Question 1

Suppose that when the price of pizza goes from $7 to $10 per pie,production increases from 2,500 pies per month to 4,000 pies.Using the mid-point method,the percentage change in price would be:

Accepted Answer

A)  35 percent.
B)  46 percent.
C)  1.31.
D)  0.35.E) B) and D)
F) B) and C)

Question 2

A movie ticket is _________________ than a ticket to a Broadway show because ______________.

Accepted Answer

A)  less price elastic;it is a smaller portion of one's income
B)  more price elastic;it is a smaller portion of one's income
C)  less price elastic;it has less available substitutes
D)  more price elastic;it has less available substitutesE) None of the above
F) A) and B)

Question 3

When the quantity effect outweighs the price effect:

Accepted Answer

A)  a price increase will cause a drop in revenue.
B)  a price increase will cause an increase in revenue.
C)  a price decrease will cause a decrease in revenue.
D)  None of these is true.E) B) and C)
F) A) and B)

Question 4

If the price of a cup of coffee increases by 50 percent,the quantity demanded decreases by 50 percent.The price elasticity of demand is:

Accepted Answer

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

Question 5

Novels are _____________ than textbooks because __________________.

Accepted Answer

A)  less price elastic;they have more available substitutes
B)  more price elastic;they have less available substitutes
C)  less price elastic;they have less available substitutes
D)  more price elastic;they have more available substitutesE) B) and C)
F) A) and D)

Question 6

A pound of coffee is _________________ than a pound sugar of because ________________.

Accepted Answer

A)  less price elastic;it is a larger portion of one's income
B)  more price elastic;it is a larger portion of one's income
C)  less price elastic;people will have a longer time to adjust to the change in its price
D)  more price elastic;people will have a longer time to adjust to the change in its priceE) B) and C)
F) A) and D)

Question 7

Knowing the price elasticity of demand is important in business because:

Accepted Answer

A)  it allows a manager to determine whether a price increase will cause total revenue to rise or fall.
B)  it allows a manager to determine whether an increase in supply will cause total profit to rise or fall.
C)  it allows a manager to determine how to maximize the firm's profits.
D)  it allows a manager to determine whether a price increase will cause the demand to rise or fall.E) A) and B)
F) B) and C)

Question 8

If the price of a Domino's pizza decreases,while the price of a Pizza Hut pizza doesn't,we expect the quantity of Pizza Hut pizza demanded to:

Accepted Answer

A)  decrease as some people switch from Pizza Hut to the relatively cheaper Domino's.
B)  increase as some people switch from Pizza Hut to the relatively cheaper Domino's.
C)  decrease as some people switch from Pizza Hut to the relatively more expensive Domino's.
D)  increase as some people switch from Pizza Hut to the relatively more expensive Domino's.E) A) and C)
F) B) and C)

Question 9

Income elasticity of demand describes:

Accepted Answer

A)  how much the quantity demanded changes in response to a change in consumers' incomes.
B)  which way the demand shifts in response to a change in price.
C)  how much the quantity demanded changes in response to a change in price.
D)  how quickly the market will change in response to a change in consumers' incomes.E) A) and B)
F) A) and C)

Question 10

Economists use the percentage change in quantity rather than the absolute change in quantity because:

Accepted Answer

A)  percentage changes are easier to calculate than absolute changes.
B)  the measured elasticity is the same regardless of the unit of measurement for quantity.
C)  absolute changes are confusing to convert.
D)  absolute changes often result in negative numbers.E) None of the above
F) A) and D) B

Question 11

Farmfresh brand apple juice is likely to be:

Accepted Answer

A)  very price elastic,since there are many close substitutes available.
B)  less price elastic,since there are many close substitutes available.
C)  very price elastic,since the adjustment time is so fast.
D)  less price elastic,since the adjustment time is so slow.E) A) and C)
F) B) and C)

Question 12

When two goods are substitutes,we expect their cross-price elasticity of demand to:

Accepted Answer

A)  be positive.
B)  be negative.
C)  be zero.
D)  be greater than 1.E) C) and D)
F) B) and D)

Question 13

The mid-point method of calculating elasticity:

Accepted Answer

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

Question 14

Shoes are ___________________ than sneakers because __________________.

