Question 1

When the price of a pizza is $10,the quantity of soda demanded is 300 drinks.When the price of a pizza is $15,the quantity soda demanded is 100 drinks.The cross elasticity of demand is equal to

Accepted Answer

A)  -0.25.
B)  -0.40.
C)  -2.50.
D)  -25.00.
E)  4.00.

Question 2

If the cross elasticity of demand between good A and good B is negative,then a decrease in the price of good A results in

Accepted Answer

A)  an increase in the demand for good B.
B)  a decrease in the demand for good B.
C)  a movement downward along the demand curve for good B.
D)  an increase in the supply of good B.
E)  a decrease in the supply of good B.

Question 3

All of the following statements are true EXCEPT

Accepted Answer

A)  the demand for food is less elastic than the demand for a Hawaiian vacation.
B)  the demand for clothing is less elastic than the demand for blue jeans.
C)  the demand for gasoline is more elastic the longer the time elapsed.
D)  the smaller the proportion of income spent on a good,the more inelastic demand will be.
E)  the demand for Nike running shoes is less elastic than the demand for shoes.

Question 4

If a product is narrowly defined,it is likely to

Accepted Answer

A)  have many substitutes and therefore its demand is elastic.
B)  have few substitutes,and therefore its demand is less elastic.
C)  be unique,and therefore its demand is inelastic.
D)  be unique and have many substitutes.
E)  have a larger proportion of income spent on it.

Question 5

Suppose the price of a DVD rose from $15 to $17 and the quantity demanded decreased from 1,000 per month to 900 per month.Using the midpoint formula,the ________ percent change in price led to a ________ percent change in the quantity demanded.

Accepted Answer

A)  12.5;10.5
B)  13.3;10.0
C)  11.8;11.1
D)  8.0;9.5
E)  None of the above answers is correct.

Question 6

What happens to the price elasticity of demand moving down along a downward-sloping,linear demand curve?

Accepted Answer

Moving down along a downward-sloping,lin...

Question 7

If a 20 percent increase in the price of a good does not change the quantity supplied,the

Accepted Answer

A)  supply is perfectly inelastic.
B)  supply is unit elastic.
C)  supply is perfectly elastic.
D)  supply is elastic.
E)  None of the above answers is correct.

Question 8

List factors that increase the price elasticity of supply.

Accepted Answer

Factors that increase the price elastici...

Question 9

If the percentage change in the quantity demanded is not zero but is less than the percentage change in the price,demand is

Accepted Answer

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

Question 10

The demand for oil is inelastic.So,does an increase in the price of oil mean an increase in total revenue or a decrease in total revenue for oil producers?

Accepted Answer

Because the demand is inelasti...

Question 11

Suppose the demand for peaches sold from one roadside stand in Georgia is perfectly elastic.As a result,a 7 percent increase in the price charged by the owner of this stand leads to

Accepted Answer

A)  zero peaches sold by this stand.
B)  no change in the quantity demanded at this stand.
C)  a 7 percent decrease in the quantity demanded at this stand.
D)  a 7 percent decrease in demand at this stand.
E)  a virtually infinite increase in the quantity demanded at this stand.

Question 12

What is the price elasticity of demand? In terms of percentage changes,what is its formula?

Accepted Answer

The price elasticity of demand is a meas...

Question 13

One reason why the demand for gasoline is inelastic is because

Accepted Answer

A)  substitutes for gas abound.
B)  substitutes for gas are hard to find.
C)  gasoline is a luxury item.
D)  people have a long time to shop around for automobiles that use less gas.
E)  buses run on diesel fuel rather than gasoline.

Question 14

Perfectly inelastic demand means that consumers

Accepted Answer

A)  are willing to buy any quantity of the good at a given price,but none at higher prices.
B)  decrease their consumption as price rises.
C)  increase their consumption as price rises.
D)  will buy a certain quantity,regardless of price.
E)  will buy a huge,almost infinite amount more,if the price falls just a little.

Question 15

If a small percentage change in the price brings a very large percentage change in the quantity supplied,then the supply is almost perfectly ________ and the supply curve is almost ________.

Accepted Answer

A)  elastic;vertical
B)  elastic;horizontal
C)  inelastic;horizontal
D)  inelastic;vertical
E)  elastic;45 degrees

Question 16

When the percentage change in the quantity supplied is twice the percentage change in price,then supply is

Accepted Answer

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

Question 17

The price elasticity of demand measures which of the following?

Accepted Answer

A)  the slope of the demand curve
B)  the rate at which demand changes when price changes
C)  how responsive the quantity demanded is to changes in price
D)  the percentage-slope of the demand curve
E)  None of these correctly defines what price elasticity of demand measures.

Question 18

-In the figure above,at which point (a,b,or c)along the linear demand curve illustrated would demand be
a.most elastic?
b.most inelastic?

Accepted Answer

a.The demand would b...

Question 19

The price of lumber increased by 10 percent and the quantity supplied increased by 20 percent.The supply of lumber is

Accepted Answer

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

Question 20

You own a small store.Your cashier thinks you should raise prices to increase your total revenue and your customer thinks you should lower prices to increase your total revenue.The cashier thinks the price elasticity of demand is ________ and the customer believes the price elasticity of demand is ________.

Accepted Answer

A)  inelastic;elastic
B)  elastic;inelastic
C)  elastic;elastic
D)  inelastic;inelastic
E)  unit elastic;elastic

Exam 5: Elasticities of Demand and Supply

Perfectly inelastic demand means that consumers

Correct AnswerverifiedShow Answer

If a product is narrowly defined,it is likely to

Correct AnswerverifiedShow Answer

-In the figure above,at which point (a,b,or c)along the linear demand curve illustrated would demand be a.most elastic? b.most inelastic?

Correct Answerverifieda.The demand would b...View AnswerShow Answer

Correct AnswerverifiedShow Answer

If a small percentage change in the price brings a very large percentage change in the quantity supplied,then the supply is almost perfectly ________ and the supply curve is almost ________.

Correct AnswerverifiedShow Answer

What is the price elasticity of demand? In terms of percentage changes,what is its formula?

Correct AnswerverifiedThe price elasticity of demand is a meas...View AnswerShow Answer

Suppose the demand for peaches sold from one roadside stand in Georgia is perfectly elastic.As a result,a 7 percent increase in the price charged by the owner of this stand leads to

Correct AnswerverifiedShow Answer

If a 20 percent increase in the price of a good does not change the quantity supplied,the

Correct AnswerverifiedShow Answer

The price of lumber increased by 10 percent and the quantity supplied increased by 20 percent.The supply of lumber is

Correct AnswerverifiedShow Answer

The price elasticity of demand measures which of the following?

Correct AnswerverifiedShow Answer

Suppose the price of a DVD rose from $15 to $17 and the quantity demanded decreased from 1,000 per month to 900 per month.Using the midpoint formula,the ________ percent change in price led to a ________ percent change in the quantity demanded.

Correct AnswerverifiedShow Answer

List factors that increase the price elasticity of supply.

Correct AnswerverifiedFactors that increase the price elastici...View AnswerShow Answer

If the cross elasticity of demand between good A and good B is negative,then a decrease in the price of good A results in

Correct AnswerverifiedShow Answer

All of the following statements are true EXCEPT

Correct AnswerverifiedShow Answer

The demand for oil is inelastic.So,does an increase in the price of oil mean an increase in total revenue or a decrease in total revenue for oil producers?

Correct AnswerverifiedBecause the demand is inelasti...View AnswerShow Answer

When the percentage change in the quantity supplied is twice the percentage change in price,then supply is

Correct AnswerverifiedShow Answer

One reason why the demand for gasoline is inelastic is because

Correct AnswerverifiedShow Answer

If the percentage change in the quantity demanded is not zero but is less than the percentage change in the price,demand is

Correct AnswerverifiedShow Answer

What happens to the price elasticity of demand moving down along a downward-sloping,linear demand curve?

Correct AnswerverifiedMoving down along a downward-sloping,lin...View AnswerShow Answer

When the price of a pizza is $10,the quantity of soda demanded is 300 drinks.When the price of a pizza is $15,the quantity soda demanded is 100 drinks.The cross elasticity of demand is equal to

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a.The demand would b...
View Answer

Correct Answer
verified

If a small percentage change in the price brings a very large percentage change in the quantity supplied,then the supply is almost perfectly and the supply curve is almost .

Correct Answer
verified

Correct Answer
verified
The price elasticity of demand is a meas...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Suppose the price of a DVD rose from $15 to $17 and the quantity demanded decreased from 1,000 per month to 900 per month.Using the midpoint formula,the percent change in price led to a percent change in the quantity demanded.

Correct Answer
verified

Correct Answer
verified
Factors that increase the price elastici...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Because the demand is inelasti...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Moving down along a downward-sloping,lin...
View Answer

Correct Answer
verified