Question 1

Price elasticity is a measure of how

Accepted Answer

A)   much a market responds to a change in market conditions.
B)   much consumers or producers respond to a change in market price.
C)   quickly consumers or producers respond to a change in market price.
D)   quickly a market will respond to a change in market conditions.E) B) and C)
F) A) and D)

Question 2

Gasoline and motel rooms are complements for many consumers.When the price of gasoline declines,consumers take longer vacations and rent more motel rooms.Therefore,the cross price elasticity between gasoline and motel rooms is

Accepted Answer

A)   positive.
B)   negative.
C)   less than one because neither is a luxury.
D)   more than one because both are luxuries.E) A) and D)
F) B) and C)

Question 3

A good with an income elasticity of 0.4 is:

Accepted Answer

A)   a luxury good.
B)   a normal good.
C)   an inferior good.
D)   a substitute good.E) A) and C)
F) A) and B)

Question 4

The cross-price elasticity of demand for peanut butter and jelly is likely:

Accepted Answer

A)   a positive number.
B)   a very high positive number.
C)   a negative number.
D)   less than one.E) None of the above
F) B) and C)

Question 5

A determinant of the price elasticity of supply that is also a determinant of the price elasticity of demand is:

Accepted Answer

A)   availability of inputs.
B)   flexibility of the production process.
C)   adjustment time.
D)   whether the good is a luxury or a necessity.E) All of the above
F) C) and D)

Question 6

The price elasticity of demand for leisure air travel is 1.60.Therefore,a

Accepted Answer

A)   10 percent decrease in the price of leisure air travel will cause a 16 percent decrease in the amount of leisure air travel.
B)   10 percent decrease in the price of leisure air travel will cause a 16 percent increase in the amount of leisure air travel.
C)   16 percent decrease in the price of leisure air travel will cause a 10 percent increase in the amount of leisure air travel.
D)   a 16 percent decrease in the price of leisure air travel will cause a 10 percent decrease in the amount of leisure air travel.E) B) and C)
F) B) and D)

Question 7

When price was 10,quantity demanded was 50.When price increased to 12,quantity demanded decreased to 40.Therefore,when price increased,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) B) and C)
F) B) and D)

Question 8

Different measurements of elasticity include:

Accepted Answer

A)   income elasticity of demand, income elasticity of supply.
B)   price elasticity of demand, price elasticity of supply.
C)   cross-price elasticity of demand, income elasticity of supply.
D)   preference elasticity of demand, cross-price elasticity of supply.E) B) and D)
F) None of the above

Question 9

Economists use the percentage change in quantity rather than the absolute change in quantity because:

Accepted Answer

A)   percentage changes are easier to calculate than absolute changes.
B)   the measured elasticity is the same regardless of the unit of measurement for quantity.
C)   absolute changes are confusing to convert.
D)   absolute changes often result in negative numbers.E) B) and C)
F) A) and B)

Question 10

When two goods are complements,their cross-price elasticity of demand is:

Accepted Answer

A)   positive.
B)   negative.
C)   zero.
D)   equal to one.E) A) and B)
F) None of the above

Question 11

The demand for dolls is __________________ than is the demand for Barbie dolls because ___________________.

Accepted Answer

A)   less price elastic; the scope of the market for dolls is more broadly defined
B)   more price elastic; the scope of the market for dolls is more broadly defined
C)   less price elastic; Barbie dolls have more available substitutes
D)   more price elastic; Barbie dolls have more available substitutesE) A) and D)
F) None of the above

Question 12

The change in the quantity demanded of gas because of increasing gas prices over the last decade:

Accepted Answer

A)   was more elastic than it has been in the last six months.
B)   was less elastic than it has been in the last six months.
C)   has been relatively the same over both time periods.
D)   has become a non-issue for people now that they are used to higher gas prices.E) B) and C)
F) A) and D)

Question 13

If the price of a cup of coffee increases by 50 percent,the quantity demanded decreases by 50 percent.The price elasticity of demand is:

Accepted Answer

A)   elastic.
B)   inelastic.
C)   unit elastic.
D)   zero.E) A) and B)
F) A) and C)

Question 14

Suppose when the price of pineapples goes from $5 to $3 per pineapple,production decreases from 3,500 pineapples to 2,000 pineapples per year.Using the mid-point method,the percentage change in price would be:

Accepted Answer

A)   0.50
B)   50 percent
C)   0.54
D)   54 percentE) A) and C)
F) B) and C)

Question 15

A corn farmer is likely to have a _____________ price elasticity of supply than does a tree farmer due to ________________.

