Question 1

Does the fact that the price elasticity of demand for a good is inelastic violate the law of demand?

Accepted Answer

No,if the demand is inelastic,when the p...

Question 2

The price elasticity of demand measures which of the following?

Accepted Answer

A)   the slope of the demand curve
B)   the rate at which demand changes when price changes
C)   how responsive the quantity demanded is to changes in price
D)   the percentage-slope of the demand curve
E)   None of these correctly defines what price elasticity of demand measures.

Question 3

If the price of suntan lotion increases from $6 to $8 per bottle and quantity demanded decreases from 900,000 bottles to 845,000 bottles,using the midpoint method,what is the price elasticity of demand for suntan lotion?

Accepted Answer

The price elasticity of demand = (percen...

Question 4

In a study session,your friend says,"Demand is elastic if the percentage change in the price exceeds the percentage change in quantity demanded." Is your friend correct?

Accepted Answer

No,your friend is incorrect.De...

Question 5

Suppose the Chicago Bears football team raises ticket prices by 13 percent and as a result the quantity of tickets demanded decreases by 21 percent.This response means that the demand for Bears tickets is

Accepted Answer

A)   inelastic.
B)   elastic.
C)   unit elastic.
D)   perfectly inelastic.
E)   perfectly elastic.

Question 6

The price elasticity of demand measures the extent to which the quantity demanded changes when

Accepted Answer

A)   the price of the good changes.
B)   the price of a related good changes.
C)   the expected future price of a good changes.
D)   consumer preferences change.
E)   both the demand and supply of the good change.

Question 7

If the price of a magazine increases from $5 to $7 and the quantity demanded of the magazines decreases from 10 million per month to 8 million per month,using the midpoint method,what is the price elasticity of demand? Show your work.Is the demand elastic,inelastic,or unit elastic?

Accepted Answer

The price elasticity of demand = (percen...

Question 8

Goods that can be produced at a constant or very gently rising opportunity cost have

Accepted Answer

A)   an elastic demand.
B)   an inelastic demand.
C)   an inelastic supply.
D)   an elastic supply.
E)   a unit elastic demand.

Question 9

When the percentage change in the quantity supplied is twice the percentage change in price,then supply is

Accepted Answer

A)   elastic.
B)   inelastic.
C)   unit elastic.
D)   perfectly inelastic.
E)   perfectly elastic.

Question 10

Suppose the quantity supplied of computers increases from 2 million to 4 million units as the price of a computer increases from $600 to $700.What does the price elasticity of supply equal?

Accepted Answer

The price elasticity of supply = (percen...

Question 11

What are the three cases for the price elasticity of demand? Briefly define each.

Accepted Answer

Demand can be elastic,inelastic,or unit ...

Question 12

If the demand for a good is elastic,then

Accepted Answer

A)   people do not change the quantity they demand when the price of the good changes.
B)   a change in price leads to a smaller percentage change in the quantity demanded.
C)   people substantially decrease the quantity of the good they buy if its price increases by a small percentage.
D)   a change in the quantity demanded is smaller than the change in price.
E)   the quantity demanded divided by the price exceeds 1.00.

Question 13

Suppose Starbucks currently charges $3.25 per cup for its latte.If Starbucks lowers the price to $3.00 per cup,based on the demand curve in the figure above,its total revenue will ________ because the demand for Starbucks latte is ________ over this price range.

Accepted Answer

A)   increase; elastic
B)   decrease; elastic
C)   increase; inelastic
D)   increase; unit elastic
E)   not change; unit elastic

Question 14

If income increases from $50,000 to $60,000 while the demand for a good increases from 100 units to 125 units,what is the income elasticity of demand? Is the good a normal good or an inferior good?

Accepted Answer

The income elasticity equals 1...

Question 15

The income elasticity of demand for store brands of soda (that is,non-name brands)is negative.What does this fact indicate about consumers' perceptions about the store brands?

Accepted Answer

The negative income elasticity indicates...

Question 16

When a firm raises the price of its product,what happens to its total revenue?

Accepted Answer

A)   If demand is elastic, total revenue decreases.
B)   If demand is unit elastic, total revenue increases.
C)   If demand is inelastic, total revenue decreases.
D)   If demand is elastic, total revenue increases.
E)   If demand is unit elastic, total revenue decreases.

Question 17

The figure above shows the demand curve for Starbucks latte.
-In the figure above,the demand is elastic in the range of prices between

Accepted Answer

A)   $3.50 and $4.50 per cup.
B)   $2.50 and $3.50 per cup.
C)   $1.00 and $2.00 per cup.
D)   $2.00 and $4.00 per cup.
E)   $1.75 and $2.75 per cup.

Question 18

Is supply more elastic or less elastic as more time passes after a price change? Explain your answer.

Accepted Answer

Supply becomes elastic as more time pass...

Question 19

For a product with a rapidly increasing opportunity cost of producing additional units,

Accepted Answer

A)   demand is price elastic.
B)   supply is price elastic.
C)   demand is price inelastic.
D)   supply is price inelastic.
E)   the demand curve is vertical.

