Quiz 5: Elasticity of Demand and Supply
Business
Free
True False
False
Free
Multiple Choice
A
Q 3Q 3
Price elasticity of demand is useful because it measures __________ responsiveness to changes in __________.
A)taxpayers'; demand
B)producers'; supply
C)consumers'; price
D)consumers'; demand
E)producers'; income
Free
Multiple Choice
C
Q 4Q 4
The price elasticity of demand helps determine the effect of price changes on a firm's
A)property taxes
B)profits
C)quantity supplied
D)revenues
E)total costs
Free
Multiple Choice
Q 5Q 5
A good synonym for elasticity would be
A)stability
B)volatility
C)stickiness
D)demand
E)responsiveness
Free
Multiple Choice
Q 6Q 6
Elasticity measures
A)whether a price increase causes quantity demanded to increase or decrease
B)the strength of an economy's tendency to recover from recession
C)the responsiveness of decision makers to changes in prices, income, or other variables
D)the profitability of investment in an industry
E)the long-run flexibility of prices in the economy
Free
Multiple Choice
Q 7Q 7
"More elastic" means
A)unchanging
B)less desirable
C)more desirable
D)less responsive
E)more responsive
Free
Multiple Choice
Q 8Q 8
In calculating price elasticity of demand, which of the following is assumed to be constant?
A)the price of the product itself
B)the quantity demanded of the product
C)total revenue received from the sale of the product
D)the prices of all other products
E)none of the above
Free
Multiple Choice
Q 9Q 9
If a $1 increase in price leads to a 3-unit decrease in quantity demanded, then demand must be elastic.
Free
True False
Q 10Q 10
The general term elasticity refers to a relationship between
A)quantity demanded and price only
B)quantity supplied and price only
C)quantity supplied or demanded and price only
D)quantity supplied or demanded and anything other than price
E)percentage changes in any two variables
Free
Multiple Choice
Q 11Q 11
Price elasticity of demand is defined as
A)the percentage change in price divided by the percentage change in quantity demanded
B)the percentage change in quantity demanded divided by the percentage change in price
C)the change in quantity demanded divided by the change in price
D)the change in price divided by the change in quantity demanded
E)the quantity demanded divided by the price
Free
Multiple Choice
Q 12Q 12
Price elasticity of demand is typically negative because
A)as price decreases, quantity demanded decreases
B)as price decreases, quantity demanded increases
C)as price decreases, demand decreases
D)as price decreases, demand increases
E)consumers rarely respond to a change in price
Free
Multiple Choice
Q 13Q 13
If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then the value of price elasticity of demand is
A)elastic
B)inelastic
C)unit elastic
D)suggestive of an inferior good
E)equal to -20
Free
Multiple Choice
Q 14Q 14
If the price of Pepsi-Cola increases from 40 cents to 50 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then, according to the midpoint formula, the value of price elasticity of demand for Pepsi-Cola is
A)-0.5
B)-0.25
C)-1
D)-3
E)-2
Free
Multiple Choice
Q 15Q 15
If the value of the price elasticity of demand is -0.2, this means that a
A)20 percent decrease in price causes a 1 percent increase in quantity demanded
B)0.2 percent decrease in price causes a 1 percent increase in quantity demanded
C)5 percent decrease in price causes a 1 percent increase in quantity demanded
D)0.2 percent decrease in price causes a 0.2 percent increase in quantity demanded
E)100 percent decrease in price causes a 200 percent increase in quantity demanded
Free
Multiple Choice
Q 16Q 16
Elasticity is always
A)measured in dollars
B)measured in dollars per unit of quantity
C)measured in units of quantity
D)measured in units of quantity per dollar
E)independent of the units of measurement
Free
Multiple Choice
Q 17Q 17
When quantity is measured in gallons, the price elasticity of demand for milk will be __________ the price elasticity when quantity is measured in quarts.
A)the same as
B)four times
C)one quarter
D)two times
E)less than
Free
Multiple Choice
Free
Multiple Choice
Q 19Q 19
The midpoint quantity between 100 and 300 units is
A)100 units
B)200 units
C)300 units
D)150 units
E)20, 000 units
Free
Multiple Choice
Q 20Q 20
Exhibit 5-2 Use the information in Exhibit 5-2 to calculate the value of price elasticity of demand.
A)-2/3
B)-1/3
C)-3/5
D)-5/3
E)0
Free
Multiple Choice
Q 21Q 21
Exhibit 5-2 Based on the information in Exhibit 5-2, the demand for the good is __________ and an increase in price from $40 to $60 per unit will __________ total revenue.
A)unit elastic; increase
B)elastic; decrease
C)unit elastic; not change
D)inelastic; increase
E)elastic; decrease
Free
Multiple Choice
Q 22Q 22
Exhibit 5-3 Use the information in Exhibit 5-3 to calculate the value of price elasticity of demand for restaurant meals.
A)-1/2
B)-5/3
C)-3/5
D)-3/7
E)-7/3
Free
Multiple Choice
Q 23Q 23
If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units, then the value of price elasticity of demand is
A)-1/3
B)-2 1/3
C)-1/4
D)-3
E)-2/3
Free
Multiple Choice
Q 24Q 24
Price elasticity of demand is calculated as
A)the percentage change in quantity demanded divided by the percentage change in price
B)the percentage change in price divided by the percentage change in quantity demanded
C)the absolute change in quantity demanded divided by the absolute change in price
D)the absolute change in price divided by the absolute change in quantity demanded
E)none of the above
Free
Multiple Choice
Q 25Q 25
If a 5% increase in price leads to an 8% decrease in quantity demanded, demand is
A)perfectly elastic
B)elastic
C)unit elastic
D)inelastic
E)perfectly inelastic
Free
Multiple Choice
Q 26Q 26
If price elasticity of demand is -0.5,
A)a 1% decrease in quantity demanded leads to a 0.5% decrease in price
B)a 1% decrease in price leads to a 0.5% increase in quantity demanded
C)a 50% decrease in price leads to a 1% increase in quantity demanded
D)a 50% decrease in price leads to a 100% increase in quantity demanded
E)demand is elastic
Free
Multiple Choice
Q 27Q 27
If demand is inelastic, the percentage change in price is greater than the resulting percentage change in quantity demanded.
Free
True False
Q 28Q 28
If an increase in the price of a product from $100 to $200 per unit leads to a decrease in the quantity demanded from 10 to 8 units, then demand is
A)elastic
B)inelastic
C)unit elastic
D)0
E)inferior
Free
Multiple Choice
Q 29Q 29
Demand is inelastic only if
A)price elasticity has an absolute value of 1
B)price elasticity has an absolute value greater than 1
C)price elasticity has an absolute value less than 1
D)price elasticity is negative
E)consumers do not respond to a change in price
Free
Multiple Choice
Q 30Q 30
Demand is inelastic if
A)the percentage change in price is greater than the percentage change in quantity demanded
B)the percentage change in price is less than the percentage change in quantity demanded
C)the percentage change in price is equal to the percentage change in quantity demanded
D)the value of price elasticity is equal to -1
E)the value of price elasticity is less than -1
Free
Multiple Choice
Q 31Q 31
Demand is unit elastic whenever
A)price elasticity has an absolute value of 1
B)price elasticity has an absolute value greater than 1
C)price elasticity has an absolute value less than 1
D)price elasticity is negative
E)consumers always respond to a one-dollar change in price by decreasing their quantity demanded by one unit
Free
Multiple Choice
Q 32Q 32
If the price of Pepsi-Cola increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the demand for Pepsi-Cola is
A)unit elastic
B)perfectly elastic
C)perfectly inelastic
D)relatively elastic
E)relatively inelastic
Free
Multiple Choice
Q 33Q 33
Demand is elastic whenever
A)price elasticity has an absolute value of 1
B)price elasticity has an absolute value greater than 1
C)price elasticity has an absolute value less than 1
D)price elasticity is negative
E)consumers respond to a change in price
Free
Multiple Choice
Q 34Q 34
Unit elastic demand occurs when
A)a one-unit increase in price leads to a one-unit decrease in quantity demanded
B)a 1% increase in price leads to a one-unit decrease in quantity demanded
C)price elasticity of demand is positive
D)price elasticity of demand is exactly zero
E)price elasticity of demand is exactly -1
Free
Multiple Choice
Q 35Q 35
A perfectly elastic demand curve is
A)a vertical straight line
B)a horizontal straight line
C)a downward-sloping straight line
D)an upward-sloping straight line
E)not a straight line
Free
Multiple Choice
Q 36Q 36
If a firm facing a perfectly elastic demand curve raises its price,
A)it will still sell exactly the same amount of output as it did at the lower price
B)it will lose some, but not all, of its sales
C)its sales will decrease to zero
D)its sales will increase
E)it is impossible to predict what will happen to its sales
Free
Multiple Choice
Q 37Q 37
A perfectly inelastic demand curve is
A)a vertical straight line
B)a horizontal straight line
C)a downward-sloping straight line
D)an upward-sloping straight line
E)not a straight line
Free
Multiple Choice
Q 38Q 38
Exhibit 5-4 Demand in Exhibit 5-4 is
A)unit elastic
B)somewhat elastic
C)perfectly elastic
D)somewhat inelastic
E)perfectly inelastic
Free
Multiple Choice
Q 39Q 39
Exhibit 5-4 What is the price elasticity of demand in Exhibit 5-4?
A)0
B)-1
C)negative infinity
D)1
E)-100
Free
Multiple Choice
Free
True False
Free
True False
Q 42Q 42
Total revenue is the same for every price-quantity combination along a unit elastic demand curve.
Free
True False
Q 43Q 43
Suppose that you allow yourself $50 per month to spend on compact disks.You spend exactly this much every month regardless of the price of compact disks.Therefore, your demand for CDs
A)is elastic
B)is inelastic
C)is unit elastic
D)cannot be characterized unless we know the price of a disk
E)cannot be characterized unless we know the price and quantity of compact disks purchased
Free
Multiple Choice
Q 44Q 44
The price elasticity of demand
A)is of no use to producers
B)tells producers what will happen to total profit if they change product price
C)tells producers what will happen to quantity supplied if they change product price
D)tells producers what will happen to total revenue if they change product price
E)tells producers what will happen to price in the following time period
Free
Multiple Choice
Q 45Q 45
If a firm raises the price of its product, its total revenue will
A)always increase
B)increase only if demand is price inelastic
C)increase only if demand is price elastic
D)remain constant, regardless of price elasticity of demand
E)never increase
Free
Multiple Choice
Q 46Q 46
If a price reduction leads to larger total revenue, demand is
A)perfectly inelastic
B)inelastic
C)unit elastic
D)elastic
E)perfectly elastic
Free
Multiple Choice
Q 47Q 47
John spends exactly the same dollar amount on candy bars each week, regardless of their price.John's demand curve for candy bars is
A)upward-sloping
B)backward-bending
C)perfectly inelastic
D)perfectly elastic
E)unit elastic
Free
Multiple Choice
Q 48Q 48
If demand is price elastic, total revenue is
A)directly related to quantity demanded
B)inversely related to quantity demanded
C)directly related to price
D)directly related to price and inversely related to quantity demanded
E)not related to either price or to quantity demanded
Free
Multiple Choice
Free
True False
Q 50Q 50
Price elasticity is unit elastic at the midpoint of a linear, downward-sloping demand curve.
Free
True False
Free
True False
Q 52Q 52
The total revenue from selling trucks is equal to
A)the price of a truck times the quantity sold
B)the change in quantity sold divided by the change in price
C)average cost times quantity produced
D)the price of a truck times the quantity produced
E)the price of a truck times the price elasticity of demand
Free
Multiple Choice
Q 53Q 53
Exhibit 5-5 In Exhibit 5-5, what is the total revenue at point a?
A)$4
B)$5
C)$10
D)$50
E)$100
Free
Multiple Choice
Q 54Q 54
Exhibit 5-5 In Exhibit 5-5, what is the total revenue to the left of point a?
A)less than $50, if demand is price inelastic
B)less than $50, if demand is price elastic
C)$50
D)more than $50, if demand is price elastic
E)not enough information to tell
Free
Multiple Choice
Q 55Q 55
Exhibit 5-5 In Exhibit 5-5, what is the total revenue to the right of point a?
A)less than $50, if demand is price inelastic
B)less than $50, if demand is price elastic
C)$50
D)more than $50, if demand is price inelastic
E)not enough information to tell
Free
Multiple Choice
Q 56Q 56
Exhibit 5-5 In Exhibit 5-5, what is the total revenue to the right of point a?
A)equal to $50, if demand is price inelastic
B)less than $50, if demand is price elastic
C)equal to $50, if demand is unitary elastic
D)more than $50, if demand is price inelastic
E)not enough information to tell
Free
Multiple Choice
Q 57Q 57
If the administration raises tuition on our campus in order to increase revenue, it will
A)not be successful if the demand curve slopes downward
B)be successful if demand is elastic
C)be successful if demand is inelastic
D)be successful if supply is elastic
E)be successful if supply is inelastic
Free
Multiple Choice
Q 58Q 58
If the demand for a good is elastic, then total revenue
A)increases as price increases
B)remains constant as quantity demanded increases
C)increases as price decreases
D)decreases as quantity demanded increases
E)decreases as price decreases
Free
Multiple Choice
Q 59Q 59
Which of the following will cause demand to be relatively elastic?
A)There are few substitutes
B)The time interval is relatively long
C)The good is considered a necessity
D)The good involves a relatively small portion of the consumers' budget
E)The time interval is relatively short
Free
Multiple Choice
Q 60Q 60
If city officials expect that an increase in bus fares will raise mass transit revenues, they must think that the demand for bus travel is
A)elastic
B)unit elastic
C)inelastic
D)perfectly inelastic
E)-10
Free
Multiple Choice
Q 61Q 61
If demand is unit elastic, a price reduction will
A)increase revenues
B)reduce revenues
C)reduce quantity demanded
D)have no effect on revenues
E)increase profits
Free
Multiple Choice
Q 62Q 62
Suppose the price elasticity of demand for your economics textbook is -1.If the publisher raises the price by 5 percent,
A)revenues will rise 5 percent
B)quantity demanded will rise 5 percent
C)total revenues will not change
D)revenues will fall
E)revenues will fall 5 percent
Free
Multiple Choice
Q 63Q 63
The demand for a good is elastic if
A)an increase in price leads to a decrease in total revenue
B)an increase in price leads to an increase in total revenue
C)an increase in price causes no change in total revenue
D)total revenue is maximum
E)total revenue is minimum
Free
Multiple Choice
Q 64Q 64
If the price of Pepsi-Cola increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the Pepsi-Cola Company could increase its total revenue by
A)lowering price
B)decreasing quantity supplied
C)leaving price the same
D)raising price
E)decreasing supply
Free
Multiple Choice
Q 65Q 65
If the demand for swordfish is price elastic and the price of swordfish increases, then
A)the quantity of swordfish demanded will increase
B)the total revenue from swordfish sales will decrease
C)the total revenue from swordfish sales will increase
D)the total revenue from swordfish sales will not change
E)whether total revenue rises or falls depends on how much the price of swordfish increases
Free
Multiple Choice
Q 66Q 66
If the demand for ptyalin is unit elastic, then
A)total revenue decreases as quantity demanded increases
B)total revenue increases as quantity demanded increases
C)total revenue increases as price increases
D)total revenue remains constant as price increases
E)total revenue decreases as price increases
Free
Multiple Choice
Q 67Q 67
If the demand for airline tickets to Fort Lauderdale is price elastic,
A)airline revenue will increase if supply increases
B)airline revenue will increase if supply decreases
C)a small change in price will cause a large shift in the demand curve
D)a large change in price will cause a small shift in the demand curve
E)a large change in price will cause a large shift in the demand curve
Free
Multiple Choice
Q 68Q 68
If the demand for a product is price inelastic,
A)producers' revenues will increase if supply increases
B)producers' revenues will increase if supply decreases
C)a small change in price will cause a large shift in the demand curve
D)a large change in price will cause a small shift in the demand curve
E)a small change in price will cause a small shift in the demand curve
Free
Multiple Choice
Q 69Q 69
Wheat farmers in Kansas would benefit from a devastating crop failure in North Dakota (another major wheat-producing state)if the U.S.demand for wheat is
A)inelastic
B)elastic
C)unit elastic
D)downward sloping
E)perfectly elastic
Free
Multiple Choice
Q 70Q 70
Which of the following describes a situation in which demand must be elastic?
A)The price of pens rises by 10 cents, and quantity of pens demanded falls by 50.
B)The price of pens rises by 10 cents, and total revenue rises.
C)A 20 percent increase in the price of pens leads to a 20 percent decrease in the quantity of pens demanded.
D)Total revenue does not change when the price of pens rises.
E)Total revenue decreases when the price of pencils rises.
Free
Multiple Choice
Q 71Q 71
Which of the following describes a situation in which demand must be inelastic?
A)The price of pens rises by 10 cents, and quantity of pens demanded falls by 50.
B)The price of pens rises by 10 cents, and total revenue rises.
C)A 20 percent increase in the price of pens leads to a 20 percent decrease in the quantity of pens demanded.
D)Total revenue does not change when the price of pens rises.
E)Total revenue decreases when the price of pens rises.
Free
Multiple Choice
Q 72Q 72
Which of the following describes a situation in which demand must be inelastic?
A)Total revenue decreases by 10 percent when the price of spats rises by 10 percent.
B)Total revenue decreases by less than 10 percent when the price of spats rises by 10 percent.
C)Total revenue increases by more than 10 percent when the price of spats rises by 10 percent.
D)Total revenue decreases by $10 when the price of spats rises by $10.
E)Total revenue decreases by more than $10 when the price of spats rises by $10.
Free
Multiple Choice
Q 73Q 73
Which of the following describes a situation in which demand must be elastic?
A)Total revenue increases by 15 percent when the price of corndogs rises by 15 percent.
B)Total revenue increases by less than 15 percent when the price of corndogs rises by 15 percent.
C)Total revenue decreases by more than 15 percent when the price of corndogs rises by 15 percent.
D)Total revenue increases by $15 when the price of corndogs rises by $15.
E)Total revenue increases by more than $15 when the price of corndogs rises by $15.
Free
Multiple Choice
Q 74Q 74
One group of people uses New York City subways only during rush hour to travel to and from work.Another group uses them only in midday for leisure activity.If New York City wants to increase transit fares with the smallest possible reduction in revenue, for which group should it increase the fare?
A)The rush-hour group because its demand for subway service is more elastic than that of the midday group.
B)The rush-hour group because its demand for subway service is less elastic than that of the midday group.
C)The midday group because its demand for subway service is more elastic than that of the rush-hour group.
D)The midday group because its demand for subway service is less elastic than that of the rush-hour group.
E)It doesn't matter because both groups have the same elasticity of demand.
Free
Multiple Choice
Q 75Q 75
Along a linear demand curve,
A)both the slope and price elasticity are constant
B)the price elasticity is constant, but the slope varies
C)total revenues are constant
D)the slope is constant, but the price elasticity varies
E)total revenues are negative
Free
Multiple Choice
Q 76Q 76
Along a linear demand curve, as the price increases from zero,
A)demand decreases
B)demand increases
C)quantity demanded increases
D)total revenue first increases but eventually decreases
E)total revenue first decreases but eventually increases
Free
Multiple Choice
Q 77Q 77
The absolute value of the price elasticity of demand at the midpoint of a linear demand curve is always
A)greater than one
B)less than one
C)one
D)zero
E)infinity
Free
Multiple Choice
Q 78Q 78
Along a downward-sloping linear demand curve, total revenue is greatest if demand is
A)inelastic
B)elastic
C)inelastic when prices are high
D)elastic when prices are high
E)unit elastic
Free
Multiple Choice
Q 79Q 79
If the managers of a theater plan to raise ticket prices to increase ticket revenues, then they must believe that demand is
A)elastic
B)inelastic
C)unit elastic
D)perfectly elastic
E)income elastic
Free
Multiple Choice
Q 80Q 80
Along a straight-line downward-sloping demand curve, elasticity is
A)constant, but its value cannot be determined without measurement
B)constant and equal to an absolute value of one
C)greater at higher prices
D)greater at lower prices
E)greater in the middle
Free
Multiple Choice
Q 81Q 81
Along a downward-sloping linear demand curve,
A)slope is constant and elasticity is changing
B)slope is changing and elasticity is constant
C)both slope and elasticity are constant
D)both slope and elasticity are changing
E)no generalizations can be made about slope
Free
Multiple Choice
Q 82Q 82
The total revenue curve that corresponds to a downward-sloping linear demand curve
A)slopes downward
B)slopes upward
C)is a horizontal line
D)first rises, then falls
E)first falls, then rises
Free
Multiple Choice
Q 83Q 83
If the sellers in the cigarette industry formed a cartel and decided to set price along a straight-line downward-sloping demand curve, which point would they choose if they wanted to gain the highest total revenue?
A)The point nearest the vertical axis, where the price is highest.
B)The point nearest the horizontal axis, where quantity demanded is greatest.
C)One of the points higher up on the demand curve, where demand is elastic.
D)One of the points lower down on the demand curve, where demand is inelastic.
E)The point of unit elasticity, in the middle of the demand curve.
Free
Multiple Choice
Q 84Q 84
Along a linear demand curve, as the price rises, demand becomes more
A)steep
B)elastic
C)inelastic
D)unit elastic
E)variable
Free
Multiple Choice
Q 85Q 85
Along a linear demand curve, total revenue is maximized when demand is
A)elastic
B)inelastic
C)unit elastic
D)perfectly elastic
E)perfectly inelastic
Free
Multiple Choice
Q 86Q 86
Dusty Rags, Inc.provides janitorial services to retail stores.Dusty had been charging $10 per hour and selling 400 hours of service per week at that rate.When he raised his price to $15 per hour, his customers cut back to 300 weekly hours of service.Which of the following is true?
A)Revenue went from $4, 000 per week to $4, 500 per week, indicating that the demand curve for his services must have shifted to the right.
B)Revenue went from $4, 000 per week to $4, 500 per week, indicating that the demand for his services must be elastic.
C)Revenue went from $4, 000 per week to $4, 500 per week, indicating that the demand for his services must be inelastic.
D)Revenue went from $400 to $300 per week, indicating that demand must be elastic.
E)Revenue went from $10 to $15 per week, indicating that demand must be inelastic.
Free
Multiple Choice
Q 87Q 87
Suppose consumers spent $42 million on Christmas trees last year when the average tree cost $30 and this year spent $42 million when the average tree costs $25.Assuming nothing else changed, this data suggests that
A)consumers bought the same number of Christmas trees this year as last year
B)the price of Christmas trees stayed the same
C)total revenues to tree producers rose this year
D)the demand for trees is unit elastic
E)the demand for trees is inelastic
Free
Multiple Choice
Q 88Q 88
A government-imposed price floor above the market price of milk would increase consumers' expenditures on milk only if
A)demand is elastic
B)supply is inelastic
C)demand falls
D)demand is inelastic
E)supply is unit elastic
Free
Multiple Choice
Q 89Q 89
Exhibit 5-6 We can tell that demand is elastic as price falls between point a and point b in Exhibit 5-6 because
A)quantity demanded is increasing
B)total revenue is increasing
C)total revenue is decreasing
D)total revenue is unchanged
E)the demand curve slopes downward
Free
Multiple Choice
Q 90Q 90
Exhibit 5-7 In Exhibit 5-7, demand is unit elastic
A)between points a and d
B)between points d and e
C)between points e and g
D)only at the top and bottom of the curve
E)anywhere along the curve
Free
Multiple Choice
Q 91Q 91
Exhibit 5-7 Between points b and c in Exhibit 5-7, price decreases by $1, quantity demanded increases by 10,
A)total revenue decreases by $1, and demand is elastic
B)total revenue decreases by $1, and demand is inelastic
C)total revenue increases by $40, and demand is elastic
D)total revenue increases by $40, and demand is inelastic
E)and total revenue increases by $80
Free
Multiple Choice
Q 92Q 92
Exhibit 5-7 Which of the following is true between points g and h in Exhibit 5-7?
