Question 1

When a 9% increase in price leads to a 6% increase in quantity supplied, supply is relatively inelastic.

Accepted Answer

A) True 
 B)False  True

Question 2

A perfectly elastic demand curve is vertical.

Accepted Answer

A) True 
 B)False  False

Question 3

When a tax is imposed on a good for which the supply is relatively elastic and the demand is relatively inelastic,

Accepted Answer

A) ​buyers of the good will incur most of the burden of the tax. 
B) ​sellers of the good will incur most of the burden of the tax. 
C) ​buyers and sellers will each incur 50 percent of the burden of the tax. 
D) ​the equilibrium quantity will increase. 
A) ​buyers of the good will incur most of the burden of the tax. 
B) ​sellers of the good will incur most of the burden of the tax. 
C) ​buyers and sellers will each incur 50 percent of the burden of the tax. 
D) ​the equilibrium quantity will increase. A

Question 4

A decrease in demand will increase total revenue:

Accepted Answer

A) ​Always. 
B) ​Only if supply is relatively inelastic. 
C) ​Only if supply is relatively elastic. 
D) ​Never. 
A) ​Always. 
B) ​Only if supply is relatively inelastic. 
C) ​Only if supply is relatively elastic. 
D) ​Never.

Question 5

If the government increases its efforts to reduce illegal drugs which of the following would explain the possible unintended consequences-an increase in drug-related crimes.

Accepted Answer

A) ​More people will commit crimes as a result of the increased drug use. 
B) ​Tough drug enforcement policies reduce the demand for illegal drugs. 
C) ​Drug addicts will have an even greater need for quick cash to support their habits. 
D) ​In the short run, both equilibrium quantities and prices will fall in the markets for illegal drugs. 
A) ​More people will commit crimes as a result of the increased drug use. 
B) ​Tough drug enforcement policies reduce the demand for illegal drugs. 
C) ​Drug addicts will have an even greater need for quick cash to support their habits. 
D) ​In the short run, both equilibrium quantities and prices will fall in the markets for illegal drugs.

Question 6

If the price elasticity coefficient equals 4.2, then demand is relatively inelastic with regard to price.

Accepted Answer

A) True 
 B)False

Question 7

Total revenue for a seller represents the amount that:

Accepted Answer

A) ​sellers receive for a good or service which is computed as P ÷ Q. 
B) ​sellers receive for a good or service which is computed as P   Q. 
C) ​one buyer spends on a good or service which is computed as P   Q. 
D) ​one buyer spends on a good or service which is computed as P ÷ Q. 
A) ​sellers receive for a good or service which is computed as P ÷ Q. 
B) ​sellers receive for a good or service which is computed as P   Q. 
C) ​one buyer spends on a good or service which is computed as P   Q. 
D) ​one buyer spends on a good or service which is computed as P ÷ Q.

Question 8

Demand is said to be ____ when the quantity demanded is very responsive to changes in price.

Accepted Answer

A) ​independent 
B) ​inelastic 
C) ​unit elastic 
D) ​elastic 
A) ​independent 
B) ​inelastic 
C) ​unit elastic 
D) ​elastic

Question 9

Demand for a good is said to be inelastic if the quantity demanded increases slightly when the price falls by a large amount.

Accepted Answer

A) True 
 B)False

Question 10

The current supply of Rembrandt paintings:

Accepted Answer

A) ​is perfectly elastic. 
B) ​is elastic. 
C) ​is unit elastic. 
D) ​is perfectly inelastic. 
A) ​is perfectly elastic. 
B) ​is elastic. 
C) ​is unit elastic. 
D) ​is perfectly inelastic.

Question 11

​Exhibit 6-3
​  
-Refer to Exhibit 6-3. The graph that best illustrates a relatively inelastic (but not perfectly inelastic) range along a demand curve is:

Accepted Answer

A) ​Graph A. 
B) ​Graph B. 
C) ​Graph C. 
D) ​Graph D. 
A) ​Graph A. 
B) ​Graph B. 
C) ​Graph C. 
D) ​Graph D.

Question 12

If the measured elasticity of supply coefficient equals 0.6, then supply is:

Accepted Answer

A) ​perfectly elastic. 
B) ​elastic. 
C) ​unit elastic. 
D) ​inelastic. 
A) ​perfectly elastic. 
B) ​elastic. 
C) ​unit elastic. 
D) ​inelastic.

Question 13

The government proposes a tax on flowers in order to boost its revenue. Consumers will bear all of this tax if the:

Accepted Answer

A) ​demand for flowers is perfectly inelastic. 
B) ​supply of flowers is perfectly inelastic. 
C) ​demand for flowers is perfectly elastic. 
D) ​demand for flowers is unit elastic. 
A) ​demand for flowers is perfectly inelastic. 
B) ​supply of flowers is perfectly inelastic. 
C) ​demand for flowers is perfectly elastic. 
D) ​demand for flowers is unit elastic.

Question 14

Say that a consumer's income elasticity of demand over the relevant range is equal to 2. When she has a monthly income of $2,000, she spends $600 on food. If her monthly income rose to $4,000, how much would she spend on food?

Accepted Answer

A) ​$900. 
B) ​$1200. 
C) ​$1800. 
D) ​$2400. 
A) ​$900. 
B) ​$1200. 
C) ​$1800. 
D) ​$2400.

