Question 1

Cross elasticity of demand measures consumer responsiveness to a change in the price of one good, in terms of the quantity demanded of some other good.

Accepted Answer

A) True 
 B)False

Question 2

Exhibit 19-7
​
  
-Refer to Exhibit 19-7. As a producer, if you had a choice, which of the depicted markets would you operate in?

Accepted Answer

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

Question 3

If the cross elasticity of demand for good A with respect to good B is +2.7, then good A is

Accepted Answer

A) an inferior good. 
B) a normal good. 
C) a substitute for good B. 
D) a complement to good B. 
A) an inferior good. 
B) a normal good. 
C) a substitute for good B. 
D) a complement to good B.

Question 4

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 producers end up paying?

Accepted Answer

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

Question 5

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

Accepted Answer

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

Question 6

If the demand for health care is elastic and health care co-payments are lowered, the percentage change in the quantity demanded of health care will be _______________ than the percentage decrease in co-payments, and the total dollar amount spent on health care will ___________.

Accepted Answer

A) greater; rise 
B) less; rise 
C) greater; fall 
D) less; fall 
A) greater; rise 
B) less; rise 
C) greater; fall 
D) less; fall

Question 7

All other things being equal, the __________ substitutes for a good, the __________ the price elasticity of demand.

Accepted Answer

A) fewer; higher 
B) more; higher 
C) more; lower 
D) a and c 
E) none of the above 
A) fewer; higher 
B) more; higher 
C) more; lower 
D) a and c 
E) none of the above

Question 8

A good will tend to have a low price elasticity of demand if

Accepted Answer

A) the good has few substitutes. 
B) a person spends a high percentage of his or her budget on the good. 
C) a person has a long period of time to adjust to price changes. 
D) the good is a luxury. 
A) the good has few substitutes. 
B) a person spends a high percentage of his or her budget on the good. 
C) a person has a long period of time to adjust to price changes. 
D) the good is a luxury.

Question 9

Exhibit 19-6
​
  
-Refer to Exhibit 19-6. Suppose the three equilibrium quantities are 700, 800, and 900, and the two equilibrium prices are $2.20 and $2.75. What is the tax revenue collected from the tax that shifted S1 to S2 when D1 is the relevant demand curve?

Accepted Answer

A) $440 
B) $600 
C) $800 
D) $900 
A) $440 
B) $600 
C) $800 
D) $900

Question 10

Exhibit 19-1
​
  
-Refer to Exhibit 19-l. The demand for the good represented by demand curve D2 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 11

The price elasticity of demand for a given good is 2.3. This implies that if price

Accepted Answer

A) rises by 10 percent, quantity demanded falls 2.3 percent. 
B) rises by 2.3 percent, quantity demanded falls 2.3 percent. 
C) rises by 20 percent, quantity demanded falls 46 percent. 
D) falls by 10 percent, quantity demanded falls 2.3 percent. 
E) none of the above 
A) rises by 10 percent, quantity demanded falls 2.3 percent. 
B) rises by 2.3 percent, quantity demanded falls 2.3 percent. 
C) rises by 20 percent, quantity demanded falls 46 percent. 
D) falls by 10 percent, quantity demanded falls 2.3 percent. 
E) none of the above

Question 12

As price rises from $22 to $26, quantity supplied rises from 100 to 110 units and quantity demanded falls from 90 units to 65 units. It follows that supply is __________ and demand is __________.

Accepted Answer

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

Question 13

Exhibit 19-3
  
-Refer to Exhibit 19-3. If price increases from $2.50 to $3.50, total revenue along the demand curve

Accepted Answer

A) increases to $67.50. 
B) increases to $87.50. 
C) remains at $87.50. 
D) decreases to $67.50. 
A) increases to $67.50. 
B) increases to $87.50. 
C) remains at $87.50. 
D) decreases to $67.50.

Question 14

Demand for a given good is elastic, which means that the percentage change in __________ is greater than the percentage change in __________.

Accepted Answer

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

Question 15

If supply is perfectly inelastic, it follows that a

Accepted Answer

A) rise in price will not change quantity supplied. 
B) fall in price will not change quantity supplied. 
C) rise in price will change quantity supplied by more than a fall in price. 
D) fall in price will change quantity supplied by more than a rise in price. 
E) a and b 
A) rise in price will not change quantity supplied. 
B) fall in price will not change quantity supplied. 
C) rise in price will change quantity supplied by more than a fall in price. 
D) fall in price will change quantity supplied by more than a rise in price. 
E) a and b

Question 16

If the demand for a good is inelastic and the price of the good decreases, then

Accepted Answer

A) total revenue increases. 
B) total revenue decreases. 
C) total revenue is not affected. 
D) the direction of the change in total revenue cannot be determined from the information given. 
A) total revenue increases. 
B) total revenue decreases. 
C) total revenue is not affected. 
D) the direction of the change in total revenue cannot be determined from the information given.

