Question 1

Necessities, such as food and shelter, are product purchases that consumers are sensitive to, so the demand is elastic for these goods.

Accepted Answer

A) True 
 B)False

Question 2

As we move down a straight-line demand curve, the price elasticity becomes

Accepted Answer

A)  larger.
B)  smaller.
C)  larger and then smaller.
D)  smaller and then larger.

Question 3

The demand for potatoes at current prices is likely to be

Accepted Answer

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

Question 4

A straight-line demand curve has an elasticity that becomes smaller as we move from left to right along the schedule.

Accepted Answer

A) True 
 B)False

Question 5

The elasticity of supply is calculated by

Accepted Answer

A)  determining the slope of the supply curve.
B)  dividing the absolute change in quantity supplied by the absolute change in price.
C)  dividing the percentage change in quantity supplied by the percentage change in price.
D)  dividing the percentage change in price by the percentage change in quantity demanded.

Question 6

If goods X and Y are complements, the

Accepted Answer

A)  quantities demanded of X and Y tend to move in opposite directions.
B)  quantities demanded of X and Y tend to move in the same direction.
C)  prices of X and Y tend to move in the same direction.
D)  supply curves for X and Y tend to move in the same direction.

Question 7

The local symphony recently raised its price for tickets to their summer concerts in the park. At the end of the summer season, the symphony was surprised to see that total revenue had actually decreased. The reason was that the elasticity of demand for tickets was

Accepted Answer

A)  unit elastic.
B)  inelastic.
C)  elastic.
D)  Not enough information is given.

Question 8

At $6 per steak, consumers are willing to buy two steaks. At a price of $2, consumers are willing to buy six steaks. The elasticity of the market demand curve between P = $6 and P = $2 (dropping all minus signs) is

Accepted Answer

A)  0.33.
B)  1
C)  2
D)  4

Question 9

As one moves down a straight-line demand curve, the elasticity increases.

Accepted Answer

A) True 
 B)False

Question 10

Elasticity provides a guide to both

Accepted Answer

A)  market stability and change in revenue as price changes.
B)  responsiveness of quantity demanded to a change in price and market stability.
C)  responsiveness of quantity demanded to a change in price and change in revenue as price changes.
D)  technological change and change in revenue as price changes.

Question 11

The emigration of some of Whoville's workers reduces the quantity of thingamabobs supplied at every price by 50. The new supply curve will ____ the old supply curve.

Accepted Answer

A)  be steeper and less elastic at every price than
B)  have the same slope and the same elasticity at every price as
C)  have the same slope and be more elastic at every price than
D)  More information is needed to predict the relationship between the elasticities of the two supply curves.

Question 12

If a study shows that two goods have a high negative cross elasticity of demand value, then the two goods are competing in the same market.

Accepted Answer

A) True 
 B)False

Question 13

When Scuba, Inc., lowered the price of a tank of compressed air by 20 percent, it sold 10 percent more tankfuls. The price elasticity for compressed air is

Accepted Answer

A)  2
B)  1\2.
C)  1
D)  20

Question 14

Two economists from Ohio University estimated that the demand curve for kerosene in Indonesia was such that a 10 percent increase in the price reduced the quantity demanded by 2.2 percent and that a 10 percent increase in the price of electricity increased the demand for kerosene by 1.6 percent. This indicates that (i) the demand for kerosene is price inelastic and (ii) kerosene and electricity are substitutes. Which of these two statements is correct?

Accepted Answer

A)  i and ii
B)  i not ii
C)  ii not i
D)  neither i nor ii

Question 15

If the price elasticity of demand for smart watches is 1.4 (dropping the minus sign) , then a 50 percent increase in the price of smart watches will lead to

Accepted Answer

A)  the sale of 200 additional smart watches.
B)  the sale of 125 percent fewer smart watches than before.
C)  the sale of 70 percent fewer smart watches than before.
D)  the sale of 25 percent fewer smart watches than before.

Question 16

Total expenditure equals price times elasticity.

Accepted Answer

A) True 
 B)False

Question 17

If the demand for gasoline becomes more elastic over time,

Accepted Answer

A)  the demand curve will shift out.
B)  the demand curve will become flatter.
C)  other things being equal, the equilibrium price of gasoline must fall.
D)  other things being equal, the equilibrium quantity of gasoline must fall.

Question 18

The price elasticity of a horizontal demand curve is always

Accepted Answer

A)  infinitely large.
B)  zero.
C)  one.
D)  increasing as price increases.

Question 19

Elasticity of demand is calculated by dividing the change in quantity by the change in the price of a good.

Accepted Answer

A) True 
 B)False

Question 20

If the demand curve is vertical, the elasticity is

Accepted Answer

A)  1.0.
B)  0.0.
C)  0.5.
D)  infinite.

Exam 6: Demand and Elasticity

If goods X and Y are complements, the

Correct Answer
verified

A straight-line demand curve has an elasticity that becomes smaller as we move from left to right along the schedule.

Correct Answer
verified

If the demand for gasoline becomes more elastic over time,

Correct Answer
verified

When Scuba, Inc., lowered the price of a tank of compressed air by 20 percent, it sold 10 percent more tankfuls. The price elasticity for compressed air is

Correct Answer
verified

If the demand curve is vertical, the elasticity is

Correct Answer
verified

The local symphony recently raised its price for tickets to their summer concerts in the park. At the end of the summer season, the symphony was surprised to see that total revenue had actually decreased. The reason was that the elasticity of demand for tickets was

Correct Answer
verified

If the price elasticity of demand for smart watches is 1.4 (dropping the minus sign) , then a 50 percent increase in the price of smart watches will lead to

Correct Answer
verified

The price elasticity of a horizontal demand curve is always

Correct Answer
verified

If a study shows that two goods have a high negative cross elasticity of demand value, then the two goods are competing in the same market.

Correct Answer
verified

Elasticity of demand is calculated by dividing the change in quantity by the change in the price of a good.

Correct Answer
verified

At $6 per steak, consumers are willing to buy two steaks. At a price of $2, consumers are willing to buy six steaks. The elasticity of the market demand curve between P = $6 and P = $2 (dropping all minus signs) is

Correct Answer
verified

Total expenditure equals price times elasticity.

Correct Answer
verified

As we move down a straight-line demand curve, the price elasticity becomes

Correct Answer
verified

The emigration of some of Whoville's workers reduces the quantity of thingamabobs supplied at every price by 50. The new supply curve will ____ the old supply curve.

Correct Answer
verified

Necessities, such as food and shelter, are product purchases that consumers are sensitive to, so the demand is elastic for these goods.

Correct Answer
verified

As one moves down a straight-line demand curve, the elasticity increases.

Correct Answer
verified

Elasticity provides a guide to both

Correct Answer
verified

Correct Answer
verified

The demand for potatoes at current prices is likely to be

Correct Answer
verified

The elasticity of supply is calculated by

Correct Answer
verified

Exam 6: Demand and Elasticity

If goods X and Y are complements, the

Correct AnswerverifiedShow Answer

A straight-line demand curve has an elasticity that becomes smaller as we move from left to right along the schedule.

Correct AnswerverifiedShow Answer

If the demand for gasoline becomes more elastic over time,

Correct AnswerverifiedShow Answer

When Scuba, Inc., lowered the price of a tank of compressed air by 20 percent, it sold 10 percent more tankfuls. The price elasticity for compressed air is

Correct AnswerverifiedShow Answer

If the demand curve is vertical, the elasticity is

Correct AnswerverifiedShow Answer

The local symphony recently raised its price for tickets to their summer concerts in the park. At the end of the summer season, the symphony was surprised to see that total revenue had actually decreased. The reason was that the elasticity of demand for tickets was

Correct AnswerverifiedShow Answer

If the price elasticity of demand for smart watches is 1.4 (dropping the minus sign) , then a 50 percent increase in the price of smart watches will lead to

Correct AnswerverifiedShow Answer

The price elasticity of a horizontal demand curve is always

Correct AnswerverifiedShow Answer

If a study shows that two goods have a high negative cross elasticity of demand value, then the two goods are competing in the same market.

Correct AnswerverifiedShow Answer

Elasticity of demand is calculated by dividing the change in quantity by the change in the price of a good.

Correct AnswerverifiedShow Answer

At $6 per steak, consumers are willing to buy two steaks. At a price of $2, consumers are willing to buy six steaks. The elasticity of the market demand curve between P = $6 and P = $2 (dropping all minus signs) is

Correct AnswerverifiedShow Answer

Total expenditure equals price times elasticity.

Correct AnswerverifiedShow Answer

As we move down a straight-line demand curve, the price elasticity becomes

Correct AnswerverifiedShow Answer

The emigration of some of Whoville's workers reduces the quantity of thingamabobs supplied at every price by 50. The new supply curve will ____ the old supply curve.

Correct AnswerverifiedShow Answer

Necessities, such as food and shelter, are product purchases that consumers are sensitive to, so the demand is elastic for these goods.

Correct AnswerverifiedShow Answer

As one moves down a straight-line demand curve, the elasticity increases.

Correct AnswerverifiedShow Answer

Elasticity provides a guide to both

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The demand for potatoes at current prices is likely to be

Correct AnswerverifiedShow Answer

The elasticity of supply is calculated by

Correct AnswerverifiedShow Answer

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