Question 1

A value of the absolute price elasticity of demand equal to 0.6 indicates that

Accepted Answer

A)  a 6 percent increase in price leads to a 10 percent decrease in quantity demanded.
B)  a 10 percent increase in price leads to a 6 percent decrease in quantity demanded.
C)  a 0.6 percent increase in price leads to a 1 percent decrease in quantity demanded.
D)  a 1 percent increase in price leads to a 6 percent decrease in quantity demanded.

Question 2

-In the above table, the cross price elasticity of demand for good Z with good Y when PY rises from $15 to $18 is

Accepted Answer

A)  -2.20.
B)  +2.20.
C)  +1.10.
D)  -1.10.

Question 3

A demand relationship that is a vertical line up from the quantity axis is

Accepted Answer

A)  perfectly elastic.
B)  unit-elastic.
C)  perfectly inelastic.
D)  somewhat elastic.

Question 4

When total revenue and price are directly related, demand is

Accepted Answer

A)  unit-elastic.
B)  inelastic.
C)  elastic.
D)  not related.

Question 5

-The most important determinant of price elasticity of supply is

Accepted Answer

A)  the number of close substitutes there are for the good.
B)  the time period firms have to adjust to the new price.
C)  the price of the good.
D)  the importance of the good in the budgets of consumers.

Question 6

If your income rises by 25 percent and, as a result, you buy fewer packages of Ramen Noodles, then Ramen Noodles are a(n)

Accepted Answer

A)  substitute.
B)  normal good.
C)  complement.
D)  inferior good.

Question 7

-Which of the following is a determinant of the price elasticity of demand for a product? I. The existence of substitute goods
II. The percentage of a consumer's total budget devoted to purchases of that commodity

Accepted Answer

A)  I only
B)  II only
C)  Both I and II
D)  Neither I nor II

Question 8

We generally expect the price elasticity of supply to be

Accepted Answer

A)  zero.
B)  negative.
C)  positive.
D)  between -1 and +1.

Question 9

The price elasticity of demand is a measure of

Accepted Answer

A)  the responsiveness of the quantity demanded of a good to a changes in the price of the good.
B)  the quantity demanded of a good at a given price.
C)  the demand for a product holding prices constant.
D)  the horizontal shift in the demand curve when the price of a good changes.

Question 10

Suppose 1000 units of a good are sold at $10 a unit. If price increases to $15 and total revenue increases to $15,000 and increases by $1000 for every dollar increase in price after that, we know that

Accepted Answer

A)  demand is perfectly elastic.
B)  the demand curve is vertical.
C)  the demand curve is downward sloping and the firm is on the inelastic portion of the demand curve.
D)  the demand curve is a rectangular hyperbola.

Question 11

The cross price elasticity of demand is measured by the

Accepted Answer

A)  percentage change in the quantity demanded of one good divided by the percentage change in quantity demanded of another good.
B)  percentage change in the price of one good divided by the percentage change in price of another good.
C)  percentage change in the demand for one good divided by the percentage change in price of another good.
D)  percentage change in the price of one good divided by the percentage change in the demand for another good.

Question 12

-Use the above figure. When the price increases from $2 to $10, total revenue

Accepted Answer

A)  increases from areas A + B to areas B + C and demand is inelastic.
B)  increases from areas B + C to areas A + B and demand is inelastic.
C)  increases from areas B + C to areas A + D and demand is elastic.
D)  increases from areas C + D to areas B + A and demand is elastic.

Question 13

When price is $5 per unit, quantity demanded is 12 units. When price is $6 per unit, quantity demanded is 8 units. The value of the absolute price elasticity of demand is approximately

Accepted Answer

A)  2.20.
B)  4.00.
C)  1.82.
D)  0.36.

Exam 19: Demand and Supply Elasticity

We generally expect the price elasticity of supply to be

Correct Answer
verified

-In the above table, the cross price elasticity of demand for good Z with good Y when PY rises from $15 to $18 is

Correct Answer
verified

-The most important determinant of price elasticity of supply is

Correct Answer
verified

The cross price elasticity of demand is measured by the

Correct Answer
verified

-Use the above figure. When the price increases from $2 to $10, total revenue

Correct Answer
verified

When total revenue and price are directly related, demand is

Correct Answer
verified

When price is $5 per unit, quantity demanded is 12 units. When price is $6 per unit, quantity demanded is 8 units. The value of the absolute price elasticity of demand is approximately

Correct Answer
verified

The price elasticity of demand is a measure of

Correct Answer
verified

A demand relationship that is a vertical line up from the quantity axis is

Correct Answer
verified

-Which of the following is a determinant of the price elasticity of demand for a product? I. The existence of substitute goods II. The percentage of a consumer's total budget devoted to purchases of that commodity

Correct Answer
verified

Suppose 1000 units of a good are sold at $10 a unit. If price increases to $15 and total revenue increases to $15,000 and increases by $1000 for every dollar increase in price after that, we know that

Correct Answer
verified

A value of the absolute price elasticity of demand equal to 0.6 indicates that

Correct Answer
verified

If your income rises by 25 percent and, as a result, you buy fewer packages of Ramen Noodles, then Ramen Noodles are a(n)

Correct Answer
verified

Exam 19: Demand and Supply Elasticity

We generally expect the price elasticity of supply to be

Correct AnswerverifiedShow Answer

-In the above table, the cross price elasticity of demand for good Z with good Y when PY rises from $15 to $18 is

Correct AnswerverifiedShow Answer

-The most important determinant of price elasticity of supply is

Correct AnswerverifiedShow Answer

The cross price elasticity of demand is measured by the

Correct AnswerverifiedShow Answer

-Use the above figure. When the price increases from $2 to $10, total revenue

Correct AnswerverifiedShow Answer

When total revenue and price are directly related, demand is

Correct AnswerverifiedShow Answer

When price is $5 per unit, quantity demanded is 12 units. When price is $6 per unit, quantity demanded is 8 units. The value of the absolute price elasticity of demand is approximately

Correct AnswerverifiedShow Answer

The price elasticity of demand is a measure of

Correct AnswerverifiedShow Answer

A demand relationship that is a vertical line up from the quantity axis is

Correct AnswerverifiedShow Answer

-Which of the following is a determinant of the price elasticity of demand for a product? I. The existence of substitute goods II. The percentage of a consumer's total budget devoted to purchases of that commodity

Correct AnswerverifiedShow Answer

Suppose 1000 units of a good are sold at $10 a unit. If price increases to $15 and total revenue increases to $15,000 and increases by $1000 for every dollar increase in price after that, we know that

Correct AnswerverifiedShow Answer

A value of the absolute price elasticity of demand equal to 0.6 indicates that

Correct AnswerverifiedShow Answer

If your income rises by 25 percent and, as a result, you buy fewer packages of Ramen Noodles, then Ramen Noodles are a(n)

Correct AnswerverifiedShow Answer

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