Question 1

If the prices of computer tablets rise, we would expect the number of tablet covers purchased to

Accepted Answer

A)  increase. 
B)  decrease. 
C)  be equal to ten. 
D)  be equal to one. 
A)  increase. 
B)  decrease. 
C)  be equal to ten. 
D)  be equal to one.

Question 2

If total revenues decline when the market clearing price increases, then we know that

Accepted Answer

A)  demand is inelastic. 
B)  demand is elastic. 
C)  demand is unit-elastic. 
D)  demand has zero elasticity. 
A)  demand is inelastic. 
B)  demand is elastic. 
C)  demand is unit-elastic. 
D)  demand has zero elasticity.

Question 3

The price elasticity of demand along a vertical demand curve is

Accepted Answer

A)  elastic at high prices and inelastic at low prices. 
B)  infinite. 
C)  one. 
D)  zero. 
A)  elastic at high prices and inelastic at low prices. 
B)  infinite. 
C)  one. 
D)  zero.

Question 4

If the price of a cola increased by 12 % and consumers responded by purchasing 20 % less cola, the absolute value of price elasticity of demand for cola would be

Accepted Answer

A)  0.20. 
B)  0.80. 
C)  1.67. 
D)  1.80. 
A)  0.20. 
B)  0.80. 
C)  1.67. 
D)  1.80.

Question 5

-Refer to the above table. For which prices is demand elastic?

Accepted Answer

A)  In a range of prices below $6.50 
B)  In a range of prices above $6.50 
C)  In a range of prices between $5 and $10 
D)  In a range of prices above $9.00 
A)  In a range of prices below $6.50 
B)  In a range of prices above $6.50 
C)  In a range of prices between $5 and $10 
D)  In a range of prices above $9.00

Question 6

No matter what the price of coffee is in the cafeteria, Jack spends $20 a week on coffee. We can conclude that the absolute value of the price elasticity of demand for coffee for Jack is

Accepted Answer

A)  greater than 1. 
B)  equal to 1. 
C)  less than 1. 
D)  equal to 0. 
A)  greater than 1. 
B)  equal to 1. 
C)  less than 1. 
D)  equal to 0.

Question 7

For which of the following purchases would the absolute price elasticity of demand be smallest?

Accepted Answer

A)  A sports car 
B)  Utilities 
C)  Chewing gum 
D)  A cell phone 
A)  A sports car 
B)  Utilities 
C)  Chewing gum 
D)  A cell phone

Question 8

If the government places a $0.50 tax on an item for which demand is perfectly elastic

Accepted Answer

A)  the entire tax will be paid by the consumer. 
B)  the tax will be split equally between the consumer and producer, with each paying exactly $0.25. 
C)  most of the tax will be paid by the consumer. 
D)  the entire tax will be paid by the producer. 
A)  the entire tax will be paid by the consumer. 
B)  the tax will be split equally between the consumer and producer, with each paying exactly $0.25. 
C)  most of the tax will be paid by the consumer. 
D)  the entire tax will be paid by the producer.

Question 9

When two goods are complements,

Accepted Answer

A)  the demands for both goods will be elastic. 
B)  cross price elasticity of demand will be 0. 
C)  cross price elasticity of demand will be negative. 
D)  cross price elasticity of demand will be positive. 
A)  the demands for both goods will be elastic. 
B)  cross price elasticity of demand will be 0. 
C)  cross price elasticity of demand will be negative. 
D)  cross price elasticity of demand will be positive.

Question 10

When economists want to obtain a measure of the responsiveness of quantity demanded to changes in price, they use

Accepted Answer

A)  the slope of the demand curve. 
B)  the price elasticity of demand. 
C)  only the percentage change in quantity demanded. 
D)  the cross-price elasticity of demand. 
A)  the slope of the demand curve. 
B)  the price elasticity of demand. 
C)  only the percentage change in quantity demanded. 
D)  the cross-price elasticity of demand.

Question 11

Suppose the demand for rental apartments decreased substantially. We would expect to observe

Accepted Answer

A)  no change in rent and a sharp reduction in quantity supplied in the short run, and an even larger decrease in quantity supplied in the long run. 
B)  a large decrease in quantity supplied in the short run, followed by a counter-reaction and an increase in quantity supplied in the long run. 
C)  a small decrease in quantity supplied and significantly lower rents in the short run, and quantity supplied to decrease much more in the long run. 
D)  a large decrease in quantity supplied in the short run and the long run, but much larger reductions in rent in the long run. 
A)  no change in rent and a sharp reduction in quantity supplied in the short run, and an even larger decrease in quantity supplied in the long run. 
B)  a large decrease in quantity supplied in the short run, followed by a counter-reaction and an increase in quantity supplied in the long run. 
C)  a small decrease in quantity supplied and significantly lower rents in the short run, and quantity supplied to decrease much more in the long run. 
D)  a large decrease in quantity supplied in the short run and the long run, but much larger reductions in rent in the long run.

Question 12

A value of the absolute price elasticity of demand equal to 0.6 indicates that

Accepted Answer

A)  a 6 percent increase in price leads to a 10 percent decrease in quantity demanded. 
B)  a 10 percent increase in price leads to a 6 percent decrease in quantity demanded. 
C)  a 0.6 percent increase in price leads to a 1 percent decrease in quantity demanded. 
D)  a 1 percent increase in price leads to a 6 percent decrease in quantity demanded. 
A)  a 6 percent increase in price leads to a 10 percent decrease in quantity demanded. 
B)  a 10 percent increase in price leads to a 6 percent decrease in quantity demanded. 
C)  a 0.6 percent increase in price leads to a 1 percent decrease in quantity demanded. 
D)  a 1 percent increase in price leads to a 6 percent decrease in quantity demanded.

Question 13

Why is elasticity of demand greater for goods that are a large share of a consumer's budget?

Accepted Answer

The greater the share of a consumer's bu

Exam 19: Demand and Supply Elasticity

If the prices of computer tablets rise, we would expect the number of tablet covers purchased to

If total revenues decline when the market clearing price increases, then we know that

The price elasticity of demand along a vertical demand curve is

If the price of a cola increased by 12 % and consumers responded by purchasing 20 % less cola, the absolute value of price elasticity of demand for cola would be

-Refer to the above table. For which prices is demand elastic?

No matter what the price of coffee is in the cafeteria, Jack spends $20 a week on coffee. We can conclude that the absolute value of the price elasticity of demand for coffee for Jack is

For which of the following purchases would the absolute price elasticity of demand be smallest?

If the government places a $0.50 tax on an item for which demand is perfectly elastic

When two goods are complements,

When economists want to obtain a measure of the responsiveness of quantity demanded to changes in price, they use

Suppose the demand for rental apartments decreased substantially. We would expect to observe

A value of the absolute price elasticity of demand equal to 0.6 indicates that

Why is elasticity of demand greater for goods that are a large share of a consumer's budget?

The Nature of Economics

Scarcity and the World of Trade-Offs

Demand and Supply

Extensions of Demand and Supply Analysis

Public Spending and Public Choice

Funding the Public Sector

The Macroeconomy: Unemployment, Inflation, and Deflation

Measuring the Economys Performance

Global Economic Growth and Development

Real GDP and the Price Level in the Long Run

Classical and Keynesian Macro Analyses

Consumption, Real GDP, and the Multiplier

Fiscal Policy

Deficit Spending and the Public Debt

Money, Banking, and Central Banking

Domestic and International Dimensions of Monetary Policy

Stabilization in an Integrated World Economy

Policies and Prospects for Global Economic Growth

Consumer Choice

Rents, Profits, and the Financial Environment of Business

The Firm: Cost and Output Determination

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly and Strategic Behavior

Regulation and Antitrust Policy in a Globalized Economy

The Labor Market: Demand, Supply and Outsourcing

Unions and Labor Market Monopoly Power

Income, Poverty, and Health Care

Environmental Economics

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

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