Question 1

The price elasticity of demand coefficient measures:

Accepted Answer

A)   buyer responsiveness to price changes.
B)   the extent to which a demand curve shifts as incomes change.
C)   the slope of the demand curve.
D)   how far business executives can stretch their fixed costs.E) B) and D)
F) A) and D)

Question 2

The supply of product X is inelastic (but not perfectly inelastic) if the price of X rises by:

Accepted Answer

A)   5 percent and quantity supplied rises by 7 percent.
B)   8 percent and quantity supplied rises by 8 percent.
C)   10 percent and quantity supplied remains the same.
D)   7 percent and quantity supplied rises by 5 percent.E) A) and C)
F) A) and B)

Question 3

Which of the following statements is not correct?

Accepted Answer

A)   If the relative change in price is greater than the relative change in the quantity demanded associated with it,demand is inelastic.
B)   In the range of prices in which demand is elastic,total revenue will diminish as price decreases.
C)   Total revenue will not change if price varies within a range where the elasticity coefficient is unity.
D)   Demand tends to be elastic at high prices and inelastic at low prices.E) B) and D)
F) A) and C)

Question 4

The price of product X is reduced from $100 to $90 and,as a result,the quantity demanded increases from 50 to 60 units.Therefore,demand for X in this price range:

Accepted Answer

A)   has declined.
B)   is of unit elasticity.
C)   is inelastic.
D)   is elastic.E) All of the above
F) A) and C)

Question 5

(Last Word) Which of the following is not an example of pricing based on group differences in elasticity of demand?

Accepted Answer

A)   Senior-citizen discounts at restaurants and motels.
B)   Cash rebates for purchases of automobiles.
C)   Child discounts for admission to theme parks.
D)   Discounted student prices for visits to museums.E) None of the above
F) C) and D)

Question 6

If the demand for wheat is highly price inelastic,an extraordinarily large crop may reduce farm incomes.

Accepted Answer

A) True 
 B)False

Question 7

Answer the question on the basis of the following demand and supply data: $ \begin{array}{cccc}\text {Quantity Demanded}&&
\text {Quantity Supplied}\\underline{\text { Per Month }} &\underline{\text { Price }} &\underline{ \text { Per Month} } \ 30& \$ 8 & 44 \ 36 & 7 & 38 \ 42 & 6 & 30 \ 50 & 5 &  20\end{array} $ Refer to the data.The demand for this product is elastic in the $8-$7 price range.

Accepted Answer

A) True 
 B)False

Question 8

If the price elasticity of demand for a product is 2.5,then a price cut from $2.00 to $1.80 will:

Accepted Answer

A)   increase the quantity demanded by about 2.5 percent.
B)   decrease the quantity demanded by about 2.5 percent.
C)   increase the quantity demanded by about 25 percent.
D)   increase the quantity demanded by about 250 percent.E) A) and B)
F) A) and C)

Question 9

The price elasticity of supply measures how:

Accepted Answer

A)   easily labor and capital can be substituted for one another in the production process.
B)   responsive the quantity supplied of X is to changes in the price of X.
C)   responsive the quantity supplied of Y is to changes in the price of X.
D)   responsive quantity supplied is to a change in incomes.E) A) and B)
F) None of the above

Question 10

The larger the positive cross elasticity coefficient of demand between products X and Y,the:

Accepted Answer

A)   stronger their complementariness.
B)   greater their substitutability.
C)   smaller the price elasticity of demand for both products.
D)   the less sensitive purchases of each are to increases in income.E) None of the above
F) A) and D)

Question 11

Suppose that as the price of Y falls from $2.00 to $1.90,the quantity of Y demanded increases from 110 to 118.Then the price elasticity of demand is:

Accepted Answer

A)   4.00.
B)   2.09.
C)   1.45.
D)   3.94.E) B) and C)
F) A) and B)

Question 12

The supply curve of antique reproductions is:

Accepted Answer

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

Question 13

If the elasticity coefficient of supply is 0.7,supply is elastic.

Accepted Answer

A) True 
 B)False

Question 14

If a firm's demand for labor is elastic,a union-negotiated wage increase will:

Accepted Answer

A)   necessarily be inflationary.
B)   cause the firm's total payroll to increase.
C)   cause the firm's total payroll to decline.
D)   cause a shortage of labor.E) C) and D)
F) A) and D)

Question 15

A perfectly inelastic demand schedule:

Accepted Answer

A)   rises upward and to the right but has a constant slope.
B)   can be represented by a line parallel to the vertical axis.
C)   cannot be shown on a two-dimensional graph.
D)   can be represented by a line parallel to the horizontal axis.E) C) and D)
F) A) and C)

Question 16

The state legislature has cut Gigantic State University's appropriations.GSU's Board of Regents decides to increase tuition and fees to compensate for the loss of revenue.The board is assuming that the:

Accepted Answer

A)   demand for education at GSU is elastic.
B)   demand for education at GSU is inelastic.
C)   coefficient of price elasticity of demand for education at GSU is unity.
D)   coefficient of price elasticity of demand for education at GSU is greater than unity.E) B) and D)
F) B) and C)

Question 17

The elasticity of demand for a product is likely to be greater:

