Question 1

If a good has an elastic demand,then:

Accepted Answer

A)   a small percentage change in price will cause a larger percentage change in quantity demanded.
B)   a small percentage change in price will cause virtually no change in quantity demanded.
C)   a large percentage change in price will cause a smaller change in quantity demanded.
D)   any percentage change in price will cause an almost immediate response in quantity demanded.E) C) and D)
F) A) and B)

Question 2

The demand for classical music is _______________ than is the demand for Beethoven's music because _______________.

Accepted Answer

A)   less price elastic; classical music requires a smaller portion of one's income
B)   more price elastic; classical music requires a smaller portion of one's income
C)   less price elastic; the scope of the market for classical music is more broadly defined
D)   more price elastic; the scope of the market for classical music is more broadly definedE) A) and C)
F) B) and C)

Question 3

If the price of butter increases 5 percent and the amount of margarine purchased increases 25 percent,then the cross-price elasticity of these goods is:

Accepted Answer

A)   5.
B)   5
C)   0.2
D)   0.2.E) A) and B)
F) C) and D)

Question 4

The determinants of price elasticity of demand include:

Accepted Answer

A)   availability of substitutes, cost relative to benefit, and scope of market.
B)   degree of necessity, cost relative to income, scope of market, and adjustment time.
C)   availability of complements, cost relative to income, and scope of market.
D)   cost relative to income, scope of demand, and adjustment time.E) A) and B)
F) B) and C)

Question 5

A perfectly inelastic demand:

Accepted Answer

A)   means people will quickly change the quantity they purchase when price changes.
B)   means people will not respond to any change in price.
C)   is demonstrated by a perfectly horizontal demand curve.
D)   has an absolute value greater than 1.E) B) and C)
F) A) and C)

Question 6

A rare coin dealer is likely to have a _______________ price elasticity of supply than does a coffee shop due to ____________________.

Accepted Answer

A)   more elastic; the availability of inputs
B)   less elastic; the availability of inputs
C)   more elastic; a longer adjustment time
D)   more elastic; a shorter adjustment timeE) C) and D)
F) A) and B)

Question 7

Suppose when the price of coffee beans goes from $1 to $1.20 per pound,production increases from 90 million pounds of coffee beans to 110 million pounds per year.Using the mid-point method,the percentage change in quantity supplied is:

Accepted Answer

A)   20 percent
B)   18 percent
C)   0.6
D)   6.0E) A) and D)
F) C) and D)

Question 8

An automobile manufacturing plant is likely to have a ______________ price elasticity of supply than a bread bakery due to _________________.

Accepted Answer

A)   more elastic; a more flexible production process
B)   more elastic; greater availability of inputs
C)   less elastic; a less flexible production process
D)   more elastic; lower availability of inputsE) None of the above
F) A) and B)

Question 9

The price elasticity of demand for eggs is .27 and the price elasticity of demand for soft drinks is .70.Therefore,the demand for eggs

Accepted Answer

A)   is more elastic.
B)   is less elastic.
C)   cannot be compared to the demand for soft drinks because both are negative.
D)   cannot be compared to the demand for soft drinks because eggs cannot be substituted for soft drinks.E) B) and C)
F) All of the above

Question 10

When price was 10,quantity demanded was 50.When price decreased to 8,quantity demanded increased to 60.Therefore,when price decreased,total revenue

Accepted Answer

A)   decreased from 500 to 480, indicating that demand is inelastic.
B)   decreased from 500 to 480, indicating that demand is elastic.
C)   increased from 480 to 500, indicating that demand is inelastic.
D)   increased from 480 to 500, indicating that demand is elastic.E) A) and D)
F) B) and D)

Question 11

The concept of price elasticity is applied to changes in:

Accepted Answer

A)   quantity demanded, but not quantity supplied.
B)   quantity supplied, but not quantity demanded.
C)   both quantities supplied and quantity demanded.
D)   neither quantity supplied nor quantity demanded.E) A) and D)
F) B) and C)

Question 12

A horizontal demand curve indicates:

Accepted Answer

A)   a perfectly inelastic demand.
B)   quantity demanded will drop to zero if the price increases by any amount.
C)   price elasticity is 1.
D)   price is not important in this market.E) A) and B)
F) A) and C)

Question 13

An increase in price:

Accepted Answer

A)   cannot cause a quantity effect.
B)   cannot cause a price effect.
C)   causes a decrease in revenue resulting from selling fewer units and a simultaneous increase in revenue resulting from receiving a higher price.
D)   causes an increase in quantity demanded.E) All of the above
F) None of the above

Question 14

The price elasticity ofdemand for insulin is:

Accepted Answer

A)   likely to be perfectly inelastic over some range of prices.
B)   perfectly elastic.
C)   a large portion of someone's income.
D)   low relative to the supply.E) B) and C)
F) C) and D)

Question 15

The demand for Farm fresh brand apple juice is likely to be:

Accepted Answer

A)   very price elastic, because there are many close substitutes available.
B)   less price elastic, because there are many close substitutes available.
C)   very price elastic, because the adjustment time is so fast.
D)   less price elastic, because the adjustment time is so slow.E) A) and B)
F) None of the above

Question 16

Suppose when the price of calculators is $18,the quantity demanded is 90,and when the price is $22,the quantity demanded drops to 70.Using the mid-point method,the price elasticity of demand is:

Accepted Answer

A)   1.25
B)   25 percent
C)   20 percent
D)   25E) A) and C)
F) All of the above

Question 17

Assuming elasticity of demand is reported as an absolute value,a price elasticity of demand of 0.4 indicates an:

Accepted Answer

A)   elastic demand, meaning the percentage change in quantity demanded will be greater than the percentage change in price.
B)   inelastic demand, meaning the percentage change in quantity demanded will be greater than the percentage change in price.
C)   elastic demand, meaning the percentage change in quantity demanded will be less than the percentage change in price.
D)   inelastic demand, meaning the percentage change in quantity demanded will be less than the percentage change in price.E) B) and D)
F) All of the above

Question 18

Suppose price increases from $9.00 to $11.00.Using the mid-point formula,the percentage change in price is:

Accepted Answer

A)   20%
B)   25%
C)   20%.
D)   2%E) A) and B)
F) All of the above

Question 19

The demand for novels is _____________ than is the demand for science textbooks because __________________.

Accepted Answer

A)   less price elastic; novels have more available substitutes.
B)   more price elastic; novels have less available substitutes.
C)   less price elastic; novels have less available substitutes.
D)   more price elastic; novels have more available substitutes.E) None of the above
F) All of the above

Question 20

The demand for markers is _______________________ than is the demand for Sharpies because ____________________.

Accepted Answer

A)   less price elastic; markers require a smaller portion of one's income
B)   more price elastic; markers require a smaller portion of one's income
C)   less price elastic; the scope of the market for markers is more broadly defined
D)   more price elastic; the scope of the market is for markers is more broadly definedE) B) and C)
F) A) and D)

Exam 4: Elasticity

When price was 10,quantity demanded was 50.When price decreased to 8,quantity demanded increased to 60.Therefore,when price decreased,total revenue

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The demand for classical music is _______________ than is the demand for Beethoven's music because _______________.

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Suppose price increases from $9.00 to $11.00.Using the mid-point formula,the percentage change in price is:

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Suppose when the price of calculators is $18,the quantity demanded is 90,and when the price is $22,the quantity demanded drops to 70.Using the mid-point method,the price elasticity of demand is:

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The concept of price elasticity is applied to changes in:

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The demand for markers is _______________________ than is the demand for Sharpies because ____________________.

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If a good has an elastic demand,then:

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The demand for Farm fresh brand apple juice is likely to be:

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The price elasticity ofdemand for insulin is:

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A rare coin dealer is likely to have a _______________ price elasticity of supply than does a coffee shop due to ____________________.

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The determinants of price elasticity of demand include:

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Suppose when the price of coffee beans goes from $1 to $1.20 per pound,production increases from 90 million pounds of coffee beans to 110 million pounds per year.Using the mid-point method,the percentage change in quantity supplied is:

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An increase in price:

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A horizontal demand curve indicates:

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The price elasticity of demand for eggs is .27 and the price elasticity of demand for soft drinks is .70.Therefore,the demand for eggs

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A perfectly inelastic demand:

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Assuming elasticity of demand is reported as an absolute value,a price elasticity of demand of 0.4 indicates an:

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The demand for novels is _____________ than is the demand for science textbooks because __________________.

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An automobile manufacturing plant is likely to have a ______________ price elasticity of supply than a bread bakery due to _________________.

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If the price of butter increases 5 percent and the amount of margarine purchased increases 25 percent,then the cross-price elasticity of these goods is:

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The demand for classical music is _ than is the demand for Beethoven's music because _.

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The demand for markers is ___ than is the demand for Sharpies because .

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A rare coin dealer is likely to have a _ price elasticity of supply than does a coffee shop due to ______.

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The demand for novels is _ than is the demand for science textbooks because ______.

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An automobile manufacturing plant is likely to have a price elasticity of supply than a bread bakery due to ___.

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