Question 1

If a good is a normal good, it can not also be income inelastic.

Accepted Answer

A) True 
 B)False

Question 2

Suppose that when the price of a good falls from $12 to $9, the quantity demanded of that good rises from 310 units to 350 units. What is the approximate price elasticity of demand between these two prices?

Accepted Answer

A) 0.42 
B) 2.36 
C) 0.68 
D) 3.80 
E) 1.12 
A) 0.42 
B) 2.36 
C) 0.68 
D) 3.80 
E) 1.12

Question 3

If for good Z income elasticity is less than 1 but greater than zero, 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; an inferior 
E) unit elastic; normal 
A) inelastic; normal 
B) inelastic; inferior 
C) elastic; normal 
D) elastic; an inferior 
E) unit elastic; normal

Question 4

Income elasticity of demand for an inferior good is

Accepted Answer

A) less than 0. 
B) greater than 1. 
C) equal to 1. 
D) equal to 0. 
E) none of the above 
A) less than 0. 
B) greater than 1. 
C) equal to 1. 
D) equal to 0. 
E) none of the above

Question 5

Exhibit 19-6
​
  
-Refer to Exhibit 19-6. Let S1 be the supply curve of a producer. If S2 is the supply curve of the same producer after the government imposes a per-unit tax, the share of the tax paid by the producer as compared to the share of the tax paid by consumers will be

Accepted Answer

A) greater if D1 is the demand curve facing the producer. 
B) greater if D2 is the demand curve facing the producer. 
C) the same regardless of which demand curve the firm faces. 
D) Any of the above, depending on the type of good the tax is imposed on. 
A) greater if D1 is the demand curve facing the producer. 
B) greater if D2 is the demand curve facing the producer. 
C) the same regardless of which demand curve the firm faces. 
D) Any of the above, depending on the type of good the tax is imposed on.

Question 6

All other things being equal, the __________ the percentage of one's budget spent on a good, the __________ the price elasticity of demand.

Accepted Answer

A) greater; higher 
B) smaller; lower 
C) greater; lower 
D) smaller; higher 
E) a and b 
A) greater; higher 
B) smaller; lower 
C) greater; lower 
D) smaller; higher 
E) a and b

Question 7

It is impossible for a given good to be both elastic in demand and inelastic in supply.

Accepted Answer

A) True 
 B)False

Question 8

The more narrowly defined a good is, the more elastic the demand for the good will tend to be, ceteris paribus.

Accepted Answer

A) True 
 B)False

Question 9

A per-unit tax is placed on the production of good Y. Someone who believes that the producers of the good will end up paying the full tax may be assuming that the good's demand curve is

Accepted Answer

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

Question 10

Suppose that when the price of cigarettes decreases by 20 percent, the quantity demanded increases by 10 percent. The price elasticity of demand for cigarettes is __________, making cigarettes an ____________ product (in this example).

Accepted Answer

A) 0.6; elastic 
B) 1.7; inelastic 
C) 0.5; inelastic 
D) 1.7; elastic 
E) 2.0; elastic 
A) 0.6; elastic 
B) 1.7; inelastic 
C) 0.5; inelastic 
D) 1.7; elastic 
E) 2.0; elastic

Question 11

The quantity supplied of land is constant regardless of price. Suppose a tax is imposed on the rental price of land. Who will pay the greater share of such a tax?

Accepted Answer

A) The buyers will pay the entire share. 
B) The sellers will pay the entire share. 
C) The buyers and the sellers will pay equal shares. 
D) The buyers will bear the greater share of the tax. 
A) The buyers will pay the entire share. 
B) The sellers will pay the entire share. 
C) The buyers and the sellers will pay equal shares. 
D) The buyers will bear the greater share of the tax.

Question 12

Price elasticity of supply is perfectly inelastic if the coefficient of price elasticity of supply is

Accepted Answer

A) infinity. 
B) 1. 
C) 0. 
D) -1. 
A) infinity. 
B) 1. 
C) 0. 
D) -1.

Question 13

Price elasticity of supply measures the responsiveness of __________ to changes in __________.

Accepted Answer

A) quantity supplied; income 
B) quantity supplied; price 
C) quantity supplied; quantity demanded 
D) income; quantity demanded 
E) none of the above 
A) quantity supplied; income 
B) quantity supplied; price 
C) quantity supplied; quantity demanded 
D) income; quantity demanded 
E) none of the above

Question 14

As the price of a product rises the product will become more elastic in demand, assuming that the demand curve for the product is a downward-sloping straight line.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following statements is true?

Accepted Answer

A) When a firm lowers the price of its product, total revenue always falls. 
B) When a firm raises the price of its product, total revenue always rises. 
C) When a firm raises the price of its product, total revenue always falls. 
D) When a firm lowers the price of its product, total revenue always rises. 
E) none of the above 
A) When a firm lowers the price of its product, total revenue always falls. 
B) When a firm raises the price of its product, total revenue always rises. 
C) When a firm raises the price of its product, total revenue always falls. 
D) When a firm lowers the price of its product, total revenue always rises. 
E) none of the above

Question 16

Demand for a given good is inelastic, so it follows that if price rises, __________ will rise, too.

