Question 1

Use the following Figure to answer the question : 
-As a result of the tax cigarette consumption declines by _____ million packs a week.

Accepted Answer

A)  5
B)  10
C)  40
D)  50
E)  more than 60

Question 2

When a tax is lowered this will

Accepted Answer

A)  raise both demand and supply.
B)  lower both demand and supply.
C)  lower only supply.
D)  raise only supply.

Question 3

Which statement is the most accurate?

Accepted Answer

A)  Almost all advertising has been found by the courts to be "false and deceptive."
B)  The goal of advertising is to make a firm's demand curve more elastic.
C)  It is illegal to make false and deceptive advertising claims.
D)  All forms of advertising are legal because advertising is a form of speech protected by the Bill of Rights.

Question 4

When demand is perfectly elastic the buyer pays _____ of a tax.

Accepted Answer

A)  all
B)  most
C)  half
D)  less than half
E)  none

Question 5

When supply is perfectly elastic, the entire tax burden falls on the ____.

Accepted Answer

The answer of When supply is perfectly elastic, the entire...

Question 6

If income elasticity for a good or service is _____, then we can say that the good or service is _____.

Accepted Answer

A)  zero; inferior
B)  negative; normal
C)  positive; inferior
D)  positive; normal

Question 7

Use the following figure to answer the question : 
-In the above graph, unit elasticity would occur at approximately point ____.

Accepted Answer

A)  A
B)  B
C)  C
D)  D
E)  E

Question 8

The demand for goods such as household electricity, bread and legal services tend to be

Accepted Answer

A)  perfectly elastic
B)  relatively elastic
C)  unit elastic
D)  relatively inelastic

Question 9

If the demand for table salt were perfectly inelastic at all prices, a decrease in supply would

Accepted Answer

A)  increase the price and decrease the quantity demanded.
B)  increase the price while not affecting the quantity demanded.
C)  reduce the quantity demanded to zero no matter what the initial price.
D)  have no effect on either price or quantity demanded.

Question 10

Use the following figure to answer the question :

-If the price elasticity of supply for a good increases over time

Accepted Answer

A)  quantity supplied becomes more sensitive to price.
B)  quantity demanded is not sensitive to price.
C)  quantity supplied becomes less sensitive to price.
D)  quantity demanded is very sensitive to price.

Question 11

Advertisers try to

Accepted Answer

A)  raise the demand for their product and make it more elastic.
B)  raise the demand for their product and make it less elastic.
C)  lower the demand for their product and make it more elastic.
D)  lower the demand for their product and make it less elastic.

Question 12

When the demand elasticity of a service is ____, a small increase in price will lead to a decline of the same percentage in quantity.

Accepted Answer

A)  10
B)  1.0
C)  0.0
D)  0.1

Question 13

In the __________ (short run/long run) a steel manufacturer that has fixed productive capacity and is operating its plant with one eight-hour shift, can still increase output by adding a second or third shift.

Accepted Answer

The answer of In the __________ (short run/long run) a...

Question 14

Use the following figure to answer the question :

-The basic effect of a tax on a service is to _____ that service.

Accepted Answer

A)  decrease the supply of
B)  increase the supply of
C)  decrease the demand for
D)  increase the demand for

Question 15

A car dealership estimates that the elasticity of demand for its top models is 0.5. If it raises its prices by 10%,

Accepted Answer

A)  quantity demanded will decrease by 5% and total revenue will increase.
B)  there will be no change in either quantity demanded or total revenue because demand is inelastic.
C)  quantity demanded will decrease by 5% and total revenue will decrease.
D)  quantity demanded will decrease by 10% and total revenue will increase.

Question 16

Which is the most accurate statement?

Accepted Answer

A)  The most important determinant of the degree of elasticity of demand is the availability of substitutes.
B)  The demand for gasoline is very elastic.
C)  The advertiser wants to push her product's demand curve to the right and make it more elastic.
D)  Supply is most elastic in the market period.

Question 17

A demand curve that is perfectly horizontal is

Accepted Answer

A)  perfectly elastic.
B)  perfectly inelastic.
C)  relatively elastic.
D)  relatively inelastic.

Question 18

Use the following Figure to answer the question : 
-About how much of the tax is paid by consumers in the form of higher prices?

Accepted Answer

A)  2 cents
B)  8 cents
C)  12 cents
D)  18 cents
E)  20 cents

Question 19

If price were lowered from $11 to $10 and quantity demanded rose from 87 to 89, calculate elasticity; state whether demand is elastic, unit elastic, or inelastic; and find how much total revenue was when price was $11 and $10.

Accepted Answer

P1 = $11; ...

Question 20

Statement I: In the very short run, the demand for gasoline and home heating oil is almost perfectly inelastic. Statement II: When American consumers traded in their gas-guzzler automobiles for Japanese fuel-efficient cars from the mid-1970s to the mid 1980s, this was an example of how the demand for gasoline had become more elastic in the long run.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.

Exam 6: The Price Elasticities of Demand and Supply

Which statement is the most accurate?

Correct Answer
verified

Use the following figure to answer the question : -In the above graph, unit elasticity would occur at approximately point ____.

Correct Answer
verified

A car dealership estimates that the elasticity of demand for its top models is 0.5. If it raises its prices by 10%,

Correct Answer
verified

If price were lowered from $11 to $10 and quantity demanded rose from 87 to 89, calculate elasticity; state whether demand is elastic, unit elastic, or inelastic; and find how much total revenue was when price was $11 and $10.

Correct Answer
verified
P1 = $11; ...
View Answer

A demand curve that is perfectly horizontal is

Correct Answer
verified

If the demand for table salt were perfectly inelastic at all prices, a decrease in supply would

Correct Answer
verified

Use the following Figure to answer the question : -As a result of the tax cigarette consumption declines by _____ million packs a week.

Correct Answer
verified

When supply is perfectly elastic, the entire tax burden falls on the ____.

Correct Answer
verified

If income elasticity for a good or service is _, then we can say that the good or service is _.

Correct Answer
verified

Which is the most accurate statement?

Correct Answer
verified

When demand is perfectly elastic the buyer pays _____ of a tax.

Correct Answer
verified

Use the following Figure to answer the question : -About how much of the tax is paid by consumers in the form of higher prices?

Correct Answer
verified

When a tax is lowered this will

Correct Answer
verified

Use the following figure to answer the question : -If the price elasticity of supply for a good increases over time

Correct Answer
verified

The demand for goods such as household electricity, bread and legal services tend to be

Correct Answer
verified

Use the following figure to answer the question : -The basic effect of a tax on a service is to _____ that service.

Correct Answer
verified

Advertisers try to

Correct Answer
verified

Correct Answer
verified

In the __________ (short run/long run) a steel manufacturer that has fixed productive capacity and is operating its plant with one eight-hour shift, can still increase output by adding a second or third shift.

Correct Answer
verified

When the demand elasticity of a service is ____, a small increase in price will lead to a decline of the same percentage in quantity.

Correct Answer
verified

Exam 6: The Price Elasticities of Demand and Supply

Which statement is the most accurate?

Correct AnswerverifiedShow Answer

Use the following figure to answer the question : -In the above graph, unit elasticity would occur at approximately point ____.

Correct AnswerverifiedShow Answer

A car dealership estimates that the elasticity of demand for its top models is 0.5. If it raises its prices by 10%,

Correct AnswerverifiedShow Answer

If price were lowered from $11 to $10 and quantity demanded rose from 87 to 89, calculate elasticity; state whether demand is elastic, unit elastic, or inelastic; and find how much total revenue was when price was $11 and $10.

Correct AnswerverifiedP1 = $11; ...View AnswerShow Answer

A demand curve that is perfectly horizontal is

Correct AnswerverifiedShow Answer

If the demand for table salt were perfectly inelastic at all prices, a decrease in supply would

Correct AnswerverifiedShow Answer

Use the following Figure to answer the question : -As a result of the tax cigarette consumption declines by _____ million packs a week.

Correct AnswerverifiedShow Answer

When supply is perfectly elastic, the entire tax burden falls on the ____.

Correct AnswerverifiedShow Answer

If income elasticity for a good or service is _____, then we can say that the good or service is _____.

Correct AnswerverifiedShow Answer

Which is the most accurate statement?

Correct AnswerverifiedShow Answer

When demand is perfectly elastic the buyer pays _____ of a tax.

Correct AnswerverifiedShow Answer

Use the following Figure to answer the question : -About how much of the tax is paid by consumers in the form of higher prices?

Correct AnswerverifiedShow Answer

When a tax is lowered this will

Correct AnswerverifiedShow Answer

Use the following figure to answer the question : -If the price elasticity of supply for a good increases over time

Correct AnswerverifiedShow Answer

The demand for goods such as household electricity, bread and legal services tend to be

Correct AnswerverifiedShow Answer

Use the following figure to answer the question : -The basic effect of a tax on a service is to _____ that service.

Correct AnswerverifiedShow Answer

Advertisers try to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the __________ (short run/long run) a steel manufacturer that has fixed productive capacity and is operating its plant with one eight-hour shift, can still increase output by adding a second or third shift.

Correct AnswerverifiedShow Answer

When the demand elasticity of a service is ____, a small increase in price will lead to a decline of the same percentage in quantity.

Correct AnswerverifiedShow Answer

Correct Answer
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P1 = $11; ...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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If income elasticity for a good or service is _, then we can say that the good or service is _.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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