Accepted Answer

A)   more elastic; a more flexible production process
B)   less elastic; a more flexible production process
C)   less elastic; a less flexible production process
D)   more elastic; a less flexible production processE) A) and D)
F) A) and C)

Question 16

Suppose price increases from $7.00 to $13.00.Using the mid-point formula,the percentage change in price is:

Accepted Answer

A)   .0.6 = 60 percent.
B)   0.6 = 60 percent.
C)   70 percent.
D)   130 percent.E) A) and B)
F) A) and C)

Question 17

The demand for a subway ride is probably ___________________ than is the demand for a car because ___________________.

Accepted Answer

A)   less price elastic; a subway ride requires a smaller portion of one's income
B)   more price elastic; a subway ride requires a smaller portion of one's income
C)   less price elastic; people will take a longer time to adjust to the change in the price of a subway ride
D)   more price elastic; people will take a longer time to adjust to the change in the price of a subway ride.E) A) and D)
F) B) and D)

Question 18

If a good has an income elasticity of 1.83,then it:

Accepted Answer

A)   is a normal good, and a necessity.
B)   is an inferior good, and a necessity.
C)   probably has a lot of close substitutes available.
D)   is a luxury.E) None of the above
F) C) and D)

Question 19

The demand for Ben & Jerry's ice cream is _________________ than is the demand for all ice cream because _______________.

Accepted Answer

A)   less price elastic; the scope of the market for Ben & Jerry's is less broadly defined
B)   more price elastic; the scope of the market for Ben & Jerry's is less broadly defined
C)   less price elastic; Ben & Jerry's has fewer available substitutes
D)   more price elastic; Ben & Jerry's has fewer available substitutesE) None of the above
F) B) and D)

Question 20

How much the demand for one good changes in response to a change in the price of a different good is measured by:

Accepted Answer

A)   price elasticity of supply.
B)   price elasticity of demand.
C)   income elasticity.
D)   cross-price elasticity.E) A) and B)
F) A) and C)

Exam 4: Elasticity

The cross-price elasticity of demand for peanut butter and jelly is likely:

Correct AnswerverifiedShow Answer

Suppose when the price of pineapples goes from $5 to $3 per pineapple,production decreases from 3,500 pineapples to 2,000 pineapples per year.Using the mid-point method,the percentage change in price would be:

Correct AnswerverifiedShow Answer

How much the demand for one good changes in response to a change in the price of a different good is measured by:

Correct AnswerverifiedShow Answer

The demand for a subway ride is probably ___________________ than is the demand for a car because ___________________.

Correct AnswerverifiedShow Answer

Price elasticity is a measure of how

Correct AnswerverifiedShow Answer

The demand for dolls is __________________ than is the demand for Barbie dolls because ___________________.

Correct AnswerverifiedShow Answer

Different measurements of elasticity include:

Correct AnswerverifiedShow Answer

A corn farmer is likely to have a _____________ price elasticity of supply than does a tree farmer due to ________________.

Correct AnswerverifiedShow Answer

When two goods are complements,their cross-price elasticity of demand is:

Correct AnswerverifiedShow Answer

Gasoline and motel rooms are complements for many consumers.When the price of gasoline declines,consumers take longer vacations and rent more motel rooms.Therefore,the cross price elasticity between gasoline and motel rooms is

Correct AnswerverifiedShow Answer

A good with an income elasticity of 0.4 is:

Correct AnswerverifiedShow Answer

Economists use the percentage change in quantity rather than the absolute change in quantity because:

Correct AnswerverifiedShow Answer

Suppose price increases from $7.00 to $13.00.Using the mid-point formula,the percentage change in price is:

Correct AnswerverifiedShow Answer

A determinant of the price elasticity of supply that is also a determinant of the price elasticity of demand is:

Correct AnswerverifiedShow Answer

The demand for Ben & Jerry's ice cream is _________________ than is the demand for all ice cream because _______________.

Correct AnswerverifiedShow Answer

If the price of a cup of coffee increases by 50 percent,the quantity demanded decreases by 50 percent.The price elasticity of demand is:

Correct AnswerverifiedShow Answer

The change in the quantity demanded of gas because of increasing gas prices over the last decade:

Correct AnswerverifiedShow Answer

When price was 10,quantity demanded was 50.When price increased to 12,quantity demanded decreased to 40.Therefore,when price increased,total revenue

Correct AnswerverifiedShow Answer

The price elasticity of demand for leisure air travel is 1.60.Therefore,a

Correct AnswerverifiedShow Answer

If a good has an income elasticity of 1.83,then it:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The demand for a subway ride is probably _ than is the demand for a car because _.

Correct Answer
verified

Correct Answer
verified

The demand for dolls is than is the demand for Barbie dolls because _.

Correct Answer
verified

Correct Answer
verified

A corn farmer is likely to have a _ price elasticity of supply than does a tree farmer due to ____.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

The demand for Ben & Jerry's ice cream is ___ than is the demand for all ice cream because _.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified