Question 1

Suppose the price of science textbooks increases by 50 percent. Suppose that the price of mystery novels also increases by 50 percent. The price of other books remains unchanged. The demand for science textbooks is _____ price elastic than the demand for mystery novels because science textbooks have _____ available substitutes.

Accepted Answer

A)  less; more
B)  more; less
C)  less; less
D)  more; moreE) B) and D)
F) A) and D)

Question 2

The price elasticity of demand for insulin (a hormone necessary to treat Type I diabetes) is:

Accepted Answer

A)  likely to be perfectly inelastic over some range of prices.
B)  perfectly elastic.
C)  always perfectly inelastic.
D)  low relative to the price elasticity of supply.E) A) and B)
F) B) and D)

Question 3

Suppose when the price of shoe laces goes from $1 to $2 per pair, production increases from 95 million pairs to 105 million pairs per year. Using the mid-point method, what is the price elasticity of supply?

Accepted Answer

A)  6.28
B)  0.66
C)  0.11
D)  0.15E) B) and C)
F) A) and D)

Question 4

The demand for markers is _____ price elastic than the demand for Sharpies because _____.

Accepted Answer

A)  less; markers require a smaller portion of one's income
B)  more; markers require a smaller portion of one's income
C)  less; the scope of the market for markers is more broadly defined
D)  more; the scope of the market is for markers is more broadly definedE) A) and B)
F) None of the above

Question 5

How does the amount of time consumers have to adjust to a price change affect elasticity?

Accepted Answer

A)  The more time consumers have to adjust, the less elastic their demand will be.
B)  The time consumers have to adjust does not affect the elasticity of their response unless it is a luxury good.
C)  The more time consumers have to adjust, the more elastic their demand will be.
D)  The time consumers have to adjust will not affect the elasticity of their response unless the good is a necessity.E) B) and D)
F) A) and B)

Question 6

When demand is perfectly elastic:

Accepted Answer

A)  the demand curve is perfectly vertical.
B)  the demand curve is perfectly horizontal.
C)  price elasticity is exactly −1.
D)  the response to a change in price is immediate.E) None of the above
F) All of the above

Question 7

Consider the demand curve in the graph shown. What is the price elasticity of demand between a price of $4 and $6?

Accepted Answer

A)  −0.45
B)  −2.20
C)  −0.18
D)  −0.40E) None of the above
F) C) and D)

Question 8

A price increase will cause an increase in total revenue when:

Accepted Answer

A)  the price effect outweighs the quantity effect.
B)  the quantity effect outweighs the price effect.
C)  demand is perfectly elastic.
D)  demand is unit elastic.E) A) and D)
F) A) and C)

Question 9

How does price elasticity of demand appear when calculated?

Accepted Answer

A)  It is always a negative number, although it is sometimes reported as an absolute value.
B)  It is sometimes a negative number and sometimes a positive number, depending on the magnitude of response.
C)  It is always a positive number because price and quantity are directly related in terms of demand.
D)  It can be a positive number or a negative number, but is always reported as an absolute value.E) B) and C)
F) A) and B)

Question 10

When demand is perfectly inelastic:

Accepted Answer

A)  the demand curve is perfectly vertical.
B)  the demand curve is perfectly horizontal.
C)  the measured elasticity is exactly −1.
D)  the response to a change in price is immediate.E) B) and C)
F) A) and C)

Question 11

If the price of subway rides increases, quantity demanded will be:

Accepted Answer

A)  more elastic in six weeks than in six months.
B)  more elastic in six months than in six weeks.
C)  the same over any time period.
D)  unpredictable without more information.E) A) and B)
F) B) and C)

Question 12

If the quantity effect outweighs the price effect of a price increase, then demand is:

Accepted Answer

A)  elastic.
B)  inelastic.
C)  unit elastic.
D)  normal.E) A) and D)
F) None of the above

Question 13

Economists use the percentage change in quantity rather than the absolute change in quantity for elasticity calculations because:

Accepted Answer

A)  percentage changes are easier to calculate than absolute changes.
B)  elasticity measurements come out the same when using percentage changes regardless of the unit of measurement used for quantity.
C)  absolute changes in quantity are difficult to convert to changes in price.
D)  absolute changes often result in negative numbers.E) B) and D)
F) B) and C)

Question 14

If the price elasticity of demand for leisure air travel is −1.60 a _____ percent decrease in its price will cause a _____ in the amount of leisure air travel demanded.

Accepted Answer

A)  10; 16 percent decrease
B)  10; 16 percent increase
C)  16; 10 percent increase
D)  16; 10 percent decreaseE) All of the above
F) C) and D)

Question 15

Consider the demand curve in the graph shown. Suppose the price is initially $6 and then falls to $4. Which of the following statements is true?

