Question 1

If a 10 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

Accepted Answer

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

Question 2

What is the price elasticity of demand? In terms of percentage changes,what is its formula?

Accepted Answer

The price elasticity of demand is a meas

Question 3

The income elasticity of demand is ________ if the good is ________ good.

Accepted Answer

A)  positive; a normal 
B)  positive; an inferior 
C)  negative; a normal 
D)  less than one; an inferior 
E)  positive; a substitute 
A)  positive; a normal 
B)  positive; an inferior 
C)  negative; a normal 
D)  less than one; an inferior 
E)  positive; a substitute

Question 4

-The demand curve shown in the figure above reflects demand that is

Accepted Answer

A)  perfectly elastic. 
B)  perfectly inelastic. 
C)  unit elastic. 
D)  elastic but not perfectly elastic. 
E)  inelastic but not perfectly inelastic. 
A)  perfectly elastic. 
B)  perfectly inelastic. 
C)  unit elastic. 
D)  elastic but not perfectly elastic. 
E)  inelastic but not perfectly inelastic.

Question 5

The price of lumber increased by 10 percent and the quantity supplied increased by 20 percent.The supply of lumber is

Accepted Answer

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

Question 6

If a 30 percent price increase generates a 20 percent decrease in quantity demanded,then demand 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 7

The cross elasticity of demand for strawberry jelly and grape jelly is likely to be

Accepted Answer

A)  positive because they are substitutes. 
B)  positive because they are complements. 
C)  negative because they are substitutes. 
D)  negative because they are complements. 
E)  negative because they are inferior goods. 
A)  positive because they are substitutes. 
B)  positive because they are complements. 
C)  negative because they are substitutes. 
D)  negative because they are complements. 
E)  negative because they are inferior goods.

Question 8

Along a linear (straight-line)downward-sloping demand curve,demand is unit elastic at

Accepted Answer

A)  the highest price. 
B)  the lowest price. 
C)  the midpoint. 
D)  all points on the linear demand curve. 
E)  None of the above because linear demand curves are never unit elastic. 
A)  the highest price. 
B)  the lowest price. 
C)  the midpoint. 
D)  all points on the linear demand curve. 
E)  None of the above because linear demand curves are never unit elastic.

Question 9

A firm lowers the price it charges.The firm's total revenue decreases.What can we conclude about the price elasticity of demand?

Accepted Answer

A)  Demand is elastic. 
B)  Demand is unit elastic. 
C)  Demand is inelastic. 
D)  Demand is perfectly elastic. 
E)  Not enough information is given to conclude anything about price elasticity of demand. 
A)  Demand is elastic. 
B)  Demand is unit elastic. 
C)  Demand is inelastic. 
D)  Demand is perfectly elastic. 
E)  Not enough information is given to conclude anything about price elasticity of demand.

Question 10

Assume that it is predicted that for the years after you graduate from college,the entire economy will experience a long period of recession during which people's incomes decrease.What type of industry would be the best for you to find employment if this prediction is correct? An industry that produces a product that

Accepted Answer

A)  is income elastic. 
B)  is income inelastic. 
C)  is inferior. 
D)  is a complement. 
E)  none of these industries 
A)  is income elastic. 
B)  is income inelastic. 
C)  is inferior. 
D)  is a complement. 
E)  none of these industries

Question 11

If the price elasticity of demand for gasoline equals 0.3,then an increase in the price of a gallon of gasoline from $3.70 to $3.90

Accepted Answer

A)  decreases total revenue. 
B)  increases total revenue. 
C)  leads to no change in total revenue. 
D)  makes the demand for gasoline elastic. 
E)  Both answers B and D are correct. 
A)  decreases total revenue. 
B)  increases total revenue. 
C)  leads to no change in total revenue. 
D)  makes the demand for gasoline elastic. 
E)  Both answers B and D are correct.

Question 12

If the supply of a good decreases and it causes total revenue to increase,this shows that the good has an

Accepted Answer

A)  inelastic demand 
B)  elastic demand 
C)  unit elastic demand 
D)  inelastic supply 
E)  elastic supply 
A)  inelastic demand 
B)  elastic demand 
C)  unit elastic demand 
D)  inelastic supply 
E)  elastic supply

Question 13

For which of the following would the supply likely be most inelastic?

Accepted Answer

A)  aircraft carrier 
B)  canned soup 
C)  toy airplane 
D)  t-shirt 
E)  bottled water 
A)  aircraft carrier 
B)  canned soup 
C)  toy airplane 
D)  t-shirt 
E)  bottled water

Question 14

A firm raises the price it charges.The firm's total revenue does not change.What can we conclude about the price elasticity of demand?

Accepted Answer

A)  Demand is elastic. 
B)  Demand is unit elastic. 
C)  Demand is inelastic. 
D)  Demand is perfectly elastic. 
E)  Not enough information is given to conclude anything about price elasticity of demand. 
A)  Demand is elastic. 
B)  Demand is unit elastic. 
C)  Demand is inelastic. 
D)  Demand is perfectly elastic. 
E)  Not enough information is given to conclude anything about price elasticity of demand.

Question 15

Suppose a decrease in supply raises the price from $4.00 to $5.50 and decreases the quantity demanded from 2,000 to 1,500.Using the midpoint method,the elasticity of demand equals

Accepted Answer

A)  2.10. 
B)  1.11. 
C)  0.90. 
D)  0.72. 
E)  None of the above answers is correct. 
A)  2.10. 
B)  1.11. 
C)  0.90. 
D)  0.72. 
E)  None of the above answers is correct.

Question 16

When income increases from $30,000 a year to $40,000 a year,the quantity demanded of weekend vacations by Sara increases from 2 a year to 5 a year.For Sara,the income elasticity of demand of weekend vacations is ________ and weekend vacations are ________ good.

Accepted Answer

A)  3; a normal 
B)  4.5 a normal 
C)  1/3; an inferior 
D)  -4.5; an inferior 
E)  1/3; a normal 
A)  3; a normal 
B)  4.5 a normal 
C)  1/3; an inferior 
D)  -4.5; an inferior 
E)  1/3; a normal

Question 17

Which of the following does NOT influence the price elasticity of demand?

Accepted Answer

A)  the amount by which the demand curve shifts when the price of another good changes 
B)  the number of substitutes available to consumers 
C)  the price of the good relative to total income 
D)  the time period buyers have to respond to a price change 
E)  whether the good is a necessity or a luxury 
A)  the amount by which the demand curve shifts when the price of another good changes 
B)  the number of substitutes available to consumers 
C)  the price of the good relative to total income 
D)  the time period buyers have to respond to a price change 
E)  whether the good is a necessity or a luxury

Question 18

-In the figure above,using the midpoint method,what is the price elasticity of demand when the price falls from $8 to $7?

Accepted Answer

A)  4.0 
B)  5.0 
C)  0.5 
D)  0.4 
E)  0.25 
A)  4.0 
B)  5.0 
C)  0.5 
D)  0.4 
E)  0.25

Question 19

When the price of tacos rise 4 percent,the quantity demanded decreases 10 percent.What is the price elasticity of demand for tacos?

Accepted Answer

A)  40.0 
B)  25.0 
C)  0.4 
D)  2.5 
E)  10.0 
A)  40.0 
B)  25.0 
C)  0.4 
D)  2.5 
E)  10.0

Question 20

During the winter of 2011-2012,the price of fuel oil increased enormously but the quantity demanded decreased only a little.This response indicates that the demand for fuel oil was

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.

If a 10 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

What is the price elasticity of demand? In terms of percentage changes,what is its formula?

The income elasticity of demand is if the good is good.

-The demand curve shown in the figure above reflects demand that is

The price of lumber increased by 10 percent and the quantity supplied increased by 20 percent.The supply of lumber is

If a 30 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

The cross elasticity of demand for strawberry jelly and grape jelly is likely to be

Along a linear (straight-line)downward-sloping demand curve,demand is unit elastic at

A firm lowers the price it charges.The firm's total revenue decreases.What can we conclude about the price elasticity of demand?

If the price elasticity of demand for gasoline equals 0.3,then an increase in the price of a gallon of gasoline from $3.70 to $3.90

If the supply of a good decreases and it causes total revenue to increase,this shows that the good has an

For which of the following would the supply likely be most inelastic?

A firm raises the price it charges.The firm's total revenue does not change.What can we conclude about the price elasticity of demand?

Suppose a decrease in supply raises the price from $4.00 to $5.50 and decreases the quantity demanded from 2,000 to 1,500.Using the midpoint method,the elasticity of demand equals

When income increases from $30,000 a year to $40,000 a year,the quantity demanded of weekend vacations by Sara increases from 2 a year to 5 a year.For Sara,the income elasticity of demand of weekend vacations is and weekend vacations are good.

Which of the following does NOT influence the price elasticity of demand?

-In the figure above,using the midpoint method,what is the price elasticity of demand when the price falls from $8 to $7?

When the price of tacos rise 4 percent,the quantity demanded decreases 10 percent.What is the price elasticity of demand for tacos?

During the winter of 2011-2012,the price of fuel oil increased enormously but the quantity demanded decreased only a little.This response indicates that the demand for fuel oil was

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

If a 10 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

What is the price elasticity of demand? In terms of percentage changes,what is its formula?

The income elasticity of demand is ________ if the good is ________ good.

-The demand curve shown in the figure above reflects demand that is

The price of lumber increased by 10 percent and the quantity supplied increased by 20 percent.The supply of lumber is

If a 30 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

The cross elasticity of demand for strawberry jelly and grape jelly is likely to be

Along a linear (straight-line)downward-sloping demand curve,demand is unit elastic at

A firm lowers the price it charges.The firm's total revenue decreases.What can we conclude about the price elasticity of demand?

If the price elasticity of demand for gasoline equals 0.3,then an increase in the price of a gallon of gasoline from $3.70 to $3.90

If the supply of a good decreases and it causes total revenue to increase,this shows that the good has an

For which of the following would the supply likely be most inelastic?

A firm raises the price it charges.The firm's total revenue does not change.What can we conclude about the price elasticity of demand?

Suppose a decrease in supply raises the price from $4.00 to $5.50 and decreases the quantity demanded from 2,000 to 1,500.Using the midpoint method,the elasticity of demand equals

When income increases from $30,000 a year to $40,000 a year,the quantity demanded of weekend vacations by Sara increases from 2 a year to 5 a year.For Sara,the income elasticity of demand of weekend vacations is ________ and weekend vacations are ________ good.

Which of the following does NOT influence the price elasticity of demand?

-In the figure above,using the midpoint method,what is the price elasticity of demand when the price falls from $8 to $7?

When the price of tacos rise 4 percent,the quantity demanded decreases 10 percent.What is the price elasticity of demand for tacos?

During the winter of 2011-2012,the price of fuel oil increased enormously but the quantity demanded decreased only a little.This response indicates that the demand for fuel oil was

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

The income elasticity of demand is if the good is good.

When income increases from $30,000 a year to $40,000 a year,the quantity demanded of weekend vacations by Sara increases from 2 a year to 5 a year.For Sara,the income elasticity of demand of weekend vacations is and weekend vacations are good.