Question 1

Answer the question on the basis of the following demand schedule: $\begin{array}{l}
\begin{array}{ccc}
&\text { Quantity }\
\underline{\text { Price} } &  \underline{\text { Demanded}} \
\$6 & 1 \
5 &  2 \
4 &  3 \
3 &  4 \
2 &  5 \
1 &  6
\end{array}
\end{array}$ Refer to the data.The price elasticity of demand is relatively elastic:

Accepted Answer

A)  in the $6-$4 price range. 
B)  over the entire $6-$1 price range. 
C)  in the $3-$1 price range. 
D)  in the $6-$5 price range only. 
A)  in the $6-$4 price range. 
B)  over the entire $6-$1 price range. 
C)  in the $3-$1 price range. 
D)  in the $6-$5 price range only.

Question 2

The total revenue test for elasticity:

Accepted Answer

A)  is equally applicable to both demand and supply. 
B)  does not apply to demand because price and quantity are inversely related. 
C)  does not apply to supply because price and total revenue always move together. 
D)  applies to the short-run supply curve but not to the long-run supply curve. 
A)  is equally applicable to both demand and supply. 
B)  does not apply to demand because price and quantity are inversely related. 
C)  does not apply to supply because price and total revenue always move together. 
D)  applies to the short-run supply curve but not to the long-run supply curve.

Question 3

If the coefficient of income elasticity of demand is positive,the product is an inferior good.

Accepted Answer

A) True 
 B)False

Question 4

Answer the question on the basis of the following demand schedule: $\begin{array}{l}
\begin{array}{ccc}
&\text { Quantity }\
\underline{\text { Price} } &  \underline{\text { Demanded}} \
 \$6 & 1 \
5 &  2 \
4 &  3 \
3 &  4 \
2 &  5 \
1 &  6
\end{array}
\end{array}$ Refer to the data.If this demand schedule were graphed,we would find that:

Accepted Answer

A)  its slope diminishes as we move southeast down the curve. 
B)  its slope diminishes as we move northwest up the curve. 
C)  its slope is constant throughout. 
D)  the data are inconsistent with the law of demand. 
A)  its slope diminishes as we move southeast down the curve. 
B)  its slope diminishes as we move northwest up the curve. 
C)  its slope is constant throughout. 
D)  the data are inconsistent with the law of demand.

Question 5

The demand for a product is inelastic with respect to price if:

Accepted Answer

A)  consumers are largely unresponsive to a per unit price change. 
B)  the elasticity coefficient is greater than 1. 
C)  a drop in price is accompanied by a decrease in the quantity demanded. 
D)  a drop in price is accompanied by an increase in the quantity demanded. 
A)  consumers are largely unresponsive to a per unit price change. 
B)  the elasticity coefficient is greater than 1. 
C)  a drop in price is accompanied by a decrease in the quantity demanded. 
D)  a drop in price is accompanied by an increase in the quantity demanded.

Question 6

The narrower the definition of a product:

Accepted Answer

A)  the larger the number of substitutes and the greater the price elasticity of demand. 
B)  the smaller the number of substitutes and the greater the price elasticity of demand. 
C)  the larger the number of substitutes and the smaller the price elasticity of demand. 
D)  the smaller the number of substitutes and the smaller the price elasticity of demand. 
A)  the larger the number of substitutes and the greater the price elasticity of demand. 
B)  the smaller the number of substitutes and the greater the price elasticity of demand. 
C)  the larger the number of substitutes and the smaller the price elasticity of demand. 
D)  the smaller the number of substitutes and the smaller the price elasticity of demand.

Question 7

Suppose that a 10 percent increase in the price of normal good Y causes a 20 percent increase in the quantity demanded of normal good X.The coefficient of cross elasticity of demand is:

Accepted Answer

A)  negative and therefore these goods are substitutes. 
B)  negative and therefore these goods are complements. 
C)  positive and therefore these goods are substitutes. 
D)  positive and therefore these goods are complements. 
A)  negative and therefore these goods are substitutes. 
B)  negative and therefore these goods are complements. 
C)  positive and therefore these goods are substitutes. 
D)  positive and therefore these goods are complements.

Question 8

If a firm can sell 3,000 units of product A at $10 per unit and 5,000 at $8,then:

Accepted Answer

A)  the price elasticity of demand is 0.44. 
B)  A is a complementary good. 
C)  the price elasticity of demand is 2.25. 
D)  A is an inferior good. 
A)  the price elasticity of demand is 0.44. 
B)  A is a complementary good. 
C)  the price elasticity of demand is 2.25. 
D)  A is an inferior good.

Question 9

A perfectly inelastic demand curve:

Accepted Answer

A)  has a price elasticity coefficient greater than unity. 
B)  has a price elasticity coefficient of unity throughout. 
C)  graphs as a line parallel to the vertical axis. 
D)  graphs as a line parallel to the horizontal axis. 
A)  has a price elasticity coefficient greater than unity. 
B)  has a price elasticity coefficient of unity throughout. 
C)  graphs as a line parallel to the vertical axis. 
D)  graphs as a line parallel to the horizontal axis.

Question 10

If the demand for bacon is relatively elastic,a 10 percent decline in the price of bacon will:

Accepted Answer

A)  decrease the amount demanded by more than 10 percent. 
B)  increase the amount demanded by more than 10 percent. 
C)  decrease the amount demanded by less than 10 percent. 
D)  increase the amount demanded by less than 10 percent. 
A)  decrease the amount demanded by more than 10 percent. 
B)  increase the amount demanded by more than 10 percent. 
C)  decrease the amount demanded by less than 10 percent. 
D)  increase the amount demanded by less than 10 percent.

Question 11

It takes a considerable amount of time to increase the production of pork.This implies that:

Accepted Answer

A)  a change in the demand for pork will not affect its price in the short run. 
B)  the short-run supply curve for pork is less elastic than the long-run supply curve for pork. 
C)  an increase in the demand for pork will elicit a larger supply response in the short run than in the long run. 
D)  the long-run supply curve for pork is less elastic than the short-run supply curve for pork. 
A)  a change in the demand for pork will not affect its price in the short run. 
B)  the short-run supply curve for pork is less elastic than the long-run supply curve for pork. 
C)  an increase in the demand for pork will elicit a larger supply response in the short run than in the long run. 
D)  the long-run supply curve for pork is less elastic than the short-run supply curve for pork.

Question 12

In which price range of the accompanying demand schedule is demand elastic? $\begin{array}{l}
\begin{array} { c c c } 
&\text { Quantity }\
\underline{\text { Price }} & \underline{\text { Demanded} } \
 3 & 2 \
3 & 4 \
2 &  6 \
1 &  8
\end{array}
\end{array}$

Accepted Answer

A)  $4-$3. 
B)  $3-$2. 
C)  $2-$1. 
D)  Below $1. 
A)  $4-$3. 
B)  $3-$2. 
C)  $2-$1. 
D)  Below $1.

Question 13

We would expect the coefficient of cross elasticity of demand for DVD players and DVDs to be positive.

Accepted Answer

A) True 
 B)False

Question 14

Farmers often find that large bumper crops are associated with declines in their gross incomes.This suggests that:

Accepted Answer

A)  farm products are normal goods. 
B)  farm products are inferior goods. 
C)  the price elasticity of demand for farm products is less than 1. 
D)  the price elasticity of demand for farm products is greater than 1. 
A)  farm products are normal goods. 
B)  farm products are inferior goods. 
C)  the price elasticity of demand for farm products is less than 1. 
D)  the price elasticity of demand for farm products is greater than 1.

