Question 1

The figure above shows the demand curve for Starbucks latte.
-In the figure above,the demand is unit elastic

Accepted Answer

A)  at the point where the price is $3.00 per cup. 
B)  at the point where the price is $2.00 per cup. 
C)  at the point where the price is $4.00 per cup. 
D)  at the point where the price is $2.50 per cup. 
E)  at all points along the demand curve. 
A)  at the point where the price is $3.00 per cup. 
B)  at the point where the price is $2.00 per cup. 
C)  at the point where the price is $4.00 per cup. 
D)  at the point where the price is $2.50 per cup. 
E)  at all points along the demand curve.

Question 2

For a good such as a large screen HD television set,the income elasticity would likely be

Accepted Answer

A)  negative. 
B)  equal to zero. 
C)  positive and less than one. 
D)  positive and greater than one. 
E)  undefined because large screen, HD TVs are bought by many consumers. 
A)  negative. 
B)  equal to zero. 
C)  positive and less than one. 
D)  positive and greater than one. 
E)  undefined because large screen, HD TVs are bought by many consumers.

Question 3

For a good such as food,the income elasticity is likely

Accepted Answer

A)  negative. 
B)  equal to zero. 
C)  positive and less than one. 
D)  positive and greater than one. 
E)  undefined because people always buy the same amount of food. 
A)  negative. 
B)  equal to zero. 
C)  positive and less than one. 
D)  positive and greater than one. 
E)  undefined because people always buy the same amount of food.

Question 4

To determine the price elasticity of demand,we

Accepted Answer

A)  need information on consumers' incomes. 
B)  need to know how much is available. 
C)  compare the percentage change in the quantity demanded to the percentage change in the price. 
D)  compare the change in the quantity to the change in price. 
E)  divide the quantity by the price. 
A)  need information on consumers' incomes. 
B)  need to know how much is available. 
C)  compare the percentage change in the quantity demanded to the percentage change in the price. 
D)  compare the change in the quantity to the change in price. 
E)  divide the quantity by the price.

Question 5

Tacos and pizza are substitutes.If a 2 percent change in the price of a taco leads to a 4 percent change in the demand for pizza,the cross elasticity of demand equals

Accepted Answer

A)  -1/2. 
B)  1/2. 
C)  2. 
D)  -2. 
E)  4. 
A)  -1/2. 
B)  1/2. 
C)  2. 
D)  -2. 
E)  4.

Question 6

The fact that there is a very limited amount of land in Hong Kong means the supply of new apartments in Hong Kong is

Accepted Answer

A)  inelastic. 
B)  elastic. 
C)  unit elastic. 
D)  perfectly elastic. 
E)  limited by the demand. 
A)  inelastic. 
B)  elastic. 
C)  unit elastic. 
D)  perfectly elastic. 
E)  limited by the demand.

Question 7

If a good is a necessity,it has ________ substitutes and its demand is ________.

Accepted Answer

A)  poor; elastic 
B)  poor; inelastic 
C)  many; elastic 
D)  many; inelastic 
E)  many; precisely unit elastic 
A)  poor; elastic 
B)  poor; inelastic 
C)  many; elastic 
D)  many; inelastic 
E)  many; precisely unit elastic

Question 8

If the price elasticity of demand for razors is 0.32,the demand for razors is

Accepted Answer

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

Question 9

If two goods are ________,then an increase in the price of one leads to ________ in the quantity demanded of the other.

Accepted Answer

A)  complements; a decrease 
B)  complements; no change 
C)  substitutes; a decrease 
D)  substitutes; no change 
E)  normal; an increase 
A)  complements; a decrease 
B)  complements; no change 
C)  substitutes; a decrease 
D)  substitutes; no change 
E)  normal; an increase

Question 10

Suppose the price of flour increases from $0.80 to $1.00 a pound and the quantity demanded decreases from 100 pounds to 95 pounds.Using the midpoint method,what is the price elasticity of demand for flour? Is the demand for flour elastic or inelastic?

