Question 1

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1
  
-Income elasticity of demand is expected to be _____.

Accepted Answer

A) relatively high for necessities 
B) positive for most products 
C) relatively low for luxuries 
D) negative for most products 
E) zero for most products 
A) relatively high for necessities 
B) positive for most products 
C) relatively low for luxuries 
D) negative for most products 
E) zero for most products

Question 2

The table below shows the quantities of automobiles, margarine, and coffee purchased by Ted at different levels of income.Table 6.2
  
-Arc elasticity is calculated as _____.

Accepted Answer

A)    
B)    
C)    
D)    
E)    
A)    
B)    
C)    
D)    
E)

Question 3

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2PS1U1B1xS1U1B0. Assume that P = $8, I = 200, and PS1U1B1xS1U1B0 = $10.
-Which of the following statements correctly describe the elasticities of demand for gasoline and automobiles?

Accepted Answer

A) The income elasticity of demand for gasoline and automobiles is negative. 
B) The price elasticity of demand for gasoline is elastic and the cross-price elasticity between gasoline and SUVs is positive. 
C) The price elasticity of demand for gasoline is inelastic and the cross-price elasticity between gasoline and SUVs is negative. 
D) The price elasticity of demand for gasoline is inelastic and the income elasticity between gasoline and SUVs is positive. 
E) The price elasticity of demand for gasoline is elastic and the income elasticity between gasoline and SUVs is negative. 
A) The income elasticity of demand for gasoline and automobiles is negative. 
B) The price elasticity of demand for gasoline is elastic and the cross-price elasticity between gasoline and SUVs is positive. 
C) The price elasticity of demand for gasoline is inelastic and the cross-price elasticity between gasoline and SUVs is negative. 
D) The price elasticity of demand for gasoline is inelastic and the income elasticity between gasoline and SUVs is positive. 
E) The price elasticity of demand for gasoline is elastic and the income elasticity between gasoline and SUVs is negative.

Question 4

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1
  
-For a given product, income elasticity of demand relates the percentage change in:

Accepted Answer

A) quantity demanded to the percentage change in income. 
B) quantity demanded to the absolute change in income. 
C) income to the percentage change in price. 
D) price to the absolute change in quantity demanded. 
E) income to the percentage change in quantity available for sale. 
A) quantity demanded to the percentage change in income. 
B) quantity demanded to the absolute change in income. 
C) income to the percentage change in price. 
D) price to the absolute change in quantity demanded. 
E) income to the percentage change in quantity available for sale.

Question 5

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2PS1U1B1xS1U1B0. Assume that P = $8, I = 200, and PS1U1B1xS1U1B0 = $10.
-The actual or chronological time for the short and the long run does not vary from industry to industry.

Accepted Answer

A) True 
 B)False

Question 6

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2PS1U1B1xS1U1B0. Assume that P = $8, I = 200, and PS1U1B1xS1U1B0 = $10.
-Assume that as the price of wheat falls from $10 to $8, the quantity demanded of wheat increases from 100 bushels to 150 bushels. This implies the price elasticity of demand for wheat is 0.5.

Accepted Answer

A) True 
 B)False

Question 7

​Figure 5.3. The figure shows the wage rate and the quantity of labor supplied in an unskilled labor market.  
-The less responsive consumers are to a change in the price of a product, _____.

Accepted Answer

A) the more price-elastic is the supply curve 
B) the more income-inelastic is the demand curve 
C) the more price-inelastic is the demand curve 
D) the more income-elastic is the supply curve 
E) the more price-elastic is the demand curve 
A) the more price-elastic is the supply curve 
B) the more income-inelastic is the demand curve 
C) the more price-inelastic is the demand curve 
D) the more income-elastic is the supply curve 
E) the more price-elastic is the demand curve

Question 8

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1
  
-Which of the following is an example of inelastic demand?

Accepted Answer

A) A 10 percent increase in the price of milk leads to a 20 percent decrease in the quantity demanded of milk. 
B) A 10 percent increase in the price of milk leads to a 10 percent decrease in the quantity demanded of milk. 
C) A 10 percent increase in the price of milk leads to a 5 percent decrease in the quantity demanded of milk. 
D) A 10 percent increase in the price of milk leads to a 10 percent increase in the quantity demanded of milk. 
E) A 10 percent increase in the price of milk leads to a 5 percent increase in the quantity demanded of milk. 
A) A 10 percent increase in the price of milk leads to a 20 percent decrease in the quantity demanded of milk. 
B) A 10 percent increase in the price of milk leads to a 10 percent decrease in the quantity demanded of milk. 
C) A 10 percent increase in the price of milk leads to a 5 percent decrease in the quantity demanded of milk. 
D) A 10 percent increase in the price of milk leads to a 10 percent increase in the quantity demanded of milk. 
E) A 10 percent increase in the price of milk leads to a 5 percent increase in the quantity demanded of milk.

Question 9

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1
  
-Suppose the manager of a store wants to know whether the product of the store across the street is a substitute for her product. In other words, she would need to know if the _____ for the products is positive.

Accepted Answer

A) cross-price elasticity of demand 
B) price elasticity of demand 
C) income elasticity of demand 
D) price elasticity of supply 
E) cross-price elasticity of supply 
A) cross-price elasticity of demand 
B) price elasticity of demand 
C) income elasticity of demand 
D) price elasticity of supply 
E) cross-price elasticity of supply

Question 10

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2PS1U1B1xS1U1B0. Assume that P = $8, I = 200, and PS1U1B1xS1U1B0 = $10.
-A measure of the responsiveness of quantity supplied to changes in price is known as _____.

Accepted Answer

A) cross-price elasticity 
B) price elasticity of demand 
C) price elasticity of supply 
D) income elasticity 
E) point elasticity 
A) cross-price elasticity 
B) price elasticity of demand 
C) price elasticity of supply 
D) income elasticity 
E) point elasticity

Question 11

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2PS1U1B1xS1U1B0. Assume that P = $8, I = 200, and PS1U1B1xS1U1B0 = $10.
-If demand is relatively elastic and supply is relatively inelastic, then the incidence of a tax will fall mainly on consumers.

Accepted Answer

A) True 
 B)False

Question 12

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2PS1U1B1xS1U1B0. Assume that P = $8, I = 200, and PS1U1B1xS1U1B0 = $10.
-The demand for mansions is elastic because a small percentage change in price results in a large change in quantity demanded.

Accepted Answer

A) True 
 B)False

Question 13

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1
  
-If a 15 percent reduction in the price of electricity per kilowatt hour has no impact on the total electricity consumption, we can infer that in the short run, the demand for electricity is _____.

Accepted Answer

A) perfectly inelastic 
B) perfectly elastic 
C) unit-elastic 
D) relatively inelastic 
E) relatively elastic 
A) perfectly inelastic 
B) perfectly elastic 
C) unit-elastic 
D) relatively inelastic 
E) relatively elastic

Question 14

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2PS1U1B1xS1U1B0. Assume that P = $8, I = 200, and PS1U1B1xS1U1B0 = $10.
-Economists have said that deregulation of the electric utility industry might lead to increased prices in the short run, but prices will fall in the long run. In this context:

Accepted Answer

A) the short run means the middle of next year. 
B) the short run means the period after all adjustments have been made, and the quantities of all resources have been varied as necessary. 
C) the long run means after all adjustments have been made, the quantities of all resources have been varied as necessary, and new market entrants begin producing electricity. 
D) the short run means the period after new firms begin producing electricity. 
E) the long run means approximately ten years. 
A) the short run means the middle of next year. 
B) the short run means the period after all adjustments have been made, and the quantities of all resources have been varied as necessary. 
C) the long run means after all adjustments have been made, the quantities of all resources have been varied as necessary, and new market entrants begin producing electricity. 
D) the short run means the period after new firms begin producing electricity. 
E) the long run means approximately ten years.

Question 15

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1
  
-Demand for a good becomes more elastic as:

Accepted Answer

A) the number of substitutes available declines. 
B) the time period under consideration becomes shorter. 
C) a good makes up a larger percentage of a consumer's budget. 
D) a good makes up a smaller percentage of a consumer's budget. 
E) the producer has more time to respond to price changes. 
A) the number of substitutes available declines. 
B) the time period under consideration becomes shorter. 
C) a good makes up a larger percentage of a consumer's budget. 
D) a good makes up a smaller percentage of a consumer's budget. 
E) the producer has more time to respond to price changes.

Question 16

​Figure 5.3. The figure shows the wage rate and the quantity of labor supplied in an unskilled labor market.  
-Suppose 50 loaves of bread are demanded at a particular price. If that price rises by 2 percent, the quantity demanded decreases to 49.5 loaves of bread. This implies that the:

Accepted Answer

A) demand is elastic. 
B) demand is unit-elastic. 
C) price elasticity of demand is equal to 2. 
D) demand is inelastic. 
E) income elasticity of demand is equal to 0.5. 
A) demand is elastic. 
B) demand is unit-elastic. 
C) price elasticity of demand is equal to 2. 
D) demand is inelastic. 
E) income elasticity of demand is equal to 0.5.

Question 17

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1
  
-When the income elasticity of demand for a good is negative, one can correctly conclude that:

Accepted Answer

A) the good is a normal good. 
B) the good is an inferior good. 
C) the good is a substitute. 
D) the good is a complement. 
E) total revenue will decrease when the price increases. 
A) the good is a normal good. 
B) the good is an inferior good. 
C) the good is a substitute. 
D) the good is a complement. 
E) total revenue will decrease when the price increases.

Question 18

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2PS1U1B1xS1U1B0. Assume that P = $8, I = 200, and PS1U1B1xS1U1B0 = $10.
-Ceteris paribus, if a 20 percent increase in the price of shoes leads to a 10 percent increase in the quantity supplied of shoes, then the price elasticity of supply is equal to _____.

Accepted Answer

A) 2 
B) 20 
C) 10 
D) 0.5 
E) 0.2 
A) 2 
B) 20 
C) 10 
D) 0.5 
E) 0.2

Question 19

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2PS1U1B1xS1U1B0. Assume that P = $8, I = 200, and PS1U1B1xS1U1B0 = $10.
-When the income elasticity of demand for a good is negative, the good is called a luxury good.

Accepted Answer

A) True 
 B)False

Question 20

Scenario 5.1
The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2PS1U1B1xS1U1B0. Assume that P = $8, I = 200, and PS1U1B1xS1U1B0 = $10.
-If the price of chocolate increases by 15 percent and the quantity demanded of chocolate declines by 5 percent, the price elasticity of demand () is -3.

Accepted Answer

A) True 
 B)False

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1 -Income elasticity of demand is expected to be _____.

The table below shows the quantities of automobiles, margarine, and coffee purchased by Ted at different levels of income.Table 6.2 -Arc elasticity is calculated as _____.

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10. -Which of the following statements correctly describe the elasticities of demand for gasoline and automobiles?

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1 -For a given product, income elasticity of demand relates the percentage change in:

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10. -The actual or chronological time for the short and the long run does not vary from industry to industry.

Figure 5.3. The figure shows the wage rate and the quantity of labor supplied in an unskilled labor market. -The less responsive consumers are to a change in the price of a product, _____.

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1 -Which of the following is an example of inelastic demand?

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10. -A measure of the responsiveness of quantity supplied to changes in price is known as _____.

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10. -If demand is relatively elastic and supply is relatively inelastic, then the incidence of a tax will fall mainly on consumers.

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10. -The demand for mansions is elastic because a small percentage change in price results in a large change in quantity demanded.

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1 -If a 15 percent reduction in the price of electricity per kilowatt hour has no impact on the total electricity consumption, we can infer that in the short run, the demand for electricity is _____.

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1 -Demand for a good becomes more elastic as:

Figure 5.3. The figure shows the wage rate and the quantity of labor supplied in an unskilled labor market. -Suppose 50 loaves of bread are demanded at a particular price. If that price rises by 2 percent, the quantity demanded decreases to 49.5 loaves of bread. This implies that the:

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1 -When the income elasticity of demand for a good is negative, one can correctly conclude that:

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10. -When the income elasticity of demand for a good is negative, the good is called a luxury good.

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10. -If the price of chocolate increases by 15 percent and the quantity demanded of chocolate declines by 5 percent, the price elasticity of demand () is -3.

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

Markets and the Price System

The Aggregate Economy

Using Economics to Understand the World Around You

Demand: Consumer Choice

Supply: the Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Markets and Government

Antitrust and Regulation

Resource Markets

The Labor Market

The Capital Market

The Land Market and Natural Resources

Current Issues: Income, Income Distribution, Poverty, and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

Exam 6: Elasticity: Demand and Supply

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1 -Income elasticity of demand is expected to be _____.

The table below shows the quantities of automobiles, margarine, and coffee purchased by Ted at different levels of income.Table 6.2 -Arc elasticity is calculated as _____.

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2Px. Assume that P = $8, I = 200, and Px = $10. -Which of the following statements correctly describe the elasticities of demand for gasoline and automobiles?

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1 -For a given product, income elasticity of demand relates the percentage change in:

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2Px. Assume that P = $8, I = 200, and Px = $10. -The actual or chronological time for the short and the long run does not vary from industry to industry.

​Figure 5.3. The figure shows the wage rate and the quantity of labor supplied in an unskilled labor market. -The less responsive consumers are to a change in the price of a product, _____.

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1 -Which of the following is an example of inelastic demand?

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2Px. Assume that P = $8, I = 200, and Px = $10. -A measure of the responsiveness of quantity supplied to changes in price is known as _____.

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2Px. Assume that P = $8, I = 200, and Px = $10. -If demand is relatively elastic and supply is relatively inelastic, then the incidence of a tax will fall mainly on consumers.

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2Px. Assume that P = $8, I = 200, and Px = $10. -The demand for mansions is elastic because a small percentage change in price results in a large change in quantity demanded.

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1 -If a 15 percent reduction in the price of electricity per kilowatt hour has no impact on the total electricity consumption, we can infer that in the short run, the demand for electricity is _____.

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1 -Demand for a good becomes more elastic as:

​Figure 5.3. The figure shows the wage rate and the quantity of labor supplied in an unskilled labor market. -Suppose 50 loaves of bread are demanded at a particular price. If that price rises by 2 percent, the quantity demanded decreases to 49.5 loaves of bread. This implies that the:

The figure given below shows the demand curves for five products: A, B, C, D, and E.Figure 6.1 -When the income elasticity of demand for a good is negative, one can correctly conclude that:

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2Px. Assume that P = $8, I = 200, and Px = $10. -When the income elasticity of demand for a good is negative, the good is called a luxury good.

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2Px. Assume that P = $8, I = 200, and Px = $10. -If the price of chocolate increases by 15 percent and the quantity demanded of chocolate declines by 5 percent, the price elasticity of demand () is -3.

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

Markets and the Price System

The Aggregate Economy

Using Economics to Understand the World Around You

Demand: Consumer Choice

Supply: the Costs of Doing Business

Profit Maximization

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Markets and Government

Antitrust and Regulation

Resource Markets

The Labor Market

The Capital Market

The Land Market and Natural Resources

Current Issues: Income, Income Distribution, Poverty, and Government Policy

World Trade Equilibrium

International Trade Restrictions

Exchange Rates and Financial Links Between Countries

Filters

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10. -Which of the following statements correctly describe the elasticities of demand for gasoline and automobiles?

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10. -The actual or chronological time for the short and the long run does not vary from industry to industry.

Figure 5.3. The figure shows the wage rate and the quantity of labor supplied in an unskilled labor market. -The less responsive consumers are to a change in the price of a product, _____.

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10. -A measure of the responsiveness of quantity supplied to changes in price is known as _____.

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10. -If demand is relatively elastic and supply is relatively inelastic, then the incidence of a tax will fall mainly on consumers.

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10. -The demand for mansions is elastic because a small percentage change in price results in a large change in quantity demanded.

Figure 5.3. The figure shows the wage rate and the quantity of labor supplied in an unskilled labor market. -Suppose 50 loaves of bread are demanded at a particular price. If that price rises by 2 percent, the quantity demanded decreases to 49.5 loaves of bread. This implies that the:

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10. -When the income elasticity of demand for a good is negative, the good is called a luxury good.

Scenario 5.1 The demand for noodles is given by the following equation: Q = 20 - 4P + 0.2I - 2P_x. Assume that P = $8, I = 200, and P_x = $10. -If the price of chocolate increases by 15 percent and the quantity demanded of chocolate declines by 5 percent, the price elasticity of demand () is -3.