A)Total revenue remains constant at $180.
B)Total revenue falls by $12.
C)Total revenue falls by $60.
D)Total revenue falls by $180.
E)Demand is elastic.
Free
Multiple Choice
Q 93Q 93
Exhibit 5-8 Which of the following statements is true in the range of the total revenue curve labeled A in Exhibit 5-8?
A)Demand is elastic.
B)Demand is inelastic.
C)Demand is unit elastic.
D)We cannot tell anything about elasticity of demand because this is a total revenue curve.
E)Demand is perfectly elastic.
Free
Multiple Choice
Q 94Q 94
Exhibit 5-8 Which of the following statements is true in the range of the total revenue curve labeled B in Exhibit 5-8?
A)Demand is elastic.
B)Demand is inelastic.
C)Demand is unit elastic.
D)We cannot tell anything about elasticity of demand because this is a total revenue curve.
E)Demand is perfectly elastic.
Free
Multiple Choice
Q 95Q 95
Exhibit 5-8 In Exhibit 5-8, which of the following statements is true at a quantity of 10?
A)Demand is elastic.
B)Demand is inelastic.
C)Demand is unit elastic.
D)We cannot tell anything about elasticity of demand because this is a total revenue curve.
E)Demand is perfectly elastic.
Free
Multiple Choice
Q 96Q 96
Exhibit 5-8 Which of the following is not true in the range of the total revenue curve labeled A in Exhibit 5-8?
A)Demand is inelastic.
B)Total revenue is increasing.
C)Total revenue is positive.
D)Demand is elastic.
E)Demand elasticity decreases as total revenue increases.
Free
Multiple Choice
Q 97Q 97
Exhibit 5-9 Between points a and b on the demand curve in Exhibit 5-9, demand is
A)perfectly elastic
B)elastic
C)perfectly inelastic
D)inelastic
E)unit elastic
Free
Multiple Choice
Q 98Q 98
It has been suggested that if NHL hockey teams would lower ticket prices, they could increase revenue from ticket sales.Which of the following assumptions forms the basis for this suggestion?
A)Both d and e are correct.
B)All of the following are correct.
C)Demand for NHL hockey is income inelastic.
D)Demand for NHL hockey is price elastic.
E)There are many substitutes for NHL hockey.
Free
Multiple Choice
Q 99Q 99
Exhibit 5-10 In Exhibit 5-10, between the two equilibrium prices shown, demand is
A)price elastic
B)price inelastic
C)unit elastic
D)perfectly elastic
E)perfectly inelastic
Free
Multiple Choice
Q 100Q 100
Exhibit 5-11 Refer to Exhibit 5-11.What can be said of the price elasticity of demand for this good?
A)Demand is inelastic.
B)Demand is unit elastic.
C)Demand is elastic.
D)Demand is perfectly elastic.
E)Not enough information is given to determine elasticity.
Free
Multiple Choice
Q 101Q 101
Exhibit 5-12 Refer to Exhibit 5-12.What can be said of the price elasticity of demand for this good?
A)Demand is inelastic.
B)Demand is unit elastic.
C)Demand is elastic.
D)Demand is perfectly elastic.
E)Not enough information is given to determine elasticity.
Free
Multiple Choice
Free
True False
Q 103Q 103
If the supply curve slopes upward and a $3 per unit tax on suppliers raises the profit-maximizing price by $3, demand must be perfectly inelastic.
Free
True False
Q 104Q 104
If there is no change in equilibrium price after a $1 per unit tax is imposed on suppliers, demand must be perfectly inelastic.
Free
True False
Free
True False
Q 106Q 106
Perfectly elastic demand curves are irrelevant, since real world demand curves are never perfectly elastic.
Free
True False
Q 107Q 107
Exhibit 5-13 Which of the following is true of the demand curve in Exhibit 5-13?
A)Its slope is 0, and the value of elasticity is negative infinity.
B)Its slope is infinite, and the value of elasticity is 0.
C)Both its slope and the value of elasticity are 0.
D)Both its slope and the value of elasticity are negative infinity.
E)Its slope is 0, and demand is unit elastic.
Free
Multiple Choice
Q 108Q 108
Exhibit 5-14 Which of the following is true of the demand curve in Exhibit 5-14?
A)Its slope is 0, and the value of elasticity is negative infinity.
B)Its slope is infinite, and the value of elasticity is 0.
C)Both its slope and the value of elasticity are 0.
D)Both its slope and the value of elasticity are negative infinity.
E)Its slope is 0, and demand is perfectly inelastic.
Free
Multiple Choice
Q 109Q 109
Exhibit 5-15 Which of the demand curves in Exhibit 5-15 is unit elastic?
A)the curve in graph a
B)the curve in graph b
C)the curve in graph c
D)the curve in graph d
E)the curve in graph e
Free
Multiple Choice
Q 110Q 110
Exhibit 5-15 Which demand curve in Exhibit 5-15 is perfectly elastic?
A)the curve in graph a
B)the curve in graph b
C)the curve in graph c
D)the curve in graph d
E)the curve in graph e
Free
Multiple Choice
Q 111Q 111
Exhibit 5-15 Which of the demand curves in Exhibit 5-15 has constant elasticity everywhere?
A)the curve in graph c only
B)the curves in graphs a and b
C)the curves in graphs a, b, and c
D)all of the curves shown
E)the curves in graphs c, d, and e
Free
Multiple Choice
Q 112Q 112
For which of the following products is the consumer's demand curve most likely to be vertical?
A)lobster, for a seafood lover
B)cars, for high school students
C)insulin, for a diabetic
D)compact disks, for a music lover
E)beef, for a food lover
Free
Multiple Choice
Q 113Q 113
A demand curve that is unit elastic everywhere is
A)linear and slopes downward
B)linear and slopes upward
C)vertical
D)horizontal
E)nonlinear
Free
Multiple Choice
Q 114Q 114
Exhibit 5-16 Between points a and b in Exhibit 5-16, the demand curve is
A)relatively inelastic
B)perfectly inelastic
C)unit elastic
D)perfectly elastic
E)relatively elastic
Free
Multiple Choice
Q 115Q 115
Exhibit 5-16 Consider Exhibit 5-16.Since the product P x Q remains constant between points a and b, demand must be
A)relatively inelastic
B)perfectly inelastic
C)unit elastic
D)perfectly elastic
E)relatively elastic
Free
Multiple Choice
Q 116Q 116
Perfectly elastic demand curves are
A)downward sloping
B)upward sloping
C)vertical
D)horizontal
E)steep
Free
Multiple Choice
Q 117Q 117
If Katherine claims that when it comes to buying shoes, "price is no object, " her demand curve for shoes is likely to be
A)horizontal
B)nonexistent
C)upward sloping
D)highly inelastic
E)unit elastic
Free
Multiple Choice
Q 118Q 118
In the real world, demand is not likely to be perfectly inelastic at every price because
A)no substitutes exist for some goods
B)some consumers will be unable to afford very high prices with given incomes
C)at low prices, consumers always want a lot
D)consumers are willing to pay any price for certain goods
E)the prices of certain goods don't change
Free
Multiple Choice
Free
True False
Q 120Q 120
The demand for a particular brand of automobile is likely to be more inelastic than the demand for automobiles in general.
Free
True False
Free
True False
Q 122Q 122
The greater the availability of close substitutes for a product, the greater the price elasticity of demand for that product.
Free
True False
Q 123Q 123
The more narrowly a product is defined, the less elastic the demand for that product will be.
Free
True False
Q 124Q 124
If Joe says that nothing comes close to a Pepsi, his demand for Pepsi is likely to be
A)relatively price elastic
B)relatively income elastic
C)relatively price inelastic
D)unit elastic
E)infinitely elastic
Free
Multiple Choice
Q 125Q 125
For which of the following is demand most likely to be perfectly inelastic?
A)BMW automobiles
B)Pepsi Cola
C)hot dogs
D)insulin
E)Tylenol
Free
Multiple Choice
Q 126Q 126
Given the availability of California oranges, demand for Florida oranges will
A)be less elastic than if there were no California oranges
B)be more elastic than if there were no California oranges
C)have the same elasticity as it would if there were no California oranges
D)be perfectly elastic
E)be perfectly inelastic
Free
Multiple Choice
Q 127Q 127
The demand for flounder (a specific type of fish)is
A)more elastic than the demand for fish because there are more substitutes for flounder than for fish in general
B)less elastic than the demand for fish because there are more substitutes for flounder than for fish in general
C)more elastic than the demand for fish because there are more substitutes for fish in general than for flounder
D)less elastic than the demand for fish because there are more substitutes for fish in general than for flounder
E)more elastic than the demand for fish because flounder is one of the less expensive kinds of fish
Free
Multiple Choice
Q 128Q 128
The more broadly a good is defined,
A)the more substitutes it has so the more elastic is its demand
B)the fewer substitutes it has so the more elastic is its demand
C)the more substitutes it has so the less elastic is its demand
D)the fewer substitutes it has so the less elastic is its demand
E)the more complements it has so the more elastic is its demand
Free
Multiple Choice
Q 129Q 129
Exhibit 5-17 Consider Exhibit 5-17.Demand curves D1, D2 and D3 represent the demand for food, apples and fruit.Which represents which?
A)D1 is apples, D2 is fruit and D3 is food
B)D1 is fruit, D2 is food and D3 is apples
C)D1 is food, D2 is apples and D3 is food
D)D1 is food, D2 is fruit and D3 is apples
E)impossible to tell without more information
Free
Multiple Choice
Q 130Q 130
The value of price elasticity of demand for a good with no close substitutes
A)will tend to be greater than -1
B)will tend to be less than -1
C)will tend to be equal to -1
D)will tend to be equal to 0
E)cannot be determined without more information
Free
Multiple Choice
Q 131Q 131
Demand is more elastic
A)in the short run than in the long run
B)for necessities than for luxuries
C)for food than for hamburgers
D)for goods with many substitutes than for goods with only a few
E)for broadly defined goods than for narrowly defined ones
Free
Multiple Choice
Q 132Q 132
The demand for Olin skis is likely to be
A)less elastic than the demand for skis in general
B)more elastic than the demand for skis in general
C)unit elastic relative to the demand for skis in general
D)as elastic as the demand for skis in general
E)greater than the demand for skis in general
Free
Multiple Choice
Q 133Q 133
The demand curve for a good that has many perfect substitutes in consumption is likely to be
A)upward sloping
B)steep
C)highly inelastic
D)horizontal
E)vertical
Free
Multiple Choice
Q 134Q 134
A successful advertising campaign would likely
A)increase price elasticity of demand by stressing the uniqueness of the product
B)reduce price elasticity of demand by stressing the uniqueness of the product
C)reduce price elasticity of demand by informing consumers of the availability of substitutes
D)not alter the demand curve
E)generally make the demand curve shift inward
Free
Multiple Choice
Q 135Q 135
Demand for clothing tends to be
A)elastic because there are few substitutes for clothing
B)inelastic because there are few substitutes for clothing
C)elastic because expenditures for clothing represent a large part of the consumer's budget
D)inelastic because expenditures for clothing represent a large part of the consumer's budget
E)elastic because it is a broadly defined good
Free
Multiple Choice
Q 136Q 136
As DVDs become popular substitutes for video cassettes, demand for video cassettes is likely to
A)become less price elastic
B)become more price elastic
C)increase
D)stay the same
E)become unit elastic
Free
Multiple Choice
Q 137Q 137
The more broadly a good is defined
A)the more substitutes it has, so demand will be more price-elastic
B)the less substitutes it has, so demand will be more price-elastic
C)the more substitutes it has, so demand will be less price-elastic
D)the less substitutes it has, so demand will be less price-elastic
E)has no effect on the good's price elasticity of demand
Free
Multiple Choice
Q 138Q 138
For which of the following is demand likely to be most price-elastic?
A)steak
B)beef (including steak, ribs, hamburger, etc.)
C)meat (including beef, pork, chicken, lamb, etc.)
D)protein foods (including meat, cheese, beans, eggs, fish, etc.)
E)none of the above (they will all have the same elasticity)
Free
Multiple Choice
Q 139Q 139
The larger the proportion of the consumer's budget that is spent on a product, the more elastic that consumer's demand for the product will be.
Free
True False
Q 140Q 140
A good that takes up a very large percentage of the consumer's budget will tend to have
A)an elastic demand
B)a perfectly elastic demand
C)an inelastic demand
D)an upward-sloping demand curve
E)very many substitutes
Free
Multiple Choice
Q 141Q 141
All other things constant, goods will have more __________ demand if their price uses up a __________ proportion of a consumer's budget.
A)price-elastic; greater
B)unit-elastic; smaller
C)price-elastic; smaller
D)price-inelastic; greater
E)stable; greater
Free
Multiple Choice
Q 142Q 142
For which of the following is demand likely to be the most price inelastic?
A)furniture
B)automobiles
C)hotel rooms
D)airline travel
E)candy bars
Free
Multiple Choice
Q 143Q 143
The demand for flour is
A)inelastic because there are few substitutes for flour and it represents a large percentage of a consumer's budget
B)inelastic because there are many substitutes for flour and it represents a large percentage of a consumer's budget
C)inelastic because there are few substitutes for flour and it represents a small percentage of a consumer's budget
D)elastic because there are no substitutes for flour and it represents a large percentage of a consumer's budget
E)elastic because there are many substitutes for flour and it represents a large percentage of a consumer's budget
Free
Multiple Choice
Q 144Q 144
As consumers have a longer time period to respond, the demand for a product typically becomes more inelastic.
Free
True False
Q 145Q 145
If people have more time to adjust to a price change,
A)demand becomes more elastic, and supply becomes less elastic
B)demand becomes less elastic, and supply becomes more elastic
C)both supply and demand become less elastic
D)both supply and demand become more elastic
E)elasticity of both demand and supply tends toward unity
Free
Multiple Choice
Q 146Q 146
Which of the following tends to make demand for a good more elastic?
A)A reduction in the number of substitutes for the good.
B)Consumers have a long time to adjust to a price change.
C)The amount spent on the good is a small proportion of the consumer's budget.
D)The good is broadly defined.
E)The good is a necessity.
Free
Multiple Choice
Q 147Q 147
If people have more time to adjust to a price change, the price elasticity of demand for that good is likely to
A)increase
B)decrease
C)fall to zero
D)become equal to -1
E)remain unchanged
Free
Multiple Choice
Q 148Q 148
Which of the following does not determine a good's price elasticity of demand?
A)the time interval considered
B)the number of substitutes there are for the good
C)expenditures on the good as a percentage of the total consumer budget
D)the slope of the demand curve
E)the more of a luxury a particular good is
Free
Multiple Choice
Q 149Q 149
Exhibit 5-18 Use the information in Exhibit 5-18 to calculate the price elasticity of supply for restaurant meals.
A)7
B)2
C)1/2
D)3/5
E)5/3
Free
Multiple Choice
Q 150Q 150
If a tripling of price triples the quantity of a good supplied, the price elasticity of supply is
A)3
B)300
C)1
D)-1
E)-3
Free
Multiple Choice
Q 151Q 151
If an increase in price from $1 to $2 per unit leads to an increase in quantity supplied from 20 to 100 units, then the value of price elasticity of supply is
A)0.38
B)2
C)2.67
D)4
E)8
Free
Multiple Choice
Q 152Q 152
If price increases from $45 to $55, the market quantity supplied increases from 20 units per week to 30 units per week.The price elasticity of supply is
A)1/2 = 0.5
B)1.0
C)11/6 = 1.8333
D)9/4 = 2.25
E)2.0
Free
Multiple Choice
Q 153Q 153
If the demand curve shifts but the supply curve does not and price remains the same, supply must be perfectly inelastic.
Free
True False
Q 154Q 154
Any supply curve that is a straight line passing through the graph's origin is unit elastic.
Free
True False
Q 155Q 155
If supply is perfectly elastic, the supply curve is
A)vertical
B)horizontal
C)any straight-line supply curve
D)any supply curve intersecting a perfectly elastic demand curve
E)any supply curve intersecting a demand curve which is unit elastic
Free
Multiple Choice
Q 156Q 156
If the price elasticity of supply in the kiwi fruit industry equals 1, supply is
A)perfectly elastic
B)relatively elastic
C)unit elastic
D)relatively inelastic
E)perfectly inelastic
Free
Multiple Choice
Q 157Q 157
If an increase in price from $1.20 to $2 per unit leads to an increase in quantity supplied from 20 to 100 units,
A)demand is elastic
B)demand is inelastic
C)demand is unit elastic
D)supply is elastic
E)supply is inelastic
Free
Multiple Choice
Q 158Q 158
The supply of paintings by Van Gogh is most likely to be
A)of infinite elasticity because supply is limited
B)of high elasticity because supply is limited
C)elastic because the paintings are luxury goods
D)inelastic because supply is limited
E)unit elastic
Free
Multiple Choice
Q 159Q 159
If the price of a good doubles and quantity supplied triples, then
A)demand is elastic
B)demand is inelastic
C)supply is inelastic
D)supply is elastic
E)there is insufficient information to reach any conclusion about the price elasticity of supply
Free
Multiple Choice
Q 160Q 160
Exhibit 5-19 The curve shown in Exhibit 5-19 could represent
A)perfectly elastic demand or supply
B)perfectly inelastic supply or perfectly elastic demand
C)perfectly elastic supply or perfectly inelastic demand
D)perfectly inelastic supply or demand
E)perfectly inelastic supply or demand which is unit elastic
Free
Multiple Choice
Q 161Q 161
If output in the calculator market increases by 5 percent when the price increases by more than 5 percent, then
A)supply is inelastic
B)supply is elastic
C)a small increase in price will cause a leftward shift of the supply curve
D)a small increase in price will cause a rightward shift of the supply curve
E)a large increase in price will cause a large shift of the supply curve
Free
Multiple Choice
Q 162Q 162
Today's supply curve of dorm rooms on campus is likely to be
A)downward sloping
B)relatively flat
C)vertical
D)horizontal
E)price elastic
Free
Multiple Choice
Q 163Q 163
A perfectly elastic supply curve
A)has no relevance, since real-world supply curves are never perfectly elastic
B)is a horizontal straight line
C)is a vertical straight line
D)is an upward-sloping straight line
E)is not a straight line
Free
Multiple Choice
Q 164Q 164
The supply curve will be more elastic if
A)the good has few substitutes
B)the time the producer has to adjust is long
C)the time frame for adjusting to price changes is short
D)demand is elastic
E)demand is inelastic
Free
Multiple Choice
Q 165Q 165
As producers have more time to adjust to a price change, price elasticity of supply
A)increases
B)decreases
C)remains the same
D)rises and then falls
E)falls and then rises
Free
Multiple Choice
Q 166Q 166
The price elasticity of today's supply curve of classrooms on campus is likely to
A)be greater than 1
B)be less than 1
C)be equal to 1
D)approach zero
E)be infinity
Free
Multiple Choice
Q 167Q 167
Exhibit 5-20 Consider Exhibit 5-20.Between the prices of $5 and $6, which supply curve is most elastic and which is least elastic?
A)S1 is most elastic; S2 is least elastic.
B)S1 is most elastic; S3 is least elastic.
C)S3 is most elastic; S1 is least elastic.
D)S3 is most elastic; S2 is least elastic.
E)S2 is most elastic; S3 is least elastic.
Free
Multiple Choice
Q 168Q 168
Price elasticity of demand and price elasticity of supply are both influenced by
A)the availability of close substitutes for the product
B)the proportion of the consumer's budget spend on the product
C)the length of the adjustment period considered
D)technological conditions such as the additional costs of increasing production
E)none of the above
Free
Multiple Choice
Q 169Q 169
The most important determinant of price elasticity of supply is
A)price elasticity of demand
B)technological conditions such as how rapidly costs increase when a firm increases its output
C)whether the production process relies heavily on capital or on labor
D)the number and closeness of available substitutes
E)whether the product is a normal good or an inferior good
Free
Multiple Choice
Q 170Q 170
Exhibit 5-21 What is the price elasticity of supply between $10 and $20 on supply curve S in Exhibit 5-21?
A)0
B)infinity
C)1
D)2
E)10
Free
Multiple Choice
Q 171Q 171
Exhibit 5-21 What is the price elasticity of supply between $20 and $40 on supply curve S' in Exhibit 5-21?
A)0
B)infinity
C)1
D)2
E)10
Free
Multiple Choice
Q 172Q 172
Exhibit 5-21 Which supply curve is more elastic in Exhibit 5-21?
A)Both S and S' have the same elasticity.
B)S is more elastic at lower prices and S' is more elastic at higher prices.
C)S is more elastic at higher prices and S' is more elastic at lower prices.
D)S
E)S'
Free
Multiple Choice
Q 173Q 173
Both income elasticity of demand and cross-price elasticity of demand coefficients can take on negative, zero, or positive values.
Free
True False
Q 174Q 174
If income rises and the demand for toothbrushes stays the same, income elasticity of toothbrushes is said to be unit elastic.
Free
True False
Free
True False
Q 176Q 176
A normal good is defined as a product for which quantity demanded increases as price decreases.
Free
True False
Q 177Q 177
If income rises and the demand for a product remains unchanged, the income elasticity of demand for that product is unit elastic.
Free
True False
Q 178Q 178
Inferior goods have an income elasticity of demand that is
A)positive
B)negative
C)0
D)greater than 1 in absolute value
E)equal to 1 in absolute value
Free
Multiple Choice
Q 179Q 179
For which of the following goods is the value of income elasticity most likely to be negative?
A)macaroni and cheese
B)champagne
C)airline tickets
D)clothes
E)toothpaste
Free
Multiple Choice
Q 180Q 180
Goods with an income elasticity of demand greater than 1 are called
A)necessities
B)inferior goods
C)normal goods
D)luxuries
E)complements
Free
Multiple Choice
Q 181Q 181
For which of the following goods is the income elasticity of demand likely to be largest?
A)paperback mystery stories
B)best-selling hardcover novels
C)used textbooks
D)children's books
E)leather-bound editions of Shakespeare
Free
Multiple Choice
Q 182Q 182
For which of the following medical goods or services is the income elasticity of demand likely to be largest?
A)emergency services after a car accident
B)measles shots
C)physical examinations for life insurance applications
D)medical tests to diagnose specific symptoms
E)face-lifts
Free
Multiple Choice
Q 183Q 183
Suppose the income elasticity of demand for a private college education is equal to 1.5.This means that
A)every $1 increase in income provides an incentive for a $1.50 increase in expenditures on private college education
B)every $1.50 increase in income provides an incentive for a $1 increase in expenditures on private college education
C)a 10 percent increase in income causes a 15 percent increase in the demand for a private college education
D)a 15 percent increase in income causes a 10 percent increase in the demand for a private college education
E)a 10 percent decrease in private college tuition will have a large enough income effect to increase spending on private college education by 15 percent
Free
Multiple Choice
Q 184Q 184
An inferior good is
A)any good of low quality
B)one that consumers buy less of as the price rises
C)one that consumers buy less of as their income rises
D)one that has few substitutes
E)any good made with inexpensive labor
Free
Multiple Choice
Q 185Q 185
An indication that the economy is in recession, e.g., a rise in the number of used clothing stores for babies, suggests that
A)used clothes for babies are a necessity
B)used clothes for babies are an inferior good
C)used clothes for babies are a normal good
D)new clothes for babies are a luxury
E)used clothes for babies have price-elastic demand
Free
Multiple Choice
Q 186Q 186
As the economy recovers from a recession, we should expect that
A)demand for inferior goods will fall and demand for normal goods will rise
B)demand for both inferior and normal goods will rise
C)demand for inferior goods will rise and demand for normal goods will fall
D)demand for both inferior and normal goods will fall
E)demand for complements will fall
Free
Multiple Choice
Q 187Q 187
Demand for a necessity, such as food, is
A)both income and price inelastic
B)income inelastic and price elastic
C)income elastic and price inelastic
D)both income and price elastic
E)income elastic and perfectly price inelastic
Free
Multiple Choice
Q 188Q 188
If we wanted to prove that macaroni is an inferior good, we would test the __________ of macaroni and get a __________.
