Question 1

-In Figure 5-3,the price elasticity of demand between points T and U is the same as between points V and W.

Accepted Answer

A) True 
 B)False

Question 2

-Figure 5-7 shows Sally's demand for movie theater tickets (quantity of movies per year) .At a price of $9 per ticket,the price elasticity of demand is

Accepted Answer

A)   .5
B)   1.0
C)   1.5
D)   2
E)   cannot tell from information givenF) A) and B)
G) All of the above

Question 3

Suppose that the income elasticity of demand for college education is 1.3.This indicates that

Accepted Answer

A)   college education is a necessity
B)   college education is an inferior good
C)   the demand curve for college education slopes downward
D)   college education is a normal good
E)   the demand curve for college education is horizontalF) None of the above
G) A) and D)

Question 4

If the demand for good A is more elastic than the demand for good B,a small increase in supply in both markets will cause

Accepted Answer

A)   a much greater decrease in price for good A than for good B
B)   a much greater decrease in price for good B than for good A
C)   the price will decrease by the same amount in both markets
D)   only the price of good B will decrease
E)   only the price of good A will decreaseF) A) and E)
G) B) and E)

Question 5

The price elasticity of demand measures the responsiveness of quantity demanded to changes in price.

Accepted Answer

A) True 
 B)False

Question 6

The price elasticity of demand measures the

Accepted Answer

A)   responsiveness of a good's price to a change in quantity demanded
B)   adaptability of suppliers when a change in demand alters the price of a good
C)   responsiveness of quantity demanded to a change in a good's price
D)   adaptability of buyers when there is a change in demand
E)   responsiveness of quantity supplied to a change in quantity demandedF) A) and B)
G) C) and D)

Question 7

We would expect the cross-price elasticity of demand between two different brands of flour to be

Accepted Answer

A)   negative with a high absolute value
B)   negative with a low absolute value
C)   zero
D)   positive with a low absolute value
E)   positive with a high absolute valueF) None of the above
G) A) and E)

Question 8

Which of the following goods is likely to have the most elastic demand over the relevant range of prices?

Accepted Answer

A)   insulin
B)   eggs
C)   milk
D)   Pepsi Cola
E)   gasolineF) A) and E)
G) A) and D)

Question 9

The more available substitutes there are for a good,the

Accepted Answer

A)   larger the number of consumers
B)   smaller the number of consumers
C)   smaller the supply side response
D)   more elastic the demand for that good
E)   less elastic the demand for that goodF) B) and E)
G) A) and B)

Question 10

The supply of a good is more price elastic,

Accepted Answer

A)   the fewer alternatives there are to producing the good in question
B)   the more broadly the market for the good is defined
C)   the longer the time horizon over which it is measured
D)   the higher the cost of production
E)   the more elastic the demand for that good.F) B) and D)
G) B) and C)

Question 11

If demand is price elastic,a decrease in seller's total revenue would result from a(n)

Accepted Answer

A)   decrease in price
B)   increase in quantity demanded
C)   increase in price
D)   decrease in income for an inferior good
E)   increase in total cost to the sellerF) B) and D)
G) A) and B)

Question 12

In measuring the sensitivity of demand,the

Accepted Answer

A)   price and income elasticities refer to movements along the demand curve;other elasticities refer to shifts of the entire demand curve
B)   price and cross-price elasticities analyze movements along the demand curve;other elasticities refer to shifts of the entire demand curve
C)   income and cross-price elasticities refer to movements along the demand curve;price elasticity refers to shifts of the entire demand curve
D)   price elasticity refers to movements along the demand curve;income and cross-price elasticities refer to shifts of the entire demand curve
E)   income elasticity refers to movements along the demand curve;other elasticities refer to shifts of the entire demand curveF) B) and D)
G) B) and C)

Question 13

If the elasticity of supply is much greater than the elasticity of demand,a subsidy awarded to demanders will

Accepted Answer

A)   benefit the demanders more than the suppliers
B)   benefit the suppliers more than the demanders
C)   the benefit of the subsidy will be equally shared between the demanders and the suppliers
D)   allow the demanders to be the only ones who will benefit
E)   Without more information as to the amount of the subsidy,who will benefit more can not be determinedF) All of the above
G) C) and E)

Question 14

If the elasticity of supply is much greater than the elasticity of demand,an excise tax levied on the suppliers will

Accepted Answer

A)   cause the suppliers to incur a greater burden of the tax than demanders
B)   cause the demanders to incur a greater burden of the tax than suppliers
C)   the burden of the tax will be shared equally between the suppliers and the demanders
D)   cause the entire burden of the tax to rest on the demanders
E)   Without more information as to the amount of the excise tax,who will incur a greater burden will be unclearF) A) and E)
G) A) and B)

Question 15

Demand for goods in broader category definitions,such as "beverages",is usually less elastic than demand for more narrowly defined goods,such as "diet colas."

Accepted Answer

A) True 
 B)False

Question 16

Figure 5-2
-In Figure 5-2,compare demand curve D between points F and G to demand curve D' between points J and K.Which of the following statements is correct?

Accepted Answer

A)   Both demand curves have the same slope,but D' is more elastic in the $2 to $3 range.
B)   Both demand curves have the same slope,but D' is less elastic in the $2 to $3 range.
C)   Both demand curves have the same price elasticity of demand,but D' has a larger slope.
D)   Both demand curves have the same price elasticity of demand,but D' has a smaller slope.
E)   Both demand curves have the same slope and the same value for the price elasticity of demand.F) B) and D)
G) A) and E)

Question 17

For which of the following items is demand likely to be the most price elastic?

Accepted Answer

A)   Tide liquid laundry detergent
B)   laundry detergent in general
C)   powdered laundry detergent
D)   liquid laundry detergentE) None of the above
F) C) and D)

Question 18

If a 10 percent rise in the price of bananas leads to a 20 percent reduction in the quantity of bananas demanded,then the price elasticity of demand is 0.50.

Accepted Answer

A) True 
 B)False

Question 19

Figure 5-2
-Consider demand curve D in Figure 5-2.Between points F and G,the price elasticity of demand is

Accepted Answer

A)   1
B)   0.5
C)   2
D)   0.2
E)   none of theseF) A) and D)
G) A) and B)

Question 20

The slope of the demand curve and the price elasticity of demand are

Accepted Answer

A)   basically the same thing
B)   determined by supply
C)   are derived from production and distribution costs
D)   different because slope is based on absolute changes and elasticity is based on percentage changes
E)   implicit in the shape of the supply curveF) B) and C)
G) A) and B)

Exam 5: Elasticity

If the elasticity of supply is much greater than the elasticity of demand,a subsidy awarded to demanders will

Correct AnswerverifiedShow Answer

For which of the following items is demand likely to be the most price elastic?

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The supply of a good is more price elastic,

Correct AnswerverifiedShow Answer

If demand is price elastic,a decrease in seller's total revenue would result from a(n)

Correct AnswerverifiedShow Answer

The more available substitutes there are for a good,the

Correct AnswerverifiedShow Answer

The price elasticity of demand measures the responsiveness of quantity demanded to changes in price.

Correct AnswerverifiedShow Answer

Demand for goods in broader category definitions,such as "beverages",is usually less elastic than demand for more narrowly defined goods,such as "diet colas."

Correct AnswerverifiedShow Answer

-In Figure 5-3,the price elasticity of demand between points T and U is the same as between points V and W.

Correct AnswerverifiedShow Answer

If the elasticity of supply is much greater than the elasticity of demand,an excise tax levied on the suppliers will

Correct AnswerverifiedShow Answer

If the demand for good A is more elastic than the demand for good B,a small increase in supply in both markets will cause

Correct AnswerverifiedShow Answer

Figure 5-2 -In Figure 5-2,compare demand curve D between points F and G to demand curve D' between points J and K.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The price elasticity of demand measures the

Correct AnswerverifiedShow Answer

-Figure 5-7 shows Sally's demand for movie theater tickets (quantity of movies per year) .At a price of $9 per ticket,the price elasticity of demand is

Correct AnswerverifiedShow Answer

We would expect the cross-price elasticity of demand between two different brands of flour to be

Correct AnswerverifiedShow Answer

Which of the following goods is likely to have the most elastic demand over the relevant range of prices?

Correct AnswerverifiedShow Answer

Suppose that the income elasticity of demand for college education is 1.3.This indicates that

Correct AnswerverifiedShow Answer

If a 10 percent rise in the price of bananas leads to a 20 percent reduction in the quantity of bananas demanded,then the price elasticity of demand is 0.50.

Correct AnswerverifiedShow Answer

Figure 5-2 -Consider demand curve D in Figure 5-2.Between points F and G,the price elasticity of demand is

Correct AnswerverifiedShow Answer

In measuring the sensitivity of demand,the

Correct AnswerverifiedShow Answer

The slope of the demand curve and the price elasticity of demand are

Correct AnswerverifiedShow Answer

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