Question 1

The price elasticity of demand is the

Accepted Answer

A) percentage change in price divided by the percentage change in quantity demanded 
B) average change in price divided by the average change in quantity demanded 
C) percentage change in quantity demanded divided by the percentage change in price 
D) average change in price divided by the average change in quantity demanded. 
E) percentage change in quantity demanded divided by the average change in price. 
A) percentage change in price divided by the percentage change in quantity demanded 
B) average change in price divided by the average change in quantity demanded 
C) percentage change in quantity demanded divided by the percentage change in price 
D) average change in price divided by the average change in quantity demanded. 
E) percentage change in quantity demanded divided by the average change in price.

Question 2

For which of the following items is demand likely to be the most price elastic?

Accepted Answer

A) Tide liquid laundry detergent 
B) laundry detergent in general 
C) powdered laundry detergent 
D) liquid laundry detergent 
A) Tide liquid laundry detergent 
B) laundry detergent in general 
C) powdered laundry detergent 
D) liquid laundry detergent

Question 3

If the numerical value of the price elasticity of demand is 3,then a one-percent change in price will cause a(n)

Accepted Answer

A) larger percentage change in quantity demanded,so demand is elastic 
B) larger percentage change in quantity demanded,so demand is inelastic 
C) smaller percentage change in quantity demanded,so demand is elastic 
D) smaller percentage change in quantity demanded,so demand is inelastic 
E) equal percentage change in quantity demand,so demand is unitary elastic 
A) larger percentage change in quantity demanded,so demand is elastic 
B) larger percentage change in quantity demanded,so demand is inelastic 
C) smaller percentage change in quantity demanded,so demand is elastic 
D) smaller percentage change in quantity demanded,so demand is inelastic 
E) equal percentage change in quantity demand,so demand is unitary elastic

Question 4

-Figure 5-8 shows the demand schedule for hockey pucks.At which price is demand the least price elastic?

Accepted Answer

A) $1 
B) $2 
C) $3 
D) $4 
E) $5 
A) $1 
B) $2 
C) $3 
D) $4 
E) $5

Question 5

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 2.00.

Accepted Answer

A) True 
 B)False

Question 6

The price elasticity of demand is important to firms because

Accepted Answer

A) it explains the relationship between income and demand for the goods they sell 
B) it shows how price changes affect total expenditures on the goods they sell 
C) the law of demand suggests that elasticity falls as total expenditures continuously rises 
D) it helps identify the equilibrium price and quantity in the market 
E) it relates price to supply 
A) it explains the relationship between income and demand for the goods they sell 
B) it shows how price changes affect total expenditures on the goods they sell 
C) the law of demand suggests that elasticity falls as total expenditures continuously rises 
D) it helps identify the equilibrium price and quantity in the market 
E) it relates price to supply

Question 7

Suppose that the income elasticity of demand for fresh vegetables is 0.26.If buyers' incomes rise by 10 percent,then

Accepted Answer

A) the demand curve for fresh vegetables will shift to the left 
B) the quantity of fresh vegetables demanded will rise by 2.6 percent 
C) the quantity of fresh vegetables demanded will rise by 12.6 percent 
D) there will be a movement down and to the right on the demand curve for fresh vegetables 
E) there will be a movement up and to the left along the demand curve for fresh vegetables 
A) the demand curve for fresh vegetables will shift to the left 
B) the quantity of fresh vegetables demanded will rise by 2.6 percent 
C) the quantity of fresh vegetables demanded will rise by 12.6 percent 
D) there will be a movement down and to the right on the demand curve for fresh vegetables 
E) there will be a movement up and to the left along the demand curve for fresh vegetables

Question 8

The sign of the cross-price elasticity tells us whether two commodities are complements or substitutes,but the size of this elasticity measure tells us

Accepted Answer

A) how the supply side of the market reacts to changes in demand 
B) whether the government should regulate the two markets 
C) which technology producers use 
D) how closely the two goods are related 
E) whether or not excess profits can be made in either market 
A) how the supply side of the market reacts to changes in demand 
B) whether the government should regulate the two markets 
C) which technology producers use 
D) how closely the two goods are related 
E) whether or not excess profits can be made in either market

Question 9

If the income elasticity of demand is negative,this means that the good is

Accepted Answer

A) an inferior good 
B) sold at a lower than equilibrium price 
C) provided by a monopoly producer 
D) provided by competitive producers 
E) a normal good 
A) an inferior good 
B) sold at a lower than equilibrium price 
C) provided by a monopoly producer 
D) provided by competitive producers 
E) a normal good

Question 10

The income elasticity of demand measures

Accepted Answer

A) the relative certainty of future income 
B) how elastic supply is compared to demand 
C) the percent change in quantity demanded relative to the percent change in income 
D) the percent change in income relative to the percent change in quantity demanded 
E) how much income will stretch to make expected payments 
A) the relative certainty of future income 
B) how elastic supply is compared to demand 
C) the percent change in quantity demanded relative to the percent change in income 
D) the percent change in income relative to the percent change in quantity demanded 
E) how much income will stretch to make expected payments

Question 11

If the percentage change in quantity demanded is smaller (in absolute value)than the percentage change in price,then demand is

Accepted Answer

A) inelastic 
B) elastic 
C) unit elastic 
D) determined by supply 
E) inadequate compared to supply 
A) inelastic 
B) elastic 
C) unit elastic 
D) determined by supply 
E) inadequate compared to supply

Question 12

If the demand curve is a vertical line,then

Accepted Answer

A) demand is perfectly elastic 
B) demand is perfectly inelastic 
C) demand is unit elastic 
D) demand is determined by supply 
E) supply is a horizontal line 
A) demand is perfectly elastic 
B) demand is perfectly inelastic 
C) demand is unit elastic 
D) demand is determined by supply 
E) supply is a horizontal line

Question 13

An inferior good is defined by an income elasticity less than 1.

Accepted Answer

A) True 
 B)False

Question 14

The fact that travel on buses fell as incomes increased in many cities suggests that

Accepted Answer

A) bus travel is a normal good 
B) the law of demand does not apply to bus travel 
C) bus travel is an inferior good 
D) there are no good substitute goods for bus travel 
A) bus travel is a normal good 
B) the law of demand does not apply to bus travel 
C) bus travel is an inferior good 
D) there are no good substitute goods for bus travel

Question 15

-If demand for a good is represented by curve D in Figure 5-10,then an increase in supply of the good will cause

Accepted Answer

A) the equilibrium quantity to rise,but seller's total revenue to fall 
B) the equilibrium quantity to fall,but seller's total revenue to rise 
C) both the equilibrium quantity and seller's total revenue to fall 
D) the equilibrium quantity to rise,but seller's total revenue will not change 
E) both the equilibrium quantity and seller's total revenue to rise 
A) the equilibrium quantity to rise,but seller's total revenue to fall 
B) the equilibrium quantity to fall,but seller's total revenue to rise 
C) both the equilibrium quantity and seller's total revenue to fall 
D) the equilibrium quantity to rise,but seller's total revenue will not change 
E) both the equilibrium quantity and seller's total revenue to rise

Question 16

If the cross-price elasticity of demand is positive,then the

Accepted Answer

A) two goods are complements 
B) two goods are substitutes 
C) two goods have no relationship to each other 
D) price is below the equilibrium 
E) price is above the equilibrium 
A) two goods are complements 
B) two goods are substitutes 
C) two goods have no relationship to each other 
D) price is below the equilibrium 
E) price is above the equilibrium

Question 17

For a normal good,quantity demanded

Accepted Answer

A) increases as income rises,so the income elasticity of demand is positive 
B) increases as income rises,so the income elasticity of demand is negative 
C) falls as income rises,so the income elasticity of demand is positive 
D) falls as income rises,so the income elasticity of demand is negative 
E) remains unchanged as income rises,so the income elasticity of demand is zero 
A) increases as income rises,so the income elasticity of demand is positive 
B) increases as income rises,so the income elasticity of demand is negative 
C) falls as income rises,so the income elasticity of demand is positive 
D) falls as income rises,so the income elasticity of demand is negative 
E) remains unchanged as income rises,so the income elasticity of demand is zero

Question 18

If the elasticity of supply is much greater than the elasticity of demand,a subsidy awarded to demanders will

Accepted Answer

A) benefit the demanders more than the suppliers 
B) benefit the suppliers more than the demanders 
C) the benefit of the subsidy will be equally shared between the demanders and the suppliers 
D) allow the demanders to be the only ones who will benefit 
E) Without more information as to the amount of the subsidy,who will benefit more can not be determined 
A) benefit the demanders more than the suppliers 
B) benefit the suppliers more than the demanders 
C) the benefit of the subsidy will be equally shared between the demanders and the suppliers 
D) allow the demanders to be the only ones who will benefit 
E) Without more information as to the amount of the subsidy,who will benefit more can not be determined

Question 19

If the cross-price elasticity of demand between two goods is negative,then

Accepted Answer

A) the two goods are complements 
B) the two goods are substitutes 
C) as price of one good rises,the quantity demanded of the other good also rises 
D) one of the goods must be inferior 
E) the two goods are rarely used together by consumers 
A) the two goods are complements 
B) the two goods are substitutes 
C) as price of one good rises,the quantity demanded of the other good also rises 
D) one of the goods must be inferior 
E) the two goods are rarely used together by consumers

Question 20

-Figure 5-1 shows the prices of two services offered by Earl's Barber Shop and the resulting quantities demanded by customers.Suppose that the current price for a haircut is $20 and the current price for a manicure is $12,and Earl has a sale of $4 off the price of either a haircut or a manicure.In this example,

Accepted Answer

A) haircuts have the smaller absolute change in quantity demanded and the more elastic demand 
B) Earl can earn more revenue from manicures at the lower price 
C) Earl should decrease the number of spaces in his shop allocated to haircuts 
D) the demand for haircuts is unitary elastic 
E) the demand for haircuts is inelastic 
A) haircuts have the smaller absolute change in quantity demanded and the more elastic demand 
B) Earl can earn more revenue from manicures at the lower price 
C) Earl should decrease the number of spaces in his shop allocated to haircuts 
D) the demand for haircuts is unitary elastic 
E) the demand for haircuts is inelastic

The price elasticity of demand is the

For which of the following items is demand likely to be the most price elastic?

If the numerical value of the price elasticity of demand is 3,then a one-percent change in price will cause a(n)

-Figure 5-8 shows the demand schedule for hockey pucks.At which price is demand the least price elastic?

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 2.00.

The price elasticity of demand is important to firms because

Suppose that the income elasticity of demand for fresh vegetables is 0.26.If buyers' incomes rise by 10 percent,then

The sign of the cross-price elasticity tells us whether two commodities are complements or substitutes,but the size of this elasticity measure tells us

If the income elasticity of demand is negative,this means that the good is

The income elasticity of demand measures

If the percentage change in quantity demanded is smaller (in absolute value)than the percentage change in price,then demand is

If the demand curve is a vertical line,then

An inferior good is defined by an income elasticity less than 1.

The fact that travel on buses fell as incomes increased in many cities suggests that

-If demand for a good is represented by curve D in Figure 5-10,then an increase in supply of the good will cause

If the cross-price elasticity of demand is positive,then the

For a normal good,quantity demanded

If the elasticity of supply is much greater than the elasticity of demand,a subsidy awarded to demanders will

If the cross-price elasticity of demand between two goods is negative,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

The price elasticity of demand is the

For which of the following items is demand likely to be the most price elastic?

If the numerical value of the price elasticity of demand is 3,then a one-percent change in price will cause a(n)

-Figure 5-8 shows the demand schedule for hockey pucks.At which price is demand the least price elastic?

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 2.00.

The price elasticity of demand is important to firms because

Suppose that the income elasticity of demand for fresh vegetables is 0.26.If buyers' incomes rise by 10 percent,then

The sign of the cross-price elasticity tells us whether two commodities are complements or substitutes,but the size of this elasticity measure tells us

If the income elasticity of demand is negative,this means that the good is

The income elasticity of demand measures

If the percentage change in quantity demanded is smaller (in absolute value)than the percentage change in price,then demand is

If the demand curve is a vertical line,then

An inferior good is defined by an income elasticity less than 1.

The fact that travel on buses fell as incomes increased in many cities suggests that

-If demand for a good is represented by curve D in Figure 5-10,then an increase in supply of the good will cause

If the cross-price elasticity of demand is positive,then the

For a normal good,quantity demanded

If the elasticity of supply is much greater than the elasticity of demand,a subsidy awarded to demanders will

If the cross-price elasticity of demand between two goods is negative,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