Question 1

Answer the question on the basis of the following demand and supply data: $ \begin{array}{cccc}\text {Quantity Demanded}&&
\text {Quantity Supplied}\\underline{\text { Per Month }} &\underline{\text { Price }} &\underline{ \text { Per Month} } \ 30& \$ 8 & 44 \ 36 & 7 & 38 \ 42 & 6 & 30 \ 50 & 5 &  20\end{array} $ Refer to the data.The supply of this product is inelastic in the $6-$5 price range.

Accepted Answer

A) True 
 B)False

Question 2

If a firm finds that it can sell $13,000 worth of a product when its price is $5 per unit and $11,000 worth of it when its price is $6,then:

Accepted Answer

A)   the demand for the product is elastic in the $6-$5 price range.
B)   the demand for the product must have increased.
C)   elasticity of demand is 0.74.
D)   the demand for the product is inelastic in the $6-$5 price range.E) B) and C)
F) B) and D)

Question 3

For a linear demand curve:

Accepted Answer

A)   elasticity is constant along the curve.
B)   elasticity is unity at every point on the curve.
C)   demand is elastic at low prices.
D)   demand is elastic at high prices.E) B) and D)
F) A) and D)

Question 4

Which of the following is not characteristic of the demand for a commodity that is elastic?

Accepted Answer

A)   The relative change in quantity demanded is greater than the relative change in price.
B)   Buyers are relatively sensitive to price changes.
C)   Total revenue declines if price is increased.
D)   The elasticity coefficient is less than one.E) A) and C)
F) A) and B)

Question 5

Cross elasticity of demand measures how sensitive purchases of a specific product are to changes in:

Accepted Answer

A)   the price of some other product.
B)   the price of that same product.
C)   income.
D)   the general price level.E) All of the above
F) C) and D)

Question 6

Suppose that a 20 percent increase in the price of normal good Y causes a 10 percent decline in the quantity demanded of normal good X.The coefficient of cross elasticity of demand is:

Accepted Answer

A)   negative and therefore these goods are substitutes.
B)   negative and therefore these goods are complements.
C)   positive and therefore these goods are substitutes.
D)   positive and therefore these goods are complements.E) C) and D)
F) A) and D)

Question 7

If the price of hand calculators falls from $10 to $9 and,as a result,the quantity demanded increases from 100 to 125,then:

Accepted Answer

A)   demand is elastic.
B)   demand is inelastic.
C)   demand is of unit elasticity.
D)   not enough information is given to make a statement about elasticity.E) C) and D)
F) All of the above

Question 8

The price of old baseball cards rises rapidly with increases in demand because:

Accepted Answer

A)   the supply of old baseball cards is price inelastic.
B)   the supply of old baseball cards in price elastic.
C)   the demand for old baseball cards is price inelastic.
D)   the demand for old baseball cards is price elastic.E) A) and D)
F) None of the above

Question 9

The supply of product X is elastic if the price of X rises by:

Accepted Answer

A)   5 percent and quantity supplied rises by 7 percent.
B)   8 percent and quantity supplied rises by 8 percent.
C)   10 percent and quantity supplied remains the same.
D)   7 percent and quantity supplied rises by 5 percent.E) A) and C)
F) C) and D)

Question 10

The demand for a luxury good whose purchase would exhaust a big portion of one's income is:

Accepted Answer

A)   perfectly price inelastic.
B)   perfectly price elastic.
C)   relatively price inelastic.
D)   relatively price elastic.E) A) and B)
F) All of the above

Question 11

The elasticity of supply of product X is unitary if the price of X rises by:

Accepted Answer

A)   5 percent and quantity supplied rises by 7 percent.
B)   8 percent and quantity supplied rises by 8 percent.
C)   10 percent and quantity supplied stays the same.
D)   7 percent and quantity supplied rises by 5 percent.E) A) and C)
F) A) and B)

Question 12

Other things the same,if a price change causes total revenue to change in the opposite direction,demand is:

Accepted Answer

A)   perfectly inelastic.
B)   relatively elastic.
C)   relatively inelastic.
D)   of unit elasticity.E) A) and B)
F) B) and D)

Question 13

Answer the question on the basis of the following demand schedule:   Quantity  Price‾ Demanded‾$615243342516\begin{array}{l}\begin{array}{ccc}&	ext { Quantity }\\underline{	ext { Price} } &  \underline{	ext { Demanded}} \ \$6 & 1 \5 &  2 \4 &  3 \3 &  4 \2 &  5 \1 &  6\end{array}\end{array} Price​$654321​ Quantity  Demanded​123456​​  Refer to the data.The price elasticity of demand is unity:

Accepted Answer

A)   throughout the entire price range because the slope of the demand curve is constant.
B)   in the $4-$3 price range only.
C)   over the entire $3-$1 price range.
D)   over the entire $6-$4 price range. E) None of the above
F) A) and D)

Question 14

(Consider This) The supply of higher education in the United States is:

Accepted Answer

A)   highly price elastic.
B)   highly price inelastic.
C)   unitary elastic with respect to price.
D)   perfectly price elastic.E) A) and C)
F) C) and D)

Question 15

Suppose the price of local cable TV service increased from $16.20 to $19.80 and as a result the number of cable subscribers decreased from 224,000 to 176,000.Along this portion of the demand curve,price elasticity of demand is:

Accepted Answer

A)   0.8.
B)   1.2.
C)   1.6.
D)   8.0.E) All of the above
F) A) and B)

Question 16

Suppose the price elasticity of demand for bread is 0.20.If the price of bread falls by 10 percent,the quantity demanded will increase by:

Accepted Answer

A)   2 percent and total expenditures on bread will rise.
B)   2 percent and total expenditures on bread will fall.
C)   20 percent and total expenditures on bread will fall.
D)   20 percent and total expenditures on bread will rise.E) All of the above
F) A) and B)

Question 17

Compared to coffee,we would expect the cross elasticity of demand for:

Accepted Answer

A)   tea to be negative,but positive for cream.
B)   tea to be positive,but negative for cream.
C)   both tea and cream to be negative.
D)   both tea and cream to be positive.E) All of the above
F) A) and B)

Question 18

When the percentage change in price is greater than the resulting percentage change in quantity demanded:

Accepted Answer

A)   a decrease in price will increase total revenue.
B)   demand may be either elastic or inelastic.
C)   an increase in price will increase total revenue.
D)   demand is elastic.E) A) and C)
F) B) and C)

Question 19

We would expect the cross elasticity of demand between Pepsi and Coke to be:

Accepted Answer

A)   positive,indicating normal goods.
B)   positive,indicating inferior goods.
C)   positive,indicating substitute goods.
D)   negative,indicating substitute goods.E) A) and B)
F) B) and D)

Question 20

The price elasticity of demand is generally:

Accepted Answer

A)   negative,but the minus sign is ignored.
B)   positive,but the plus sign is ignored.
C)   positive for normal goods and negative for inferior goods.
D)   positive because price and quantity demanded are inversely related.E) B) and C)
F) All of the above

Exam 6: Elasticity

Suppose the price of local cable TV service increased from $16.20 to $19.80 and as a result the number of cable subscribers decreased from 224,000 to 176,000.Along this portion of the demand curve,price elasticity of demand is:

Correct Answer
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The price elasticity of demand is generally:

Correct Answer
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(Consider This) The supply of higher education in the United States is:

Correct Answer
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We would expect the cross elasticity of demand between Pepsi and Coke to be:

Correct Answer
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Correct Answer
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If the price of hand calculators falls from $10 to $9 and,as a result,the quantity demanded increases from 100 to 125,then:

Correct Answer
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If a firm finds that it can sell $13,000 worth of a product when its price is $5 per unit and $11,000 worth of it when its price is $6,then:

Correct Answer
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When the percentage change in price is greater than the resulting percentage change in quantity demanded:

Correct Answer
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Cross elasticity of demand measures how sensitive purchases of a specific product are to changes in:

Correct Answer
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The elasticity of supply of product X is unitary if the price of X rises by:

Correct Answer
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The supply of product X is elastic if the price of X rises by:

Correct Answer
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Suppose that a 20 percent increase in the price of normal good Y causes a 10 percent decline in the quantity demanded of normal good X.The coefficient of cross elasticity of demand is:

Correct Answer
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Compared to coffee,we would expect the cross elasticity of demand for:

Correct Answer
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The demand for a luxury good whose purchase would exhaust a big portion of one's income is:

Correct Answer
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Which of the following is not characteristic of the demand for a commodity that is elastic?

Correct Answer
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The price of old baseball cards rises rapidly with increases in demand because:

Correct Answer
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Suppose the price elasticity of demand for bread is 0.20.If the price of bread falls by 10 percent,the quantity demanded will increase by:

Correct Answer
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Correct Answer
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Other things the same,if a price change causes total revenue to change in the opposite direction,demand is:

Correct Answer
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For a linear demand curve:

Correct Answer
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Exam 6: Elasticity

Suppose the price of local cable TV service increased from $16.20 to $19.80 and as a result the number of cable subscribers decreased from 224,000 to 176,000.Along this portion of the demand curve,price elasticity of demand is:

Correct AnswerverifiedShow Answer

The price elasticity of demand is generally:

Correct AnswerverifiedShow Answer

(Consider This) The supply of higher education in the United States is:

Correct AnswerverifiedShow Answer

We would expect the cross elasticity of demand between Pepsi and Coke to be:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If the price of hand calculators falls from $10 to $9 and,as a result,the quantity demanded increases from 100 to 125,then:

Correct AnswerverifiedShow Answer

If a firm finds that it can sell $13,000 worth of a product when its price is $5 per unit and $11,000 worth of it when its price is $6,then:

Correct AnswerverifiedShow Answer

When the percentage change in price is greater than the resulting percentage change in quantity demanded:

Correct AnswerverifiedShow Answer

Cross elasticity of demand measures how sensitive purchases of a specific product are to changes in:

Correct AnswerverifiedShow Answer

The elasticity of supply of product X is unitary if the price of X rises by:

Correct AnswerverifiedShow Answer

The supply of product X is elastic if the price of X rises by:

Correct AnswerverifiedShow Answer

Suppose that a 20 percent increase in the price of normal good Y causes a 10 percent decline in the quantity demanded of normal good X.The coefficient of cross elasticity of demand is:

Correct AnswerverifiedShow Answer

Compared to coffee,we would expect the cross elasticity of demand for:

Correct AnswerverifiedShow Answer

The demand for a luxury good whose purchase would exhaust a big portion of one's income is:

Correct AnswerverifiedShow Answer

Which of the following is not characteristic of the demand for a commodity that is elastic?

Correct AnswerverifiedShow Answer

The price of old baseball cards rises rapidly with increases in demand because:

Correct AnswerverifiedShow Answer

Suppose the price elasticity of demand for bread is 0.20.If the price of bread falls by 10 percent,the quantity demanded will increase by:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Other things the same,if a price change causes total revenue to change in the opposite direction,demand is:

Correct AnswerverifiedShow Answer

For a linear demand curve:

Correct AnswerverifiedShow Answer

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