Accepted Answer

The price elasticity of demand is 0.23.(

Question 11

If the income elasticity of demand for a good is 2,then when income rises 10 percent,the quantity demanded

Accepted Answer

A)  increases 2 percent. 
B)  increases 20 percent. 
C)  decreases 2 percent. 
D)  decreases 20 percent. 
E)  increases 12 percent. 
A)  increases 2 percent. 
B)  increases 20 percent. 
C)  decreases 2 percent. 
D)  decreases 20 percent. 
E)  increases 12 percent.

Question 12

-In the figure above,what happens to total revenue as we move from point A to point B?

Accepted Answer

A)  It increases. 
B)  It decreases. 
C)  It remains constant. 
D)  It becomes negative. 
E)  More information about the elasticity of demand is needed to determine if it increases, decreases, or does not change. 
A)  It increases. 
B)  It decreases. 
C)  It remains constant. 
D)  It becomes negative. 
E)  More information about the elasticity of demand is needed to determine if it increases, decreases, or does not change.

Question 13

If demand is ________,a price cut ________ the total revenue.

Accepted Answer

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

Question 14

If a 4 percent change in the price of a good leads to a 3 percent change in quantity demanded,the price elasticity of demand equals

Accepted Answer

A)  1.33. 
B)  0.75. 
C)  4.00. 
D)  3.44. 
E)  None of the above answers are correct. 
A)  1.33. 
B)  0.75. 
C)  4.00. 
D)  3.44. 
E)  None of the above answers are correct.

Question 15

If a good is inferior,then it has an income elasticity of demand that is

Accepted Answer

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

Question 16

If a lower price for a Pepsi decreases the demand for a Coke,the cross elasticity value for Pepsi and Coke is

Accepted Answer

A)  definitely negative. 
B)  definitely equal to zero. 
C)  definitely positive. 
D)  definitely greater than one. 
E)  possibly negative, positive, or zero, but there is not enough information to decide. 
A)  definitely negative. 
B)  definitely equal to zero. 
C)  definitely positive. 
D)  definitely greater than one. 
E)  possibly negative, positive, or zero, but there is not enough information to decide.

Question 17

The demand for luxury suites at basketball games is more elastic if

Accepted Answer

A)  these suites are a necessity. 
B)  these suites are a luxury item. 
C)  few close substitutes exist for these suites. 
D)  basketball fans have little time to look for alternative suites. 
E)  poorer fans cannot afford luxury suites. 
A)  these suites are a necessity. 
B)  these suites are a luxury item. 
C)  few close substitutes exist for these suites. 
D)  basketball fans have little time to look for alternative suites. 
E)  poorer fans cannot afford luxury suites.

Question 18

You own a small store.Your cashier thinks you should raise prices to increase your total revenue and your customer thinks you should lower prices to increase your total revenue.The cashier thinks the price elasticity of demand is ________ and the customer believes the price elasticity of demand is ________.

Accepted Answer

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

Question 19

If a product is narrowly defined,it is likely to

Accepted Answer

A)  have many substitutes and therefore its demand is elastic. 
B)  have few substitutes, and therefore its demand is less elastic. 
C)  be unique, and therefore its demand is inelastic. 
D)  be unique and have many substitutes. 
E)  have a larger proportion of income spent on it. 
A)  have many substitutes and therefore its demand is elastic. 
B)  have few substitutes, and therefore its demand is less elastic. 
C)  be unique, and therefore its demand is inelastic. 
D)  be unique and have many substitutes. 
E)  have a larger proportion of income spent on it.

Question 20

The total revenue test says
i.Demand is elastic if a decrease in price results in an increase in total revenue.
ii.Total revenue is maximized when demand is elastic.
iii.Total revenue is minimized when demand is unit elastic.

