Question 1

Which of the following statements is correct for the price elasticity of demand along a linear,downward-sloping demand curve?

Accepted Answer

A)  The price elasticity of demand is constant because the slope is constant. 
B)  At low prices, demand is elastic but at high prices demand is inelastic. 
C)  At high prices, demand is elastic but at low prices demand is inelastic. 
D)  The price elasticity of demand is not defined for a linear demand curve because the slope is constant. 
E)  None of the above answers is correct. 
A)  The price elasticity of demand is constant because the slope is constant. 
B)  At low prices, demand is elastic but at high prices demand is inelastic. 
C)  At high prices, demand is elastic but at low prices demand is inelastic. 
D)  The price elasticity of demand is not defined for a linear demand curve because the slope is constant. 
E)  None of the above answers is correct.

Question 2

If two goods have a cross elasticity of demand of -2,then when the price of one good increases,the demand curve of the other good

Accepted Answer

A)  shifts rightward. 
B)  shifts leftward. 
C)  remains unchanged and the supply curve also remains unchanged. 
D)  might shift rightward, leftward, or remain unchanged. 
E)  remains unchanged but the supply curve shifts leftward. 
A)  shifts rightward. 
B)  shifts leftward. 
C)  remains unchanged and the supply curve also remains unchanged. 
D)  might shift rightward, leftward, or remain unchanged. 
E)  remains unchanged but the supply curve shifts leftward.

Question 3

-Based on data in the table above,use the midpoint method to determine the cross elasticity of demand for ice cream and cake.

Accepted Answer

A)  The cross elasticity is -0.75. 
B)  The cross elasticity is -1.75. 
C)  The cross elasticity is -0.83. 
D)  The cross elasticity is -4.0. 
E)  The cross elasticity is -1.33. 
A)  The cross elasticity is -0.75. 
B)  The cross elasticity is -1.75. 
C)  The cross elasticity is -0.83. 
D)  The cross elasticity is -4.0. 
E)  The cross elasticity is -1.33.

Question 4

The demand for a good is more elastic if the

Accepted Answer

A)  good is a necessity. 
B)  good has few substitutes. 
C)  good is narrowly defined. 
D)  supply of the good is plentiful. 
E)  Both answers B and C are correct. 
A)  good is a necessity. 
B)  good has few substitutes. 
C)  good is narrowly defined. 
D)  supply of the good is plentiful. 
E)  Both answers B and C are correct.

Question 5

If an Atlanta bakery raises the price of their rye bread by 11 percent and the quantity demanded decreases by 11 percent,then the demand for the rye bread is ________ and the bakery's total revenue ________.

Accepted Answer

A)  unit elastic; does not change 
B)  unit elastic; increases 
C)  unit elastic; decreases 
D)  elastic; does not change 
E)  inelastic; does not change 
A)  unit elastic; does not change 
B)  unit elastic; increases 
C)  unit elastic; decreases 
D)  elastic; does not change 
E)  inelastic; does not change

Question 6

If the quantity supplied increases by 8 percent when the price rises by 2 percent,the price elasticity of supply is ________ .

Accepted Answer

A)  10.0 
B)  6.0 
C)  0.25 
D)  16.0 
E)  4.0 
A)  10.0 
B)  6.0 
C)  0.25 
D)  16.0 
E)  4.0

Question 7

The price elasticity of supply is a measure of the extent to which the quantity supplied of a good changes when the

Accepted Answer

A)  cost of producing the product increases. 
B)  quantity of the good demanded increases. 
C)  supply increases. 
D)  price changes. 
E)  number of firms supplying the good changes. 
A)  cost of producing the product increases. 
B)  quantity of the good demanded increases. 
C)  supply increases. 
D)  price changes. 
E)  number of firms supplying the good changes.

Question 8

-The table above gives Sharon's demand for ground beef at two different income levels.Use the midpoint method in this problem.
a.What is the percentage change in Sharon's income?
b.What is the percentage change in the quantity demanded?
c.What is Sharon's income elasticity of demand for ground beef?
d.Is ground beef a normal or an inferior good for Sharon?

Accepted Answer

a.The percentage change in Sharon's inco

Question 9

-The figure above shows the demand curve for pizza.Using the midpoint method and moving from point A to point B,calculate the
a.percentage change in price.
b.percentage change in quantity demanded.
c.price elasticity of demand.

Accepted Answer

a.Between points A and B,the p

Question 10

When income increases from $20,000 to $30,000 the quantity of inter-city bus trips taken per year decreases from 10 to 8.Hence

Accepted Answer

A)  inter-city bus trips are a normal good. 
B)  the income elasticity of demand for inter-city bus trips is -1.8. 
C)  the income elasticity of demand for inter-city bus trips is -0.56. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct. 
A)  inter-city bus trips are a normal good. 
B)  the income elasticity of demand for inter-city bus trips is -1.8. 
C)  the income elasticity of demand for inter-city bus trips is -0.56. 
D)  Both answers A and B are correct. 
E)  Both answers A and C are correct.

Question 11

The figure above shows the demand curve for Starbucks latte.
-In in the figure above,when the price rises from $3 to $4,the price elasticity of demand is

Accepted Answer

A)  1.4. 
B)  2. 
C)  0.71. 
D)  0.4. 
E)  1. 
A)  1.4. 
B)  2. 
C)  0.71. 
D)  0.4. 
E)  1.

Question 12

When the percentage change in the quantity demanded exceeds the percentage change in price,then demand is

Accepted Answer

A)  inelastic. 
B)  unit elastic. 
C)  elastic. 
D)  irrelevant. 
E)  undefined. 
A)  inelastic. 
B)  unit elastic. 
C)  elastic. 
D)  irrelevant. 
E)  undefined.

Question 13

If the income elasticity of demand for a Miami Dolphin season ticket is 2.34,then are Dolphin season tickets a normal or an inferior good?

Accepted Answer

Because the income e

Question 14

The price elasticity of demand for an agricultural product is 0.4.This value means that,when the quantity decreases 1 percent,the price

Accepted Answer

A)  falls 4 percent. 
B)  rises 4 percent. 
C)  falls 2.5 percent. 
D)  rises 2.5 percent. 
E)  rises 0.25 percent. 
A)  falls 4 percent. 
B)  rises 4 percent. 
C)  falls 2.5 percent. 
D)  rises 2.5 percent. 
E)  rises 0.25 percent.

Question 15

You are the brand manager of Crest toothpaste and you observe that when you increase the price of Crest,your total revenue increases.How is that possible?

Accepted Answer

The demand for Crest toothpast

Question 16

Goods are ________ when the income elasticity of demand is less than zero.

Accepted Answer

A)  substitutes 
B)  complements 
C)  inferior 
D)  elastic 
E)  normal 
A)  substitutes 
B)  complements 
C)  inferior 
D)  elastic 
E)  normal

Question 17

-The table above gives the demand schedule for a good.What is the total revenue at point A? At point B? At point C? At point D? At point E?

Accepted Answer

The total revenue is the price multiplie

Question 18

Which of the following statements is correct?

Accepted Answer

A)  The demand for New Balance shoes is more elastic than the demand for shoes in general. 
B)  The demand for salt is very elastic. 
C)  The demand for luxuries is less elastic than the demand for necessities. 
D)  The demand for a narrowly defined good is less elastic than the demand for a more broadly defined good. 
E)  The larger the proportion of income spent on a good, the smaller the elasticity of demand. 
A)  The demand for New Balance shoes is more elastic than the demand for shoes in general. 
B)  The demand for salt is very elastic. 
C)  The demand for luxuries is less elastic than the demand for necessities. 
D)  The demand for a narrowly defined good is less elastic than the demand for a more broadly defined good. 
E)  The larger the proportion of income spent on a good, the smaller the elasticity of demand.

Question 19

At the midpoint of a linear,downward-sloping demand curve,the price elasticity of demand is

Accepted Answer

A)  greater than one. 
B)  equal to one. 
C)  less than one but greater than zero. 
D)  zero. 
E)  infinite. 
A)  greater than one. 
B)  equal to one. 
C)  less than one but greater than zero. 
D)  zero. 
E)  infinite.

Question 20

If the price of a six-pack of Pepsi falls from $4 to $3 and the quantity purchased increases 80 percent,then demand is

Accepted Answer

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

Which of the following statements is correct for the price elasticity of demand along a linear,downward-sloping demand curve?

