Question 1

When two goods are complements,we expect their cross-price elasticity of demand to:

Accepted Answer

A)  be positive.
B)  be negative.
C)  be zero.
D)  equal 1.

Question 2

Mathematically,price elasticity of demand is:

Accepted Answer

A)  the percentage change in the quantity of a good that is demanded in response to a given percentage change in price.
B)  the percentage change in the price of a good that is demanded in response to a given percentage change in quantity.
C)  the percentage change in the quantity of a good that is supplied in response to a given percentage change in price.
D)  the percentage change in the price of a good that is supplied in response to a given percentage change in quantity.

Question 3

Assuming elasticity is reported in absolute value,a measured price elasticity of demand of 0.4 would indicate:

Accepted Answer

A)  an elastic demand,meaning the percentage change in quantity demanded will be greater than the percentage change in price.
B)  an inelastic demand,meaning the percentage change in quantity demanded will be greater than the percentage change in price.
C)  an elastic demand,meaning the percentage change in quantity demanded will be less than the percentage change in price.
D)  an inelastic demand,meaning the percentage change in quantity demanded will be less than the percentage change in price.

Question 4

The percentage change in the quantity demanded of a good or service when its price changes by one percent is:

Accepted Answer

A)  price elasticity of demand.
B)  price elasticity of supply.
C)  cross-price elasticity of demand.
D)  income elasticity of demand.

Question 5

It is most likely for which of the following to have an income elasticity greater than zero?

Accepted Answer

A)  Mac n cheese
B)  Ramen noodles
C)  Store brand cola
D)  Deli meat

Question 6

If the price of butter changes by 5 percent,we observe a 25 percent change in the quantity demanded of margarine.The cross-price elasticity of these goods is:

Accepted Answer

A)  -5.
B)  5.
C)  0.2.
D)  -0.2.

Question 7

The concept of elasticity can be used to measure responses to a change in:

Accepted Answer

A)  the price of a good.
B)  the price of a related good.
C)  income.
D)  All of these are true.

Question 8

Suppose when the price of a can of tuna is $1,the quantity demanded is 250,and when the price is $2,the quantity demanded is 100.Using the mid-point method,the price elasticity of demand is:

Accepted Answer

A)  1.28.
B)  0.78.
C)  128 percent.
D)  78 percent.

Question 9

If the price of hairbrushes decreases by 20 percent,the quantity demanded increases by 2 percent.the price elasticity of demand is:

Accepted Answer

A)  0.1,and is elastic.
B)  10 and is elastic.
C)  0.1 and is inelastic.
D)  10 and is inelastic.

Question 10

Assuming elasticity is reported in absolute value,an inelastic demand has a measured elasticity:

Accepted Answer

A)  of greater than zero.
B)  of greater than one.
C)  of less than one.
D)  of exactly one.

Question 11

Elasticity measures:

Accepted Answer

A)  how much a market will respond to a change in market conditions.
B)  how much consumers and producers will respond to a change in market conditions.
C)  how quickly consumers and producers will respond to a change in market conditions.
D)  how quickly a market will respond to a change in market conditions.

Question 12

A perfectly inelastic demand:

Accepted Answer

A)  means people will not respond to any change in price.
B)  means quantity demanded will stay constant regardless of the price.
C)  is demonstrated by a perfectly vertical demand curve.
D)  All of these are true.

Question 13

A determinant of the price elasticity of supply that is also a determinant of the price elasticity of demand is:

Accepted Answer

A)  availability of inputs.
B)  flexibility of the production process.
C)  adjustment time.
D)  availability of outputs.

Question 14

Assuming elasticity is reported in absolute value,a measured elasticity of one implies:

Accepted Answer

A)  the percentage change in quantity demanded will exactly equal the percentage change in price.
B)  the percentage change in quantity demanded will always exactly equal one.
C)  both the percentage change in price and quantity demanded exactly equal one.
D)  None of these is true.

Question 15

Suppose that when the price of novels goes from $15 to $20 per book,production increases from 550 million books per year to 800 million books.Using the mid-point method,the price elasticity of supply would be:

Accepted Answer

A)  0.77.
B)  28.5 percent.
C)  37 percent.
D)  1.4.

Question 16

An increase in price:

Accepted Answer

A)  causes a quantity effect.
B)  causes a price effect.
C)  causes a decrease in revenue that results from selling fewer units of the good,and a simultaneous increase in revenue that results from receiving a higher price for each unit sold.
D)  All of these are true.

Question 17

Which of the following is most likely to have an income elasticity between 0 and 1?

Accepted Answer

A)  European vacation
B)  Store brand cola
C)  Milk
D)  Frappuccino

Question 18

The response in demand of a price increase in subways rides:

Accepted Answer

A)  will be more elastic in six weeks than in six months.
B)  will be less elastic in six weeks than in six months.
C)  will be the same over that time period.
D)  is unpredictable without more information.

Question 19

Price elasticity of demand describes:

Accepted Answer

A)  the size of the percentage change in the quantity demanded of a good or service when its price changes by one percent.
B)  the size of the shift in demand of a good or service when its price changes by one percent.
C)  the size of the percentage change in the quantity supplied of a good or service when its demand changes due to a price change.
D)  None of these is true.

Question 20

If the cross-price elasticity of two goods is 0.25,then we know that:

Accepted Answer

A)  those goods are substitutes because their elasticity is greater than zero.
B)  those goods are complements because their elasticity is less than 1.
C)  those goods are substitutes because their elasticity is less than 1.
D)  those goods are complements because their elasticity is greater than zero.

Exam 4: Elasticity

The percentage change in the quantity demanded of a good or service when its price changes by one percent is:

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Elasticity measures:

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Assuming elasticity is reported in absolute value,an inelastic demand has a measured elasticity:

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If the price of hairbrushes decreases by 20 percent,the quantity demanded increases by 2 percent.the price elasticity of demand is:

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The response in demand of a price increase in subways rides:

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A determinant of the price elasticity of supply that is also a determinant of the price elasticity of demand is:

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Suppose that when the price of novels goes from $15 to $20 per book,production increases from 550 million books per year to 800 million books.Using the mid-point method,the price elasticity of supply would be:

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Mathematically,price elasticity of demand is:

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It is most likely for which of the following to have an income elasticity greater than zero?

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A perfectly inelastic demand:

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If the cross-price elasticity of two goods is 0.25,then we know that:

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An increase in price:

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Assuming elasticity is reported in absolute value,a measured price elasticity of demand of 0.4 would indicate:

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Price elasticity of demand describes:

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Which of the following is most likely to have an income elasticity between 0 and 1?

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If the price of butter changes by 5 percent,we observe a 25 percent change in the quantity demanded of margarine.The cross-price elasticity of these goods is:

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Assuming elasticity is reported in absolute value,a measured elasticity of one implies:

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Suppose when the price of a can of tuna is $1,the quantity demanded is 250,and when the price is $2,the quantity demanded is 100.Using the mid-point method,the price elasticity of demand is:

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The concept of elasticity can be used to measure responses to a change in:

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When two goods are complements,we expect their cross-price elasticity of demand to:

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