Accepted Answer

A)  i only 
B)  i and ii 
C)  ii and iii 
D)  i, ii and iii 
E)  ii only 
A)  i only 
B)  i and ii 
C)  ii and iii 
D)  i, ii and iii 
E)  ii only

The figure above shows the demand curve for Starbucks latte. -In the figure above,the demand is unit elastic

For a good such as a large screen HD television set,the income elasticity would likely be

For a good such as food,the income elasticity is likely

To determine the price elasticity of demand,we

Tacos and pizza are substitutes.If a 2 percent change in the price of a taco leads to a 4 percent change in the demand for pizza,the cross elasticity of demand equals

The fact that there is a very limited amount of land in Hong Kong means the supply of new apartments in Hong Kong is

If a good is a necessity,it has substitutes and its demand is .

If the price elasticity of demand for razors is 0.32,the demand for razors is

If two goods are ,then an increase in the price of one leads to in the quantity demanded of the other.

Suppose the price of flour increases from $0.80 to $1.00 a pound and the quantity demanded decreases from 100 pounds to 95 pounds.Using the midpoint method,what is the price elasticity of demand for flour? Is the demand for flour elastic or inelastic?

If the income elasticity of demand for a good is 2,then when income rises 10 percent,the quantity demanded

-In the figure above,what happens to total revenue as we move from point A to point B?

If demand is ,a price cut the total revenue.

If a 4 percent change in the price of a good leads to a 3 percent change in quantity demanded,the price elasticity of demand equals

If a good is inferior,then it has an income elasticity of demand that is

If a lower price for a Pepsi decreases the demand for a Coke,the cross elasticity value for Pepsi and Coke is

The demand for luxury suites at basketball games is more elastic if

You own a small store.Your cashier thinks you should raise prices to increase your total revenue and your customer thinks you should lower prices to increase your total revenue.The cashier thinks the price elasticity of demand is and the customer believes the price elasticity of demand is .

If a product is narrowly defined,it is likely to

The total revenue test says i.Demand is elastic if a decrease in price results in an increase in total revenue. ii.Total revenue is maximized when demand is elastic. iii.Total revenue is minimized when demand is unit elastic.

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

The figure above shows the demand curve for Starbucks latte. -In the figure above,the demand is unit elastic

For a good such as a large screen HD television set,the income elasticity would likely be

For a good such as food,the income elasticity is likely

To determine the price elasticity of demand,we

Tacos and pizza are substitutes.If a 2 percent change in the price of a taco leads to a 4 percent change in the demand for pizza,the cross elasticity of demand equals

The fact that there is a very limited amount of land in Hong Kong means the supply of new apartments in Hong Kong is

If a good is a necessity,it has ________ substitutes and its demand is ________.

If the price elasticity of demand for razors is 0.32,the demand for razors is

If two goods are ________,then an increase in the price of one leads to ________ in the quantity demanded of the other.

Suppose the price of flour increases from $0.80 to $1.00 a pound and the quantity demanded decreases from 100 pounds to 95 pounds.Using the midpoint method,what is the price elasticity of demand for flour? Is the demand for flour elastic or inelastic?

If the income elasticity of demand for a good is 2,then when income rises 10 percent,the quantity demanded

-In the figure above,what happens to total revenue as we move from point A to point B?

If demand is ________,a price cut ________ the total revenue.

If a 4 percent change in the price of a good leads to a 3 percent change in quantity demanded,the price elasticity of demand equals

If a good is inferior,then it has an income elasticity of demand that is

If a lower price for a Pepsi decreases the demand for a Coke,the cross elasticity value for Pepsi and Coke is

The demand for luxury suites at basketball games is more elastic if

If a product is narrowly defined,it is likely to

The total revenue test says i.Demand is elastic if a decrease in price results in an increase in total revenue. ii.Total revenue is maximized when demand is elastic. iii.Total revenue is minimized when demand is unit elastic.

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 good is a necessity,it has substitutes and its demand is .

If two goods are ,then an increase in the price of one leads to in the quantity demanded of the other.

If demand is ,a price cut the total revenue.