Question 15

If the supply of product X is perfectly elastic,an increase in the demand for it will increase:

Accepted Answer

A)  equilibrium quantity but reduce equilibrium price. 
B)  equilibrium quantity,but equilibrium price will be unchanged. 
C)  equilibrium price but reduce equilibrium quantity. 
D)  equilibrium price,but equilibrium quantity will be unchanged. 
A)  equilibrium quantity but reduce equilibrium price. 
B)  equilibrium quantity,but equilibrium price will be unchanged. 
C)  equilibrium price but reduce equilibrium quantity. 
D)  equilibrium price,but equilibrium quantity will be unchanged.

Question 16

The price elasticity of demand of a straight-line demand curve is:

Accepted Answer

A)  elastic in high-price ranges and inelastic in low-price ranges. 
B)  elastic but does not change at various points on the curve. 
C)  inelastic but does not change at various points on the curve. 
D)  1 at all points on the curve. 
A)  elastic in high-price ranges and inelastic in low-price ranges. 
B)  elastic but does not change at various points on the curve. 
C)  inelastic but does not change at various points on the curve. 
D)  1 at all points on the curve.

Question 17

An increase in demand will increase equilibrium price to a greater extent:

Accepted Answer

A)  if the product is a normal good. 
B)  if the product is an inferior good. 
C)  the less elastic the supply curve. 
D)  the more elastic the supply curve. 
A)  if the product is a normal good. 
B)  if the product is an inferior good. 
C)  the less elastic the supply curve. 
D)  the more elastic the supply curve.

Question 18

The price elasticity of demand for widgets is 0.80.Assuming no change in the demand curve for widgets,a 16 percent increase in sales implies a:

Accepted Answer

A)  1 percent reduction in price. 
B)  12 percent reduction in price. 
C)  40 percent reduction in price. 
D)  20 percent reduction in price. 
A)  1 percent reduction in price. 
B)  12 percent reduction in price. 
C)  40 percent reduction in price. 
D)  20 percent reduction in price.

Question 19

The main determinant of elasticity of supply is the:

Accepted Answer

A)  number of close substitutes for the product available to consumers. 
B)  amount of time the producer has to adjust inputs in response to a price change. 
C)  urgency of consumer wants for the product. 
D)  number of uses for the product. 
A)  number of close substitutes for the product available to consumers. 
B)  amount of time the producer has to adjust inputs in response to a price change. 
C)  urgency of consumer wants for the product. 
D)  number of uses for the product.

Question 20

If quantity demanded is completely unresponsive to price changes,demand is:

Accepted Answer

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

Exam 6: Elasticity

Answer the question on the basis of the following demand schedule: Quantity \6 1 5 2 4 3 3 4 2 5 1 6 Refer to the data.The price elasticity of demand is relatively elastic:

The total revenue test for elasticity:

If the coefficient of income elasticity of demand is positive,the product is an inferior good.

Answer the question on the basis of the following demand schedule: Quantity \6 1 5 2 4 3 3 4 2 5 1 6 Refer to the data.If this demand schedule were graphed,we would find that:

The demand for a product is inelastic with respect to price if:

The narrower the definition of a product:

Suppose that a 10 percent increase in the price of normal good Y causes a 20 percent increase in the quantity demanded of normal good X.The coefficient of cross elasticity of demand is:

If a firm can sell 3,000 units of product A at $10 per unit and 5,000 at $8,then:

A perfectly inelastic demand curve:

If the demand for bacon is relatively elastic,a 10 percent decline in the price of bacon will:

It takes a considerable amount of time to increase the production of pork.This implies that:

In which price range of the accompanying demand schedule is demand elastic? Quantity 3 2 3 4 2 6 1 8

We would expect the coefficient of cross elasticity of demand for DVD players and DVDs to be positive.

Farmers often find that large bumper crops are associated with declines in their gross incomes.This suggests that:

If the supply of product X is perfectly elastic,an increase in the demand for it will increase:

The price elasticity of demand of a straight-line demand curve is:

An increase in demand will increase equilibrium price to a greater extent:

The price elasticity of demand for widgets is 0.80.Assuming no change in the demand curve for widgets,a 16 percent increase in sales implies a:

The main determinant of elasticity of supply is the:

If quantity demanded is completely unresponsive to price changes,demand is:

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