Question 1

If the cross price elasticity between Goods A and B equals 0.7, then a reduction in the price of Good B will:

Accepted Answer

A) ​increase the demand for Good A and increase Good A's price as a result. 
B) ​increase the demand for Good A and decrease Good A's price as a result. 
C) ​decrease the demand for Good A and increase Good A's price as a result. 
D) ​decrease the demand for Good A and decrease Good A's price as a result. 
A) ​increase the demand for Good A and increase Good A's price as a result. 
B) ​increase the demand for Good A and decrease Good A's price as a result. 
C) ​decrease the demand for Good A and increase Good A's price as a result. 
D) ​decrease the demand for Good A and decrease Good A's price as a result.

Question 2

For a given increase in price, a greater elasticity of demand will result in a greater

Accepted Answer

A) ​increase in quantity demanded. 
B) ​increase in demand. 
C) ​decrease in quantity demanded. 
D) ​decrease in demand. 
A) ​increase in quantity demanded. 
B) ​increase in demand. 
C) ​decrease in quantity demanded. 
D) ​decrease in demand.

Question 3

For a given, permanent reduction in demand for a product:

Accepted Answer

A) ​the decrease in price will be greater the more elastic is supply. 
B) ​the decrease in price will be greater in the long run than in the short run. 
C) ​the decrease in price will be greater the more inelastic is supply. 
D) ​none of the above 
A) ​the decrease in price will be greater the more elastic is supply. 
B) ​the decrease in price will be greater in the long run than in the short run. 
C) ​the decrease in price will be greater the more inelastic is supply. 
D) ​none of the above

Question 4

If the elasticity of supply coefficient for a good is 6, we know:

Accepted Answer

A) ​that for every 1% increase in quantity, there will be a 6% increase in price. 
B) ​that for every 1% increase in quantity, there will be a 6% decrease in price. 
C) ​that for every 6% increase in quantity, there will be a 1% increase in price. 
D) ​that for every 6% increase in quantity, there will be a 1% decrease in price. 
A) ​that for every 1% increase in quantity, there will be a 6% increase in price. 
B) ​that for every 1% increase in quantity, there will be a 6% decrease in price. 
C) ​that for every 6% increase in quantity, there will be a 1% increase in price. 
D) ​that for every 6% increase in quantity, there will be a 1% decrease in price.

Question 5

The price elasticity of demand for tickets to local hockey matches is estimated to be equal to 0.89. In order to boost ticket revenues, an economist would advise:

Accepted Answer

A) ​decreasing the price of hockey match tickets because demand is elastic. 
B) ​increasing the price of hockey match tickets because demand is elastic. 
C) ​not changing the price of hockey match tickets because demand is unit elastic. 
D) ​increasing the price of hockey match tickets because demand is inelastic. 
A) ​decreasing the price of hockey match tickets because demand is elastic. 
B) ​increasing the price of hockey match tickets because demand is elastic. 
C) ​not changing the price of hockey match tickets because demand is unit elastic. 
D) ​increasing the price of hockey match tickets because demand is inelastic.

Question 6

In the graph below, a tax increase would be paid:

Accepted Answer

A) ​largely by the sellers. 
B) ​largely by the buyers. 
C) ​Roughly equally by the sellers and buyers. 
D) ​by the government. 
A) ​largely by the sellers. 
B) ​largely by the buyers. 
C) ​Roughly equally by the sellers and buyers. 
D) ​by the government.

Question 7

​Exhibit 6-4  
-Refer to Exhibit 6-4. With reference to Graph A, at a price of $5, total revenue equals:

Accepted Answer

A) ​$200. 
B) ​$400. 
C) ​$500. 
D) ​$1,000. 
A) ​$200. 
B) ​$400. 
C) ​$500. 
D) ​$1,000.

Question 8

Moving along an elastic portion of a demand curve, a small percentage change in price leads to a larger percentage change in quantity demanded.

