Question 1

Which of the following goods is likely to have the most elastic demand over the relevant range of prices?

Accepted Answer

A) insulin 
B) eggs 
C) milk 
D) Pepsi Cola 
E) gasoline 
A) insulin 
B) eggs 
C) milk 
D) Pepsi Cola 
E) gasoline

Question 2

Figure 5-2
  
-In Figure 5-2,compare demand curve D between points F and G to demand curve D' between points J and K.Which of the following statements is correct?

Accepted Answer

A) Both demand curves have the same slope,but D' is more elastic in the $2 to $3 range. 
B) Both demand curves have the same slope,but D' is less elastic in the $2 to $3 range. 
C) Both demand curves have the same price elasticity of demand,but D' has a larger slope. 
D) Both demand curves have the same price elasticity of demand,but D' has a smaller slope. 
E) Both demand curves have the same slope and the same value for the price elasticity of demand. 
A) Both demand curves have the same slope,but D' is more elastic in the $2 to $3 range. 
B) Both demand curves have the same slope,but D' is less elastic in the $2 to $3 range. 
C) Both demand curves have the same price elasticity of demand,but D' has a larger slope. 
D) Both demand curves have the same price elasticity of demand,but D' has a smaller slope. 
E) Both demand curves have the same slope and the same value for the price elasticity of demand.

Question 3

If the income elasticity of demand for a good is 0.5,then

Accepted Answer

A) it is a normal good,and its demand curve will shift to the left if buyers' incomes increase 
B) it is a normal good,and its demand curve will shift to the right if buyers' incomes increase 
C) it is an inferior good,and its demand curve will shift to the right if buyers' incomes increase 
D) it is an inferior good,and its demand curve will shift to the left if buyers' incomes increase 
E) there is insufficient information to determine whether the good is normal or inferior 
A) it is a normal good,and its demand curve will shift to the left if buyers' incomes increase 
B) it is a normal good,and its demand curve will shift to the right if buyers' incomes increase 
C) it is an inferior good,and its demand curve will shift to the right if buyers' incomes increase 
D) it is an inferior good,and its demand curve will shift to the left if buyers' incomes increase 
E) there is insufficient information to determine whether the good is normal or inferior

Question 4

If a 10 percent rise in the price of bananas leads to a 20 percent reduction in the quantity of bananas demanded,then the price elasticity of demand is 0.50.

Accepted Answer

A) True 
 B)False

Question 5

A perfectly elastic supply curve

Accepted Answer

A) has an elasticity of 1 
B) has an elasticity less than 1 
C) has an elasticity of 0 
D) is horizontal 
E) is upward sloping 
A) has an elasticity of 1 
B) has an elasticity less than 1 
C) has an elasticity of 0 
D) is horizontal 
E) is upward sloping

Question 6

If the elasticity of demand is much greater than the elasticity of supply,an excise tax levied on the suppliers will

Accepted Answer

A) cause the suppliers to incur a greater burden of the tax than demanders 
B) cause the demanders to incur a greater burden of the tax than suppliers 
C) the burden of the tax will be shared equally between the suppliers and the demanders 
D) cause the entire burden of the tax to rest on the demanders 
E) Without more information as to the amount of the excise tax,who will incur a greater burden will be unclear 
A) cause the suppliers to incur a greater burden of the tax than demanders 
B) cause the demanders to incur a greater burden of the tax than suppliers 
C) the burden of the tax will be shared equally between the suppliers and the demanders 
D) cause the entire burden of the tax to rest on the demanders 
E) Without more information as to the amount of the excise tax,who will incur a greater burden will be unclear

Question 7

After John's income rose by 8 percent,the amount of chicken he consumed fell by 2 percent.This means that

Accepted Answer

A) his income elasticity for chicken is positive 
B) chicken is a normal good for John 
C) his demand curve for chicken shifted to the left 
D) his demand curve for chicken shifted to the right 
E) John is spending more of his income on chicken than before 
A) his income elasticity for chicken is positive 
B) chicken is a normal good for John 
C) his demand curve for chicken shifted to the left 
D) his demand curve for chicken shifted to the right 
E) John is spending more of his income on chicken than before

Question 8

Suppose that when the price of aspirin rises from $2 to $3 per bottle,the quantity demanded falls from 800 bottles per day to 700 bottles per day.Over this range,the demand for aspirin is

Accepted Answer

A) elastic 
B) unitary elastic 
C) perfectly elastic 
D) inelastic 
E) perfectly inelastic 
A) elastic 
B) unitary elastic 
C) perfectly elastic 
D) inelastic 
E) perfectly inelastic

Question 9

If the percentage change in quantity demanded divided by the percentage change in price equals 1,then

Accepted Answer

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

Question 10

If the demand curve is a straight line with a negative slope,then demand is more elastic at higher prices than lower prices.

