Question 1

Price elasticity of demand is the ratio of the

Accepted Answer

A)  absolute change in quantity demanded to the absolute change in price.
B)  absolute change in price to the absolute change in quantity demanded.
C)  percentage change in quantity demanded to the percentage change in price.
D)  percentage change in price to the percentage change in quantity demanded.

Question 2

For a straight-line downward-sloping demand curve, price elasticity of demand

Accepted Answer

A)  increases as we move down along the demand curve from higher to lower prices.
B)  decreases as we move down along the demand curve from higher to lower prices.
C)  remains constant along the entire demand curve.
D)  a or b depending on the actual slope of the demand curve

Question 3

If a demand curve is a straight downward sloping line, demand is

Accepted Answer

A)  unit elastic.
B)  elastic.
C)  inelastic.
D)  perfectly inelastic.
E)  There is not enough information to answer the question.

Question 4

If the price of good X rises and the demand for good X is inelastic, then the percentage fall in quantity demanded is __________ the percentage rise in price, and total revenue __________.

Accepted Answer

A)  greater than; rises
B)  less than; falls
C)  equal to; remains constant
D)  greater than; falls
E)  none of the above

Question 5

The demand curve for good X is a straight downward-sloping line. It follows that the demand for good X is ________ elastic at __________ prices than at __________ prices.

Accepted Answer

A)  less; lower; higher
B)  more; lower; higher
C)  more; higher; lower
D)  less; higher; lower
E)  a and c

Question 6

For a certain good, when price rises from $90 to $98, quantity demanded falls from 7,400 to 6,500. The price elasticity of demand here is approximately _____________, making the demand for this good ____________ in the price range between $90 and $98.

Accepted Answer

A)  1.52; inelastic
B)  1.52; elastic
C)  1.86; elastic
D)  0.66; elastic
E)  0.66; inelastic

Question 7

What does price elasticity of supply measure? Explain the relationship that exists between price elasticity of supply and the length of time sellers have to adjust to the price change.

Accepted Answer

Price elasticity of supply measures the ...

Question 8

Which of the following statements is false?

Accepted Answer

A)  Ham has a higher price elasticity of demand than meat.
B)  Peaches have a higher price elasticity of demand than fruit.
C)  Soap has a higher price elasticity of demand than Ivory brand soap.
D)  Carrots have a higher price elasticity of demand than vegetables.

Question 9

If a 7 percent increase in the price of a commodity results in a 12 percent increase in the quantity supplied, supply is said to be

Accepted Answer

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

Question 10

If the cross elasticity of demand for two goods is negative,

Accepted Answer

A)  one of the goods is necessarily a normal good, and the other good is necessarily an inferior good.
B)  both goods are normal goods.
C)  the goods are substitutes.
D)  the goods are complements.

Question 11

Exhibit 19-2
​
 1 to S2. What is the per-unit tax equal to? A) $1.00 B) $2.25 C) $0.25 D) $4.00 E) $1.25" class="answers-bank-image d-inline" rel="preload" >
-Refer to Exhibit 19-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S1 to S2. What is the per-unit tax equal to?

Accepted Answer

A)  $1.00
B)  $2.25
C)  $0.25
D)  $4.00
E)  $1.25

Question 12

If the demand for a good is currently elastic, then

Accepted Answer

A)  the percentage change in quantity demanded of the good is greater than the percentage change in price of the good.
B)  the percentage change in quantity demanded of the good is less than the percentage change in price of the good.
C)  the percentage change in quantity demanded of the good is equal to the percentage change in price of the good.
D)  quantity demanded of the good is not responsive to changes in the price of the good.

Question 13

As the price of good X rises from $1.50 to $1.75 the result is a decrease in the quantity demanded of good X from 650 units to 590 units. The price elasticity of demand for good X is _____________ and total revenue __________ as the price of good X rises from $1.50 to $1.75.

Accepted Answer

A)  0.63; falls
B)  1.59; rises
C)  1.59; falls
D)  0.63; rises

Question 14

Suppose that when the price of water rises by 30 percent, the quantity demanded falls by 10 percent. The price elasticity of demand for water is ____________, making water an _______________ good (in this example) .

Accepted Answer

A)  0.33; inelastic
B)  3.0; elastic
C)  1.0; unit elastic
D)  0.33; elastic

Question 15

Suppose someone believes that if a per-unit tax is placed on the producers of good Y, the consumers of good Y will end up paying the full tax. This person assumes that the demand curve for good Y is

Accepted Answer

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

Question 16

If the percentage change in quantity demanded is greater than the percentage change in price for good X, then the demand for good X is

Accepted Answer

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

Question 17

If the seller of good X raises the price of good X, it follows that the total revenue of good X will __________, if demand is __________.

Accepted Answer

A)  rise; unit elastic
B)  rise; elastic.
C)  fall; unit elastic.
D)  fall; inelastic.
E)  fall; elastic

Question 18

If the percentage change in quantity demanded is equal to the percentage change in price for good Z, then demand for good Z is

Accepted Answer

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

Question 19

If Jack bought 12 DVDs last year when his income was $40,000 and he buys 14 DVDs this year when his income is $43,000, then his income elasticity of demand is ______________ which means that DVDs are a(n)  ______________ good for Jack.

