Question 1

If the price elasticity of demand for a good is elastic, then consumers are relatively unresponsive with respect to the quantity purchased when the price changes.
​

Accepted Answer

A) True 
 B)False

Question 2

The short-run price elasticity of demand for airline travel is .05, while the long-run elasticity is 2.36. This means that a significant increase in airline ticket prices will cause airline companies to:

Accepted Answer

A)   collect less revenue from short-notice travelers.
B)   collect more revenue from travelers who book well in advance.
C)   lose money on short-notice travelers.
D)   collect less revenue from travelers who book well in advance.
E)   lose many of its short-notice travelers.F) A) and D)
G) C) and D)

Question 3

Exhibit 5-6 Demand curve for concert tickets
​ 
-In Exhibit 5-6, suppose promoters charge a price of $30 per ticket. How much total revenue will their sales generate?

Accepted Answer

A)   $300,000.
B)   $400,000.
C)   $500,000.
D)   $600,000.E) None of the above
F) A) and B)

Question 4

If a 10 percent price increase causes the quantity demanded for a good to decrease by 10 percent, demand is unitary elastic.
​

Accepted Answer

A) True 
 B)False

Question 5

Sally recently got a 15 percent raise. She now purchases 7.5 percent more steak dinners. Sally's income elasticity for steak dinners is:

Accepted Answer

A)   0.5.
B)   0.75.
C)   1.5.
D)   2.0.E) A) and C)
F) B) and D)

Question 6

A perfectly elastic supply curve is expressed graphically as a(n) :

Accepted Answer

A)   downward sloping line or curve.
B)   upward sloping line or curve.
C)   vertical line.
D)   horizontal line.E) B) and D)
F) All of the above

Question 7

If a consumer's purchases of a product increases as income increases, this good is classified as a(n) :

Accepted Answer

A)   superior good.
B)   inferior good.
C)   substitute good.
D)   complementary good.
E)   normal good.F) C) and D)
G) B) and C)

Question 8

A horizontal demand curve is perfectly elastic. ​
​
​

Accepted Answer

A) True 
 B)False

Question 9

All things equal, the price elasticity of supply:

Accepted Answer

A)   will be greater in the short run than in the long run.
B)   will be greater in the long run than in the short run.
C)   is the same for the short run and the long run.
D)   approaches zero in the long run.E) C) and D)
F) None of the above

Question 10

Exhibit 5-9 Supply and demand curves for good X
​ 
-As shown in Exhibit 5-9, assuming good X is an inferior good, an increase in consumer income, other factors held constant, could move the equilibrium from point E to point: ​

Accepted Answer

A)   A.
B)   B.
C)   C.
D)   D.E) A) and B)
F) None of the above

Question 11

Exhibit 5-8 Supply and demand curves for good X
​ 
-In Exhibit 5-8, the price elasticity of supply for good X between points Y and E is:

Accepted Answer

A)   1/5 = 0.20.
B)   5/3 = 1.66.
C)   3/5 = 0.60.
D)   1.E) A) and B)
F) None of the above

Question 12

Exhibit 5-8 Supply and demand curves for good X
​ 
-As shown in Exhibit 5-8, assuming goods X and Y are substitutes, a decrease in the price of Y, other factors held constant, will move the equilibrium from point E to point:

Accepted Answer

A)   W.
B)   X.
C)   Y.
D)   Z.E) A) and D)
F) B) and C)

Question 13

Elasticity measures how "sensitive" consumers are by measuring their change in ____ as the price of the product changes.

Accepted Answer

A)   attitude
B)   income
C)   quantity demanded
D)   supply
E)   taxesF) All of the above
G) A) and C)

Question 14

If a supply curve has a constant slope throughout its length, it must have a constant price elasticity throughout its length. ​
​

Accepted Answer

A) True 
 B)False

Question 15

If the price elasticity of demand coefficient equals 2 then:

Accepted Answer

A)   a 7 percent decrease in the price will result in a 14 percent decrease in the quantity demanded.
B)   a price decrease will increase total revenue.
C)   the good has an inelastic demand.
D)   there is likely few substitutes, a short time period under consideration, or this good accounts for a relatively small percentage of consumers' budgets.E) None of the above
F) A) and B)

Question 16

Exhibit 5-1 Demand curve
​ 
-In Exhibit 5-1, the demand curve between points a and b is:

Accepted Answer

A)   price elastic.
B)   price inelastic.
C)   unit elastic.
D)   perfectly elastic.
E)   perfectly inelastic.F) A) and B)
G) C) and D)

Question 17

The price elasticity of demand coefficient for a good will be greater:

Accepted Answer

A)   if close substitutes exist.
B)   if minor complements exist.
C)   in the short-run.
D)   if a small portion of the budget will be spent on it.E) A) and B)
F) A) and C)

Question 18

Within different price ranges along a linear demand curve, elasticities are:

Accepted Answer

A)   constant.
B)   different.
C)   equal.
D)   the same as slope.
E)   negative 1.F) C) and D)
G) None of the above

Question 19

Suppose the quantity demanded is 1,000 million bushels of peaches per year when the price is $3 per bushel and 1,500 million bushels when the price is $1 per bushel. The price elasticity of demand in this range of the demand curve is:

Accepted Answer

A)   elastic.
B)   inelastic.
C)   unitary elastic.
D)   infinitely elastic.E) A) and D)
F) A) and C)

Question 20

The Smith family buys much more macaroni when someone in the family is laid off. This means that the Smiths' ____ is negative.