Question 20

The price elasticity of demand is a measure of the extent to which the quantity demanded of a good changes when ________ changes and all other influences on buyers' plans remain the same.

Accepted Answer

A)   income
B)   the price of a related good
C)   the price of the good
D)   the demand alone
E)   both the demand and the supply simultaneously

Exam 5: Elasticities of Demand and Supply

If the price of suntan lotion increases from $6 to $8 per bottle and quantity demanded decreases from 900,000 bottles to 845,000 bottles,using the midpoint method,what is the price elasticity of demand for suntan lotion?

Correct AnswerverifiedThe price elasticity of demand = (percen...View AnswerShow Answer

When a firm raises the price of its product,what happens to its total revenue?

Correct AnswerverifiedShow Answer

What are the three cases for the price elasticity of demand? Briefly define each.

Correct AnswerverifiedDemand can be elastic,inelastic,or unit ...View AnswerShow Answer

Is supply more elastic or less elastic as more time passes after a price change? Explain your answer.

Correct AnswerverifiedSupply becomes elastic as more time pass...View AnswerShow Answer

The price elasticity of demand is a measure of the extent to which the quantity demanded of a good changes when ________ changes and all other influences on buyers' plans remain the same.

Correct AnswerverifiedShow Answer

Suppose the Chicago Bears football team raises ticket prices by 13 percent and as a result the quantity of tickets demanded decreases by 21 percent.This response means that the demand for Bears tickets is

Correct AnswerverifiedShow Answer

Suppose the quantity supplied of computers increases from 2 million to 4 million units as the price of a computer increases from $600 to $700.What does the price elasticity of supply equal?

Correct AnswerverifiedThe price elasticity of supply = (percen...View AnswerShow Answer

Goods that can be produced at a constant or very gently rising opportunity cost have

Correct AnswerverifiedShow Answer

Suppose Starbucks currently charges $3.25 per cup for its latte.If Starbucks lowers the price to $3.00 per cup,based on the demand curve in the figure above,its total revenue will ________ because the demand for Starbucks latte is ________ over this price range.

Correct AnswerverifiedShow Answer

If the demand for a good is elastic,then

Correct AnswerverifiedShow Answer

The price elasticity of demand measures the extent to which the quantity demanded changes when

Correct AnswerverifiedShow Answer

For a product with a rapidly increasing opportunity cost of producing additional units,

Correct AnswerverifiedShow Answer

The figure above shows the demand curve for Starbucks latte. -In the figure above,the demand is elastic in the range of prices between

Correct AnswerverifiedShow Answer

The price elasticity of demand measures which of the following?

Correct AnswerverifiedShow Answer

When the percentage change in the quantity supplied is twice the percentage change in price,then supply is

Correct AnswerverifiedShow Answer

The income elasticity of demand for store brands of soda (that is,non-name brands)is negative.What does this fact indicate about consumers' perceptions about the store brands?

Correct AnswerverifiedThe negative income elasticity indicates...View AnswerShow Answer

In a study session,your friend says,"Demand is elastic if the percentage change in the price exceeds the percentage change in quantity demanded." Is your friend correct?

Correct AnswerverifiedNo,your friend is incorrect.De...View AnswerShow Answer

Does the fact that the price elasticity of demand for a good is inelastic violate the law of demand?

Correct AnswerverifiedNo,if the demand is inelastic,when the p...View AnswerShow Answer

If the price of a magazine increases from $5 to $7 and the quantity demanded of the magazines decreases from 10 million per month to 8 million per month,using the midpoint method,what is the price elasticity of demand? Show your work.Is the demand elastic,inelastic,or unit elastic?

Correct AnswerverifiedThe price elasticity of demand = (percen...View AnswerShow Answer

If income increases from $50,000 to $60,000 while the demand for a good increases from 100 units to 125 units,what is the income elasticity of demand? Is the good a normal good or an inferior good?

Correct AnswerverifiedThe income elasticity equals 1...View AnswerShow Answer

Correct Answer
verified
The price elasticity of demand = (percen...
View Answer

Correct Answer
verified

Correct Answer
verified
Demand can be elastic,inelastic,or unit ...
View Answer

Correct Answer
verified
Supply becomes elastic as more time pass...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The price elasticity of supply = (percen...
View Answer

Correct Answer
verified

Suppose Starbucks currently charges $3.25 per cup for its latte.If Starbucks lowers the price to $3.00 per cup,based on the demand curve in the figure above,its total revenue will because the demand for Starbucks latte is over this price range.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The negative income elasticity indicates...
View Answer

Correct Answer
verified
No,your friend is incorrect.De...
View Answer

Correct Answer
verified
No,if the demand is inelastic,when the p...
View Answer

Correct Answer
verified
The price elasticity of demand = (percen...
View Answer

Correct Answer
verified
The income elasticity equals 1...
View Answer