Question 1

Sergio's rentals of Blu-ray movies increase by 10 percent when her income increases by 30 percent.Based on this information,we know that for Sergio,Blu-ray movies

Accepted Answer

A) are complements. 
B) are substitutes. 
C) are inferior goods. 
D) have an inelastic demand. 
E) are normal goods.

Question 2

For which of the following would the supply likely be most inelastic?

Accepted Answer

A) aircraft carrier 
B) canned soup 
C) toy airplane 
D) t-shirt 
E) bottled water

Question 3

If the percentage change in quantity demanded is greater than the percentage change in price,can you determine if the demand is elastic,unit elastic,or inelastic? Explain your answer.

Accepted Answer

The answer of If the percentage change in quantity demanded...

Question 4

"The fewer the number of substitutes for a product,the more elastic the demand for that product." Is the previous statement true or false?

Accepted Answer

The answer of "The fewer the number of substitutes for...

Question 5

If the percentage change in the price of a good exceeds the percentage change in the quantity supplied,then the supply is

Accepted Answer

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

Question 6

If a product is a normal good,then its income elasticity of demand is

Accepted Answer

A) zero. 
B) positive. 
C) negative. 
D) indeterminate. 
E) greater than 1.

Question 7

What does a horizontal demand curve indicate about the price elasticity of demand?

Accepted Answer

The answer of What does a horizontal demand curve indicate...

Question 8

Economists use elasticity to measure the responsiveness of quantity to a change in price rather than the slope of the demand curve because elasticity is

Accepted Answer

A) independent of the units of measurement. 
B) dependent on the units of measurement. 
C) easier to calculate. 
D) harder to calculate. 
E) always negative whereas the slope is always positive.

Question 9

Along a linear (straight-line)downward-sloping demand curve,demand is unit elastic at

Accepted Answer

A) the highest price. 
B) the lowest price. 
C) the midpoint. 
D) all points on the linear demand curve. 
E) None of the above because linear demand curves are never unit elastic.

Question 10

Suppose the quantity supplied of computers increases from 2 million to 4 million units as the price of a computer increases from $600 to $700.What does the price elasticity of supply equal?

Accepted Answer

The answer of Suppose the quantity supplied of computers increases...

Question 11

-In the figure above,using the midpoint method,what is the price elasticity of demand when the price falls from $8 to $7?

Accepted Answer

A) 4.0 
B) 5.0 
C) 0.5 
D) 0.4 
E) 0.25

Question 12

The cross elasticity of demand for butter and margarine is likely to be

Accepted Answer

A) positive because they are substitutes. 
B) positive because they are complements. 
C) negative because they are substitutes. 
D) negative because they are complements. 
E) positive because they are normal goods.

Question 13

In the figure above,at the point where the price is $4 per cup the price elasticity of demand is

Accepted Answer

A) 2. 
B) 0.5. 
C) 1. 
D) 1.5. 
E) 0.

Question 14

Suppose bad weather decreases the quantity of wheat by 12 percent.If the price elasticity of demand for wheat is 0.6,how would the crop failure affect the price of wheat? Would the crop decrease benefit or harm wheat farmers?

Accepted Answer

The answer of Suppose bad weather decreases the quantity of...

Question 15

When the price of Ford pickup trucks rises from $18,000 to $19,000,the quantity of Chevy trucks demanded increases from 112,000 to 144,000.What does the cross elasticity of demand between Ford and Chevy trucks equal?

Accepted Answer

The answer of When the price of Ford pickup trucks...

Question 16

Goods are ________ when the income elasticity of demand is less than zero.

Accepted Answer

A) substitutes 
B) complements 
C) inferior 
D) elastic 
E) normal

Question 17

The supply of beach front property on St.Simon's Island is

Accepted Answer

A) elastic. 
B) unit elastic. 
C) negative. 
D) inelastic. 
E) perfectly elastic.

Question 18

If the income elasticity of demand for a Miami Dolphins season ticket is 2.34,then are Dolphins season tickets a normal or an inferior good?

Accepted Answer

The answer of If the income elasticity of demand for...

Question 19

-Using the table above,the elasticity of demand is equal to 1 at a price of

Accepted Answer

A) $8. 
B) $6. 
C) $5. 
D) $3. 
E) $1.

Question 20

-Using the data in the table above,when the price of a skirt rises from $20 to $35,what is the price elasticity of demand? (Use the midpoint method. )

Accepted Answer

A) 0.33 
B) 0.25 
C) 1.00 
D) 1.33 
E) 3.00

Exam 5: Elasticities of Demand and Supply