Accepted Answer

A)  +0.41; normal
B)  -0.47; inferior
C)  +2.13; normal
D)  +0.59; inferior
E)  -2.13; inferior

Question 20

For a normal good, __________ falls as income __________; for an inferior good, __________ rises as income __________.

Accepted Answer

A)  demand; falls; demand; falls
B)  demand; rises; demand; rises
C)  supply; falls; demand; falls
D)  supply; rises; supply; falls

Exam 19: Elasticity

What does price elasticity of supply measure? Explain the relationship that exists between price elasticity of supply and the length of time sellers have to adjust to the price change.

Correct AnswerverifiedPrice elasticity of supply measures the ...View AnswerShow Answer

Suppose someone believes that if a per-unit tax is placed on the producers of good Y, the consumers of good Y will end up paying the full tax. This person assumes that the demand curve for good Y is

Correct AnswerverifiedShow Answer

For a straight-line downward-sloping demand curve, price elasticity of demand

Correct AnswerverifiedShow Answer

The demand curve for good X is a straight downward-sloping line. It follows that the demand for good X is ________ elastic at __________ prices than at __________ prices.

Correct AnswerverifiedShow Answer

If the percentage change in quantity demanded is equal to the percentage change in price for good Z, then demand for good Z is

Correct AnswerverifiedShow Answer

Exhibit 19-2 ​ -Refer to Exhibit 19-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S1 to S2. What is the per-unit tax equal to?

Correct AnswerverifiedShow Answer

If a 7 percent increase in the price of a commodity results in a 12 percent increase in the quantity supplied, supply is said to be

Correct AnswerverifiedShow Answer

For a certain good, when price rises from $90 to $98, quantity demanded falls from 7,400 to 6,500. The price elasticity of demand here is approximately _____________, making the demand for this good ____________ in the price range between $90 and $98.

Correct AnswerverifiedShow Answer

Which of the following statements is false?

Correct AnswerverifiedShow Answer

If a demand curve is a straight downward sloping line, demand is

Correct AnswerverifiedShow Answer

If the percentage change in quantity demanded is greater than the percentage change in price for good X, then the demand for good X is

Correct AnswerverifiedShow Answer

Suppose that when the price of water rises by 30 percent, the quantity demanded falls by 10 percent. The price elasticity of demand for water is ____________, making water an _______________ good (in this example) .

Correct AnswerverifiedShow Answer

If the price of good X rises and the demand for good X is inelastic, then the percentage fall in quantity demanded is __________ the percentage rise in price, and total revenue __________.

Correct AnswerverifiedShow Answer

For a normal good, __________ falls as income __________; for an inferior good, __________ rises as income __________.

Correct AnswerverifiedShow Answer

If the seller of good X raises the price of good X, it follows that the total revenue of good X will __________, if demand is __________.

Correct AnswerverifiedShow Answer

If Jack bought 12 DVDs last year when his income was $40,000 and he buys 14 DVDs this year when his income is $43,000, then his income elasticity of demand is ______________ which means that DVDs are a(n) ______________ good for Jack.

Correct AnswerverifiedShow Answer

As the price of good X rises from $1.50 to $1.75 the result is a decrease in the quantity demanded of good X from 650 units to 590 units. The price elasticity of demand for good X is _____________ and total revenue __________ as the price of good X rises from $1.50 to $1.75.

Correct AnswerverifiedShow Answer

Price elasticity of demand is the ratio of the

Correct AnswerverifiedShow Answer

If the demand for a good is currently elastic, then

Correct AnswerverifiedShow Answer

If the cross elasticity of demand for two goods is negative,

Correct AnswerverifiedShow Answer

Correct Answer
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Price elasticity of supply measures the ...
View Answer

Correct Answer
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Correct Answer
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The demand curve for good X is a straight downward-sloping line. It follows that the demand for good X is elastic at prices than at ____ prices.

Correct Answer
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Correct Answer
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Exhibit 19-2 -Refer to Exhibit 19-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S₁ to S₂. What is the per-unit tax equal to?

Correct Answer
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Correct Answer
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For a certain good, when price rises from $90 to $98, quantity demanded falls from 7,400 to 6,500. The price elasticity of demand here is approximately _, making the demand for this good in the price range between $90 and $98.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Suppose that when the price of water rises by 30 percent, the quantity demanded falls by 10 percent. The price elasticity of demand for water is , making water an ___ good (in this example) .

Correct Answer
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If the price of good X rises and the demand for good X is inelastic, then the percentage fall in quantity demanded is the percentage rise in price, and total revenue .

Correct Answer
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For a normal good, falls as income ; for an inferior good, rises as income .

Correct Answer
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If the seller of good X raises the price of good X, it follows that the total revenue of good X will , if demand is .

Correct Answer
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If Jack bought 12 DVDs last year when his income was $40,000 and he buys 14 DVDs this year when his income is $43,000, then his income elasticity of demand is which means that DVDs are a(n) good for Jack.

Correct Answer
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As the price of good X rises from $1.50 to $1.75 the result is a decrease in the quantity demanded of good X from 650 units to 590 units. The price elasticity of demand for good X is ___ and total revenue as the price of good X rises from $1.50 to $1.75.

Correct Answer
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Correct Answer
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