Question 1

If the cross elasticity of demand between peanut butter and milk is -1.11,then are peanut butter and milk substitutes or complements?

Accepted Answer

Because the cross el

Question 2

What factors determine the size of the price elasticity of demand?

Accepted Answer

The factors that determine the size of t

Question 3

If the cross elasticity of demand between car insurance and new cars is -0.41,then car insurance and new cars are

Accepted Answer

A)  complements. 
B)  substitutes. 
C)  normal goods. 
D)  inferior goods. 
E)  unrelated goods. 
A)  complements. 
B)  substitutes. 
C)  normal goods. 
D)  inferior goods. 
E)  unrelated goods.

Question 4

The cross elasticity of demand for butter and margarine 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)  positive because they are normal 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)  positive because they are normal goods.

Question 5

The price elasticity of demand is a measure of

Accepted Answer

A)  the equilibrium price of a product. 
B)  buyers' responsiveness to changes in the price of a product. 
C)  the amount of a product purchased when income increases. 
D)  whether a product is a substitute or a complement. 
E)  how much a change in demand affects the equilibrium price. 
A)  the equilibrium price of a product. 
B)  buyers' responsiveness to changes in the price of a product. 
C)  the amount of a product purchased when income increases. 
D)  whether a product is a substitute or a complement. 
E)  how much a change in demand affects the equilibrium price.

Question 6

Suppose the price of a ticket to a Lenny Kravitz concert is $41 and at that price,the quantity of tickets demanded is 17,000 per concert.Using the midpoint method of calculating percentage changes,if Mr.Kravitz raises the price to $48 and the quantity demanded decreases to 16,000,the price elasticity of demand for his concert tickets is

Accepted Answer

A)  15.73. 
B)  6.06. 
C)  1.00. 
D)  0.39. 
E)  0.93. 
A)  15.73. 
B)  6.06. 
C)  1.00. 
D)  0.39. 
E)  0.93.

Question 7

Suppose the price of a movie falls from $9 to $7.Using the midpoint method,what is the percentage change in price?

Accepted Answer

A)  33 percent 
B)  -33 percent 
C)  25 percent 
D)  -25 percent 
E)  -97 percent 
A)  33 percent 
B)  -33 percent 
C)  25 percent 
D)  -25 percent 
E)  -97 percent

Question 8

If the percentage change in the price of a good exceeds the percentage change in the quantity supplied,then the supply is

Accepted Answer

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

Question 9

If a Pizza Hut raises the price of a slice of pizza from $3.00 to $3.25,the quantity demanded decreases from 1,500 slices per week to 1,300 slices per week.The demand for slices of pizza is ________ and the total revenue received by this Pizza Hut ________.

Accepted Answer

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

Question 10

Recently the governor of Vermont proposed that cigarette taxes in Vermont should be increased substantially,from 44 cents a pack to 66 cents a pack.He estimates that Vermont can raise $20 million in revenue from this tax hike.He also pointed out that the neighboring state of New Hampshire was considering an increase in cigarette taxes.
a.How can it be that an increase in cigarette taxes will increase tax revenue,because,after all,a higher tax will increase cigarette prices and thereby decrease the quantity demanded?
b.If New Hampshire chooses not to increase cigarette taxes,is it likely that Vermont can still raise $20 million in tax revenue? Why or why not? Explain

Accepted Answer

a.The governor knows that cigarettes hav

Question 11

If the price elasticity of demand for a good is 2,then a 10 percent increase in the price of that good ________ the quantity demanded by ________ percent.

Accepted Answer

A)  increases; 20 
B)  decreases; 2 
C)  decreases; 10 
D)  decreases; 20 
E)  increases; 8 
A)  increases; 20 
B)  decreases; 2 
C)  decreases; 10 
D)  decreases; 20 
E)  increases; 8

Question 12

When the price of Cosmopolitan magazine decreases from $5 to $3,the quantity demanded increases from 600,000 to 1,000,000 copies each month.Using the midpoint method,the price elasticity of demand equals

Accepted Answer

A)  1. 
B)  3. 
C)  2. 
D)  1/3. 
E)  1/2. 
A)  1. 
B)  3. 
C)  2. 
D)  1/3. 
E)  1/2.

Question 13

The longer the time that has elapsed since the price of a good changed,the

Accepted Answer

A)  more elastic the demand for that good. 
B)  steeper the demand curve. 
C)  less elastic the demand for that good. 
D)  smaller the amount of that good bought. 
E)  fewer substitutes available for the good. 
A)  more elastic the demand for that good. 
B)  steeper the demand curve. 
C)  less elastic the demand for that good. 
D)  smaller the amount of that good bought. 
E)  fewer substitutes available for the good.

Question 14

KFC raises the price of its grilled chicken.The price elasticity of demand for KFC grilled chicken is 0.8.What happens to the KFC's total revenue?

Accepted Answer

A)  nothing 
B)  It increases. 
C)  It decreases. 
D)  It becomes negative. 
E)  It might change, but more information is needed to determine if it increases, decreases, or does not change. 
A)  nothing 
B)  It increases. 
C)  It decreases. 
D)  It becomes negative. 
E)  It might change, but more information is needed to determine if it increases, decreases, or does not change.

Question 15

In the mid-1970s,Newsweek magazine reported that the city of Atlanta lowered its city bus fares from 40 cents to 15 cents a passenger.The number of bus riders increased by 15 percent after the fare cut.This set of results indicates that the demand for bus rides in Atlanta at that time was

Accepted Answer

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

Question 16

If the price elasticity of supply of corn is 3.12,then is the supply of corn elastic or inelastic?

Accepted Answer

Because the price el

Question 17

"The fewer the number of substitutes for a product,the more elastic the demand for that product." Is the previous statement true or false?

Accepted Answer

The statement is false.The greater the n

Question 18

When the price of a cup of coffee falls from $3.00 to $2.50,the quantity demanded increases from 1,000 per month to 1,150 per month.Using the midpoint method,the price elasticity of demand is

Accepted Answer

A)  0.77. 
B)  1.30. 
C)  0.07. 
D)  3.00. 
E)  2.50. 
A)  0.77. 
B)  1.30. 
C)  0.07. 
D)  3.00. 
E)  2.50.

Question 19

If Microsoft wanted to prove to the Justice Department that its Windows software has many substitutes that personal computer owners can use,Microsoft hopes to find

Accepted Answer

A)  that the demand for Windows' is inelastic. 
B)  that the demand for Windows is elastic. 
C)  a large positive value for the cross elasticity of Windows and other software. 
D)  a negative income elasticity for Windows. 
E)  a positive income elasticity for Windows. 
A)  that the demand for Windows' is inelastic. 
B)  that the demand for Windows is elastic. 
C)  a large positive value for the cross elasticity of Windows and other software. 
D)  a negative income elasticity for Windows. 
E)  a positive income elasticity for Windows.

Question 20

Natural gas is difficult to store.What implication does this fact have for the elasticity of supply of natural gas?

Accepted Answer

Because natural gas is difficult to stor

If the cross elasticity of demand between peanut butter and milk is -1.11,then are peanut butter and milk substitutes or complements?

What factors determine the size of the price elasticity of demand?

If the cross elasticity of demand between car insurance and new cars is -0.41,then car insurance and new cars are

The cross elasticity of demand for butter and margarine is likely to be

The price elasticity of demand is a measure of

Suppose the price of a movie falls from $9 to $7.Using the midpoint method,what is the percentage change in price?

If the percentage change in the price of a good exceeds the percentage change in the quantity supplied,then the supply is

If a Pizza Hut raises the price of a slice of pizza from $3.00 to $3.25,the quantity demanded decreases from 1,500 slices per week to 1,300 slices per week.The demand for slices of pizza is and the total revenue received by this Pizza Hut .

