Question 1

2 to P1.In this price range,demand is relatively: A)  inelastic because the loss in total revenue (areas D + G + I + J) is greater than the gain in total revenue (areas C + F + H) . B)  elastic because the loss in total revenue (areas C + F + H) is greater than the gain in total revenue (area J) . C)  elastic because the loss in total revenue (area J) is less than the gain in total revenue (areas C + F + H) . D)  inelastic because the gain in total revenue (area J) is less than the loss in total revenue (areas C + F + H) ." class="answers-bank-image d-inline" rel="preload" > Refer to the graph above and assume that the areas of the boxes are the same.Consider a situation where price decreases from P2 to P1.In this price range,demand is relatively:

Accepted Answer

A)   inelastic because the loss in total revenue (areas D + G + I + J) is greater than the gain in total revenue (areas C + F + H) .
B)   elastic because the loss in total revenue (areas C + F + H) is greater than the gain in total revenue (area J) .
C)   elastic because the loss in total revenue (area J) is less than the gain in total revenue (areas C + F + H) .
D)   inelastic because the gain in total revenue (area J) is less than the loss in total revenue (areas C + F + H) .

Question 2

Inelastic demand displays:

Accepted Answer

A)   little price stretch.
B)   little quantity stretch.
C)   considerable price stretch.
D)   considerable quantity stretch.

Question 3

Refer to the table above.Which product is an inferior good?

Accepted Answer

A)   Product W
B)   Product X
C)   Product Y
D)   Product Z

Question 4

The supply curve for cars will be more elastic the:

Accepted Answer

A)   greater the quantity demanded.
B)   longer the time interval considered.
C)   greater the decline in input prices.
D)   less able producers are to make other goods.

Question 5

State government wants to increase the taxes on cigarettes to increase tax revenue.This tax would only be effective in raising new tax revenues if the price elasticity of demand is:

Accepted Answer

A)   unity.
B)   elastic.
C)   inelastic.
D)   perfectly elastic.

Question 6

Refer to the table above.Starting at a $1 price,at what price range does demand become elastic?

Accepted Answer

A)   $1-2
B)   $2-3
C)   $3-4
D)   $4-5At $3-4,the change in quantity is (20 - 30) /(20 + 30) = 0.20 and the change in price is (3 - 4) /(3 + 4) = 0.143.Thus,elasticity is 1.40,which is elastic.

Question 7

Suppose that when the price of good X changes from $5 to $10,the demand for good Y changes from 110 to 100,then the cross-elasticity of demand is:

Accepted Answer

A)   -0.09 and the goods are complements.
B)   1.44 and the goods are complements.
C)   1.44 and the goods are substitutes.
D)   -0.143 and the goods are complements.The percent change in quantity of Y is (100 - 110) /(100 + 110) = -0.0476 and the percent change in the price of X is (10 - 5) /(10 + 5) = 0.333.Thus the cross-price-elasticity is-0.0476/0.333 = -0.143.

Question 8

The demand for cocaine is believed to be relatively elastic among addicts.

Accepted Answer

A) True 
 B)False

Question 9

At a price of $4 per unit,Gadgets Inc.is willing to supply 20,000 gadgets,while United Gadgets is willing to supply 10,000 gadgets.If the price were to rise to $8 per unit,their respective quantities supplied would rise to 45,000 and 25,000.If these are the only two firms supplying gadgets,what is the elasticity of supply in the market for gadgets?

Accepted Answer

A)   1.2
B)   1.0
C)   0.833
D)   0.80The change in quantity supplied is (70,000 - 30,000) /(70,000 + 30,000) = 0.40 and the change in price is (8 - 4) /(8 + 4) = 0.333.Thus,elasticity is 0.40/.0333 = 1.2.

Question 10

Changes in demand have a large effect on the price of gold because the:

Accepted Answer

A)   supply of gold is relatively elastic.
B)   supply of gold is relatively inelastic.
C)   demand for gold is relatively elastic.
D)   demand for gold is relatively inelastic.

Question 11

Refer to the above data.Over which price range is the price elasticity of demand inelastic?

Accepted Answer

A)   $20-$18
B)   $18-$16
C)   $12-$10
D)   $10-$8

Question 12

Refer to the above data.Over which price range is the price elasticity of demand unitary?

Accepted Answer

A)   $16-$14
B)   $14-$12
C)   $12-$10
D)   $10-$8Over the price range $12-$10,the change in quantity is (36 - 30) /(36 + 30) = 0.091 and the change in price is (12 - 10) /(12 + 10) = 0.091.Thus,price elasticity is 0.091/0.091 = 1.0.

Question 13

Demand can be said to be inelastic when:

Accepted Answer

A)   an increase in price results in a reduction in total revenue.
B)   a reduction in price results in an increase in total revenue.
C)   a reduction in price results in a decrease in total revenue.
D)   the elasticity coefficient exceeds one.

Question 14

Refer to the graph above.Which statement is correct?

Accepted Answer

A)   The demand curve is perfectly elastic.
B)   The demand curve is perfectly inelastic.
C)   The supply curve is perfectly elastic.
D)   The supply curve is perfectly inelastic.

Question 15

Sony is considering a 10 percent price reduction on its LCD television sets.If the demand for sets in this price range is inelastic:

Accepted Answer

A)   revenues from LCD sets will remain constant.
B)   revenues from LCD sets will decrease.
C)   revenues from LCD sets will increase.
D)   the number of LCD sets sold will decrease.

Question 16

In the price range where demand is elastic,an increase in price will result in a gain in total revenue.

Accepted Answer

A) True 
 B)False

Question 17

2 B)  D3 C)  D4 D)  D5" class="answers-bank-image d-inline" rel="preload" > Refer to the figure above.Which demand curve above is perfectly inelastic?

Accepted Answer

A)   D2
B)   D3
C)   D4
D)   D5

Question 18

Airlines charge business travelers more than leisure travelers because there is a more:

Accepted Answer

A)   elastic supply of business travel.
B)   inelastic supply of business travel.
C)   elastic demand for business travel.
D)   inelastic demand for business travel.

Question 19

If a business decreased the price of its product from $10 to $9 when demand was price inelastic,then total revenues would:

Accepted Answer

A)   decrease.
B)   increase.
C)   remain unchanged.
D)   be perfectly inelastic.

Question 20

If an increase in the supply of a product results in a decrease in the price,but no change in the actual quantity of the product exchanged,then the:

Accepted Answer

A)   price elasticity of supply is zero.
B)   price elasticity of supply is infinite.
C)   price elasticity of demand is unitary.
D)   price elasticity of demand is zero.

Exam 4: Elasticity of Demand and Supply

Refer to the above data.Over which price range is the price elasticity of demand inelastic?

Correct Answer
verified

State government wants to increase the taxes on cigarettes to increase tax revenue.This tax would only be effective in raising new tax revenues if the price elasticity of demand is:

Correct Answer
verified

Airlines charge business travelers more than leisure travelers because there is a more:

Correct Answer
verified

Refer to the table above.Which product is an inferior good?

Correct Answer
verified

Correct Answer
verified

The supply curve for cars will be more elastic the:

Correct Answer
verified

In the price range where demand is elastic,an increase in price will result in a gain in total revenue.

Correct Answer
verified

Demand can be said to be inelastic when:

Correct Answer
verified

Refer to the graph above and assume that the areas of the boxes are the same.Consider a situation where price decreases from P₂ to P₁.In this price range,demand is relatively:

Correct Answer
verified

Sony is considering a 10 percent price reduction on its LCD television sets.If the demand for sets in this price range is inelastic:

Correct Answer
verified

If an increase in the supply of a product results in a decrease in the price,but no change in the actual quantity of the product exchanged,then the:

Correct Answer
verified

Changes in demand have a large effect on the price of gold because the:

Correct Answer
verified

The demand for cocaine is believed to be relatively elastic among addicts.

Correct Answer
verified

Refer to the figure above.Which demand curve above is perfectly inelastic?

Correct Answer
verified

Refer to the table above.Starting at a $1 price,at what price range does demand become elastic?

Correct Answer
verified

Suppose that when the price of good X changes from $5 to $10,the demand for good Y changes from 110 to 100,then the cross-elasticity of demand is:

Correct Answer
verified

Inelastic demand displays:

Correct Answer
verified

Refer to the above data.Over which price range is the price elasticity of demand unitary?

Correct Answer
verified

Refer to the graph above.Which statement is correct?

Correct Answer
verified

If a business decreased the price of its product from $10 to $9 when demand was price inelastic,then total revenues would:

Correct Answer
verified

Exam 4: Elasticity of Demand and Supply

Refer to the above data.Over which price range is the price elasticity of demand inelastic?

Correct AnswerverifiedShow Answer

State government wants to increase the taxes on cigarettes to increase tax revenue.This tax would only be effective in raising new tax revenues if the price elasticity of demand is:

Correct AnswerverifiedShow Answer

Airlines charge business travelers more than leisure travelers because there is a more:

Correct AnswerverifiedShow Answer

Refer to the table above.Which product is an inferior good?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The supply curve for cars will be more elastic the:

Correct AnswerverifiedShow Answer

In the price range where demand is elastic,an increase in price will result in a gain in total revenue.

Correct AnswerverifiedShow Answer

Demand can be said to be inelastic when:

Correct AnswerverifiedShow Answer

Refer to the graph above and assume that the areas of the boxes are the same.Consider a situation where price decreases from P2 to P1.In this price range,demand is relatively:

Correct AnswerverifiedShow Answer

Sony is considering a 10 percent price reduction on its LCD television sets.If the demand for sets in this price range is inelastic:

Correct AnswerverifiedShow Answer

If an increase in the supply of a product results in a decrease in the price,but no change in the actual quantity of the product exchanged,then the:

Correct AnswerverifiedShow Answer

Changes in demand have a large effect on the price of gold because the:

Correct AnswerverifiedShow Answer

The demand for cocaine is believed to be relatively elastic among addicts.

Correct AnswerverifiedShow Answer

Refer to the figure above.Which demand curve above is perfectly inelastic?

Correct AnswerverifiedShow Answer

Refer to the table above.Starting at a $1 price,at what price range does demand become elastic?

Correct AnswerverifiedShow Answer

Suppose that when the price of good X changes from $5 to $10,the demand for good Y changes from 110 to 100,then the cross-elasticity of demand is:

Correct AnswerverifiedShow Answer

Inelastic demand displays:

Correct AnswerverifiedShow Answer

Refer to the above data.Over which price range is the price elasticity of demand unitary?

Correct AnswerverifiedShow Answer

Refer to the graph above.Which statement is correct?

Correct AnswerverifiedShow Answer

If a business decreased the price of its product from $10 to $9 when demand was price inelastic,then total revenues would:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Refer to the graph above and assume that the areas of the boxes are the same.Consider a situation where price decreases from P₂ to P₁.In this price range,demand is relatively:

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified