Question 1

If a 10 percent price increase causes the quantity demanded for a good to decrease by 5 percent,demand is elastic.

Accepted Answer

A) True 
 B)False

Question 2

Exhibit 5-1 Demand curves
  
-In Exhibit 5-1,the demand curve between points a and b is:

Accepted Answer

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

Question 3

If the price of Pepsi-Cola increases from 40 cents to 50 cents per bottle and the quantity demanded decreases from 100 bottles to 50 bottles,then according to the averaging equation,the value of price elasticity of demand for Pepsi-Cola is:

Accepted Answer

A)  0.5. 
B)  0.25. 
C)  1. 
D)  3. 
E)  2. 
A)  0.5. 
B)  0.25. 
C)  1. 
D)  3. 
E)  2.

Question 4

Exhibit 5-3 Demand curves for gallons of orange juice
  
-Using Exhibit 5-3,whose elasticity of demand is greatest when the price falls from $7 to $6?

Accepted Answer

A)  Albert 
B)  Betty 
C)  Carl 
D)  Dana 
E)  Edward 
A)  Albert 
B)  Betty 
C)  Carl 
D)  Dana 
E)  Edward

Question 5

Suppose an oil company wants to make its total revenue as large as possible.It should charge a price at which the demand for oil is:

Accepted Answer

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

Question 6

Exhibit 5-6 Demand curve for concert tickets
  
-In Exhibit 5-6,the demand curve for concert tickets shown above is classified as:

Accepted Answer

A)  inelastic. 
B)  elastic. 
C)  unitary elastic. 
D)  cross elastic. 
A)  inelastic. 
B)  elastic. 
C)  unitary elastic. 
D)  cross elastic.

Question 7

A perfectly elastic demand curve has a price elasticity of demand coefficient of:

Accepted Answer

A)  zero. 
B)  1. 
C)  greater than 1, but less than infinity. 
D)  less than 1, but greater than zero. 
E)  infinity. 
A)  zero. 
B)  1. 
C)  greater than 1, but less than infinity. 
D)  less than 1, but greater than zero. 
E)  infinity.

Question 8

If the price elasticity of demand coefficient equals 2 then:

Accepted Answer

A)  a 7 percent decrease in the price will result in a 14 percent decrease in the quantity demanded. 
B)  a price decrease will increase total revenue. 
C)  the good has an inelastic demand. 
D)  there is likely few substitutes, a short time period under consideration, or this good accounts for a relatively small percentage of consumers' budgets. 
A)  a 7 percent decrease in the price will result in a 14 percent decrease in the quantity demanded. 
B)  a price decrease will increase total revenue. 
C)  the good has an inelastic demand. 
D)  there is likely few substitutes, a short time period under consideration, or this good accounts for a relatively small percentage of consumers' budgets.

Question 9

The price elasticity of demand for a particular good is influenced by which of the following factors?

Accepted Answer

A) b and c. 
B) The income of the buyers. 
C) The availability of substitutes. 
D) The level of competition among sellers. 
E) How many uses the good has. 
A) b and c. 
B) The income of the buyers. 
C) The availability of substitutes. 
D) The level of competition among sellers. 
E) How many uses the good has.

Question 10

If the price elasticity of demand for football tickets is estimated to be 4.5,then a 10 percent increase in football ticket prices would be expected to cause a:

Accepted Answer

A)  4.5 percent decrease in quantity demanded. 
B)  4.5 percent increase in quantity demanded. 
C)  45 percent decrease in quantity demanded. 
D)  45 percent increase in quantity demanded. 
E)  450 percent increase in quantity demanded 
A)  4.5 percent decrease in quantity demanded. 
B)  4.5 percent increase in quantity demanded. 
C)  45 percent decrease in quantity demanded. 
D)  45 percent increase in quantity demanded. 
E)  450 percent increase in quantity demanded

Question 11

You are on a campus committee which sets the ticket prices for basketball games.The committee wants to increase the total money generated from ticket sales.When should the committee choose to lower its ticket prices?

Accepted Answer

A)  Always. 
B)  Never. 
C)  When demand for basketball tickets is elastic. 
D)  When demand for basketball tickets is inelastic. 
A)  Always. 
B)  Never. 
C)  When demand for basketball tickets is elastic. 
D)  When demand for basketball tickets is inelastic.

Question 12

If the demand curve for a good is elastic,consumers will spend more on that good when its price increases.

Accepted Answer

A) True 
 B)False

Question 13

Using the midpoints formula,what would be price elasticity of demand for a gallbladder operation if the number of operations fell from 6,000 to 4,000 per week after its price increased from $6,000 to $10,000?

Accepted Answer

A)  0.25. 
B)  0.50. 
C)  0.80. 
D)  1.25 
A)  0.25. 
B)  0.50. 
C)  0.80. 
D)  1.25

Question 14

Exhibit 5-5 Demand curve for computers
  
-In Exhibit 5-5,the total revenue at point B on the demand curve equals:

Accepted Answer

A)  OA. 
B)  CB. 
C)  AB. 
D)  OABC. 
E)  None of the above. 
A)  OA. 
B)  CB. 
C)  AB. 
D)  OABC. 
E)  None of the above.

Question 15

As one moves down a straight-line,down-sloping demand curve,price elasticity will:

Accepted Answer

A)  change from elastic, to unit elastic, then to inelastic. 
B)  remain the same between any two points. 
C)  change from inelastic, to elastic, then to unit elastic. 
D)  change from unit elastic, to elastic, then to inelastic. 
E)  change from elastic, to inelastic, then to unit elastic. 
A)  change from elastic, to unit elastic, then to inelastic. 
B)  remain the same between any two points. 
C)  change from inelastic, to elastic, then to unit elastic. 
D)  change from unit elastic, to elastic, then to inelastic. 
E)  change from elastic, to inelastic, then to unit elastic.

Question 16

If a decrease in the price of movie tickets increases the total revenue of movie theaters,this is evidence that demand is:

Accepted Answer

A)  price elastic. 
B)  price inelastic. 
C)  unit elastic with respect to price. 
D)  perfectly inelastic. 
A)  price elastic. 
B)  price inelastic. 
C)  unit elastic with respect to price. 
D)  perfectly inelastic.

Question 17

The fewer the substitutes for a good the greater will be the value of the price elasticity of demand coefficient.

Accepted Answer

A) True 
 B)False

Question 18

If the quantity of concert tickets sold decreases by 10 percent when the price increases by 5 percent,the price elasticity of demand over this range of the demand curve is:

Accepted Answer

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

Question 19

Price elasticity of demand refers to the:

Accepted Answer

A)  percentage increase in price in response to a percentage increase in quantity demanded. 
B)  percentage decrease in price in response to a percentage increase in income. 
C)  minimum amount that consumers will pay for a percentage change in quantity demanded or supplied. 
D)  responsiveness of quantity demanded to a change in the price of a good. 
A)  percentage increase in price in response to a percentage increase in quantity demanded. 
B)  percentage decrease in price in response to a percentage increase in income. 
C)  minimum amount that consumers will pay for a percentage change in quantity demanded or supplied. 
D)  responsiveness of quantity demanded to a change in the price of a good.

Question 20

Price elasticity of demand refers to the ratio of the:

Accepted Answer

A)  percentage change in price of a good in response to a percentage change in quantity demanded. 
B)  percentage change in price of a good to a percentage increase in income. 
C)  percentage change in the quantity demanded of a good to a percentage change in its price. 
D)  none of the above. 
A)  percentage change in price of a good in response to a percentage change in quantity demanded. 
B)  percentage change in price of a good to a percentage increase in income. 
C)  percentage change in the quantity demanded of a good to a percentage change in its price. 
D)  none of the above.

Exam 5: Price Elasticity of Demand

If a 10 percent price increase causes the quantity demanded for a good to decrease by 5 percent,demand is elastic.

Exhibit 5-1 Demand curves -In Exhibit 5-1,the demand curve between points a and b is:

If the price of Pepsi-Cola increases from 40 cents to 50 cents per bottle and the quantity demanded decreases from 100 bottles to 50 bottles,then according to the averaging equation,the value of price elasticity of demand for Pepsi-Cola is:

Exhibit 5-3 Demand curves for gallons of orange juice -Using Exhibit 5-3,whose elasticity of demand is greatest when the price falls from $7 to $6?

Suppose an oil company wants to make its total revenue as large as possible.It should charge a price at which the demand for oil is:

Exhibit 5-6 Demand curve for concert tickets -In Exhibit 5-6,the demand curve for concert tickets shown above is classified as:

A perfectly elastic demand curve has a price elasticity of demand coefficient of:

If the price elasticity of demand coefficient equals 2 then:

The price elasticity of demand for a particular good is influenced by which of the following factors?

If the price elasticity of demand for football tickets is estimated to be 4.5,then a 10 percent increase in football ticket prices would be expected to cause a:

You are on a campus committee which sets the ticket prices for basketball games.The committee wants to increase the total money generated from ticket sales.When should the committee choose to lower its ticket prices?

If the demand curve for a good is elastic,consumers will spend more on that good when its price increases.

Using the midpoints formula,what would be price elasticity of demand for a gallbladder operation if the number of operations fell from 6,000 to 4,000 per week after its price increased from $6,000 to $10,000?

Exhibit 5-5 Demand curve for computers -In Exhibit 5-5,the total revenue at point B on the demand curve equals:

As one moves down a straight-line,down-sloping demand curve,price elasticity will:

If a decrease in the price of movie tickets increases the total revenue of movie theaters,this is evidence that demand is:

The fewer the substitutes for a good the greater will be the value of the price elasticity of demand coefficient.

If the quantity of concert tickets sold decreases by 10 percent when the price increases by 5 percent,the price elasticity of demand over this range of the demand curve is:

Price elasticity of demand refers to the:

Price elasticity of demand refers to the ratio of 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