If the price elasticity of demand for a good is 2,then a 10 percent increase in the price of that good the quantity demanded by percent.

When the price of Cosmopolitan magazine decreases from $5 to $3,the quantity demanded increases from 600,000 to 1,000,000 copies each month.Using the midpoint method,the price elasticity of demand equals

The longer the time that has elapsed since the price of a good changed,the

KFC raises the price of its grilled chicken.The price elasticity of demand for KFC grilled chicken is 0.8.What happens to the KFC's total revenue?

In the mid-1970s,Newsweek magazine reported that the city of Atlanta lowered its city bus fares from 40 cents to 15 cents a passenger.The number of bus riders increased by 15 percent after the fare cut.This set of results indicates that the demand for bus rides in Atlanta at that time was

If the price elasticity of supply of corn is 3.12,then is the supply of corn elastic or inelastic?

"The fewer the number of substitutes for a product,the more elastic the demand for that product." Is the previous statement true or false?

When the price of a cup of coffee falls from $3.00 to $2.50,the quantity demanded increases from 1,000 per month to 1,150 per month.Using the midpoint method,the price elasticity of demand is

If Microsoft wanted to prove to the Justice Department that its Windows software has many substitutes that personal computer owners can use,Microsoft hopes to find

Natural gas is difficult to store.What implication does this fact have for the elasticity of supply of natural gas?

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 the cross elasticity of demand between peanut butter and milk is -1.11,then are peanut butter and milk substitutes or complements?

What factors determine the size of the price elasticity of demand?

If the cross elasticity of demand between car insurance and new cars is -0.41,then car insurance and new cars are

The cross elasticity of demand for butter and margarine is likely to be

The price elasticity of demand is a measure of

Suppose the price of a movie falls from $9 to $7.Using the midpoint method,what is the percentage change in price?

If the percentage change in the price of a good exceeds the percentage change in the quantity supplied,then the supply is

If a Pizza Hut raises the price of a slice of pizza from $3.00 to $3.25,the quantity demanded decreases from 1,500 slices per week to 1,300 slices per week.The demand for slices of pizza is ________ and the total revenue received by this Pizza Hut ________.

If the price elasticity of demand for a good is 2,then a 10 percent increase in the price of that good ________ the quantity demanded by ________ percent.

When the price of Cosmopolitan magazine decreases from $5 to $3,the quantity demanded increases from 600,000 to 1,000,000 copies each month.Using the midpoint method,the price elasticity of demand equals

The longer the time that has elapsed since the price of a good changed,the

KFC raises the price of its grilled chicken.The price elasticity of demand for KFC grilled chicken is 0.8.What happens to the KFC's total revenue?

In the mid-1970s,Newsweek magazine reported that the city of Atlanta lowered its city bus fares from 40 cents to 15 cents a passenger.The number of bus riders increased by 15 percent after the fare cut.This set of results indicates that the demand for bus rides in Atlanta at that time was

If the price elasticity of supply of corn is 3.12,then is the supply of corn elastic or inelastic?

"The fewer the number of substitutes for a product,the more elastic the demand for that product." Is the previous statement true or false?

When the price of a cup of coffee falls from $3.00 to $2.50,the quantity demanded increases from 1,000 per month to 1,150 per month.Using the midpoint method,the price elasticity of demand is

If Microsoft wanted to prove to the Justice Department that its Windows software has many substitutes that personal computer owners can use,Microsoft hopes to find

Natural gas is difficult to store.What implication does this fact have for the elasticity of supply of natural gas?

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 a Pizza Hut raises the price of a slice of pizza from $3.00 to $3.25,the quantity demanded decreases from 1,500 slices per week to 1,300 slices per week.The demand for slices of pizza is and the total revenue received by this Pizza Hut .

If the price elasticity of demand for a good is 2,then a 10 percent increase in the price of that good the quantity demanded by percent.