Accepted Answer

A)   if the product is a necessity,rather than a luxury good.
B)   the greater the amount of time over which buyers adjust to a price change.
C)   the smaller the proportion of one's income spent on the product.
D)   the smaller the number of substitute products available.E) A) and D)
F) None of the above

Question 18

Suppose that the price of product X rises by 20 percent and the quantity supplied of X increases by 15 percent.The coefficient of price elasticity of supply for good X is:

Accepted Answer

A)   negative and therefore X is an inferior good.
B)   positive and therefore X is a normal good.
C)   less than 1 and therefore supply is inelastic.
D)   more than 1 and therefore supply is elastic.E) B) and C)
F) All of the above

Question 19

Studies show that the demand for gasoline is:

Accepted Answer

A)   price inelastic in the short run but elastic in the long run.
B)   price inelastic in both the short and long run.
C)   price elastic in the short run but inelastic in the long run.
D)   price elastic in both the short and long run.E) A) and D)
F) A) and C)

Question 20

The more time consumers have to adjust to a change in price:

Accepted Answer

A)   the smaller will be the price elasticity of demand.
B)   the greater will be the price elasticity of demand.
C)   the more likely the product is a normal good.
D)   the more likely the product is an inferior good.E) None of the above
F) A) and B)

Exam 6: Elasticity

Suppose that as the price of Y falls from $2.00 to $1.90,the quantity of Y demanded increases from 110 to 118.Then the price elasticity of demand is:

Correct Answer
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The supply curve of antique reproductions is:

Correct Answer
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The supply of product X is inelastic (but not perfectly inelastic) if the price of X rises by:

Correct Answer
verified

The state legislature has cut Gigantic State University's appropriations.GSU's Board of Regents decides to increase tuition and fees to compensate for the loss of revenue.The board is assuming that the:

Correct Answer
verified

If the demand for wheat is highly price inelastic,an extraordinarily large crop may reduce farm incomes.

Correct Answer
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If the elasticity coefficient of supply is 0.7,supply is elastic.

Correct Answer
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The elasticity of demand for a product is likely to be greater:

Correct Answer
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If a firm's demand for labor is elastic,a union-negotiated wage increase will:

Correct Answer
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The more time consumers have to adjust to a change in price:

Correct Answer
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Studies show that the demand for gasoline is:

Correct Answer
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Suppose that the price of product X rises by 20 percent and the quantity supplied of X increases by 15 percent.The coefficient of price elasticity of supply for good X is:

Correct Answer
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(Last Word) Which of the following is not an example of pricing based on group differences in elasticity of demand?

Correct Answer
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Which of the following statements is not correct?

Correct Answer
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The larger the positive cross elasticity coefficient of demand between products X and Y,the:

Correct Answer
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If the price elasticity of demand for a product is 2.5,then a price cut from $2.00 to $1.80 will:

Correct Answer
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The price elasticity of demand coefficient measures:

Correct Answer
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A perfectly inelastic demand schedule:

Correct Answer
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The price elasticity of supply measures how:

Correct Answer
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The price of product X is reduced from $100 to $90 and,as a result,the quantity demanded increases from 50 to 60 units.Therefore,demand for X in this price range:

Correct Answer
verified

Exam 6: Elasticity

Suppose that as the price of Y falls from $2.00 to $1.90,the quantity of Y demanded increases from 110 to 118.Then the price elasticity of demand is:

Correct AnswerverifiedShow Answer

The supply curve of antique reproductions is:

Correct AnswerverifiedShow Answer

The supply of product X is inelastic (but not perfectly inelastic) if the price of X rises by:

Correct AnswerverifiedShow Answer

The state legislature has cut Gigantic State University's appropriations.GSU's Board of Regents decides to increase tuition and fees to compensate for the loss of revenue.The board is assuming that the:

Correct AnswerverifiedShow Answer

If the demand for wheat is highly price inelastic,an extraordinarily large crop may reduce farm incomes.

Correct AnswerverifiedShow Answer

If the elasticity coefficient of supply is 0.7,supply is elastic.

Correct AnswerverifiedShow Answer

The elasticity of demand for a product is likely to be greater:

Correct AnswerverifiedShow Answer

If a firm's demand for labor is elastic,a union-negotiated wage increase will:

Correct AnswerverifiedShow Answer

The more time consumers have to adjust to a change in price:

Correct AnswerverifiedShow Answer

Studies show that the demand for gasoline is:

Correct AnswerverifiedShow Answer

Suppose that the price of product X rises by 20 percent and the quantity supplied of X increases by 15 percent.The coefficient of price elasticity of supply for good X is:

Correct AnswerverifiedShow Answer

(Last Word) Which of the following is not an example of pricing based on group differences in elasticity of demand?

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

The larger the positive cross elasticity coefficient of demand between products X and Y,the:

Correct AnswerverifiedShow Answer

If the price elasticity of demand for a product is 2.5,then a price cut from $2.00 to $1.80 will:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The price elasticity of demand coefficient measures:

Correct AnswerverifiedShow Answer

A perfectly inelastic demand schedule:

Correct AnswerverifiedShow Answer

The price elasticity of supply measures how:

Correct AnswerverifiedShow Answer

The price of product X is reduced from $100 to $90 and,as a result,the quantity demanded increases from 50 to 60 units.Therefore,demand for X in this price range:

Correct AnswerverifiedShow Answer

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