Accepted Answer

A) True 
 B)False

Question 9

In a recent fare war, America West reduced the price of its roundtrip airfare from Charlotte, North Carolina, to New York City from $198 to $138 to match American Airlines. America West matched the fare reluctantly, saying it would cost the company millions of dollars in revenue for those tickets to be sold for less. American, on the other hand, believed the fare cut would increase its revenue even if rival airlines matched the lower fares. What different assumptions about the underlying price elasticity of demand for airline tickets on that route did each airline believe true?

Accepted Answer

America West must have believed demand i

Question 10

If the price elasticity of demand for a good is 5.0, then a 10 percent increase in price results in a

Accepted Answer

A) ​0.5 percent decrease in the quantity demanded. 
B) ​2.5 percent decrease in the quantity demanded. 
C) ​5 percent decrease in the quantity demanded. 
D) ​50 percent decrease in the quantity demanded. 
A) ​0.5 percent decrease in the quantity demanded. 
B) ​2.5 percent decrease in the quantity demanded. 
C) ​5 percent decrease in the quantity demanded. 
D) ​50 percent decrease in the quantity demanded.

Question 11

When a 5% increase in price leads to an 8% increase in quantity supplied, supply is relatively inelastic.

Accepted Answer

A) True 
 B)False

Question 12

If the measured elasticity of supply coefficient equals 1.3, 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

Unlike demand, the longer the time suppliers have to respond to a change in price, the less elastic is the supply curve.

Accepted Answer

A) True 
 B)False

Question 14

Supply is said to be ____ when the quantity supplied 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 15

When a product's price increases from $800 to $1,200, the quantity demanded decreases from 11,000 to 9,000. Based on this information, the price elasticity of demand (in absolute terms) is estimated to be equal to:

Accepted Answer

A) ​0.5. 
B) ​2.0. 
C) ​0.25. 
D) ​4.0. 
A) ​0.5. 
B) ​2.0. 
C) ​0.25. 
D) ​4.0.

Question 16

If the short run elasticity of demand for widgets is 0.7 and the long run elasticity of demand for widgets is 1.5, an increase in price will ____ total revenue in the short run and ____ total revenue in the long run.

Accepted Answer

A) ​Increase; increase. 
B) ​Increase; decrease. 
C) ​Decrease; increase. 
D) ​Decrease; decrease. 
A) ​Increase; increase. 
B) ​Increase; decrease. 
C) ​Decrease; increase. 
D) ​Decrease; decrease.

Question 17

If a university charged a lower price for tuition during summer school than during the regular session, in search of added total revenue,

Accepted Answer

A) ​administrators likely believe that demand is more elastic during summer school than during the regular session. 
B) ​administrators likely believe that demand is less elastic during summer school than during the regular session. 
C) ​it indicates nothing about likely differences in the elasticity of demand during summer school than during the regular session. 
D) ​administrators likely believe that demand is both lower and less elastic during summer school than during the regular session. 
A) ​administrators likely believe that demand is more elastic during summer school than during the regular session. 
B) ​administrators likely believe that demand is less elastic during summer school than during the regular session. 
C) ​it indicates nothing about likely differences in the elasticity of demand during summer school than during the regular session. 
D) ​administrators likely believe that demand is both lower and less elastic during summer school than during the regular session.

Question 18

If two goods both had positive cross elasticities and positive income elasticities,

Accepted Answer

A) ​they are both normal and substitutes for one another. 
B) ​they are both normal and complements for one another. 
C) ​they are both inferior and substitutes for one another. 
D) ​they are both inferior and complements for one another. 
A) ​they are both normal and substitutes for one another. 
B) ​they are both normal and complements for one another. 
C) ​they are both inferior and substitutes for one another. 
D) ​they are both inferior and complements for one another.

Question 19

In the graph below, a tax increase would be paid:

Accepted Answer

A) ​largely by the sellers. 
B) ​largely by the buyers. 
C) ​equally by the sellers and buyers. 
D) ​by the government. 
A) ​largely by the sellers. 
B) ​largely by the buyers. 
C) ​equally by the sellers and buyers. 
D) ​by the government.

Question 20

Which of the following is the most important determinant of the elasticity of supply?

Accepted Answer

A) ​The number of uses for the product. 
B) ​The number of close substitutes to the product available to consumers. 
C) ​The amount of time producers have to adjust their behavior in response to a price change. 
D) ​The percentage of their incomes consumers spend on the product. 
A) ​The number of uses for the product. 
B) ​The number of close substitutes to the product available to consumers. 
C) ​The amount of time producers have to adjust their behavior in response to a price change. 
D) ​The percentage of their incomes consumers spend on the product.

If the cross price elasticity between Goods A and B equals 0.7, then a reduction in the price of Good B will:

For a given increase in price, a greater elasticity of demand will result in a greater

For a given, permanent reduction in demand for a product:

If the elasticity of supply coefficient for a good is 6, we know:

The price elasticity of demand for tickets to local hockey matches is estimated to be equal to 0.89. In order to boost ticket revenues, an economist would advise:

In the graph below, a tax increase would be paid:

Exhibit 6-4 -Refer to Exhibit 6-4. With reference to Graph A, at a price of $5, total revenue equals:

Moving along an elastic portion of a demand curve, a small percentage change in price leads to a larger percentage change in quantity demanded.

If the price elasticity of demand for a good is 5.0, then a 10 percent increase in price results in a

When a 5% increase in price leads to an 8% increase in quantity supplied, supply is relatively inelastic.

If the measured elasticity of supply coefficient equals 1.3, then supply is:

Unlike demand, the longer the time suppliers have to respond to a change in price, the less elastic is the supply curve.

Supply is said to be ____ when the quantity supplied is very responsive to changes in price.

When a product's price increases from $800 to $1,200, the quantity demanded decreases from 11,000 to 9,000. Based on this information, the price elasticity of demand (in absolute terms) is estimated to be equal to:

If the short run elasticity of demand for widgets is 0.7 and the long run elasticity of demand for widgets is 1.5, an increase in price will total revenue in the short run and total revenue in the long run.

If a university charged a lower price for tuition during summer school than during the regular session, in search of added total revenue,

If two goods both had positive cross elasticities and positive income elasticities,

In the graph below, a tax increase would be paid:

Which of the following is the most important determinant of the elasticity of supply?

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

Exam 6: Elasticities

If the cross price elasticity between Goods A and B equals 0.7, then a reduction in the price of Good B will:

For a given increase in price, a greater elasticity of demand will result in a greater

For a given, permanent reduction in demand for a product:

If the elasticity of supply coefficient for a good is 6, we know:

The price elasticity of demand for tickets to local hockey matches is estimated to be equal to 0.89. In order to boost ticket revenues, an economist would advise:

In the graph below, a tax increase would be paid:

​Exhibit 6-4 -Refer to Exhibit 6-4. With reference to Graph A, at a price of $5, total revenue equals:

Moving along an elastic portion of a demand curve, a small percentage change in price leads to a larger percentage change in quantity demanded.

If the price elasticity of demand for a good is 5.0, then a 10 percent increase in price results in a

When a 5% increase in price leads to an 8% increase in quantity supplied, supply is relatively inelastic.

If the measured elasticity of supply coefficient equals 1.3, then supply is:

Unlike demand, the longer the time suppliers have to respond to a change in price, the less elastic is the supply curve.

Supply is said to be ____ when the quantity supplied is very responsive to changes in price.

When a product's price increases from $800 to $1,200, the quantity demanded decreases from 11,000 to 9,000. Based on this information, the price elasticity of demand (in absolute terms) is estimated to be equal to:

If the short run elasticity of demand for widgets is 0.7 and the long run elasticity of demand for widgets is 1.5, an increase in price will ____ total revenue in the short run and ____ total revenue in the long run.

If a university charged a lower price for tuition during summer school than during the regular session, in search of added total revenue,

If two goods both had positive cross elasticities and positive income elasticities,

In the graph below, a tax increase would be paid:

Which of the following is the most important determinant of the elasticity of supply?

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 6-4 -Refer to Exhibit 6-4. With reference to Graph A, at a price of $5, total revenue equals:

If the short run elasticity of demand for widgets is 0.7 and the long run elasticity of demand for widgets is 1.5, an increase in price will total revenue in the short run and total revenue in the long run.