Question 1

Along the elastic range of a demand curve,a decrease in price causes:

Accepted Answer

A)  no change in total revenue. 
B)  a decrease in total revenue. 
C)  an increase in total revenue. 
D)  an unpredictable change in total revenue. 
A)  no change in total revenue. 
B)  a decrease in total revenue. 
C)  an increase in total revenue. 
D)  an unpredictable change in total revenue.

Question 2

In the long run,price elasticities of demand are usually ____.

Accepted Answer

A)  less than they are in the short run because people can adjust 
B)  the same as they are in the short run because tastes don't change 
C)  greater than they are in the short run because prices rise over time 
D)  less than they are in the short run because real prices fall over time 
E)  greater than they are in the short run because consumers have time to adjust 
A)  less than they are in the short run because people can adjust 
B)  the same as they are in the short run because tastes don't change 
C)  greater than they are in the short run because prices rise over time 
D)  less than they are in the short run because real prices fall over time 
E)  greater than they are in the short run because consumers have time to adjust

Question 3

If the demand for a product is inelastic,then a price increase will result in a decrease in total revenue.

Accepted Answer

A) True 
 B)False

Question 4

Exhibit 5-1 Demand curves
  
-In Exhibit 5-1,between points b and c,the price elasticity of demand measures

Accepted Answer

A)  4.27. 
B)  1.5. 
C)  1.56. 
D)  0.636. 
E)  0.425. 
A)  4.27. 
B)  1.5. 
C)  1.56. 
D)  0.636. 
E)  0.425.

Question 5

Exhibit 5-2 Price and quantity demanded data
  
-The data in Exhibit 5-2 shows that price elasticity of demand is:

Accepted Answer

A)  increasing as the price decreases. 
B)  decreasing as the price increases. 
C)  increasing as the quantity increases. 
D)  decreasing as the quantity decreases. 
E)  decreasing as the quantity increases. 
A)  increasing as the price decreases. 
B)  decreasing as the price increases. 
C)  increasing as the quantity increases. 
D)  decreasing as the quantity decreases. 
E)  decreasing as the quantity increases.

Question 6

A horizontal demand curve indicates perfectly elastic demand.

Accepted Answer

A) True 
 B)False

Question 7

There is no change in total revenue when the demand curve for a good is:

Accepted Answer

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

Question 8

You are part of a local community theater group.It is the goal of the group to increase the amount of revenue earned through ticket sales.Mary says the obvious solution is to increase ticket prices.Is Mary correct?

Accepted Answer

A)  Mary is correct if the demand for tickets is price inelastic. 
B)  Mary is incorrect if the demand for tickets is price inelastic. 
C)  Mary is correct. The increase in ticket prices will always increase revenue. 
D)  Mary is incorrect. The increase in ticket prices will never increase revenue. 
E)  Mary is incorrect. The way to increase revenue is to decrease ticket prices. 
A)  Mary is correct if the demand for tickets is price inelastic. 
B)  Mary is incorrect if the demand for tickets is price inelastic. 
C)  Mary is correct. The increase in ticket prices will always increase revenue. 
D)  Mary is incorrect. The increase in ticket prices will never increase revenue. 
E)  Mary is incorrect. The way to increase revenue is to decrease ticket prices.

Question 9

If the managers of the bus system found that revenues increase when fares are raised,they would conclude that price elasticity demand for subway service is inelastic.

Accepted Answer

A) True 
 B)False

Question 10

Suppose an increase in symphony tickets prices reduces the total revenue.This is evidence that demand is:

Accepted Answer

A)  price elastic. 
B)  price inelastic. 
C)  unitary elastic. 
D)  perfectly elastic. 
A)  price elastic. 
B)  price inelastic. 
C)  unitary elastic. 
D)  perfectly elastic.

Question 11

If demand is inelastic,an increase in the price of a good will cause total revenue to:

Accepted Answer

A)  fall. 
B)  remain constant since the decrease in quantity sold is exactly offset by the price increase. 
C)  rise. 
D)  rise if it is a normal good and fall if it is an inferior good. 
A)  fall. 
B)  remain constant since the decrease in quantity sold is exactly offset by the price increase. 
C)  rise. 
D)  rise if it is a normal good and fall if it is an inferior good.

Question 12

A product would be more demand price elastic:

Accepted Answer

A)  the shorter the time the consumer has to adjust to price changes. 
B)  the lower the price of the good. 
C)  the fewer the number of good substitutes. 
D)  the less the essential nature of the good. 
E)  if the supply is more price elastic. 
A)  the shorter the time the consumer has to adjust to price changes. 
B)  the lower the price of the good. 
C)  the fewer the number of good substitutes. 
D)  the less the essential nature of the good. 
E)  if the supply is more price elastic.

Question 13

If a good has a price elasticity of demand coefficient less than one,then:

Accepted Answer

A)  this good has an elastic demand. 
B)  this good has an inelastic demand. 
C)  a 10 percent increase in the price will result in a greater than 10 percent decrease in the quantity demanded. 
D)  the demand curve will be vertical. 
A)  this good has an elastic demand. 
B)  this good has an inelastic demand. 
C)  a 10 percent increase in the price will result in a greater than 10 percent decrease in the quantity demanded. 
D)  the demand curve will be vertical.

Question 14

When demand is price inelastic:

Accepted Answer

A)  price and total revenue move in the same direction. 
B)  price and total revenue move in the opposite direction. 
C)  total revenue increases whether price goes up or down. 
D)  total revenue decreases whether price goes up or down. 
A)  price and total revenue move in the same direction. 
B)  price and total revenue move in the opposite direction. 
C)  total revenue increases whether price goes up or down. 
D)  total revenue decreases whether price goes up or down.

Question 15

In differentiating between the short- and long-run elasticities,when economists talk about short-run elasticities,

Accepted Answer

A) b and c. 
B) there is no need to mention short versus long run. 
C) the only issues are price and quantity. 
D) short-run elasticities are usually higher. 
E) short-run elasticities are usually lower. 
A) b and c. 
B) there is no need to mention short versus long run. 
C) the only issues are price and quantity. 
D) short-run elasticities are usually higher. 
E) short-run elasticities are usually lower.

Question 16

Which of the statements below does not describe a demand curve that is unit elastic?

Accepted Answer

A)  The percentage change in the quantity demanded = percentage change in product price. 
B)  An increase in product price will not change total revenue. 
C)  The price elasticity of demand equals one. 
D)  A change in price does not change quantity demanded. 
E)  A decrease in product price will not change total revenue. 
A)  The percentage change in the quantity demanded = percentage change in product price. 
B)  An increase in product price will not change total revenue. 
C)  The price elasticity of demand equals one. 
D)  A change in price does not change quantity demanded. 
E)  A decrease in product price will not change total revenue.

Question 17

The price elasticity of demand for a vertical demand curve is:

Accepted Answer

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

Question 18

Along the elastic range of a demand curve,a price change causes:

Accepted Answer

A)  a change in total revenue in the opposite direction. 
B)  a change in total revenue in the same direction. 
C)  no change in total revenue. 
D)  an unpredictable change in the total revenue. 
A)  a change in total revenue in the opposite direction. 
B)  a change in total revenue in the same direction. 
C)  no change in total revenue. 
D)  an unpredictable change in the total revenue.

Question 19

Over the elastic portion of a demand curve,a decrease in price causes:

Accepted Answer

A)  an increase in total revenue. 
B)  a decrease in total revenue. 
C)  no change in total revenue. 
D)  an increase in quantity demanded, but anything can happen to revenue. 
A)  an increase in total revenue. 
B)  a decrease in total revenue. 
C)  no change in total revenue. 
D)  an increase in quantity demanded, but anything can happen to revenue.

Question 20

Demand price elasticity is measured by the:

Accepted Answer

A)  percentage change in income / percentage change in price. 
B)  percentage change in quantity demanded / percentage change in income. 
C)  percentage change in price / percentage change in quantity demanded. 
D)  percentage change in quantity demanded / percent change in price. 
E)  percentage change in total revenue / percentage change in price. 
A)  percentage change in income / percentage change in price. 
B)  percentage change in quantity demanded / percentage change in income. 
C)  percentage change in price / percentage change in quantity demanded. 
D)  percentage change in quantity demanded / percent change in price. 
E)  percentage change in total revenue / percentage change in price.

Exam 5: Price Elasticity of Demand

Along the elastic range of a demand curve,a decrease in price causes:

In the long run,price elasticities of demand are usually ____.

If the demand for a product is inelastic,then a price increase will result in a decrease in total revenue.

Exhibit 5-1 Demand curves -In Exhibit 5-1,between points b and c,the price elasticity of demand measures

Exhibit 5-2 Price and quantity demanded data -The data in Exhibit 5-2 shows that price elasticity of demand is:

A horizontal demand curve indicates perfectly elastic demand.

There is no change in total revenue when the demand curve for a good is:

You are part of a local community theater group.It is the goal of the group to increase the amount of revenue earned through ticket sales.Mary says the obvious solution is to increase ticket prices.Is Mary correct?

If the managers of the bus system found that revenues increase when fares are raised,they would conclude that price elasticity demand for subway service is inelastic.

Suppose an increase in symphony tickets prices reduces the total revenue.This is evidence that demand is:

If demand is inelastic,an increase in the price of a good will cause total revenue to:

A product would be more demand price elastic:

If a good has a price elasticity of demand coefficient less than one,then:

When demand is price inelastic:

In differentiating between the short- and long-run elasticities,when economists talk about short-run elasticities,

Which of the statements below does not describe a demand curve that is unit elastic?

The price elasticity of demand for a vertical demand curve is:

Along the elastic range of a demand curve,a price change causes:

Over the elastic portion of a demand curve,a decrease in price causes:

Demand price elasticity is measured by the:

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 1: Market Demand and Supply

Part 2: Market Demand and Supply

Markets in Action

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

A: Appendix: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters