Question 1

If demand is perfectly elastic,

Accepted Answer

A)  The demand curve is vertical.
B)  The demand curve is very steep.
C)  The demand curve is horizontal.D) B) and C)
E) A) and C)

Question 2

On a demand curve,demand is more elastic

Accepted Answer

A)  At higher prices.
B)  At lower prices.
C)  When demand is unitary.D) A) and B)
E) A) and C)

Question 3

- Over the price range from $180 to $120 in Figure 20.1,ceteris paribus,

Accepted Answer

A)  Demand is elastic.
B)  Total revenue is maximized.
C)  Demand is increasing.D) All of the above
E) B) and C)

Question 4

Cross-price elasticity looks at the impact that income changes have on sales.

Accepted Answer

A) True 
 B)False

Question 5

If the price elasticity of demand is 1.0,and a firm raises its price by 10 percent,the total revenue will

Accepted Answer

A)  Rise by 10 percent.
B)  Fall by 10 percent.
C)  Not change.D) None of the above
E) A) and B)

Question 6

To find the average percentage change in price,

Accepted Answer

A)  The change in price is divided by the average price.
B)  The change in quantity is divided by the average quantity.
C)  The change in quantity is divided by the change in price.D) A) and B)
E) A) and C)

Question 7

The World View article on the rise in gold prices indicates that

Accepted Answer

A)  The quantity supplied falls when the price of gold rises.
B)  The law of supply is true: as the price of gold rises,miners around the world search for new deposits of gold.
C)  The law of supply is true because as the price of gold rises,the quantity supplied of gold actually falls.D) All of the above
E) None of the above

Question 8

If the price elasticity of demand for cigarettes is 0.4,

Accepted Answer

A)  The demand is very elastic.
B)  A 10 percent increase in price will cause quantity demanded to fall by 40 percent.
C)  The demand is very inelastic.D) A) and C)
E) None of the above

Question 9

The price elasticity of supply will always be a negative number.

Accepted Answer

A) True 
 B)False

Question 10

Supply is very inelastic when

Accepted Answer

A)  The quantity supplied changes little when the price increases.
B)  The quantity supplied changes a lot when price increases.
C)  The quantity supplied does not change at all when price increases.D) None of the above
E) A) and C)

Question 11

If the price of gasoline rises by 10 percent and new car sales fall by 5 percent,this indicates that these two goods are complementary.

Accepted Answer

A) True 
 B)False

Question 12

If DVD players and DVDs are complementary goods,an increase in the price of DVDs will,ceteris paribus,

Accepted Answer

A)  Increase the quantity demanded of DVDs.
B)  Increase the quantity demanded of DVD players.
C)  Reduce the demand for DVD players.D) None of the above
E) All of the above

Question 13

Elasticity of supply tells us

Accepted Answer

A)  How much sellers will increase production in response to a change in price.
B)  How much sellers will change their price as their quantity supplied changes.
C)  How much producers will increase production with changes in consumers' income.D) B) and C)
E) All of the above

Question 14

When the percentage change in quantity demanded is less than the percentage change in price,ceteris paribus,

Accepted Answer

A)  Demand is elastic.
B)  Demand is inelastic.
C)  Demand is unitary elastic.D) None of the above
E) All of the above

Question 15

The demand for normal goods

Accepted Answer

A)  Rises when incomes fall.
B)  Rises when incomes rise.
C)  Falls when incomes rise.D) None of the above
E) All of the above

Question 16

If the elasticity of demand is 3,and the price rises by 15 percent,then

Accepted Answer

A)  The quantity demanded will increase by 5 percent.
B)  The quantity demanded will fall by 45 percent.
C)  The quantity demanded will rise by 4.5 percent.D) B) and C)
E) All of the above

Question 17

-If the price is reduced from $100 to $80 in Figure 20.1,ceteris paribus,

Accepted Answer

A)  Total revenue will decrease.
B)  Demand will increase.
C)  Quantity demanded will decrease.D) A) and B)
E) A) and C)

Question 18

Demand is more inelastic in the long run.

Accepted Answer

A) True 
 B)False

Question 19

How does advertising influence the demand for goods and the shape of the demand curve?

Accepted Answer

Advertising can increase the demand for ...

Question 20

Assume the price elasticity of demand for MC Pretzel Co.pretzels is 0.8.If the company increases the price of each bag of pretzels,total revenue will

Accepted Answer

A)  Decrease because fewer bags will be sold.
B)  Increase because demand is elastic and revenue will rise.
C)  Increase because the percentage increase in price is greater than the percentage change in quantity demanded.D) None of the above
E) B) and C)

Exam 20: Elasticity

Demand is more inelastic in the long run.

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If the price elasticity of demand for cigarettes is 0.4,

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Supply is very inelastic when

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Assume the price elasticity of demand for MC Pretzel Co.pretzels is 0.8.If the company increases the price of each bag of pretzels,total revenue will

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If DVD players and DVDs are complementary goods,an increase in the price of DVDs will,ceteris paribus,

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To find the average percentage change in price,

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Elasticity of supply tells us

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On a demand curve,demand is more elastic

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If the elasticity of demand is 3,and the price rises by 15 percent,then

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- Over the price range from $180 to $120 in Figure 20.1,ceteris paribus,

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If demand is perfectly elastic,

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The demand for normal goods

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-If the price is reduced from $100 to $80 in Figure 20.1,ceteris paribus,

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If the price elasticity of demand is 1.0,and a firm raises its price by 10 percent,the total revenue will

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Cross-price elasticity looks at the impact that income changes have on sales.

Correct AnswerverifiedShow Answer

The World View article on the rise in gold prices indicates that

Correct AnswerverifiedShow Answer

If the price of gasoline rises by 10 percent and new car sales fall by 5 percent,this indicates that these two goods are complementary.

Correct AnswerverifiedShow Answer

When the percentage change in quantity demanded is less than the percentage change in price,ceteris paribus,

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How does advertising influence the demand for goods and the shape of the demand curve?

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The price elasticity of supply will always be a negative number.

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Advertising can increase the demand for ...
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