Accepted Answer

A)  less price elastic;the scope of the market is less broadly defined
B)  more price elastic;the scope of the market is less broadly defined
C)  less price elastic;the scope of the market is more broadly defined
D)  more price elastic;the scope of the market is more broadly definedE) None of the above
F) C) and D)

Question 15

If a good has an income elasticity of 0.18,which of the following can be said about it?

Accepted Answer

A)  It is a normal good,and a necessity.
B)  It is a normal good,and a luxury good.
C)  It is an inferior good,and a necessity.
D)  It is an inferior good,and a luxury.E) B) and C)
F) B) and D)

Question 16

The most commonly used measures of elasticity are:

Accepted Answer

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

Question 17

If the quantity effect outweighs the price effect of a price increase,then:

Accepted Answer

A)  the good is price elastic.
B)  the good is price inelastic.
C)  the good is price unit elastic.
D)  Any of these could be true.E) A) and D)
F) A) and C)

Question 18

The price elasticity of supply tells us:

Accepted Answer

A)  the percentage change in quantity supplied as we change the price of the good by one percent.
B)  in which direction the quantity supplied changes as we move along the supply curve.
C)  how quickly the supply will respond to a change in price.
D)  the magnitude of shift in supply in response to a change in price.E) None of the above
F) A) and B) A

Question 19

When a large percentage change in price causes a small percentage change in the quantity demanded,we say that they have a:

Accepted Answer

A)  very elastic demand.
B)  less elastic demand.
C)  low magnitude of response.
D)  high magnitude of response.E) A) and B)
F) All of the above

Question 20

If the price of jelly goes up by 10 percent,we observe a decrease in the quantity demanded of peanut butter of 20 percent.The cross-price elasticity of these goods is:

Accepted Answer

A)  0.5.
B)  2.
C)  -0.5.
D)  -2.E) B) and C)
F) A) and D)

Exam 4: Elasticity

Suppose that when the price of pizza goes from $7 to $10 per pie,production increases from 2,500 pies per month to 4,000 pies.Using the mid-point method,the percentage change in price would be:

Correct AnswerverifiedShow Answer

A movie ticket is _________________ than a ticket to a Broadway show because ______________.

Correct AnswerverifiedShow Answer

When the quantity effect outweighs the price effect:

Correct AnswerverifiedShow Answer

If the price of a cup of coffee increases by 50 percent,the quantity demanded decreases by 50 percent.The price elasticity of demand is:

Correct AnswerverifiedShow Answer

Novels are _____________ than textbooks because __________________.

Correct AnswerverifiedShow Answer

A pound of coffee is _________________ than a pound sugar of because ________________.

Correct AnswerverifiedShow Answer

Knowing the price elasticity of demand is important in business because:

Correct AnswerverifiedShow Answer

If the price of a Domino's pizza decreases,while the price of a Pizza Hut pizza doesn't,we expect the quantity of Pizza Hut pizza demanded to:

Correct AnswerverifiedShow Answer

Income elasticity of demand describes:

Correct AnswerverifiedShow Answer

Economists use the percentage change in quantity rather than the absolute change in quantity because:

Correct AnswerverifiedB

Farmfresh brand apple juice is likely to be:

Correct AnswerverifiedShow Answer

When two goods are substitutes,we expect their cross-price elasticity of demand to:

Correct AnswerverifiedShow Answer

The mid-point method of calculating elasticity:

Correct AnswerverifiedA

Shoes are ___________________ than sneakers because __________________.

Correct AnswerverifiedShow Answer

If a good has an income elasticity of 0.18,which of the following can be said about it?

Correct AnswerverifiedShow Answer

The most commonly used measures of elasticity are:

Correct AnswerverifiedShow Answer

If the quantity effect outweighs the price effect of a price increase,then:

Correct AnswerverifiedShow Answer

The price elasticity of supply tells us:

Correct AnswerverifiedA

When a large percentage change in price causes a small percentage change in the quantity demanded,we say that they have a:

Correct AnswerverifiedShow Answer

If the price of jelly goes up by 10 percent,we observe a decrease in the quantity demanded of peanut butter of 20 percent.The cross-price elasticity of these goods is:

Correct AnswerverifiedShow Answer

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A movie ticket is ___ than a ticket to a Broadway show because .

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Novels are _ than textbooks because ______.

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A pound of coffee is _ than a pound sugar of because .

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B

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A

Shoes are _ than sneakers because .

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A

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