Question 1

The demand for corn increases. As a result, the price of corn will ________, and the less elastic the supply of corn, the ________ will be the effect on the price.

Accepted Answer

A)   fall; smaller
B)   fall; greater
C)   rise; smaller
D)   rise; greaterE) B) and C)
F) A) and D)

Question 2

The price elasticity of demand is 5.0 if a 10 percent increase in the price results in a ________ decrease in the quantity demanded.

Accepted Answer

A)   2 percent
B)   5 percent
C)   10 percent
D)   50 percentE) B) and D)
F) A) and B)

Question 3

The price elasticity of supply of laptop computers equals 1.5 if

Accepted Answer

A)   a rightward shift of the demand curve for laptops causes the quantity supplied to increase by 1.5 percent.
B)   a rightward shift of the demand curve for laptops causes a 1.5 percent increase in their price.
C)   for every 1 percent that laptop prices increase, computer makers produce another 1.5 percent laptops.
D)   for every $1.00 that laptops increase in price, computer makers produce another 150 laptops.E) C) and D)
F) A) and B)

Question 4

If addiction makes cigarettes such a necessity, is it correct to think that cigarettes are perfectly inelastic in both supply and demand.

Accepted Answer

Cigarettes might be perfectly inelastic ...

Question 5

If Pepsi decided to raise its price, you would expect the price of Coca Cola

Accepted Answer

A)   to fall.
B)   to raise.
C)   Their prices should have no relationship because Pepsi and Coca Cola are not related.
D)   None of the above answers are correct.E) All of the above
F) A) and B)

Question 6

Joe's monthly income increases from $1,000 to $2,000. As a result, he decreases the number of his fast food meals from 20 to 5 per month. To Joe, are fast-food meals a normal or an inferior good? What kind of elasticity can tell the answer? Explain.

Accepted Answer

Fast-food meals are an inferio...

Question 7

The elasticity of supply equals ________ if the supply curve is vertical.

Accepted Answer

A)   0
B)   1
C)   infinity
D)   -1E) None of the above
F) All of the above

Question 8

-The increase in the demand for widgets, shown in the figure above, is the result of an increase in the price of McBoover devices. Therefore

Accepted Answer

A)   widgets and McBoover devices are substitutes.
B)   widgets and McBoover devices are complements.
C)   widgets are a normal good.
D)   McBoover devices are a normal good.E) C) and D)
F) A) and B)

Question 9

The air route from Dallas to Mexico City is served by more than one airline. The demand for tickets from American Airlines for that route is probably

Accepted Answer

A)   inelastic but more elastic than the demand for all tickets for that route.
B)   elastic and more elastic than the demand for all tickets for that route.
C)   inelastic and less elastic than the demand for all tickets for that route.
D)   elastic but less elastic than the demand for all tickets for that route.E) C) and D)
F) A) and B)

Question 10

The price elasticity of demand for adults for cigarettes is 0.4. If government wants to reduce smoking among adults by 15 percent, by what percentage should it raise the price of cigarettes?
Teenagers have a higher price elasticity of demand for cigarettes than do adults. Suppose the price elasticity of teenagers' demand for cigarettes is 0.8. If the government imposes a tax on cigarettes that raises the price to reduce overall smoking by 15 percent, by what percentage will the government reduce teenage smoking?

Accepted Answer

The government should raise the price of...

Question 11

Elasticity measures the

Accepted Answer

A)   percentage change in a variable.
B)   slope of a curve.
C)   change in a variable.
D)   responsiveness of a variable to a change in another variable.E) A) and B)
F) None of the above

Question 12

-The increase in the demand for widgets, shown in the figure above, is the result of an increase in people's incomes from $28,500 per year to $31,500 per year. Therefore, the income elasticity of demand for widgets is

Accepted Answer

A)   0.25.
B)   0.75.
C)   1.33.
D)   4.00.E) A) and D)
F) C) and D)

Question 13

The price elasticity of demand for gasoline is 0.40. If the price of gasoline rises by 20 percent, there will be

Accepted Answer

A)   a decrease of more than 20 percent in the quantity of gasoline demanded.
B)   an increase in the total revenue received from the sale of gasoline.
C)   a loss of total revenue for gasoline producers, because at a higher price the quantity of gasoline demanded decreases.
D)   no change in the quantity of gasoline sold because people need gasoline.E) None of the above
F) A) and C)

Question 14

If the cross elasticity of demand between goods A and B is positive

Accepted Answer

A)   the demands for A and B are both price elastic.
B)   the demands for A and B are both price inelastic.
C)   A and B are complements.
D)   A and B are substitutes.E) C) and D)
F) A) and B)

Question 15

Apple, the consumer electronics giant, on Tuesday rolled out new versions of its popular iPad tablet. Suppose when the price of an iPad decreases by 20 percent, the number of songs downloaded on iTunes increases by 30 percent. Based on this information iTunes are

Accepted Answer

A)   a normal good.
B)   an inferior good.
C)   substitutes for iPads.
D)   complements to iPads.E) B) and C)
F) B) and D)

Question 16

Specialty chocolate bars with a high cocoa content have been drawing a lot of attention in gourmet circles in 2008 but the price of cocoa beans has increased more than 44 percent in this time period. In response to the increase in the price of cocoa beans, Rogue Chocolatier has increased the price of their gourmet chocolate bars by 20 percent. Rogue notices their firm's total revenue increased after the price increase. We can determine that the demand for Rogue's bars is

Accepted Answer

A)   inelastic.
B)   elastic.
C)   perfectly inelastic.
D)   unit elastic.E) None of the above
F) All of the above

Question 17

When the price of bananas rises 2 percent, the quantity demanded of peanut butter falls 4 percent.
a) What is the cross elasticity of demand between these two goods?
b) How are these goods related?
c) If the price of bananas rises, how will that affect the demand curve for peanut butter?

Accepted Answer

a) The cross elasticity of demand equals...

Question 18

Using the average price and average quantity, what is the elasticity of demand for oranges when the price of oranges changes from $200 to $160 per bushel and so the quantity demanded changes from 1000 to 1400 bushels?

Accepted Answer

A)   1.5
B)   0.1
C)   10.0
D)   0.67E) A) and B)
F) A) and C)

Question 19

If Sam wants to increase her total revenue from her sales of flowers and she knows that the demand for flowers is price elastic, she should

Accepted Answer

A)   lower her price to increase the demand and shift the demand curve rightward.
B)   raise her price because she knows that the quantity demanded will also increase.
C)   raise her price because she knows that the percentage decrease in the quantity demanded will be smaller than the percentage increase in price.
D)   lower her price because she knows that the percentage increase in the quantity demanded will be greater than the percentage decrease in price.E) All of the above
F) A) and C)

Question 20

-The above figure shows the demand curve for movie rentals from Redbox. At which of the following prices is the demand unit elastic?

Accepted Answer

A)   $5.00
B)   $3.50
C)   $2.50
D)   $0.00E) None of the above
F) B) and D)

Exam 4: Elasticity

The demand for corn increases. As a result, the price of corn will , and the less elastic the supply of corn, the will be the effect on the price.

Correct Answer
verified

Correct Answer
verified

Using the average price and average quantity, what is the elasticity of demand for oranges when the price of oranges changes from $200 to $160 per bushel and so the quantity demanded changes from 1000 to 1400 bushels?

Correct Answer
verified

Apple, the consumer electronics giant, on Tuesday rolled out new versions of its popular iPad tablet. Suppose when the price of an iPad decreases by 20 percent, the number of songs downloaded on iTunes increases by 30 percent. Based on this information iTunes are

Correct Answer
verified

If addiction makes cigarettes such a necessity, is it correct to think that cigarettes are perfectly inelastic in both supply and demand.

Correct Answer
verified
Cigarettes might be perfectly inelastic ...
View Answer

If the cross elasticity of demand between goods A and B is positive

Correct Answer
verified

The price elasticity of demand for gasoline is 0.40. If the price of gasoline rises by 20 percent, there will be

Correct Answer
verified

The price elasticity of supply of laptop computers equals 1.5 if

Correct Answer
verified

The elasticity of supply equals ________ if the supply curve is vertical.

Correct Answer
verified

-The above figure shows the demand curve for movie rentals from Redbox. At which of the following prices is the demand unit elastic?

Correct Answer
verified

Joe's monthly income increases from $1,000 to $2,000. As a result, he decreases the number of his fast food meals from 20 to 5 per month. To Joe, are fast-food meals a normal or an inferior good? What kind of elasticity can tell the answer? Explain.