Accepted Answer

A)  The quantity effect will outweigh the price effect, and total revenue will rise.
B)  The quantity effect will outweigh the price effect, and total revenue will fall.
C)  The price effect will outweigh the quantity effect, and total revenue will rise.
D)  The price effect will outweigh the quantity effect, and total revenue will fall.E) A) and B)
F) All of the above

Question 16

A linear demand curve has a:

Accepted Answer

A)  slope equal to that of its elasticity.
B)  constant slope, but changing elasticity.
C)  changing slope, but constant elasticity.
D)  constant slope and a constant elasticity, but they need not be equal.E) None of the above
F) A) and D)

Question 17

The price elasticity of demand for eggs is −0.27 and the price elasticity of demand for soft drinks is −0.70. Therefore, the demand for eggs:

Accepted Answer

A)  is more elastic than the demand for soft drinks.
B)  is less elastic than the demand for soft drinks.
C)  cannot be compared to the demand for soft drinks because both have negative price elasticities.
D)  cannot be compared to the demand for soft drinks because eggs cannot be substituted for soft drinks.E) A) and B)
F) C) and D)

Question 18

Which of the following is a determinant of both price elasticity of supply and price elasticity of demand?

Accepted Answer

A)  Availability of inputs
B)  Flexibility of the production process
C)  Adjustment time
D)  Degree of necessityE) B) and C)
F) A) and B)

Question 19

What does price elasticity measure?

Accepted Answer

A)  How much a market responds to a change in market conditions
B)  How much consumers or producers respond to a change in market price
C)  How quickly consumers or producers respond to a change in market price
D)  How quickly a market will respond to a change in market conditionsE) A) and B)
F) A) and C)

Exam 4: Elasticity

The demand for markers is _ price elastic than the demand for Sharpies because _.

Correct Answer
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How does the amount of time consumers have to adjust to a price change affect elasticity?

Correct Answer
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Economists use the percentage change in quantity rather than the absolute change in quantity for elasticity calculations because:

Correct Answer
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Suppose when the price of shoe laces goes from $1 to $2 per pair, production increases from 95 million pairs to 105 million pairs per year. Using the mid-point method, what is the price elasticity of supply?

Correct Answer
verified

A price increase will cause an increase in total revenue when:

Correct Answer
verified

A linear demand curve has a:

Correct Answer
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Correct Answer
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Which of the following is a determinant of both price elasticity of supply and price elasticity of demand?

Correct Answer
verified

The price elasticity of demand for insulin (a hormone necessary to treat Type I diabetes) is:

Correct Answer
verified

The price elasticity of demand for eggs is −0.27 and the price elasticity of demand for soft drinks is −0.70. Therefore, the demand for eggs:

Correct Answer
verified

Consider the demand curve in the graph shown. What is the price elasticity of demand between a price of $4 and $6?

Correct Answer
verified

If the price elasticity of demand for leisure air travel is −1.60 a _ percent decrease in its price will cause a _ in the amount of leisure air travel demanded.

Correct Answer
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When demand is perfectly elastic:

Correct Answer
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Consider the demand curve in the graph shown. Suppose the price is initially $6 and then falls to $4. Which of the following statements is true?

Correct Answer
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How does price elasticity of demand appear when calculated?

Correct Answer
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When demand is perfectly inelastic:

Correct Answer
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What does price elasticity measure?

Correct Answer
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If the price of subway rides increases, quantity demanded will be:

Correct Answer
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If the quantity effect outweighs the price effect of a price increase, then demand is:

Correct Answer
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Exam 4: Elasticity

The demand for markers is _____ price elastic than the demand for Sharpies because _____.

Correct AnswerverifiedShow Answer

How does the amount of time consumers have to adjust to a price change affect elasticity?

Correct AnswerverifiedShow Answer

Economists use the percentage change in quantity rather than the absolute change in quantity for elasticity calculations because:

Correct AnswerverifiedShow Answer

Suppose when the price of shoe laces goes from $1 to $2 per pair, production increases from 95 million pairs to 105 million pairs per year. Using the mid-point method, what is the price elasticity of supply?

Correct AnswerverifiedShow Answer

A price increase will cause an increase in total revenue when:

Correct AnswerverifiedShow Answer

A linear demand curve has a:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is a determinant of both price elasticity of supply and price elasticity of demand?

Correct AnswerverifiedShow Answer

The price elasticity of demand for insulin (a hormone necessary to treat Type I diabetes) is:

Correct AnswerverifiedShow Answer

The price elasticity of demand for eggs is −0.27 and the price elasticity of demand for soft drinks is −0.70. Therefore, the demand for eggs:

Correct AnswerverifiedShow Answer

Consider the demand curve in the graph shown. What is the price elasticity of demand between a price of $4 and $6?

Correct AnswerverifiedShow Answer

If the price elasticity of demand for leisure air travel is −1.60 a _____ percent decrease in its price will cause a _____ in the amount of leisure air travel demanded.

Correct AnswerverifiedShow Answer

When demand is perfectly elastic:

Correct AnswerverifiedShow Answer

Consider the demand curve in the graph shown. Suppose the price is initially $6 and then falls to $4. Which of the following statements is true?

Correct AnswerverifiedShow Answer

How does price elasticity of demand appear when calculated?

Correct AnswerverifiedShow Answer

When demand is perfectly inelastic:

Correct AnswerverifiedShow Answer

What does price elasticity measure?

Correct AnswerverifiedShow Answer

If the price of subway rides increases, quantity demanded will be:

Correct AnswerverifiedShow Answer

If the quantity effect outweighs the price effect of a price increase, then demand is:

Correct AnswerverifiedShow Answer

The demand for markers is _ price elastic than the demand for Sharpies because _.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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If the price elasticity of demand for leisure air travel is −1.60 a _ percent decrease in its price will cause a _ in the amount of leisure air travel demanded.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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