If two goods have a cross elasticity of demand of -2,then when the price of one good increases,the demand curve of the other good

-Based on data in the table above,use the midpoint method to determine the cross elasticity of demand for ice cream and cake.

The demand for a good is more elastic if the

If an Atlanta bakery raises the price of their rye bread by 11 percent and the quantity demanded decreases by 11 percent,then the demand for the rye bread is and the bakery's total revenue .

If the quantity supplied increases by 8 percent when the price rises by 2 percent,the price elasticity of supply is ________ .

The price elasticity of supply is a measure of the extent to which the quantity supplied of a good changes when the

-The figure above shows the demand curve for pizza.Using the midpoint method and moving from point A to point B,calculate the a.percentage change in price. b.percentage change in quantity demanded. c.price elasticity of demand.

When income increases from $20,000 to $30,000 the quantity of inter-city bus trips taken per year decreases from 10 to 8.Hence

The figure above shows the demand curve for Starbucks latte. -In in the figure above,when the price rises from $3 to $4,the price elasticity of demand is

When the percentage change in the quantity demanded exceeds the percentage change in price,then demand is

If the income elasticity of demand for a Miami Dolphin season ticket is 2.34,then are Dolphin season tickets a normal or an inferior good?

The price elasticity of demand for an agricultural product is 0.4.This value means that,when the quantity decreases 1 percent,the price

You are the brand manager of Crest toothpaste and you observe that when you increase the price of Crest,your total revenue increases.How is that possible?

Goods are ________ when the income elasticity of demand is less than zero.

-The table above gives the demand schedule for a good.What is the total revenue at point A? At point B? At point C? At point D? At point E?

Which of the following statements is correct?

At the midpoint of a linear,downward-sloping demand curve,the price elasticity of demand is

If the price of a six-pack of Pepsi falls from $4 to $3 and the quantity purchased increases 80 percent,then demand is

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets With Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 5: Elasticities of Demand and Supply

Which of the following statements is correct for the price elasticity of demand along a linear,downward-sloping demand curve?

If two goods have a cross elasticity of demand of -2,then when the price of one good increases,the demand curve of the other good

-Based on data in the table above,use the midpoint method to determine the cross elasticity of demand for ice cream and cake.

The demand for a good is more elastic if the

If an Atlanta bakery raises the price of their rye bread by 11 percent and the quantity demanded decreases by 11 percent,then the demand for the rye bread is ________ and the bakery's total revenue ________.

If the quantity supplied increases by 8 percent when the price rises by 2 percent,the price elasticity of supply is ________ .

The price elasticity of supply is a measure of the extent to which the quantity supplied of a good changes when the

-The figure above shows the demand curve for pizza.Using the midpoint method and moving from point A to point B,calculate the a.percentage change in price. b.percentage change in quantity demanded. c.price elasticity of demand.

When income increases from $20,000 to $30,000 the quantity of inter-city bus trips taken per year decreases from 10 to 8.Hence

The figure above shows the demand curve for Starbucks latte. -In in the figure above,when the price rises from $3 to $4,the price elasticity of demand is

When the percentage change in the quantity demanded exceeds the percentage change in price,then demand is

If the income elasticity of demand for a Miami Dolphin season ticket is 2.34,then are Dolphin season tickets a normal or an inferior good?

The price elasticity of demand for an agricultural product is 0.4.This value means that,when the quantity decreases 1 percent,the price

You are the brand manager of Crest toothpaste and you observe that when you increase the price of Crest,your total revenue increases.How is that possible?

Goods are ________ when the income elasticity of demand is less than zero.

-The table above gives the demand schedule for a good.What is the total revenue at point A? At point B? At point C? At point D? At point E?

Which of the following statements is correct?

At the midpoint of a linear,downward-sloping demand curve,the price elasticity of demand is

If the price of a six-pack of Pepsi falls from $4 to $3 and the quantity purchased increases 80 percent,then demand is

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Markets With Private Information

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

If an Atlanta bakery raises the price of their rye bread by 11 percent and the quantity demanded decreases by 11 percent,then the demand for the rye bread is and the bakery's total revenue .