Question 1

The amount that a firm receives from the sale of goods and services is:

Accepted Answer

A)   total profit.
B)   total revenue.
C)   total surplus.
D)   total benefit.E) None of the above
F) A) and B)

Question 2

The price elasticity of supply tells us:

Accepted Answer

A)   the percentage change in quantity supplied when the price of the good changes by one percent.
B)   in which direction the quantity supplied changes as we move along the supply curve.
C)   how quickly supply will respond to a change in price.
D)   the magnitude of a shift in the supply curve in response to a change in price.E) A) and D)
F) All of the above

Question 3

Assuming price elasticity of demand is reported as an absolute value, the measured elasticity for an inelastic demand would be:

Accepted Answer

A)   greater than zero.
B)   greater than one.
C)   less than one.
D)   exactly one.E) A) and C)
F) All of the above

Question 4

Suppose when the price of shoe laces goes from $1 to $2 per pair, production increases from 95 million pairs to 105 million pairs per year. Using the mid-point method, what is the price elasticity of supply?

Accepted Answer

A)   6.28
B)   0.66
C)   0.11
D)   0.15E) A) and D)
F) None of the above

Question 5

The demand for a pack of gum is _____ price elastic than the demand for a steak because a pack of gum _____.

Accepted Answer

A)   less; requires a smaller portion of one's income
B)   more; requires a smaller portion of one's income
C)   less; is more of a luxury
D)   more; is more of a luxuryE) B) and C)
F) A) and D)

Question 6

When Bob was employed, he would see a movie at the theater once a month. However, Bob got laid off six months ago, and since then he has only gone to the movie theater twice. This type of behavior can be measured using:

Accepted Answer

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

Question 7

If increasing the admission charge for national parks increases the National Park Service's total revenue, then the demand for national park visits is:

Accepted Answer

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

Question 8

Elasticities are used to measure responses to a change in:

Accepted Answer

A)   the price of a good.
B)   the price of a related good.
C)   income.
D)   All of these are correct.E) All of the above
F) B) and D)

Question 9

Vevaan just got a raise at work, and he decides to splurge on a fancy dinner to celebrate. The change in Vevaan's demand for fancy dinners could be measured by the:

Accepted Answer

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

Question 10

An example of a good that likely has an income elasticity less than one is _____, while an example of a good that likely has an income elasticity greater than one is _____.

Accepted Answer

A)   coffee; sailboats
B)   sailboats; cars
C)   vacations; cell phones
D)   filet mignon; chickenE) A) and B)
F) B) and C)

Question 11

Suppose the price of a movie ticket is $7.50 and the quantity demanded is 550. When the increases to $8.50, the quantity demanded drops to 450. Using the mid-point method, what is the price elasticity of demand for movie tickets?

Accepted Answer

A)   0.625
B)   −0.625
C)   −1.6
D)   1.6E) A) and C)
F) B) and C)

Question 12

Suppose the price of a good is $5 and quantity demanded is 10 units. When price increases to $6, quantity demanded decreases to 9 units. What happened to total revenue and what does this indicate?

Accepted Answer

A)   Total revenue decreased from $54 to $50, indicating that demand is inelastic.
B)   Total revenue decreased from $54 to $50, indicating that demand is elastic.
C)   Total revenue increased from $50 to $54, indicating that demand is inelastic.
D)   Total revenue increased from $50 to $54, indicating that demand is elastic.E) None of the above
F) B) and C)

Question 13

Demand tends to be more elastic when:

Accepted Answer

A)   price is high and more inelastic when price is low.
B)   price is low and more inelastic when price is high.
C)   demand is perfectly inelastic.
D)   the quantity demanded is larger.E) C) and D)
F) B) and C)

Question 14

Which elasticity measures producers' responsiveness to a change in price?

Accepted Answer

A)   Price elasticity of demand
B)   Cross-price elasticity
C)   Price elasticity of supply
D)   Income elasticity of supplyE) None of the above
F) A) and B)

Question 15

The demand for classical music overall is _____ price elastic than the demand for Beethoven's music because _____.

Accepted Answer

A)   less; classical music has more substitutes than Beethoven's music
B)   more; classical music has more substitutes than Beethoven's music
C)   less; the scope of the market for classical music is more broadly defined
D)   more; the scope of the market for classical music is more broadly definedE) B) and C)
F) C) and D)

Question 16

The demand for a movie ticket is likely _____ price elastic than the demand for a Broadway show ticket because a movie ticket _____.

Accepted Answer

A)   less; requires a smaller portion of one's income
B)   more; requires a smaller portion of one's income
C)   less; has fewer available substitutes
D)   more; has fewer available substitutesE) B) and C)
F) A) and B)

Question 17

Suppose when the price of pizza goes from $8 to $12 per pie, production increases from 2,500 pies to 4,000 pies per month. Using the mid-point method, what is the percentage change in price?

Accepted Answer

A)   40 percent
B)   46 percent
C)   50 percent
D)   33 percentE) A) and D)
F) B) and C)

Question 18

The demand for a cup of coffee is _____ price elastic than the demand for a dinner at a fancy restaurant because a cup of coffee _____.

Accepted Answer

A)   more; requires a smaller portion of one's income
B)   less; requires a smaller portion of one's income
C)   less; is more of a luxury
D)   more; is more of a luxuryE) B) and D)
F) C) and D)

Question 19

Assuming price elasticity of demand is reported as an absolute value, a price elasticity of demand less than one indicates that demand for the good is:

Accepted Answer

A)   elastic.
B)   inelastic.
C)   unitary elastic.
D)   unrelated to price.E) B) and C)
F) A) and B)

Question 20

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

Accepted Answer

A)   −0.6 = −60 percent
B)   0.6 = 60 percent
C)   0.7 = 70 percent
D)   1.30 = 130 percentE) None of the above
F) A) and B)

Exam 4: Elasticity

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

Correct AnswerverifiedShow Answer

An example of a good that likely has an income elasticity less than one is _____, while an example of a good that likely has an income elasticity greater than one is _____.

Correct AnswerverifiedShow Answer

Assuming price elasticity of demand is reported as an absolute value, a price elasticity of demand less than one indicates that demand for the good is:

Correct AnswerverifiedShow Answer

The demand for a cup of coffee is _____ price elastic than the demand for a dinner at a fancy restaurant because a cup of coffee _____.

Correct AnswerverifiedShow Answer

Elasticities are used to measure responses to a change in:

Correct AnswerverifiedShow Answer

Suppose when the price of shoe laces goes from $1 to $2 per pair, production increases from 95 million pairs to 105 million pairs per year. Using the mid-point method, what is the price elasticity of supply?

Correct AnswerverifiedShow Answer

The demand for a pack of gum is _____ price elastic than the demand for a steak because a pack of gum _____.

Correct AnswerverifiedShow Answer

When Bob was employed, he would see a movie at the theater once a month. However, Bob got laid off six months ago, and since then he has only gone to the movie theater twice. This type of behavior can be measured using:

Correct AnswerverifiedShow Answer

The amount that a firm receives from the sale of goods and services is:

Correct AnswerverifiedShow Answer

Which elasticity measures producers' responsiveness to a change in price?

Correct AnswerverifiedShow Answer

The demand for classical music overall is _____ price elastic than the demand for Beethoven's music because _____.

Correct AnswerverifiedShow Answer

The demand for a movie ticket is likely _____ price elastic than the demand for a Broadway show ticket because a movie ticket _____.

Correct AnswerverifiedShow Answer

Suppose the price of a good is $5 and quantity demanded is 10 units. When price increases to $6, quantity demanded decreases to 9 units. What happened to total revenue and what does this indicate?

Correct AnswerverifiedShow Answer

Demand tends to be more elastic when:

Correct AnswerverifiedShow Answer

The price elasticity of supply tells us:

Correct AnswerverifiedShow Answer

Suppose when the price of pizza goes from $8 to $12 per pie, production increases from 2,500 pies to 4,000 pies per month. Using the mid-point method, what is the percentage change in price?

Correct AnswerverifiedShow Answer

Assuming price elasticity of demand is reported as an absolute value, the measured elasticity for an inelastic demand would be:

Correct AnswerverifiedShow Answer

Suppose the price of a movie ticket is $7.50 and the quantity demanded is 550. When the increases to $8.50, the quantity demanded drops to 450. Using the mid-point method, what is the price elasticity of demand for movie tickets?

Correct AnswerverifiedShow Answer

Vevaan just got a raise at work, and he decides to splurge on a fancy dinner to celebrate. The change in Vevaan's demand for fancy dinners could be measured by the:

Correct AnswerverifiedShow Answer

If increasing the admission charge for national parks increases the National Park Service's total revenue, then the demand for national park visits is:

Correct AnswerverifiedShow Answer

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An example of a good that likely has an income elasticity less than one is _, while an example of a good that likely has an income elasticity greater than one is _.

Correct Answer
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The demand for a cup of coffee is _ price elastic than the demand for a dinner at a fancy restaurant because a cup of coffee _.

Correct Answer
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The demand for a pack of gum is _ price elastic than the demand for a steak because a pack of gum _.

Correct Answer
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The demand for classical music overall is _ price elastic than the demand for Beethoven's music because _.

Correct Answer
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The demand for a movie ticket is likely _ price elastic than the demand for a Broadway show ticket because a movie ticket _.

Correct Answer
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