Question 1

If the price of good A decreases by 10 percent and the quantity demanded of good B decreases by 10 percent, this is evidence that goods A and B are

Accepted Answer

A) substitutes for one another. 
B) complement goods to one another. 
C) both inferior goods. 
D) both normal goods. 
E) not related. 
A) substitutes for one another. 
B) complement goods to one another. 
C) both inferior goods. 
D) both normal goods. 
E) not related.

Question 2

The existence of substitutes for a good and the percentage of one's budget spent on the good are among the factors that determine how elastic the demand for the good will be.

Accepted Answer

A) True 
 B)False

Question 3

If for good Z income elasticity is greater than 1, then demand for good Z is income __________, and good Z is a(n) __________ good.

Accepted Answer

A) inelastic; normal 
B) inelastic; inferior 
C) elastic; normal 
D) elastic; inferior 
E) unit elastic; normal 
A) inelastic; normal 
B) inelastic; inferior 
C) elastic; normal 
D) elastic; inferior 
E) unit elastic; normal

Question 4

When the price of a good rises, the total revenue received by the seller of that good always rises.

Accepted Answer

A) True 
 B)False

Question 5

The demand curve for good X is generally highly inelastic at and around the current price. If we assume that the supply curve is neither perfectly elastic nor perfectly inelastic, then who will pay the greater share of a tax placed on the production of good X?

Accepted Answer

A) The buyers will pay the greater share. 
B) The sellers will pay the greater share. 
C) The buyers and the sellers will pay equal shares. 
D) There is not enough information to answer the question. 
A) The buyers will pay the greater share. 
B) The sellers will pay the greater share. 
C) The buyers and the sellers will pay equal shares. 
D) There is not enough information to answer the question.

Question 6

If the percentage change in quantity demanded of a good is less than the percentage change in buyer's income, then the good is said to be

Accepted Answer

A) income elastic. 
B) income inelastic. 
C) income unit elastic. 
D) price elastic. 
E) price inelastic. 
A) income elastic. 
B) income inelastic. 
C) income unit elastic. 
D) price elastic. 
E) price inelastic.

Question 7

How does price elasticity of demand vary along a straight-line downward-sloping demand curve? Why does this occur?

Accepted Answer

The price elasticity of demand becomes h

Question 8

The price elasticity of demand is the percentage change in

Accepted Answer

A) price divided by the percentage change in quantity demanded. 
B) price divided by the percentage change in demand. 
C) quantity demanded divided by the percentage change in price. 
D) demand divided by the percentage change in price. 
E) c and d 
A) price divided by the percentage change in quantity demanded. 
B) price divided by the percentage change in demand. 
C) quantity demanded divided by the percentage change in price. 
D) demand divided by the percentage change in price. 
E) c and d

Question 9

List and describe four factors that are relevant to the determination of price elasticity of demand.

Accepted Answer

1) Number of substitutes - The more subs

Question 10

The percentage change in the quantity demanded of good X is 20 percent and the percentage change in the price of good Y is 10 percent. It follows that the __________ elasticity of demand is __________ and that the two goods are __________.

Accepted Answer

A) income; 0.50; substitutes 
B) cross; 2.00; complements 
C) cross; 0.50; substitutes 
D) cross; 2.00; substitutes 
E) price; 2.00; substitutes 
A) income; 0.50; substitutes 
B) cross; 2.00; complements 
C) cross; 0.50; substitutes 
D) cross; 2.00; substitutes 
E) price; 2.00; substitutes

Question 11

If price elasticity of demand is 0.5, it follows that a _______ percent decrease in price would cause a _______ percent increase in quantity demanded.

Accepted Answer

A) 50; 1 
B) 0.5; 1 
C) 0.5; 0.5 
D) 100; 500 
E) 2; 1 
A) 50; 1 
B) 0.5; 1 
C) 0.5; 0.5 
D) 100; 500 
E) 2; 1

Question 12

Explain the difference between price elasticity of demand and the slope of a demand curve.

Accepted Answer

There are two main differences between p

Question 13

If the cross elasticity of demand coefficient between goods X and Y is negative, then goods X and Y must be

Accepted Answer

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

Question 14

If the price elasticity of demand for a good is zero, then demand is

Accepted Answer

A) perfectly elastic. 
B) perfectly inelastic. 
C) unit elastic. 
D) inelastic. 
E) none of the above 
A) perfectly elastic. 
B) perfectly inelastic. 
C) unit elastic. 
D) inelastic. 
E) none of the above

Question 15

If supply is inelastic, it follows that

Accepted Answer

A) a rise in price will not change quantity supplied. 
B) a fall in price will not change quantity supplied. 
C) consumers will pay 100 percent of any tax placed on sellers. 
D) quantity supplied always changes more than price changes. 
E) none of the above 
A) a rise in price will not change quantity supplied. 
B) a fall in price will not change quantity supplied. 
C) consumers will pay 100 percent of any tax placed on sellers. 
D) quantity supplied always changes more than price changes. 
E) none of the above

Question 16

If a good is income elastic, it follows that the percentage change in quantity demanded of a good

Accepted Answer

A) is less than the percentage change in income. 
B) is greater than the percentage change in income. 
C) is equal to the percentage change in income. 
D) is greater than the percentage change in the price of another good. 
E) none of the above 
A) is less than the percentage change in income. 
B) is greater than the percentage change in income. 
C) is equal to the percentage change in income. 
D) is greater than the percentage change in the price of another good. 
E) none of the above

Question 17

A normal good is

Accepted Answer

A) any good that consumers normally buy. 
B) any good for which other goods can substitute. 
C) a good for which the demand rises as income falls. 
D) a good for which the demand rises as income rises. 
E) a good for which the quantity demanded rises as its price falls. 
A) any good that consumers normally buy. 
B) any good for which other goods can substitute. 
C) a good for which the demand rises as income falls. 
D) a good for which the demand rises as income rises. 
E) a good for which the quantity demanded rises as its price falls.

