Question 1

Figure 5.8 shows a horizontal line. The curve shown in the figure below could represent a:​ Figure 5.8

Accepted Answer

A)  perfectly elastic demand or supply curve.
B)  perfectly inelastic supply curve or a perfectly elastic demand curve.
C)  perfectly elastic supply curve or a perfectly inelastic demand curve.
D)  perfectly inelastic supply or demand curve.
E)  perfectly inelastic supply curve or a demand that is unit elastic.

Question 2

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 the price elasticity of supply is:​

Accepted Answer

A)  0.38.
B)  2.
C)  2.67.
D)  4.
E)  8.

Question 3

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:​

Accepted Answer

A)  root beer and orange soda are substitutes.
B)  root beer and orange soda are complements.
C)  the cross-price elasticity of demand is 1.
D)  the cross-price elasticity of demand is equal to 2.
E)  the cross-price elasticity of demand is equal to −2.

Question 4

The value of the cross-price elasticity of demand between golf balls and golf clubs is:​

Accepted Answer

A)  negative.
B)  positive.
C)  zero.
D)  greater than 1 but less than 3.
E)  equal to 1.

Question 5

Figure 5.5 shows the total revenue curve for a firm. Which of the following statements is true at a quantity of 10?​ ​
Figure 5.5
​

Accepted Answer

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

Question 6

Figure 5.6 shows a vertical demand curve. The price elasticity of demand in the figure below is _____.​ ​
Figure 5.6
​

Accepted Answer

A)  0
B)  −1
C)  infinity
D)  1
E)  −100

Question 7

A good that takes up a very large percentage of a consumer's budget will tend to have:​

Accepted Answer

A)  an elastic demand.
B)  a perfectly elastic demand.
C)  an inelastic demand.
D)  an upward-sloping demand curve.
E)  many close substitutes.

Question 8

If supply is perfectly elastic, the supply curve is:​

Accepted Answer

A)  vertical.
B)  horizontal.
C)  downward sloping.
D)  upward sloping.
E)  u-shaped.

Question 9

The demand for a good is elastic if:​

Accepted Answer

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)  a decrease in price causes no changes in total revenue.
E)  a decrease in price leads to a decrease in total revenue.

Question 10

The supply of paintings by Van Gogh is most likely to be:​

Accepted Answer

A)  relatively elastic because supply is limited.
B)  relatively inelastic because supply is limited.
C)  perfectly elastic because the paintings are luxury goods.
D)  perfectly inelastic because supply is limited.
E)  unit elastic.

Question 11

A good that is defined broadly has:​

Accepted Answer

A)  more substitutes and a more elastic demand.
B)  fewer substitutes and a more elastic demand.
C)  more substitutes and a less elastic demand.
D)  fewer substitutes and a less elastic demand.
E)  more complements and a more elastic demand.

Question 12

The supply curve for dorm rooms on a university campus is likely to be:​

Accepted Answer

A)  downward sloping.
B)  relatively flat.
C)  vertical.
D)  horizontal.
E)  upward sloping.

Question 13

If demand is inelastic, the percentage change in price is greater than the resulting percentage change in quantity demanded.​

Accepted Answer

A) True 
 B)False

Question 14

For which of the following goods is the value of income elasticity most likely to be negative?​

Accepted Answer

A)  Macaroni and cheese.
B)  Champagne.
C)  Airline tickets.
D)  Clothes.
E)  Toothpaste.

Question 15

The availability of substitutes makes the demand for a good less elastic.​

Accepted Answer

A) True 
 B)False

Question 16

Which of the following statements is not true?​

Accepted Answer

A)  A perfectly elastic demand curve is a constant-elasticity demand curve.
B)  A linear demand curve with a slope of −4 is a constant-elasticity demand curve.
C)  A perfectly inelastic demand curve is a constant-elasticity demand curve.
D)  Total revenue increases along a unit-elastic demand curve.
E)  The elasticity value for a perfectly elastic demand curve is zero.

Question 17

The demand for firewood is likely to be more elastic in the summer than in the winter.​

Accepted Answer

A) True 
 B)False

Question 18

Suppose consumers spent $42 million on Christmas trees last year, when the average tree cost was $30. This year they spend $42 million, when the average tree costs $25. Assume that everything else remains constant. This data suggests that:​

Accepted Answer

A)  consumers bought the same number of Christmas trees this year as last year.
B)  the price of the Christmas trees stayed the same.
C)  total revenue to tree producers rose this year.
D)  the demand for trees is unit elastic.
E)  the demand for trees is inelastic.

Question 19

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 the value of the price elasticity of demand for Pepsi-Cola is:​

Accepted Answer

A)  −0.5.
B)  −0.25.
C)  −1.
D)   −3.
E)   −2.

Question 20

Which of the following goods will have a higher price elasticity of demand?​

Accepted Answer

A)  A good with few substitutes.
B)  A good with many substitutes.
C)  A good that represents a small proportion of the consumer's budget.
D)  A good that is broadly defined.
E)  A good that is a necessity.

Exam 5: Elasticity of Demand and Supply

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:​

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Which of the following statements is not true?​

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Figure 5.8 shows a horizontal line. The curve shown in the figure below could represent a:​ Figure 5.8

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The demand for firewood is likely to be more elastic in the summer than in the winter.​

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The demand for a good is elastic if:​

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Suppose consumers spent $42 million on Christmas trees last year, when the average tree cost was $30. This year they spend $42 million, when the average tree costs $25. Assume that everything else remains constant. This data suggests that:​

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If supply is perfectly elastic, the supply curve is:​

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Which of the following goods will have a higher price elasticity of demand?​

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A good that is defined broadly has:​

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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 the value of the price elasticity of demand for Pepsi-Cola is:​

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The availability of substitutes makes the demand for a good less elastic.​

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The value of the cross-price elasticity of demand between golf balls and golf clubs is:​

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The supply of paintings by Van Gogh is most likely to be:​

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For which of the following goods is the value of income elasticity most likely to be negative?​

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If demand is inelastic, the percentage change in price is greater than the resulting percentage change in quantity demanded.​

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Figure 5.5 shows the total revenue curve for a firm. Which of the following statements is true at a quantity of 10?​ ​ Figure 5.5 ​

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The supply curve for dorm rooms on a university campus is likely to be:​

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Figure 5.6 shows a vertical demand curve. The price elasticity of demand in the figure below is _____.​ ​ Figure 5.6 ​

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A good that takes up a very large percentage of a consumer's budget will tend to have:​

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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 the price elasticity of supply is:​

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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:

Correct Answer
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Which of the following statements is not true?

Correct Answer
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Figure 5.8 shows a horizontal line. The curve shown in the figure below could represent a: Figure 5.8

Correct Answer
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The demand for firewood is likely to be more elastic in the summer than in the winter.

Correct Answer
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The demand for a good is elastic if:

Correct Answer
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Suppose consumers spent $42 million on Christmas trees last year, when the average tree cost was $30. This year they spend $42 million, when the average tree costs $25. Assume that everything else remains constant. This data suggests that:

Correct Answer
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If supply is perfectly elastic, the supply curve is:

Correct Answer
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Which of the following goods will have a higher price elasticity of demand?

Correct Answer
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A good that is defined broadly has:

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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 the value of the price elasticity of demand for Pepsi-Cola is:

Correct Answer
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The availability of substitutes makes the demand for a good less elastic.

Correct Answer
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The value of the cross-price elasticity of demand between golf balls and golf clubs is:

Correct Answer
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The supply of paintings by Van Gogh is most likely to be:

Correct Answer
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For which of the following goods is the value of income elasticity most likely to be negative?

Correct Answer
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If demand is inelastic, the percentage change in price is greater than the resulting percentage change in quantity demanded.

Correct Answer
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Figure 5.5 shows the total revenue curve for a firm. Which of the following statements is true at a quantity of 10? Figure 5.5

Correct Answer
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The supply curve for dorm rooms on a university campus is likely to be:

Correct Answer
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Figure 5.6 shows a vertical demand curve. The price elasticity of demand in the figure below is _____. Figure 5.6

Correct Answer
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A good that takes up a very large percentage of a consumer's budget will tend to have:

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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 the price elasticity of supply is:

Correct Answer
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