A)cross-price elasticity; negative number
B)income elasticity; number less than 1
C)income elasticity; positive number
D)price elasticity of demand; number greater than negative 1
E)income elasticity; negative number
Free
Multiple Choice
Q 189Q 189
If a good is inferior, then the income elasticity of demand for that good is
A)positive and greater than 1
B)negative
C)positive and less than 1
D)0
E)perfectly elastic
Free
Multiple Choice
Q 190Q 190
A 5 percent increase in income leads to a 10 percent decrease in quantity demanded for a service.This service is a(n)__________ good and demand is __________.
A)normal; elastic
B)normal; inelastic
C)normal; unit elastic
D)inferior; elastic
E)inferior; inelastic
Free
Multiple Choice
Q 191Q 191
If the income elasticity of demand for a service is 0.6, then a 5 percent increase in income will generate a __________ in quantity demanded
A)3 percent decrease
B)3 percent increase
C)8.33 percent decrease
D)8.33 percent increase
E)0.12 percent decrease
Free
Multiple Choice
Q 192Q 192
Economists distinguish between normal and inferior goods using
A)price elasticity of demand
B)price elasticity of supply
C)income elasticity of demand
D)cross-price elasticity of demand
E)tax incidence
Free
Multiple Choice
Q 193Q 193
An inferior good is one for which demand increases as
A)price decreases
B)price increases
C)income increases
D)income decreases
E)the price of a related good decreases
Free
Multiple Choice
Q 194Q 194
Luxury goods are
A)price inelastic
B)income inelastic
C)income elastic
D)goods with negative income elasticity
E)goods with positive price elasticity
Free
Multiple Choice
Q 195Q 195
Farm income has fallen in part because demand for farm products is price inelastic and income inelastic.
Free
True False
Q 196Q 196
The demands for wheat, soybeans, milk, and eggs tend to be
A)price inelastic
B)price elastic
C)price inelastic only in the long run
D)price elastic only in the short run
E)price elastic only in the long run
Free
Multiple Choice
Q 197Q 197
When agricultural production increases, the total amount paid for agricultural products tends to
A)increase because demand is price elastic
B)decrease because demand is price elastic
C)increase because demand is price inelastic
D)decrease because demand is price inelastic
E)remain constant because demand is price inelastic
Free
Multiple Choice
Q 198Q 198
The demand for most agricultural products tends to be
A)both price and income elastic
B)both price and income inelastic
C)price inelastic and income elastic
D)price elastic and income inelastic
E)unit elastic in terms of price elasticity and income elastic
Free
Multiple Choice
Q 199Q 199
Farm output per worker in the United States has increased since 1950 because
A)of technological improvements
B)there are more farms
C)there are fewer acres of land per farm
D)the supply of farm products is inelastic
E)of a decrease in government subsidies
Free
Multiple Choice
Q 200Q 200
Which of the following is true of U.S.farm products over the past few decades?
A)The increase in supply has been greater than the increase in demand, which has led to an increase in price.
B)The increase in supply has been less than the increase in demand, which has led to an increase in price.
C)The increase in supply has been greater than the increase in demand, which has led to a decrease in price.
D)The increase in supply has been less than the increase in demand, which has led to a decrease in price.
E)The increase in supply has been greater than the decrease in demand, which has led to an increase in price.
Free
Multiple Choice
Q 201Q 201
Cross-price elasticity measures the responsiveness of the price of good A to a change in the price of good
Free
True False
Free
True False
Free
True False
Q 204Q 204
The value of cross-price elasticity of demand between golf balls and golf clubs is
A)negative
B)positive
C)0
D)greater than 1
E)less than 1
Free
Multiple Choice
Q 205Q 205
The value of cross-price elasticity of demand between orange soda and grape soda is
A)negative
B)positive
C)0
D)between -1 and 0
E)less than -1
Free
Multiple Choice
Q 206Q 206
Cross-price elasticity of demand measures
A)elasticity of demand at the intersection of the supply and demand curves
B)elasticity of supply at the intersection of supply and demand curves
C)the relative elasticity of supply and demand at the intersection of the two curves
D)the relationship between the demand for one good and the price of another
E)the relationship between the demand for one good and the supply of another
Free
Multiple Choice
Q 207Q 207
The percentage change in the demand for film divided by the percentage change in the price of cameras indicates
A)the cross-price elasticity of demand between film and cameras
B)the cross-price elasticity of demand for photographs
C)the price elasticity of demand for film
D)the price elasticity of demand for cameras
E)nothing because the two goods fall into the broadly defined category of photographic equipment
Free
Multiple Choice
Q 208Q 208
The cross-price elasticity of demand between pancakes and waffles is positive.This indicates all of the following except one.Which is the exception?
A)Pancakes and waffles are substitutes.
B)An increase in the price of pancakes will shift the demand curve for waffles to the right.
C)An increase in the price of waffles will shift the demand curve for pancakes to the right.
D)A decrease in the supply of waffles will shift the demand curve for pancakes to the right.
E)Pancake demand and waffle demand are price elastic.
Free
Multiple Choice
Q 209Q 209
If the cross-price elasticity of demand between two goods is 0,
A)a price change for one good will be exactly offset by a price change for the other
B)neither demand curve would shift following a change in the price of one of the goods
C)there is no income effect between the two goods
D)the demand for each good is price inelastic
E)the demand for each good is price elastic
Free
Multiple Choice
Q 210Q 210
The cross-price elasticity of demand between rifles and bullets is likely to be
A)negative because the goods are complements
B)positive because the goods are complements
C)negative because the goods are substitutes
D)positive because the goods are substitutes
E)0 because the goods are not substitutes
Free
Multiple Choice
Q 211Q 211
The cross-price elasticity of demand between milk and soft drinks is likely to be
A)negative because the goods are complements
B)positive because the goods are complements
C)negative because the goods are substitutes
D)positive because the goods are substitutes
E)0 because the goods are not usually consumed by the same person at one time
Free
Multiple Choice
Q 212Q 212
Suppose the cross-price elasticity of demand between quinces and muskmelons is 5.Which of the following must be true?
A)Quinces are normal goods.
B)Muskmelons are normal goods.
C)If the price of quinces rises by $5, the demand for muskmelons will increase by 1.
D)If the price of muskmelons rises by $5, the demand for quinces will increase by 1.
E)Quinces and muskmelons are substitutes.
Free
Multiple Choice
Q 213Q 213
If the cross-price elasticity of demand is -3, then
A)the goods are substitutes
B)one good is price inelastic
C)one good is an inferior good
D)one good is a luxury good
E)the goods are complements
Free
Multiple Choice
Q 214Q 214
Computers and software programs are
A)inferior goods
B)complementary goods
C)goods with a cross-price elasticity of demand of 0
D)substitute goods
E)perfectly elastic goods
Free
Multiple Choice
Q 215Q 215
In order to prove that Coca Cola and 7-Up are substitutes, one should test the __________ and get a __________.
A)price elasticity of demand; number less than negative 1
B)income elasticity; positive number
C)cross-price elasticity; negative number
D)price elasticity of demand; number greater than negative 1
E)cross-price elasticity; positive number
Free
Multiple Choice
Q 216Q 216
If an increase in the price of peanut butter causes a decline in the demand for jelly, then
A)the goods are substitutes
B)jelly is an inferior good
C)the goods are complements
D)both goods are inelastic
E)peanut butter is an inferior good
Free
Multiple Choice
Q 217Q 217
If the cross-price elasticity of demand between two goods is positive, then
A)consumers are being irrational
B)supply is elastic
C)the goods may have similar uses
D)the goods may go well together in consumption
E)one good must be a necessity
Free
Multiple Choice
Q 218Q 218
A 10 percent increase in the price of root beer causes a 5 percent increase in the quantity demanded of orange soda.This means that
A)root beer and orange soda are substitutes
B)root beer and orange soda are complements
C)the cross-price elasticity of demand is elastic
D)the cross-price elasticity of demand is equal to 2
E)the cross-price elasticity of demand is equal to -2
Free
Multiple Choice
Q 219Q 219
If the cross-price elasticity of demand between good x and good y is 0.4, then
A)the demand for good x is highly responsive to changes in the price of good y
B)a 10 percent increase in the price of good y leads to a 0.4 percent increase in the quantity demanded of good x
C)a 10 percent decrease in the price of good y leads to a 4 percent decrease in the demand for good y
D)good x and good y are complements
E)good x is a normal good and good y is an inferior good
Free
Multiple Choice
Q 220Q 220
If the cross-price elasticity of demand is -3, then the goods are __________ and the consumers' responsiveness would be characterized as __________.
