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 cost.
D)   total benefit.E) A) and B)
F) B) and D)

Question 2

The price elasticity of supply is __________ elastic over time because ___________.

Accepted Answer

A)   less; producers get accustomed to the price changes
B)   less; the ideal number of firms have time to move into or out of the industry
C)   more; producers have a longer time to adjust their production decisions
D)   more; producers get accustomed to the price changesE) A) and B)
F) None of the above

Question 3

When price was 5,quantity demanded was 10.When price increased to 6,quantity demanded decreased to 9.Therefore,when price increased,total revenue

Accepted Answer

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

Question 4

A decrease in price causes:

Accepted Answer

A)   a quantity effect, which is an increase in revenue that results from selling fewer units of the good.
B)   a price effect, which is an increase in revenue that results from receiving a lower price for each unit sold.
C)   both a price effect and quantity effect.
D)   a decrease in quantity demanded.E) A) and B)
F) None of the above

Question 5

A baker of chocolate chip cookies is likely to have a ______________ price elasticity of supply than does the seller of rare baseball cards due to ______________.

Accepted Answer

A)   more elastic; the availability of inputs
B)   less elastic; the availability of inputs
C)   less elastic; a shorter adjustment time
D)   less elastic; a more flexible production processE) A) and B)
F) All of the above

Question 6

Cross-price elasticity refers to:

Accepted Answer

A)   how much the quantity demanded of one good changes in response to a change in the price of a different good.
B)   how much the quantity demanded of one good changes in response to a change in its price.
C)   the magnitude of the shift in demand for a good in response to a change in its price.
D)   how much the quantity demanded of a good changes in response to a change in consumers' incomes.E) C) and D)
F) None of the above

Question 7

Assuming price elasticity of demand is reported as an absolute value,an elastic demand has an elasticity:

Accepted Answer

A)   greater than one.
B)   less than one.
C)   exactly one.
D)   greater than zero and less than one.E) None of the above
F) A) and B)

Question 8

A tavern is likely to have a ______________________ price elasticity of supply than does an antiques dealer due to ______________________.

Accepted Answer

A)   more elastic; availability of inputs
B)   less elastic; availability of inputs
C)   less elastic; a longer adjustment time
D)   less elastic; a shorter adjustment timeE) A) and C)
F) A) and B)

Question 9

Price elasticity of supply:

Accepted Answer

A)   is the percentage change in the quantity supplied of a good or service divided by the percentage change in the price of the good or service.
B)   measures consumers' responsiveness to a change in price.
C)   is always a negative number.
D)   is the percentage change in the price of a good or service divided by the percentage change in the quantity supplied of the good or service.E) B) and C)
F) A) and D)

Question 10

The demand for steak is _______________________ than is the demand for food because _____________________.

Accepted Answer

A)   less price elastic; the scope of the market for steak is more broadly defined
B)   more price elastic; the scope of the market for steak is more broadly defined
C)   less price elastic; the scope of the market for steak is less broadly defined
D)   more price elastic; the scope of the market for steak is less broadly definedE) A) and B)
F) B) and C)

Question 11

The mid-point method of calculating price elasticity of demand:

Accepted Answer

A)   measures the percentage changes relative to a point midway between two points on a demand curve.
B)   measures the absolute change relative to a point midway between two points on a demand curve.
C)   measures the percentage change relative to a point midway between demand and supply.
D)   None of these is true.E) None of the above
F) A) and B)

Question 12

If consumers spend more money on coffee than on sugar,then the demand for a pound of coffee is probably _________________ than is the demand for a pound sugar of because ________________.

Accepted Answer

A)   less price elastic; coffee requires a larger portion of consumers' incomes.
B)   more price elastic; coffee requires a larger portion of consumers' incomes.
C)   less price elastic; people will take a longer time to adjust to the change in its price.
D)   more price elastic; people will take a longer time to adjust to the change in its priceE) B) and D)
F) A) and B)

Question 13

Suppose when the price of a can of tuna is $1.30,the quantity demanded is 9,and when the price is $1.50,the quantity demanded is 7.Using the mid-point method,the price elasticity of demand is:

Accepted Answer

A)   -1.75
B)   -0.57
C)   0.57
D)   29 percentE) C) and D)
F) A) and D)

Question 14

Suppose when the price of a cookie is $2.50,the quantity demanded is 50,and when the price is $1,the quantity demanded is 200.Using the midpoint method,the price elasticity of demand is:

Accepted Answer

A)   -1.40
B)   -0.72
C)   -140
D)   -7.2E) A) and B)
F) A) and C)

Question 15

Suppose quantity supplied increases from 16 to 24.Using the mid-point formula,the percentage change in quantity supplied is:

Accepted Answer

A)   40%
B)   0.4%
C)   4%
D)   40%.E) A) and D)
F) A) and C)

Question 16

The more time people have to adjust to a price change:

Accepted Answer

A)   the less elastic their demand will be.
B)   will not affect the elasticity of their response unless it is a luxury good.
C)   the more elastic their demand will be.
D)   will not affect the elasticity of their response unless the good is a necessity.E) B) and C)
F) A) and D)

Question 17

A perfectly elastic demand is one in which the:

Accepted Answer

A)   demand curve is perfectly vertical.
B)   demand curve is perfectly horizontal.
C)   price elasticity is exactly 1.
D)   response to a change in price is immediate.E) A) and B)
F) None of the above

Question 18

A perfectly inelastic demand is one in which the:

Accepted Answer

A)   demand curve is perfectly vertical.
B)   demand curve is perfectly horizontal.
C)   measured elasticity is exactly 1.
D)   response to a change in price is immediate.E) A) and B)
F) None of the above

Question 19

When a good has many close substitutes available,it is likely to be:

Accepted Answer

A)   less price elastic than are goods without close substitutes available.
B)   more price elastic than are goods with many complement goods available.
C)   less price elastic than are goods with many complement goods available.
D)   more price elastic than are goods without close substitutes available.E) B) and D)
F) A) and D)

Question 20

Considering the concept of cross-price elasticity,if two goods are complements:

Accepted Answer

A)   an increase in the price of one will cause a decrease in the demand for the other.
B)   an increase in the price of one will cause an increase in the demand for the other.
C)   a decrease in the price of one will cause a decrease in the demand for the other.
D)   the cross-price elasticity is positive.E) B) and D)
F) None of the above

Exam 4: Elasticity

A perfectly elastic demand is one in which the:

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A tavern is likely to have a ______________________ price elasticity of supply than does an antiques dealer due to ______________________.

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Assuming price elasticity of demand is reported as an absolute value,an elastic demand has an elasticity:

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

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When price was 5,quantity demanded was 10.When price increased to 6,quantity demanded decreased to 9.Therefore,when price increased,total revenue

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The mid-point method of calculating price elasticity of demand:

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Suppose quantity supplied increases from 16 to 24.Using the mid-point formula,the percentage change in quantity supplied is:

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Price elasticity of supply:

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The more time people have to adjust to a price change:

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When a good has many close substitutes available,it is likely to be:

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Suppose when the price of a can of tuna is $1.30,the quantity demanded is 9,and when the price is $1.50,the quantity demanded is 7.Using the mid-point method,the price elasticity of demand is:

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Considering the concept of cross-price elasticity,if two goods are complements:

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The demand for steak is _______________________ than is the demand for food because _____________________.

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A perfectly inelastic demand is one in which the:

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The price elasticity of supply is __________ elastic over time because ___________.

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If consumers spend more money on coffee than on sugar,then the demand for a pound of coffee is probably _________________ than is the demand for a pound sugar of because ________________.

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A decrease in price causes:

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Cross-price elasticity refers to:

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A baker of chocolate chip cookies is likely to have a ______________ price elasticity of supply than does the seller of rare baseball cards due to ______________.

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Suppose when the price of a cookie is $2.50,the quantity demanded is 50,and when the price is $1,the quantity demanded is 200.Using the midpoint method,the price elasticity of demand is:

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A tavern is likely to have a price elasticity of supply than does an antiques dealer due to .

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The demand for steak is ___ than is the demand for food because _.

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The price elasticity of supply is elastic over time because _.

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If consumers spend more money on coffee than on sugar,then the demand for a pound of coffee is probably _ than is the demand for a pound sugar of because .

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A baker of chocolate chip cookies is likely to have a price elasticity of supply than does the seller of rare baseball cards due to .

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