Question 15

A tax is imposed on orange juice. Consumers will bear the full burden of this tax if the:

Accepted Answer

A) ​price elasticity of demand for orange juice equals 1.0. 
B) ​demand for orange juice is perfectly elastic. 
C) ​demand for orange juice is unit elastic. 
D) ​demand curve for orange juice is perfectly inelastic. 
A) ​price elasticity of demand for orange juice equals 1.0. 
B) ​demand for orange juice is perfectly elastic. 
C) ​demand for orange juice is unit elastic. 
D) ​demand curve for orange juice is perfectly inelastic.

Question 16

If Pizza Hut decreases its price for a large pizza by 25% and this leads to a 75% increase in sales, we can conclude that demand is relatively elastic with regard to price over that range.

Accepted Answer

A) True 
 B)False

Question 17

A steel mill raises the price of steel by 20%, which results in a 7% reduction in the quantity of steel demanded. The demand curve facing this firm is:

Accepted Answer

A) ​elastic. 
B) ​inelastic. 
C) ​unit elastic. 
D) ​unit inelastic. 
A) ​elastic. 
B) ​inelastic. 
C) ​unit elastic. 
D) ​unit inelastic.

Question 18

If the elasticity of demand for mothballs is 0.50, then moving along the demand for mothballs:

Accepted Answer

A) ​A 20% rise in the price of mothballs will lead to a 10% fall in the quantity of mothballs demanded. 
B) ​A 10% rise in the price of mothballs will lead to a 20% fall in the quantity of mothballs demanded. 
C) ​A 20% rise in the price of mothballs will lead to a 10% rise in the quantity of mothballs demanded. 
D) ​A 10% rise in the price of mothballs will lead to a 20% rise in the quantity of mothballs demanded. 
A) ​A 20% rise in the price of mothballs will lead to a 10% fall in the quantity of mothballs demanded. 
B) ​A 10% rise in the price of mothballs will lead to a 20% fall in the quantity of mothballs demanded. 
C) ​A 20% rise in the price of mothballs will lead to a 10% rise in the quantity of mothballs demanded. 
D) ​A 10% rise in the price of mothballs will lead to a 20% rise in the quantity of mothballs demanded.

Question 19

A straight line demand curve has a different elasticity of demand at different points along the curve.

Accepted Answer

A) True 
 B)False

Question 20

The quantity of gasoline demanded will respond more to a change in price over three weeks than over three years.

Accepted Answer

A) True 
 B)False

Exam 6: Elasticities

When a 9% increase in price leads to a 6% increase in quantity supplied, supply is relatively inelastic.

A perfectly elastic demand curve is vertical.

When a tax is imposed on a good for which the supply is relatively elastic and the demand is relatively inelastic,

A decrease in demand will increase total revenue:

If the government increases its efforts to reduce illegal drugs which of the following would explain the possible unintended consequences-an increase in drug-related crimes.

If the price elasticity coefficient equals 4.2, then demand is relatively inelastic with regard to price.

Total revenue for a seller represents the amount that:

Demand is said to be ____ when the quantity demanded is very responsive to changes in price.

Demand for a good is said to be inelastic if the quantity demanded increases slightly when the price falls by a large amount.

The current supply of Rembrandt paintings:

​Exhibit 6-3 ​ -Refer to Exhibit 6-3. The graph that best illustrates a relatively inelastic (but not perfectly inelastic) range along a demand curve is:

If the measured elasticity of supply coefficient equals 0.6, then supply is:

The government proposes a tax on flowers in order to boost its revenue. Consumers will bear all of this tax if the:

Say that a consumer's income elasticity of demand over the relevant range is equal to 2. When she has a monthly income of $2,000, she spends $600 on food. If her monthly income rose to $4,000, how much would she spend on food?

A tax is imposed on orange juice. Consumers will bear the full burden of this tax if the:

If Pizza Hut decreases its price for a large pizza by 25% and this leads to a 75% increase in sales, we can conclude that demand is relatively elastic with regard to price over that range.

A steel mill raises the price of steel by 20%, which results in a 7% reduction in the quantity of steel demanded. The demand curve facing this firm is:

If the elasticity of demand for mothballs is 0.50, then moving along the demand for mothballs:

A straight line demand curve has a different elasticity of demand at different points along the curve.

The quantity of gasoline demanded will respond more to a change in price over three weeks than over three years.

The Role and Method of Economics

Eight Powerful Ideas

Scarcity, Trade-Offs, and Production Possibilities

Demand, Supply, and Market Equilibrium

Market in Motion and Price Controls

Market Efficiency and Welfare

Market Failure

Public Finance and Public Choice

Consumer Choice Theory

The Firm: Production and Costs

Firms in Perfectly Competitive Markets

Monopoly and Antitrust

Monopolistic Competition and Product Differentiation

Oligopoly and Strategic Behavior

The Markets for Labor, Capital, and Land

Income, Poverty and Health Care

Introduction to Macroeconomics: Unemployment, Inflation, and Economic Fluctuations

Measuring Economic Performance

Economic Growth in the Global Economy

Financial Markets, Saving, and Investment

Filters

Exhibit 6-3 -Refer to Exhibit 6-3. The graph that best illustrates a relatively inelastic (but not perfectly inelastic) range along a demand curve is: