Question 1

When the percentage change in the quantity supplied is twice the percentage change in price,then supply is

Accepted Answer

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

Question 2

Suppose the quantity supplied of computers increases from 2 million to 4 million units as the price of a computer increases from $600 to $700.What does the price elasticity of supply equal?

Accepted Answer

The price elasticity of supply = (percen...

Question 3

Natural gas is difficult to store.What implication does this fact have for the elasticity of supply of natural gas?

Accepted Answer

Because natural gas is difficult to stor...

Question 4

An inferior good has a ________ elasticity of demand.

Accepted Answer

A)   positive income
B)   negative income
C)   negative cross
D)   positive cross
E)   negative price

Question 5

Studies have shown that the price elasticity of demand for necessities,such as food,are higher in developing countries and lower in developed countries.What is the reason for this difference in elasticity?

Accepted Answer

One of the determinants of elasticity is...

Question 6

Which of the following statements is correct?

Accepted Answer

A)   The income elasticity of demand for inferior goods is positive.
B)   The cross elasticity of demand for substitutes is negative.
C)   The income elasticity of demand for normal goods is positive.
D)   The cross elasticity of demand for complements is positive.
E)   The income elasticity of demand for inferior goods is zero.

Question 7

Refer to the figure above.Suppose Starbucks charges $3.50 per cup for its latte.Which of the following is true?
i.At this price,the demand for Starbucks latte is inelastic.
ii.If Starbucks raises the price of its latte,its revenue will increase.
iii.If Starbucks lowers the price of its latte,it will increase its revenue.

Accepted Answer

A)   Only iii
B)   Only i
C)   Only ii
D)   i and ii
E)   i and iii

Question 8

The income elasticity of demand for skiing trips to Vermont is greater than one.Thus a trip to Vermont for skiing is ________ good.

Accepted Answer

A)   a normal
B)   an inferior
C)   a unit elastic
D)   a price elastic
E)   a price inelastic

Question 9

The lower the level of income in a country,the

Accepted Answer

A)   less income elastic is the demand for food.
B)   more income elastic is the demand for food.
C)   more negative the income elasticity of the demand for food.
D)   Both answers A and C are correct.
E)   None of the above is correct.

Question 10

The cross elasticity of demand

Accepted Answer

A)   means that an increase in the demand for one good leads to a decrease in demand for another good.
B)   measures how a change in the price of one good impacts the demand for another good.
C)   measures how a change in supply impacts the demand for the good.
D)   means that an increase in the price of one good leads to an increase in the price of another good.
E)   measures how a change in income impacts the demand for the good.

Question 11

Taco Bell firm raises the price of its tacos.The price elasticity of demand for Taco Bell tacos equals 5.0.What happens to the Taco Bell's total revenue?

Accepted Answer

A)   nothing
B)   It increases.
C)   It decreases.
D)   It becomes negative.
E)   It might change, but more information is needed to determine if it increases, decreases, or does not change.

Question 12

The income elasticity of demand for used cars is less than zero.So,used cars are

Accepted Answer

A)   an inferior good.
B)   a normal good.
C)   an inelastic good.
D)   a perfectly inelastic good.
E)   a substitute good.

Question 13

If a 30 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

Accepted Answer

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

Question 14

If the price of corn increases by 20 percent and the quantity supplied of corn increases by 30 percent,then supply is

Accepted Answer

A)   elastic and the elasticity of supply equals 1.5.
B)   inelastic and the elasticity of supply equals 1.5.
C)   elastic and the elasticity of supply equals 0.66.
D)   inelastic and the elasticity of supply equals 0.66.
E)   either elastic or inelastic, but more information about the elasticity of demand is needed to determine which.

Question 15

Suppose the demand for rescue services in our national parks is perfectly inelastic.This fact would mean that a 31 percent increase in rescue fees leads to

Accepted Answer

A)   a 31 percent decrease in the quantity demanded.
B)   a 31 percent increase in demand.
C)   a 31 percent decrease in demand.
D)   no change in the quantity demanded.
E)   a decrease in the quantity demanded to 0 rescues.

Question 16

Explain the total revenue test.

Accepted Answer

The total revenue test estimates whether...

Question 17

The cross elasticity of demand for butter and margarine is likely to be

Accepted Answer

A)   positive because they are substitutes.
B)   positive because they are complements.
C)   negative because they are substitutes.
D)   negative because they are complements.
E)   positive because they are normal goods.

Question 18

If the quantity supplied and the price change by the same percentage,then supply is

Accepted Answer

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

Question 19

When the percentage change in the quantity demanded is less than the percentage change in price,then demand is

Accepted Answer

A)   inelastic.
B)   unit elastic.
C)   elastic.
D)   irrelevant.
E)   undefined.

Question 20

Because the price elasticity of supply for jumbo jets is 0.35,the supply of jumbo jets is

Accepted Answer

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

Exam 5: Elasticities of Demand and Supply

Studies have shown that the price elasticity of demand for necessities,such as food,are higher in developing countries and lower in developed countries.What is the reason for this difference in elasticity?