Accepted Answer

A) quantity demanded 
B) total revenue 
C) total cost 
D) income 
E) supply 
A) quantity demanded 
B) total revenue 
C) total cost 
D) income 
E) supply

Question 17

Exhibit 19-6
​
  
-Refer to Exhibit 19-6. Let S1 be the supply curve of a firm. If S2 represents the supply curve of the same firm after the government imposes a per-unit tax, the tax is

Accepted Answer

A) $1 per unit. 
B) $2 per unit. 
C) $3 per unit. 
D) -$1 per unit, i.e., a subsidy of $1. 
A) $1 per unit. 
B) $2 per unit. 
C) $3 per unit. 
D) -$1 per unit, i.e., a subsidy of $1.

Question 18

If total revenue falls as a result of a decrease in the price of a given good, it follows that demand is

Accepted Answer

A) perfectly elastic. 
B) inelastic. 
C) unit elastic. 
D) perfectly inelastic. 
E) b or d 
A) perfectly elastic. 
B) inelastic. 
C) unit elastic. 
D) perfectly inelastic. 
E) b or d

Question 19

Income elasticity of demand measures the responsiveness of quantity supplied to changes in price.

Accepted Answer

A) True 
 B)False

Question 20

Exhibit 19-3
  
-Refer to Exhibit 19-3. When price decreases from $4.50 to $3.50, the price elasticity of demand is

Accepted Answer

A) 0.4375. 
B) 0.50. 
C) 1.0. 
D) 2.00. 
E) 2.86. 
A) 0.4375. 
B) 0.50. 
C) 1.0. 
D) 2.00. 
E) 2.86.

Exam 19: Elasticity

If a good is a normal good, it can not also be income inelastic.

Suppose that when the price of a good falls from $12 to $9, the quantity demanded of that good rises from 310 units to 350 units. What is the approximate price elasticity of demand between these two prices?

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

Income elasticity of demand for an inferior good is

Exhibit 19-6 ​ -Refer to Exhibit 19-6. Let S1 be the supply curve of a producer. If S2 is the supply curve of the same producer after the government imposes a per-unit tax, the share of the tax paid by the producer as compared to the share of the tax paid by consumers will be

All other things being equal, the __________ the percentage of one's budget spent on a good, the __________ the price elasticity of demand.

It is impossible for a given good to be both elastic in demand and inelastic in supply.

The more narrowly defined a good is, the more elastic the demand for the good will tend to be, ceteris paribus.

A per-unit tax is placed on the production of good Y. Someone who believes that the producers of the good will end up paying the full tax may be assuming that the good's demand curve is

Suppose that when the price of cigarettes decreases by 20 percent, the quantity demanded increases by 10 percent. The price elasticity of demand for cigarettes is __________, making cigarettes an ____________ product (in this example).

The quantity supplied of land is constant regardless of price. Suppose a tax is imposed on the rental price of land. Who will pay the greater share of such a tax?

Price elasticity of supply is perfectly inelastic if the coefficient of price elasticity of supply is

Price elasticity of supply measures the responsiveness of __________ to changes in __________.

As the price of a product rises the product will become more elastic in demand, assuming that the demand curve for the product is a downward-sloping straight line.

Which of the following statements is true?

Demand for a given good is inelastic, so it follows that if price rises, __________ will rise, too.

Exhibit 19-6 ​ -Refer to Exhibit 19-6. Let S1 be the supply curve of a firm. If S2 represents the supply curve of the same firm after the government imposes a per-unit tax, the tax is

If total revenue falls as a result of a decrease in the price of a given good, it follows that demand is

Income elasticity of demand measures the responsiveness of quantity supplied to changes in price.

Exhibit 19-3 -Refer to Exhibit 19-3. When price decreases from $4.50 to $3.50, the price elasticity of demand is

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Filters

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

Exhibit 19-6 -Refer to Exhibit 19-6. Let S₁ be the supply curve of a producer. If S₂ is the supply curve of the same producer after the government imposes a per-unit tax, the share of the tax paid by the producer as compared to the share of the tax paid by consumers will be

All other things being equal, the the percentage of one's budget spent on a good, the the price elasticity of demand.

Suppose that when the price of cigarettes decreases by 20 percent, the quantity demanded increases by 10 percent. The price elasticity of demand for cigarettes is , making cigarettes an __ product (in this example).

Price elasticity of supply measures the responsiveness of to changes in .

Exhibit 19-6 -Refer to Exhibit 19-6. Let S₁ be the supply curve of a firm. If S₂ represents the supply curve of the same firm after the government imposes a per-unit tax, the tax is