Correct Answer
verified
Fast-food meals are an inferio...
View Answer

The air route from Dallas to Mexico City is served by more than one airline. The demand for tickets from American Airlines for that route is probably

Correct Answer
verified

If Pepsi decided to raise its price, you would expect the price of Coca Cola

Correct Answer
verified

If Sam wants to increase her total revenue from her sales of flowers and she knows that the demand for flowers is price elastic, she should

Correct Answer
verified

Correct Answer
verified
The government should raise the price of...
View Answer

When the price of bananas rises 2 percent, the quantity demanded of peanut butter falls 4 percent. a) What is the cross elasticity of demand between these two goods? b) How are these goods related? c) If the price of bananas rises, how will that affect the demand curve for peanut butter?

Correct Answer
verified
a) The cross elasticity of demand equals...
View Answer

Elasticity measures the

Correct Answer
verified

-The increase in the demand for widgets, shown in the figure above, is the result of an increase in the price of McBoover devices. Therefore

Correct Answer
verified

The price elasticity of demand is 5.0 if a 10 percent increase in the price results in a ________ decrease in the quantity demanded.

Correct Answer
verified

-The increase in the demand for widgets, shown in the figure above, is the result of an increase in people's incomes from $28,500 per year to $31,500 per year. Therefore, the income elasticity of demand for widgets is

Correct Answer
verified

Exam 4: Elasticity

The demand for corn increases. As a result, the price of corn will ________, and the less elastic the supply of corn, the ________ will be the effect on the price.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Using the average price and average quantity, what is the elasticity of demand for oranges when the price of oranges changes from $200 to $160 per bushel and so the quantity demanded changes from 1000 to 1400 bushels?

Correct AnswerverifiedShow Answer

Apple, the consumer electronics giant, on Tuesday rolled out new versions of its popular iPad tablet. Suppose when the price of an iPad decreases by 20 percent, the number of songs downloaded on iTunes increases by 30 percent. Based on this information iTunes are

Correct AnswerverifiedShow Answer

If addiction makes cigarettes such a necessity, is it correct to think that cigarettes are perfectly inelastic in both supply and demand.

Correct AnswerverifiedCigarettes might be perfectly inelastic ...View AnswerShow Answer

If the cross elasticity of demand between goods A and B is positive

Correct AnswerverifiedShow Answer

The price elasticity of demand for gasoline is 0.40. If the price of gasoline rises by 20 percent, there will be

Correct AnswerverifiedShow Answer

The price elasticity of supply of laptop computers equals 1.5 if

Correct AnswerverifiedShow Answer

The elasticity of supply equals ________ if the supply curve is vertical.

Correct AnswerverifiedShow Answer

-The above figure shows the demand curve for movie rentals from Redbox. At which of the following prices is the demand unit elastic?

Correct AnswerverifiedShow Answer

Joe's monthly income increases from $1,000 to $2,000. As a result, he decreases the number of his fast food meals from 20 to 5 per month. To Joe, are fast-food meals a normal or an inferior good? What kind of elasticity can tell the answer? Explain.

Correct AnswerverifiedFast-food meals are an inferio...View AnswerShow Answer

The air route from Dallas to Mexico City is served by more than one airline. The demand for tickets from American Airlines for that route is probably

Correct AnswerverifiedShow Answer

If Pepsi decided to raise its price, you would expect the price of Coca Cola

Correct AnswerverifiedShow Answer

If Sam wants to increase her total revenue from her sales of flowers and she knows that the demand for flowers is price elastic, she should

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe government should raise the price of...View AnswerShow Answer

When the price of bananas rises 2 percent, the quantity demanded of peanut butter falls 4 percent. a) What is the cross elasticity of demand between these two goods? b) How are these goods related? c) If the price of bananas rises, how will that affect the demand curve for peanut butter?

Correct Answerverifieda) The cross elasticity of demand equals...View AnswerShow Answer

Elasticity measures the

Correct AnswerverifiedShow Answer

-The increase in the demand for widgets, shown in the figure above, is the result of an increase in the price of McBoover devices. Therefore

Correct AnswerverifiedShow Answer

The price elasticity of demand is 5.0 if a 10 percent increase in the price results in a ________ decrease in the quantity demanded.

Correct AnswerverifiedShow Answer

-The increase in the demand for widgets, shown in the figure above, is the result of an increase in people's incomes from $28,500 per year to $31,500 per year. Therefore, the income elasticity of demand for widgets is

Correct AnswerverifiedShow Answer

The demand for corn increases. As a result, the price of corn will , and the less elastic the supply of corn, the will be the effect on the price.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Cigarettes might be perfectly inelastic ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Fast-food meals are an inferio...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The government should raise the price of...
View Answer

Correct Answer
verified
a) The cross elasticity of demand equals...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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