Question 1

If the demand for good X is inelastic in the short run, then it will be __________ in the long run (as more time passes).

Accepted Answer

A) inelastic 
B) elastic 
C) unit elastic 
D) perfectly inelastic 
E) There is not enough information to answer the question. 
A) inelastic 
B) elastic 
C) unit elastic 
D) perfectly inelastic 
E) There is not enough information to answer the question.

Question 2

Price elasticity of demand is the ratio of the percentage change in price of one good to the percentage change in quantity demanded of another good.

Accepted Answer

A) True 
 B)False

Question 3

Explain how and why price elasticity of demand changes as a product is defined more narrowly or more broadly. Cite an example to help support your answer.

Accepted Answer

When a good is defined more broadly dema

Question 4

Exhibit 19-1
​
  
-Refer to Exhibit 19-l. The demand for the good represented by demand curve D3 is

Accepted Answer

A) inelastic. 
B) elastic. 
C) unit elastic. 
D) perfectly elastic. 
E) more elastic at higher prices than at lower prices. 
A) inelastic. 
B) elastic. 
C) unit elastic. 
D) perfectly elastic. 
E) more elastic at higher prices than at lower prices.

Question 5

Exhibit 19-1
​
  
-Refer to Exhibit 19-1. The demand for the good represented by demand curve D1 is

Accepted Answer

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

Question 6

Price elasticity of supply is the percentage change in the quantity __________ of a good divided by the percentage change in __________.

Accepted Answer

A) demanded; the price of the good 
B) supplied; the price of the good 
C) demanded; the price of another good 
D) supplied; the price of another good 
E) demanded; income 
A) demanded; the price of the good 
B) supplied; the price of the good 
C) demanded; the price of another good 
D) supplied; the price of another good 
E) demanded; income

Question 7

Exhibit 19-3
  
-Refer to Exhibit 19-3. When price decreases from $3.50 to $2.50, the price elasticity of supply is

Accepted Answer

A) 0. 
B) 1.0. 
C) 5.0. 
D) 0.1. 
E) 0.5. 
A) 0. 
B) 1.0. 
C) 5.0. 
D) 0.1. 
E) 0.5.

Question 8

If quantity demanded is completely unresponsive to changes in the price of good XYZ, then demand for good XYZ is

Accepted Answer

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

Question 9

Exhibit 19-3
  
-Refer to Exhibit 19-3. When price decreases from $1.50 to $0.50, the price elasticity of supply is

Accepted Answer

A) 0. 
B) 1.0. 
C) 5.0. 
D) 0.1. 
E) 0.5. 
A) 0. 
B) 1.0. 
C) 5.0. 
D) 0.1. 
E) 0.5.

Question 10

If, as the price of good Y rises from $5.00 to $5.75, the quantity demanded of good Y falls from 54 units to 48 units, price elasticity of demand for good Y in this price range is

Accepted Answer

A) 1.05. 
B) 1.19. 
C) 0.37. 
D) 4.77. 
E) 0.84. 
A) 1.05. 
B) 1.19. 
C) 0.37. 
D) 4.77. 
E) 0.84.

Question 11

When price = $33, quantity demanded = 460. When price = $31, quantity demanded = 500. The price elasticity of demand is _______________, making this an _____________ good in the price range between $31 and $33.

Accepted Answer

A) 1.33; inelastic 
B) 1.33; elastic 
C) 0.75; elastic 
D) 0.75; inelastic 
E) 6.2; elastic 
A) 1.33; inelastic 
B) 1.33; elastic 
C) 0.75; elastic 
D) 0.75; inelastic 
E) 6.2; elastic

Question 12

Exhibit 19-8
​
  
-Refer to Exhibit 19-8. The market for good X is initially at point A. A tax is then placed on the production of good X. At the new equilibrium, point __________, buyers end up paying __________ of the tax and sellers end up paying __________ of the tax.

Accepted Answer

A) B; one-half; one-half 
B) D; one-half; one-half 
C) C; one-half; one-half 
D) B; one-quarter; three-quarters 
E) none of the above 
A) B; one-half; one-half 
B) D; one-half; one-half 
C) C; one-half; one-half 
D) B; one-quarter; three-quarters 
E) none of the above

Question 13

If two goods are substitute goods,

Accepted Answer

A) an increase in the price of one will cause a decrease in the demand for the other. 
B) an increase in the price of one will cause an increase in the demand for the other. 
C) the price elasticity of demand for both goods will be greater than 1. 
D) the price elasticity of demand for both goods will be less than 1. 
A) an increase in the price of one will cause a decrease in the demand for the other. 
B) an increase in the price of one will cause an increase in the demand for the other. 
C) the price elasticity of demand for both goods will be greater than 1. 
D) the price elasticity of demand for both goods will be less than 1.

Question 14

If the price of good X rises and the demand for good X is elastic, then the percentage __________ in quantity demanded is __________ the percentage rise in price, and total revenue __________.

Accepted Answer

A) fall; greater than; rises 
B) fall; less than; falls 
C) fall; equal to; remains constant 
D) rise; greater than; falls 
E) fall; greater than; falls 
A) fall; greater than; rises 
B) fall; less than; falls 
C) fall; equal to; remains constant 
D) rise; greater than; falls 
E) fall; greater than; falls

Question 15

Exhibit 19-7
​
  
-Refer to Exhibit 19-7. If the government is contemplating imposing a per-unit tax and it wants the tax to have as small a negative effect on consumers as possible, it should choose a good for which the market is depicted on graph

Accepted Answer

A) (1). 
B) (2). 
C) (3). 
D) (4). 
A) (1). 
B) (2). 
C) (3). 
D) (4).

Question 16

Total revenue is defined as

Accepted Answer

A) price minus quantity sold. 
B) price multiplied by quantity sold. 
C) price divided by quantity sold. 
D) quantity divided by price sold. 
E) price plus quantity sold. 
A) price minus quantity sold. 
B) price multiplied by quantity sold. 
C) price divided by quantity sold. 
D) quantity divided by price sold. 
E) price plus quantity sold.

Question 17

Cross elasticity of demand measures the responsiveness of changes in the quantity __________ of one good to changes in __________.

Accepted Answer

A) demanded; the price of the same good 
B) demanded; income 
C) demanded; the price of another good 
D) supplied; the price of the same good 
E) none of the above 
A) demanded; the price of the same good 
B) demanded; income 
C) demanded; the price of another good 
D) supplied; the price of the same good 
E) none of the above

Question 18

Which of the following statements is false?

Accepted Answer

A) If the income elasticity of demand for a good is less than 1, the demand for the good is income inelastic. 
B) If the income elasticity of demand for a good is greater than 1, the demand for the good is income elastic. 
C) If the income elasticity of demand for a good is equal to 1, the demand for the good is income unit elastic. 
D) If the income elasticity of demand for a good is less than zero, the good is a normal good. 
E) A good can be both a normal good and income inelastic. 
A) If the income elasticity of demand for a good is less than 1, the demand for the good is income inelastic. 
B) If the income elasticity of demand for a good is greater than 1, the demand for the good is income elastic. 
C) If the income elasticity of demand for a good is equal to 1, the demand for the good is income unit elastic. 
D) If the income elasticity of demand for a good is less than zero, the good is a normal good. 
E) A good can be both a normal good and income inelastic.

Question 19

Ford Mustangs would tend to be more elastic in demand than all cars because there are more substitutes for Ford Mustangs than for cars.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following statements represents a correct and sequentially accurate economic explanation?

Accepted Answer

A) A tax is placed on the production of good X, the supply curve of good X shifts to the left, equilibrium price rises, equilibrium quantity falls, and buyers pay 100 percent of the tax. 
B) A tax is placed on the production of good X, the supply curve of good X shifts to the left, equilibrium price rises, equilibrium quantity stays constant, and buyers pay 100 percent of the tax. 
C) A tax is placed on the production of good X, the supply curve of good X shifts to the left, equilibrium price does not change, equilibrium quantity rises, and sellers pay 50 percent of the tax. 
D) A tax is placed on the production of good X, the supply curve of good X shifts to the right, equilibrium price falls, equilibrium quantity falls, and sellers pay 100 percent of the tax. 
A) A tax is placed on the production of good X, the supply curve of good X shifts to the left, equilibrium price rises, equilibrium quantity falls, and buyers pay 100 percent of the tax. 
B) A tax is placed on the production of good X, the supply curve of good X shifts to the left, equilibrium price rises, equilibrium quantity stays constant, and buyers pay 100 percent of the tax. 
C) A tax is placed on the production of good X, the supply curve of good X shifts to the left, equilibrium price does not change, equilibrium quantity rises, and sellers pay 50 percent of the tax. 
D) A tax is placed on the production of good X, the supply curve of good X shifts to the right, equilibrium price falls, equilibrium quantity falls, and sellers pay 100 percent of the tax.

Exam 19: Elasticity

If the demand for good X is inelastic in the short run, then it will be __________ in the long run (as more time passes).

Price elasticity of demand is the ratio of the percentage change in price of one good to the percentage change in quantity demanded of another good.

Explain how and why price elasticity of demand changes as a product is defined more narrowly or more broadly. Cite an example to help support your answer.

Exhibit 19-1 ​ -Refer to Exhibit 19-l. The demand for the good represented by demand curve D3 is

Exhibit 19-1 ​ -Refer to Exhibit 19-1. The demand for the good represented by demand curve D1 is

Price elasticity of supply is the percentage change in the quantity __________ of a good divided by the percentage change in __________.

Exhibit 19-3 -Refer to Exhibit 19-3. When price decreases from $3.50 to $2.50, the price elasticity of supply is

If quantity demanded is completely unresponsive to changes in the price of good XYZ, then demand for good XYZ is

Exhibit 19-3 -Refer to Exhibit 19-3. When price decreases from $1.50 to $0.50, the price elasticity of supply is

If, as the price of good Y rises from $5.00 to $5.75, the quantity demanded of good Y falls from 54 units to 48 units, price elasticity of demand for good Y in this price range is

When price = $33, quantity demanded = 460. When price = $31, quantity demanded = 500. The price elasticity of demand is _______________, making this an _____________ good in the price range between $31 and $33.

Exhibit 19-8 ​ -Refer to Exhibit 19-8. The market for good X is initially at point A. A tax is then placed on the production of good X. At the new equilibrium, point __________, buyers end up paying __________ of the tax and sellers end up paying __________ of the tax.

If two goods are substitute goods,

If the price of good X rises and the demand for good X is elastic, then the percentage __________ in quantity demanded is __________ the percentage rise in price, and total revenue __________.

Exhibit 19-7 ​ -Refer to Exhibit 19-7. If the government is contemplating imposing a per-unit tax and it wants the tax to have as small a negative effect on consumers as possible, it should choose a good for which the market is depicted on graph

Total revenue is defined as

Cross elasticity of demand measures the responsiveness of changes in the quantity __________ of one good to changes in __________.

Which of the following statements is false?

Ford Mustangs would tend to be more elastic in demand than all cars because there are more substitutes for Ford Mustangs than for cars.

Which of the following statements represents a correct and sequentially accurate economic explanation?

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

Exhibit 19-1 -Refer to Exhibit 19-l. The demand for the good represented by demand curve D₃ is

Exhibit 19-1 -Refer to Exhibit 19-1. The demand for the good represented by demand curve D₁ is

Price elasticity of supply is the percentage change in the quantity of a good divided by the percentage change in .

When price = $33, quantity demanded = 460. When price = $31, quantity demanded = 500. The price elasticity of demand is ___, making this an _ good in the price range between $31 and $33.

Exhibit 19-8 -Refer to Exhibit 19-8. The market for good X is initially at point A. A tax is then placed on the production of good X. At the new equilibrium, point , buyers end up paying of the tax and sellers end up paying __ of the tax.

If the price of good X rises and the demand for good X is elastic, then the percentage in quantity demanded is the percentage rise in price, and total revenue __.

Exhibit 19-7 -Refer to Exhibit 19-7. If the government is contemplating imposing a per-unit tax and it wants the tax to have as small a negative effect on consumers as possible, it should choose a good for which the market is depicted on graph

Cross elasticity of demand measures the responsiveness of changes in the quantity of one good to changes in .