Accepted Answer

A)   demand curve for macaroni
B)   income elasticity for macaroni
C)   Engel's law
D)   income
E)   price elasticity of demand for macaroniF) None of the above
G) All of the above

Exam 5: Price Elasticity of Demand and Supply

Exhibit 5-6 Demand curve for concert tickets ​ -In Exhibit 5-6, suppose promoters charge a price of $30 per ticket. How much total revenue will their sales generate?

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All things equal, the price elasticity of supply:

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The Smith family buys much more macaroni when someone in the family is laid off. This means that the Smiths' ____ is negative.

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Suppose the quantity demanded is 1,000 million bushels of peaches per year when the price is $3 per bushel and 1,500 million bushels when the price is $1 per bushel. The price elasticity of demand in this range of the demand curve is:

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Exhibit 5-8 Supply and demand curves for good X ​ -As shown in Exhibit 5-8, assuming goods X and Y are substitutes, a decrease in the price of Y, other factors held constant, will move the equilibrium from point E to point:

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Sally recently got a 15 percent raise. She now purchases 7.5 percent more steak dinners. Sally's income elasticity for steak dinners is:

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If the price elasticity of demand coefficient equals 2 then:

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A perfectly elastic supply curve is expressed graphically as a(n) :

Correct AnswerverifiedShow Answer

If a consumer's purchases of a product increases as income increases, this good is classified as a(n) :

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Within different price ranges along a linear demand curve, elasticities are:

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The price elasticity of demand coefficient for a good will be greater:

Correct AnswerverifiedShow Answer

If a 10 percent price increase causes the quantity demanded for a good to decrease by 10 percent, demand is unitary elastic. ​

Correct AnswerverifiedShow Answer

Elasticity measures how "sensitive" consumers are by measuring their change in ____ as the price of the product changes.

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Exhibit 5-9 Supply and demand curves for good X ​ -As shown in Exhibit 5-9, assuming good X is an inferior good, an increase in consumer income, other factors held constant, could move the equilibrium from point E to point: ​

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Exhibit 5-8 Supply and demand curves for good X ​ -In Exhibit 5-8, the price elasticity of supply for good X between points Y and E is:

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If a supply curve has a constant slope throughout its length, it must have a constant price elasticity throughout its length. ​ ​

Correct AnswerverifiedShow Answer

The short-run price elasticity of demand for airline travel is .05, while the long-run elasticity is 2.36. This means that a significant increase in airline ticket prices will cause airline companies to:

Correct AnswerverifiedShow Answer

A horizontal demand curve is perfectly elastic. ​ ​ ​

Correct AnswerverifiedShow Answer

If the price elasticity of demand for a good is elastic, then consumers are relatively unresponsive with respect to the quantity purchased when the price changes. ​

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Exhibit 5-1 Demand curve ​ -In Exhibit 5-1, the demand curve between points a and b is:

Correct AnswerverifiedShow Answer

Exhibit 5-6 Demand curve for concert tickets -In Exhibit 5-6, suppose promoters charge a price of $30 per ticket. How much total revenue will their sales generate?

Correct Answer
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Exhibit 5-8 Supply and demand curves for good X -As shown in Exhibit 5-8, assuming goods X and Y are substitutes, a decrease in the price of Y, other factors held constant, will move the equilibrium from point E to point:

Correct Answer
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If a 10 percent price increase causes the quantity demanded for a good to decrease by 10 percent, demand is unitary elastic.

Correct Answer
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Correct Answer
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Exhibit 5-9 Supply and demand curves for good X -As shown in Exhibit 5-9, assuming good X is an inferior good, an increase in consumer income, other factors held constant, could move the equilibrium from point E to point:

Correct Answer
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Exhibit 5-8 Supply and demand curves for good X -In Exhibit 5-8, the price elasticity of supply for good X between points Y and E is:

Correct Answer
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If a supply curve has a constant slope throughout its length, it must have a constant price elasticity throughout its length.

Correct Answer
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Correct Answer
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A horizontal demand curve is perfectly elastic.

Correct Answer
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If the price elasticity of demand for a good is elastic, then consumers are relatively unresponsive with respect to the quantity purchased when the price changes.

Correct Answer
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Exhibit 5-1 Demand curve -In Exhibit 5-1, the demand curve between points a and b is:

Correct Answer
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