Question 17

An inferior good is

Accepted Answer

A) any good that consumers think is of low quality. 
B) a good for which the quantity demanded increases as its price decreases. 
C) a good for which the demand rises as income falls. 
D) a good for which the demand rises as income rises. 
E) any good that a producer cannot sell a large quantity of, even at a low price. 
A) any good that consumers think is of low quality. 
B) a good for which the quantity demanded increases as its price decreases. 
C) a good for which the demand rises as income falls. 
D) a good for which the demand rises as income rises. 
E) any good that a producer cannot sell a large quantity of, even at a low price.

Question 18

Exhibit 19-9
​
  
-Refer to Exhibit 19-9. What is the price elasticity of demand between $4 and $6?

Accepted Answer

A) 0.825 
B) 0.833 
C) 1.25 
D) 1.20 
A) 0.825 
B) 0.833 
C) 1.25 
D) 1.20

Question 19

When quantity demanded of a good increases, total revenue

Accepted Answer

A) increases. 
B) decreases. 
C) increases, if demand is elastic. 
D) increases, if demand is inelastic. 
A) increases. 
B) decreases. 
C) increases, if demand is elastic. 
D) increases, if demand is inelastic.

Question 20

When the price of a good rises, total revenue will fall if the good is elastic in demand.

Accepted Answer

A) True 
 B)False

Exam 19: Elasticity

Cross elasticity of demand measures consumer responsiveness to a change in the price of one good, in terms of the quantity demanded of some other good.

Exhibit 19-7 ​ -Refer to Exhibit 19-7. As a producer, if you had a choice, which of the depicted markets would you operate in?

If the cross elasticity of demand for good A with respect to good B is +2.7, then good A is

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 producers end up paying?

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

If the demand for health care is elastic and health care co-payments are lowered, the percentage change in the quantity demanded of health care will be _______________ than the percentage decrease in co-payments, and the total dollar amount spent on health care will ___________.

All other things being equal, the __________ substitutes for a good, the __________ the price elasticity of demand.

A good will tend to have a low price elasticity of demand if

Exhibit 19-6 ​ -Refer to Exhibit 19-6. Suppose the three equilibrium quantities are 700, 800, and 900, and the two equilibrium prices are $2.20 and $2.75. What is the tax revenue collected from the tax that shifted S1 to S2 when D1 is the relevant demand curve?

Exhibit 19-1 ​ -Refer to Exhibit 19-l. The demand for the good represented by demand curve D2 is

The price elasticity of demand for a given good is 2.3. This implies that if price

As price rises from $22 to $26, quantity supplied rises from 100 to 110 units and quantity demanded falls from 90 units to 65 units. It follows that supply is __________ and demand is __________.

Exhibit 19-3 -Refer to Exhibit 19-3. If price increases from $2.50 to $3.50, total revenue along the demand curve

Demand for a given good is elastic, which means that the percentage change in __________ is greater than the percentage change in __________.

If supply is perfectly inelastic, it follows that a

If the demand for a good is inelastic and the price of the good decreases, then

An inferior good is

Exhibit 19-9 ​ -Refer to Exhibit 19-9. What is the price elasticity of demand between $4 and $6?

When quantity demanded of a good increases, total revenue

When the price of a good rises, total revenue will fall if the good is elastic in demand.

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

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Debates in Macroeconomics Over the Role and Effects of Government

Consumer Choice and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

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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

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Filters

Exhibit 19-7 -Refer to Exhibit 19-7. As a producer, if you had a choice, which of the depicted markets would you operate in?

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 producers end up paying?

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

If the demand for health care is elastic and health care co-payments are lowered, the percentage change in the quantity demanded of health care will be _____ than the percentage decrease in co-payments, and the total dollar amount spent on health care will _.

All other things being equal, the substitutes for a good, the the price elasticity of demand.

Exhibit 19-6 -Refer to Exhibit 19-6. Suppose the three equilibrium quantities are 700, 800, and 900, and the two equilibrium prices are $2.20 and $2.75. What is the tax revenue collected from the tax that shifted S₁ to S₂ when D₁ is the relevant demand curve?

Exhibit 19-1 -Refer to Exhibit 19-l. The demand for the good represented by demand curve D₂ is

As price rises from $22 to $26, quantity supplied rises from 100 to 110 units and quantity demanded falls from 90 units to 65 units. It follows that supply is and demand is .

Demand for a given good is elastic, which means that the percentage change in is greater than the percentage change in .

Exhibit 19-9 -Refer to Exhibit 19-9. What is the price elasticity of demand between $4 and $6?