Question 18

If income elasticity of demand is 2.12, it means that quantity demanded will __________ by 2.12 percent for every __________ percent __________ in income.

Accepted Answer

A) rise; 2.12; fall 
B) rise; 1.0; rise 
C) fall; 1.0; rise 
D) fall; 2.12; fall 
E) none of the above 
A) rise; 2.12; fall 
B) rise; 1.0; rise 
C) fall; 1.0; rise 
D) fall; 2.12; fall 
E) none of the above

Question 19

Exhibit 19-2
​
  
-Refer to Exhibit 19-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S1 to S2. Approximately what percentage of the tax do consumers end up paying?

Accepted Answer

A) 63 percent 
B) 45 percent 
C) 70 percent 
D) 55 percent 
E) 25 percent 
A) 63 percent 
B) 45 percent 
C) 70 percent 
D) 55 percent 
E) 25 percent

Question 20

Which of the following statements is false?

Accepted Answer

A) Income elasticity of demand measures the responsiveness of quantity demanded to changes in income. 
B) Price elasticity of demand measures the responsiveness of quantity demanded to changes in price. 
C) Price elasticity of demand and the slope of a demand curve are the same thing. 
D) The more substitutes for a good, the higher the price elasticity of demand, ceteris paribus. 
A) Income elasticity of demand measures the responsiveness of quantity demanded to changes in income. 
B) Price elasticity of demand measures the responsiveness of quantity demanded to changes in price. 
C) Price elasticity of demand and the slope of a demand curve are the same thing. 
D) The more substitutes for a good, the higher the price elasticity of demand, ceteris paribus.

Exam 19: Elasticity

If the price of good A decreases by 10 percent and the quantity demanded of good B decreases by 10 percent, this is evidence that goods A and B are

The existence of substitutes for a good and the percentage of one's budget spent on the good are among the factors that determine how elastic the demand for the good will be.

If for good Z income elasticity is greater than 1, then demand for good Z is income __________, and good Z is a(n) __________ good.

When the price of a good rises, the total revenue received by the seller of that good always rises.

The demand curve for good X is generally highly inelastic at and around the current price. If we assume that the supply curve is neither perfectly elastic nor perfectly inelastic, then who will pay the greater share of a tax placed on the production of good X?

If the percentage change in quantity demanded of a good is less than the percentage change in buyer's income, then the good is said to be

How does price elasticity of demand vary along a straight-line downward-sloping demand curve? Why does this occur?

The price elasticity of demand is the percentage change in

List and describe four factors that are relevant to the determination of price elasticity of demand.

The percentage change in the quantity demanded of good X is 20 percent and the percentage change in the price of good Y is 10 percent. It follows that the __________ elasticity of demand is __________ and that the two goods are __________.

If price elasticity of demand is 0.5, it follows that a _______ percent decrease in price would cause a _______ percent increase in quantity demanded.

Explain the difference between price elasticity of demand and the slope of a demand curve.

If the cross elasticity of demand coefficient between goods X and Y is negative, then goods X and Y must be

If the price elasticity of demand for a good is zero, then demand is

If supply is inelastic, it follows that

If a good is income elastic, it follows that the percentage change in quantity demanded of a good

A normal good is

If income elasticity of demand is 2.12, it means that quantity demanded will __________ by 2.12 percent for every __________ percent __________ in income.

Exhibit 19-2 ​ -Refer to Exhibit 19-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S1 to S2. Approximately what percentage of the tax do consumers end up paying?

Which of the following statements is false?

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand Theory

Prices Free Controlled and Relative

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Macroeconomic Measurements Part II Gdp and Real Gdp

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability a Critique of the Self Regulating Economy

Fiscal Policy and the Federal Budget

Money Banking and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Economic Growth Resources Technology Ideas and Institutions

Debates in Macroeconomics Over the Role and Effects of Government

Consumer Choice and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition Oligopoly and Game Theory

Government and Product Markets Antitrust and Regulation

Factor Markets With Emphasis on the Labor Market

Wages Unions and Labor

The Distribution of Income and Poverty

Interest Rent and Profit

Market Failure Externalities Public Goods and Asymmetric Information

Public Choice and Special Interest Group Politics

Building Theories to Explain Everyday Life From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government Five Topics Considered

Stocks Bonds Futures and Options

Filters

If for good Z income elasticity is greater than 1, then demand for good Z is income , and good Z is a(n) good.

The percentage change in the quantity demanded of good X is 20 percent and the percentage change in the price of good Y is 10 percent. It follows that the elasticity of demand is and that the two goods are __.

If price elasticity of demand is 0.5, it follows that a _ percent decrease in price would cause a _ percent increase in quantity demanded.

If income elasticity of demand is 2.12, it means that quantity demanded will by 2.12 percent for every percent __ in income.

Exhibit 19-2 -Refer to Exhibit 19-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S₁ to S₂. Approximately what percentage of the tax do consumers end up paying?