Accepted Answer

A) True 
 B)False

Question 11

If the elasticity of supply is much greater than the elasticity of demand,an excise tax levied on the suppliers will

Accepted Answer

A) cause the suppliers to incur a greater burden of the tax than demanders 
B) cause the demanders to incur a greater burden of the tax than suppliers 
C) the burden of the tax will be shared equally between the suppliers and the demanders 
D) cause the entire burden of the tax to rest on the demanders 
E) Without more information as to the amount of the excise tax,who will incur a greater burden will be unclear 
A) cause the suppliers to incur a greater burden of the tax than demanders 
B) cause the demanders to incur a greater burden of the tax than suppliers 
C) the burden of the tax will be shared equally between the suppliers and the demanders 
D) cause the entire burden of the tax to rest on the demanders 
E) Without more information as to the amount of the excise tax,who will incur a greater burden will be unclear

Question 12

The cross-price elasticity of demand measures

Accepted Answer

A) how the quantity demanded of one good changes along with income 
B) the slope of the demand curve 
C) the slope of the supply curve at the point of equilibrium 
D) the responsiveness of the quantity demanded of one good to changes in the price of another good 
E) how responsive changes in price are to changes in quantity demanded 
A) how the quantity demanded of one good changes along with income 
B) the slope of the demand curve 
C) the slope of the supply curve at the point of equilibrium 
D) the responsiveness of the quantity demanded of one good to changes in the price of another good 
E) how responsive changes in price are to changes in quantity demanded

Question 13

If demand is perfectly inelastic,a decrease in price results in a(n)

Accepted Answer

A) decrease in seller's total revenue 
B) increase in total seller's expenditure 
C) increase in expenditure on the good,but a decrease in revenue to the seller 
D) unfavorable shift in tastes and preferences 
E) increase in total revenue to the seller 
A) decrease in seller's total revenue 
B) increase in total seller's expenditure 
C) increase in expenditure on the good,but a decrease in revenue to the seller 
D) unfavorable shift in tastes and preferences 
E) increase in total revenue to the seller

Question 14

-Figure 5-4 shows the demand schedule for hockey pucks.What is the price elasticity of demand when the price changes from $4 per puck to $5 per puck?

Accepted Answer

A) 0.33 
B) 1.00 
C) 1.15 
D) 3.00 
E) none of these 
A) 0.33 
B) 1.00 
C) 1.15 
D) 3.00 
E) none of these

Question 15

Generally,as goods are more broadly defined,

Accepted Answer

A) demand becomes more price elastic 
B) demand becomes less price elastic 
C) total expenditure falls as the price decreases 
D) the demand curve becomes straighter 
E) more substitute goods can be identified 
A) demand becomes more price elastic 
B) demand becomes less price elastic 
C) total expenditure falls as the price decreases 
D) the demand curve becomes straighter 
E) more substitute goods can be identified

Question 16

-In Figure 5-5,the slope of the demand curve

Accepted Answer

A) has a constant value of -2 
B) is higher between points T and U than between points V and W 
C) is lower between points T and U than between points V and W 
D) matches the value of the price elasticity of demand at each point 
E) is lower than the value of the price elasticity of demand at every point 
A) has a constant value of -2 
B) is higher between points T and U than between points V and W 
C) is lower between points T and U than between points V and W 
D) matches the value of the price elasticity of demand at each point 
E) is lower than the value of the price elasticity of demand at every point

Question 17

The price elasticity of demand is usually equal to the slope of the demand curve.

Accepted Answer

A) True 
 B)False

Question 18

If demand is price elastic,a decrease in seller's total revenue would result from a(n)

Accepted Answer

A) decrease in price 
B) increase in quantity demanded 
C) increase in price 
D) decrease in income for an inferior good 
E) increase in total cost to the seller 
A) decrease in price 
B) increase in quantity demanded 
C) increase in price 
D) decrease in income for an inferior good 
E) increase in total cost to the seller

Question 19

Daniel's consumption of pizzas drops from 6 per week to 4 per week when the price rises from $9 to $11.His price elasticity of demand for pizza equals

Accepted Answer

A) 0.5 
B) 1 
C) 2 
D) 0.08 
E) 1.7 
A) 0.5 
B) 1 
C) 2 
D) 0.08 
E) 1.7

Question 20

If demand is elastic,then

Accepted Answer

A) the percentage change in quantity demanded is larger in absolute value than the percentage change in price 
B) supply is inelastic 
C) prices can neither rise nor fall 
D) the percentage change in quantity demanded is smaller in absolute value than the percentage change in price 
E) supply is elastic 
A) the percentage change in quantity demanded is larger in absolute value than the percentage change in price 
B) supply is inelastic 
C) prices can neither rise nor fall 
D) the percentage change in quantity demanded is smaller in absolute value than the percentage change in price 
E) supply is elastic

Which of the following goods is likely to have the most elastic demand over the relevant range of prices?

Figure 5-2 -In Figure 5-2,compare demand curve D between points F and G to demand curve D' between points J and K.Which of the following statements is correct?

If the income elasticity of demand for a good is 0.5,then

If a 10 percent rise in the price of bananas leads to a 20 percent reduction in the quantity of bananas demanded,then the price elasticity of demand is 0.50.

A perfectly elastic supply curve

If the elasticity of demand is much greater than the elasticity of supply,an excise tax levied on the suppliers will

After John's income rose by 8 percent,the amount of chicken he consumed fell by 2 percent.This means that

Suppose that when the price of aspirin rises from $2 to $3 per bottle,the quantity demanded falls from 800 bottles per day to 700 bottles per day.Over this range,the demand for aspirin is

If the percentage change in quantity demanded divided by the percentage change in price equals 1,then

If the demand curve is a straight line with a negative slope,then demand is more elastic at higher prices than lower prices.

If the elasticity of supply is much greater than the elasticity of demand,an excise tax levied on the suppliers will

The cross-price elasticity of demand measures

If demand is perfectly inelastic,a decrease in price results in a(n)

-Figure 5-4 shows the demand schedule for hockey pucks.What is the price elasticity of demand when the price changes from $4 per puck to $5 per puck?

Generally,as goods are more broadly defined,

-In Figure 5-5,the slope of the demand curve

The price elasticity of demand is usually equal to the slope of the demand curve.

If demand is price elastic,a decrease in seller's total revenue would result from a(n)

Daniel's consumption of pizzas drops from 6 per week to 4 per week when the price rises from $9 to $11.His price elasticity of demand for pizza equals

If demand is elastic,then

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters

Exam 5: Elasticity

Which of the following goods is likely to have the most elastic demand over the relevant range of prices?

Figure 5-2 -In Figure 5-2,compare demand curve D between points F and G to demand curve D' between points J and K.Which of the following statements is correct?

If the income elasticity of demand for a good is 0.5,then

If a 10 percent rise in the price of bananas leads to a 20 percent reduction in the quantity of bananas demanded,then the price elasticity of demand is 0.50.

A perfectly elastic supply curve

If the elasticity of demand is much greater than the elasticity of supply,an excise tax levied on the suppliers will

After John's income rose by 8 percent,the amount of chicken he consumed fell by 2 percent.This means that

Suppose that when the price of aspirin rises from $2 to $3 per bottle,the quantity demanded falls from 800 bottles per day to 700 bottles per day.Over this range,the demand for aspirin is

If the percentage change in quantity demanded divided by the percentage change in price equals 1,then

If the demand curve is a straight line with a negative slope,then demand is more elastic at higher prices than lower prices.

If the elasticity of supply is much greater than the elasticity of demand,an excise tax levied on the suppliers will

The cross-price elasticity of demand measures

If demand is perfectly inelastic,a decrease in price results in a(n)

-Figure 5-4 shows the demand schedule for hockey pucks.What is the price elasticity of demand when the price changes from $4 per puck to $5 per puck?

Generally,as goods are more broadly defined,

-In Figure 5-5,the slope of the demand curve

The price elasticity of demand is usually equal to the slope of the demand curve.

If demand is price elastic,a decrease in seller's total revenue would result from a(n)

Daniel's consumption of pizzas drops from 6 per week to 4 per week when the price rises from $9 to $11.His price elasticity of demand for pizza equals

If demand is elastic,then

What Is Economics

Scarcity, choice, and Economic Systems

Supply and Demand

Working With Supply and Demand

Consumer Choice

Production and Cost

How Firms Make Decisions: Profit Maximization

Perfect Competition

B:Perfect Competition

Monopolistic Competition and Oligopoly

Monopoly

Labor Markets

B: Labor Markets

Capital and Financial Markets

Economic Efficiency and the Competitive Ideal

Governments Role in Economic Efficiency

Comparative Advantage and the Gains From International Trade

Filters