A)substitutes; inelastic
B)substitutes; elastic
C)substitutes; unit elastic
D)complements; inelastic
E)complements; elastic
Free
Multiple Choice
Q 221Q 221
Cross-price elasticity of demand is used to determine whether
A)a product is an inferior or normal good
B)a product is a necessity or a luxury
C)two products are substitutes or complements
D)price and total revenue are directly or inversely related
E)the product's demand curve is linear
Free
Multiple Choice
Q 222Q 222
Substitutes are pairs of products with
A)positive cross-price elasticity of demand
B)negative cross-price elasticity of demand
C)positive income elasticity of demand
D)negative income elasticity of demand
E)positive price elasticity of demand
Free
Multiple Choice
Q 223Q 223
Negative cross-price elasticity of demand indicates that
A)the product is an inferior good
B)the product is a necessity
C)the product is a luxury
D)the two products are substitutes
E)the two products are complements
Free
Multiple Choice
Q 224Q 224
To ensure that we get the same result for price elasticity no matter which direction we move on the demand curve, we must take the average of the
A)initial price and the initial quantity demanded and the average of the new price and the new quantity demanded
B)new price and the initial quantity demanded and the average of the new quantity demanded and the initial price
C)initial price and the new price and the average of the initial quantity demanded and the new quantity demanded
D)initial price and the new price only
E)new quantity demanded and the initial quantity demanded only
Free
Multiple Choice
Q 225Q 225
Exhibit 5-23 Refer to Exhibit 5-23.Demand curve D is an example of a(n)
A)curvilinear demand curve
B)linear demand curve
C)linear supply curve
D)unit-elastic demand curve
E)total revenue curve
Free
Multiple Choice
Q 226Q 226
Luis wonders why commercials appear more frequently at the end of a TV movie than at the beginning.Carol says that this pattern can be explained by the
A)share of the viewer's budget spent on TV watching
B)length of the adjustment period
C)cost of supplying additional minutes of the movie
D)high elasticity of demand for watching the end of a TV movie
E)availability of substitutes
Free
Multiple Choice
Q 227Q 227
Exhibit 5-24 Refer to Exhibit 5-24.The demand curve that best illustrates how consumers will respond to a change in price over a very long time period is:
A)curve D(1)
B)curve D(2)
C)curve D(4)
D)curve D(3)
E)either curve D(1)or D(4)
Free
Multiple Choice
Q 228Q 228
The ability of increasing quantity supplied in response to a higher price is identical across industries.
Free
True False
Q 229Q 229
Income elasticity of demand is greater than zero for all of the following except
A)restaurant meals
B)beer
C)owner-occupied housing
D)food
E)rental housing
Free
Multiple Choice
Q 230Q 230
Exhibit 5-25 Exhibit 5-25 shows a hypothetical demand curve for soybeans.The vertical axis measures the average price per bushel in dollars.The horizontal axis measures billions of bushels per year.If perfect weather boosts the harvest from 3.5 billion bushels to 4.0 billion bushels (a 13 percent increase), what must happen to average price in order for the increased production to be sold?
A)The average price must increase by $1 per bushel, a 22 percent increase.
B)The average price will remain at $5 per bushel.
C)The average price must fall by $0.58 per bushel, a 13 percent decrease.
D)The average price must fall by $1 per bushel, a 22 percent decrease.
E)It is not possible to answer without knowing exactly how much supply decreases.
Free
Multiple Choice
Q 231Q 231
All of the following are examples of a constant-elasticity demand curve except a(n)
A)perfectly elastic demand curve
B)linear demand curve with a slope of -4
C)perfectly inelastic demand curve
D)unit-elastic demand curve
E)vertical demand curve
Free
Multiple Choice
Q 232Q 232
Exhibit 5-26 Refer to Exhibit 5-26.Between points A and B, price elasticity of demand is:
A)unitary
B)elastic
C)inelastic
D)perfectly elastic
E)perfectly inelastic
Free
Multiple Choice
Q 233Q 233
Exhibit 5-26 Refer to Exhibit 5-26.Between points B and C price elasticity of demand is:
A)unitary
B)elastic
C)inelastic
D)perfectly elastic
E)perfectly inelastic
Free
Multiple Choice
Q 234Q 234
Exhibit 5-26 Refer to Exhibit 5-26.Between points C and D price elasticity of demand is:
A)unitary
B)elastic
C)inelastic
D)perfectly elastic
E)perfectly inelastic
Free
Multiple Choice
Q 235Q 235
Exhibit 5-26 Refer to Exhibit 5-26.As you move down the demand curve from A to B to C to D, which of the following describes what happens to the price elasticity of demand?
A)nothing
B)goes from elastic at A and gets increasingly inelastic as you go to B and C and D
C)goes from perfectly inelastic at A and gets increasingly elastic as you go to B and C and D
D)goes from inelastic at A and gets increasingly elastic as you go to B and C and D
E)goes from inelastic at A and gets increasingly elastic as you go to B but then gets increasingly inelastic as you go to C and D
Free
Multiple Choice
Q 236Q 236
Exhibit 5-27 Consider Exhibit 5-27.Which graph depicts a perfectly elastic demand?
A)Graph A
B)Graph B
C)Graph C
D)Graph D
E)both graphs A and B
Free
Multiple Choice
Q 237Q 237
Exhibit 5-27 Consider Exhibit 5-27.Which graph depicts a perfectly inelastic demand?
A)Graph A
B)Graph B
C)Graph C
D)Graph D
E)both graphs A and B
Free
Multiple Choice
Q 238Q 238
Exhibit 5-27 Consider Exhibit 5-27.Which graph depicts a unitary elastic demand?
A)Graph A
B)Graph B
C)Graph C
D)Graph D
E)none of the graphs depicts a unitary elastic demand
Free
Multiple Choice
Q 239Q 239
Exhibit 5-27 Consider Exhibit 5-27.Which graph depicts neither a perfectly elastic nor a perfectly inelastic demand?
A)Graph A
B)Graph B
C)Graph C
D)Graph D
E)both graphs A and B
Free
Multiple Choice
Q 240Q 240
Exhibit 5-28 Use the information in Exhibit 5-28 to calculate the value of price elasticity of demand from point a to b.
A)-5/4
B)-4/5
C)-13/18
D)-18/13
E)0
Free
Multiple Choice
Q 241Q 241
Exhibit 5-28 Consider Exhibit 5-28.Between points a and b, demand would be said to be
A)perfecly price inelastic
B)price inelastic
C)perfectly price elastic
D)price elastic
E)unitary elastic
Free
Multiple Choice
Q 242Q 242
Exhibit 5-28 Use the information in Exhibit 5-28 to calculate the value of price elasticity of demand from point c to d.
A)-5/4
B)-4/5
C)-1/14
D)-14
E)0
Free
Multiple Choice
Q 243Q 243
Exhibit 5-28 Consider Exhibit 5-28.Between points c and d, demand would be said to be
A)perfecly price inelastic
B)price inelastic
C)perfectly price elastic
D)price elastic
E)unitary elastic
Free
Multiple Choice
Q 244Q 244
Exhibit 5-28 Consider Exhibit 5-28.When supply increase from S1 to S2, total revenue increases from $275 to $300.This means that demand must be
A)perfectly elastic
B)elastic
C)perfectly inelastic
D)inelastic
E)unit elastic
Free
Multiple Choice