  increase total revenue by $250 
B)  decrease total revenue by $250. 
C)  increase total revenue by $500. 
D)  decrease total revenue by $500.

Question 3

Which of the following statements about demand is true?

Accepted Answer

A)  The demand curve for a group of consumers in a market is simply the horizontal summation of each individual's demand. 
B)  The single demand curve shows the quantity of a good that people will buy, allowing all factors (price, income, expected future prices, etc.) to vary. 
C)  An increase in income will cause a person to move down and to the right along her demand curve. 
D)  All of the above are true. 
A)  The demand curve for a group of consumers in a market is simply the horizontal summation of each individual's demand. 
B)  The single demand curve shows the quantity of a good that people will buy, allowing all factors (price, income, expected future prices, etc.) to vary. 
C)  An increase in income will cause a person to move down and to the right along her demand curve. 
D)  All of the above are true.

Question 4

Economic theory indicates that the growth of subsidies to healthcare consumers and accompanying expansion in third-party payments will

Accepted Answer

A)  place downward pressure on the prices of healthcare services. 
B)  lead to higher healthcare prices. 
C)  increase the incentive of consumers to economize on their purchases of healthcare services. 
D)  increase the incentive of healthcare providers to provide their services at economical prices. 
A)  place downward pressure on the prices of healthcare services. 
B)  lead to higher healthcare prices. 
C)  increase the incentive of consumers to economize on their purchases of healthcare services. 
D)  increase the incentive of healthcare providers to provide their services at economical prices.

Question 5

According to the income effect, when the price of automobiles rises, people buy fewer automobiles because

Accepted Answer

A)  they substitute other forms of transportation for driving. 
B)  the nominal amount of their paychecks is smaller. 
C)  the purchasing power of their income is reduced. 
D)  their demand for automobiles is very elastic. 
A)  they substitute other forms of transportation for driving. 
B)  the nominal amount of their paychecks is smaller. 
C)  the purchasing power of their income is reduced. 
D)  their demand for automobiles is very elastic.

Question 6

Figure 7-5  
-Which of the following is true for the demand curve depicted in Figure 7-5?

Accepted Answer

A)  In the $3 to $4 range, the price elasticity of the demand curve equals 1. 
B)  At a price of $3, the price elasticity of the demand curve equals approximately −3.3. 
C)  In the $3 to $4 range, the demand curve is inelastic. 
D)  In the $3 to $4 range, the demand curve is elastic. 
A)  In the $3 to $4 range, the price elasticity of the demand curve equals 1. 
B)  At a price of $3, the price elasticity of the demand curve equals approximately −3.3. 
C)  In the $3 to $4 range, the demand curve is inelastic. 
D)  In the $3 to $4 range, the demand curve is elastic.

Question 7

Assuming that bus travel is an inferior good, a decrease in consumer income, other things being equal, will cause

Accepted Answer

A)  a downward movement along the demand curve for bus travel. 
B)  no change in the demand curve for bus travel. 
C)  an upward movement along the demand curve for air travel. 
D)  a rightward shift in the demand curve for bus travel. 
A)  a downward movement along the demand curve for bus travel. 
B)  no change in the demand curve for bus travel. 
C)  an upward movement along the demand curve for air travel. 
D)  a rightward shift in the demand curve for bus travel.

Question 8

When the 2010 Patient Protection and Affordable Care Act is fully implemented, it will

Accepted Answer

A)  set the prices (reimbursement rates) for more than 7,000 different medical procedures. 
B)  increase the supply of doctors and other medical services. 
C)  increase the supply of doctors and other medical services 
D)  reduce the share of health care expenses paid for by a third party, which will increase the incentive of both consumers and medical providers to economize. 
E)  All of the above are true. 
A)  set the prices (reimbursement rates) for more than 7,000 different medical procedures. 
B)  increase the supply of doctors and other medical services. 
C)  increase the supply of doctors and other medical services 
D)  reduce the share of health care expenses paid for by a third party, which will increase the incentive of both consumers and medical providers to economize. 
E)  All of the above are true.

Question 9

If people spend 30 percent less on movie tickets when movie prices decline 15 percent, the price elasticity of demand for movie tickets at these prices must be

Accepted Answer

A)  −3.0. 
B)  elastic 
C)  −0.5. 
D)  inelastic. 
A)  −3.0. 
B)  elastic 
C)  −0.5. 
D)  inelastic.

Question 10

In economic theory, the word "demand" refers to

Accepted Answer

A)  the amount people are willing to purchase at various prices. 
B)  those wants or needs that are urgent or pressing. 
C)  wants that are economic in character rather than social, cultural, or spiritual. 
D)  the desire of persons for a good, regardless of whether they're willing to purchase the good. 
A)  the amount people are willing to purchase at various prices. 
B)  those wants or needs that are urgent or pressing. 
C)  wants that are economic in character rather than social, cultural, or spiritual. 
D)  the desire of persons for a good, regardless of whether they're willing to purchase the good.

Question 11

Suppose that the quantity of chain saws sold increased from 200 to 400 when the price fell from $225 to $175. Over this price range, the absolute value of the price elasticity of demand for chain saws is

Accepted Answer

A)  0.25. 
B)  0.375. 
C)  1.0. 
D)  2.67. 
E)  4.0. 
A)  0.25. 
B)  0.375. 
C)  1.0. 
D)  2.67. 
E)  4.0.

Question 12

Which of the following describes a situation in which demand must be inelastic?

Accepted Answer

A)  The price of vitamins rises by 10 cents, and quantity of vitamins demanded falls by 50. 
B)  The price of vitamins rises by 10 cents, and total revenue rises. 
C)  A 20 percent increase in the price of vitamins leads to a 20 percent decrease in the quantity of vitamins demanded. 
D)  Total revenue does not change when the price of vitamins rises. 
E)  Total revenue decreases when the price of vitamins rises. 
A)  The price of vitamins rises by 10 cents, and quantity of vitamins demanded falls by 50. 
B)  The price of vitamins rises by 10 cents, and total revenue rises. 
C)  A 20 percent increase in the price of vitamins leads to a 20 percent decrease in the quantity of vitamins demanded. 
D)  Total revenue does not change when the price of vitamins rises. 
E)  Total revenue decreases when the price of vitamins rises.

Question 13

If the price elasticity of demand for opera tickets is estimated to be 4.5, then a 10 percent increase in opera ticket prices would be expected to cause a

Accepted Answer

A)  4.5 percent decrease in quantity demanded. 
B)  4.5 percent increase in quantity demanded. 
C)  45 percent decrease in quantity demanded. 
D)  45 percent increase in quantity demanded. 
E)  450 percent increase in quantity demanded 
A)  4.5 percent decrease in quantity demanded. 
B)  4.5 percent increase in quantity demanded. 
C)  45 percent decrease in quantity demanded. 
D)  45 percent increase in quantity demanded. 
E)  450 percent increase in quantity demanded

Question 14

Along the inelastic portion of a demand curve,

Accepted Answer

A)  the change in price will always be less than the change in quantity demanded. 
B)  the percentage change in price will be less than the percentage change in quantity demanded. 
C)  the change in price will always be more than the change in quantity demanded. 
D)  the percentage change in price will be more than the percentage change in quantity demanded. 
A)  the change in price will always be less than the change in quantity demanded. 
B)  the percentage change in price will be less than the percentage change in quantity demanded. 
C)  the change in price will always be more than the change in quantity demanded. 
D)  the percentage change in price will be more than the percentage change in quantity demanded.

Question 15

Suppose the number of picture frames purchased increased by 5 percent when consumer income increased by 10 percent. Assuming other factors are held constant, picture frames would be classified as

Accepted Answer

A)  inferior goods. 
B)  normal goods. 
C)  elastic goods. 
D)  inelastic goods. 
A)  inferior goods. 
B)  normal goods. 
C)  elastic goods. 
D)  inelastic goods.

Question 16

Studies indicate that the demand for fresh tomatoes is much more elastic than the demand for salt. These findings reflect that

Accepted Answer

A)  tomatoes are a necessity while salt is a luxury. 
B)  it takes longer for consumers to adjust to a change in the price of salt than to a change in the price of tomatoes. 
C)  salt will not spoil as easily as fresh tomatoes. 
D)  more good substitutes exist for fresh tomatoes than for salt. 
A)  tomatoes are a necessity while salt is a luxury. 
B)  it takes longer for consumers to adjust to a change in the price of salt than to a change in the price of tomatoes. 
C)  salt will not spoil as easily as fresh tomatoes. 
D)  more good substitutes exist for fresh tomatoes than for salt.

Question 17

If bus travel is an inferior good, then its income elasticity of demand will be

Accepted Answer

A)  strictly greater than one. 
B)  positive. 
C)  equal to zero. 
D)  negative. 
A)  strictly greater than one. 
B)  positive. 
C)  equal to zero. 
D)  negative.

Question 18

If the price of apples rises from $.50 to $1.50 and quantity demanded falls from 1,000 to 900, we can conclude that the price elasticity for apples is

Accepted Answer

A)  −20. 
B)  inelastic. 
C)  elastic. 
D)  unitary. 
A)  −20. 
B)  inelastic. 
C)  elastic. 
D)  unitary.

Question 19

A good that takes up a very large percentage of the consumer's budget will tend to have

Accepted Answer

A)  an elastic demand. 
B)  a perfectly elastic demand. 
C)  an inelastic demand. 
D)  an upward-sloping demand curve. 
E)  very many substitutes. 
A)  an elastic demand. 
B)  a perfectly elastic demand. 
C)  an inelastic demand. 
D)  an upward-sloping demand curve. 
E)  very many substitutes.

Question 20

A local restaurant offers an "all you can eat" barbeque special. You pay $9.00, and then you can eat as many servings as you desire at no additional cost. It would follow that you will stop eating when

Accepted Answer

A)  your marginal utility (or value) derived from eating another serving is zero. 
B)  your total utility (or value) derived from all of the servings consumed just equals $9.00. 
C)  your marginal utility (or value) derived from another serving equals $9.00. 
D)  it is physically impossible for you to eat any more. 
A)  your marginal utility (or value) derived from eating another serving is zero. 
B)  your total utility (or value) derived from all of the servings consumed just equals $9.00. 
C)  your marginal utility (or value) derived from another serving equals $9.00. 
D)  it is physically impossible for you to eat any more.

When the price of a product increases, the passage of time usually causes the price elasticity of demand for the product to become

Figure 7-12 -Refer to Figure 7-12. An increase in price from $30 to $35 would

Which of the following statements about demand is true?

Economic theory indicates that the growth of subsidies to healthcare consumers and accompanying expansion in third-party payments will

According to the income effect, when the price of automobiles rises, people buy fewer automobiles because

Figure 7-5 -Which of the following is true for the demand curve depicted in Figure 7-5?

Assuming that bus travel is an inferior good, a decrease in consumer income, other things being equal, will cause

When the 2010 Patient Protection and Affordable Care Act is fully implemented, it will

If people spend 30 percent less on movie tickets when movie prices decline 15 percent, the price elasticity of demand for movie tickets at these prices must be

In economic theory, the word "demand" refers to

Suppose that the quantity of chain saws sold increased from 200 to 400 when the price fell from $225 to $175. Over this price range, the absolute value of the price elasticity of demand for chain saws is

Which of the following describes a situation in which demand must be inelastic?

If the price elasticity of demand for opera tickets is estimated to be 4.5, then a 10 percent increase in opera ticket prices would be expected to cause a

Along the inelastic portion of a demand curve,

Suppose the number of picture frames purchased increased by 5 percent when consumer income increased by 10 percent. Assuming other factors are held constant, picture frames would be classified as

Studies indicate that the demand for fresh tomatoes is much more elastic than the demand for salt. These findings reflect that

If bus travel is an inferior good, then its income elasticity of demand will be

If the price of apples rises from $.50 to $1.50 and quantity demanded falls from 1,000 to 900, we can conclude that the price elasticity for apples is

A good that takes up a very large percentage of the consumer's budget will tend to have

A local restaurant offers an "all you can eat" barbeque special. You pay $9.00, and then you can eat as many servings as you desire at no additional cost. It would follow that you will stop eating when

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters

Exam 7: Consumer Choice and Elasticity

When the price of a product increases, the passage of time usually causes the price elasticity of demand for the product to become

Figure 7-12 -Refer to Figure 7-12. An increase in price from $30 to $35 would

Which of the following statements about demand is true?

Economic theory indicates that the growth of subsidies to healthcare consumers and accompanying expansion in third-party payments will

According to the income effect, when the price of automobiles rises, people buy fewer automobiles because

Figure 7-5 -Which of the following is true for the demand curve depicted in Figure 7-5?

Assuming that bus travel is an inferior good, a decrease in consumer income, other things being equal, will cause

When the 2010 Patient Protection and Affordable Care Act is fully implemented, it will

If people spend 30 percent less on movie tickets when movie prices decline 15 percent, the price elasticity of demand for movie tickets at these prices must be

In economic theory, the word "demand" refers to

Suppose that the quantity of chain saws sold increased from 200 to 400 when the price fell from $225 to $175. Over this price range, the absolute value of the price elasticity of demand for chain saws is

Which of the following describes a situation in which demand must be inelastic?

If the price elasticity of demand for opera tickets is estimated to be 4.5, then a 10 percent increase in opera ticket prices would be expected to cause a

Along the inelastic portion of a demand curve,

Suppose the number of picture frames purchased increased by 5 percent when consumer income increased by 10 percent. Assuming other factors are held constant, picture frames would be classified as

Studies indicate that the demand for fresh tomatoes is much more elastic than the demand for salt. These findings reflect that

If bus travel is an inferior good, then its income elasticity of demand will be

If the price of apples rises from $.50 to $1.50 and quantity demanded falls from 1,000 to 900, we can conclude that the price elasticity for apples is

A good that takes up a very large percentage of the consumer's budget will tend to have

A local restaurant offers an "all you can eat" barbeque special. You pay $9.00, and then you can eat as many servings as you desire at no additional cost. It would follow that you will stop eating when

The Economic Approach

Some Tools of the Economist

Demand, Supply, and the Market Process

Supply and Demand: Applications and Extensions

Difficult Cases for the Market, and the Role of Government

The Economics of Political Action

Costs and the Supply of Goods

Price Takers and the Competitive Process

Price-Searcher Markets With Low Entry Barriers

Price-Searcher Markets With High Entry Barriers

The Supply of and Demand for Productive Resources

Earnings, Productivity, and the Job Market

Investment, the Capital Market, and the Wealth of Nations

Income Inequality and Poverty

Gaining From International Trade

Filters