Correct Answer
verified
One of the determinants of elasticity is...
View Answer

The income elasticity of demand for used cars is less than zero.So,used cars are

Correct Answer
verified

Suppose the quantity supplied of computers increases from 2 million to 4 million units as the price of a computer increases from $600 to $700.What does the price elasticity of supply equal?

Correct Answer
verified
The price elasticity of supply = (percen...
View Answer

Taco Bell firm raises the price of its tacos.The price elasticity of demand for Taco Bell tacos equals 5.0.What happens to the Taco Bell's total revenue?

Correct Answer
verified

When the percentage change in the quantity supplied is twice the percentage change in price,then supply is

Correct Answer
verified

Suppose the demand for rescue services in our national parks is perfectly inelastic.This fact would mean that a 31 percent increase in rescue fees leads to

Correct Answer
verified

An inferior good has a ________ elasticity of demand.

Correct Answer
verified

Explain the total revenue test.

Correct Answer
verified
The total revenue test estimates whether...
View Answer

Which of the following statements is correct?

Correct Answer
verified

If a 30 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

Correct Answer
verified

The lower the level of income in a country,the

Correct Answer
verified

Because the price elasticity of supply for jumbo jets is 0.35,the supply of jumbo jets is

Correct Answer
verified

If the price of corn increases by 20 percent and the quantity supplied of corn increases by 30 percent,then supply is

Correct Answer
verified

The income elasticity of demand for skiing trips to Vermont is greater than one.Thus a trip to Vermont for skiing is ________ good.

Correct Answer
verified

The cross elasticity of demand

Correct Answer
verified

If the quantity supplied and the price change by the same percentage,then supply is

Correct Answer
verified

Natural gas is difficult to store.What implication does this fact have for the elasticity of supply of natural gas?

Correct Answer
verified
Because natural gas is difficult to stor...
View Answer

When the percentage change in the quantity demanded is less than the percentage change in price,then demand is

Correct Answer
verified

The cross elasticity of demand for butter and margarine is likely to be

Correct Answer
verified

Correct Answer
verified

Exam 5: Elasticities of Demand and Supply

Studies have shown that the price elasticity of demand for necessities,such as food,are higher in developing countries and lower in developed countries.What is the reason for this difference in elasticity?

Correct AnswerverifiedOne of the determinants of elasticity is...View AnswerShow Answer

The income elasticity of demand for used cars is less than zero.So,used cars are

Correct AnswerverifiedShow Answer

Suppose the quantity supplied of computers increases from 2 million to 4 million units as the price of a computer increases from $600 to $700.What does the price elasticity of supply equal?

Correct AnswerverifiedThe price elasticity of supply = (percen...View AnswerShow Answer

Taco Bell firm raises the price of its tacos.The price elasticity of demand for Taco Bell tacos equals 5.0.What happens to the Taco Bell's total revenue?

Correct AnswerverifiedShow Answer

When the percentage change in the quantity supplied is twice the percentage change in price,then supply is

Correct AnswerverifiedShow Answer

Suppose the demand for rescue services in our national parks is perfectly inelastic.This fact would mean that a 31 percent increase in rescue fees leads to

Correct AnswerverifiedShow Answer

An inferior good has a ________ elasticity of demand.

Correct AnswerverifiedShow Answer

Explain the total revenue test.

Correct AnswerverifiedThe total revenue test estimates whether...View AnswerShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

If a 30 percent price increase generates a 20 percent decrease in quantity demanded,then demand is

Correct AnswerverifiedShow Answer

The lower the level of income in a country,the

Correct AnswerverifiedShow Answer

Because the price elasticity of supply for jumbo jets is 0.35,the supply of jumbo jets is

Correct AnswerverifiedShow Answer

If the price of corn increases by 20 percent and the quantity supplied of corn increases by 30 percent,then supply is

Correct AnswerverifiedShow Answer

The income elasticity of demand for skiing trips to Vermont is greater than one.Thus a trip to Vermont for skiing is ________ good.

Correct AnswerverifiedShow Answer

The cross elasticity of demand

Correct AnswerverifiedShow Answer

If the quantity supplied and the price change by the same percentage,then supply is

Correct AnswerverifiedShow Answer

Natural gas is difficult to store.What implication does this fact have for the elasticity of supply of natural gas?

Correct AnswerverifiedBecause natural gas is difficult to stor...View AnswerShow Answer

When the percentage change in the quantity demanded is less than the percentage change in price,then demand is

Correct AnswerverifiedShow Answer

The cross elasticity of demand for butter and margarine is likely to be

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified
One of the determinants of elasticity is...
View Answer

Correct Answer
verified

Correct Answer
verified
The price elasticity of supply = (percen...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The total revenue test estimates whether...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Because natural gas is difficult to stor...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified