Question 1

In which of the following instances will total revenue decline?

Accepted Answer

A)   Price rises and supply is elastic.
B)   Price falls and demand is elastic.
C)   Price rises and demand is inelastic.
D)   Price rises and demand is elastic.

Question 2

(Consider This) Which of the following best explains the significant increases in the equilibrium prices for higher education in the United States since the 1980s?

Accepted Answer

A)   The demand for higher education is highly price inelastic and the supply has decreased substantially.
B)   The demand for higher education is highly price elastic and the supply has decreased substantially.
C)   The supply of higher education is highly price inelastic and demand has increased substantially.
D)   The supply of higher education is highly price elastic and demand has increased substantially.

Question 3

The larger the coefficient of price elasticity of demand for a product,the:

Accepted Answer

A)   larger the resulting price change for an increase in supply.
B)   more rapid the rate at which the marginal utility of that product diminishes.
C)   less competitive will be the industry supplying that product.
D)   smaller the resulting price change for an increase in supply.

Question 4

Generally speaking,the demand for luxury goods is more price elastic than is the demand for necessities.

Accepted Answer

A) True 
 B)False

Question 5

In which of the following cases will total revenue increase?

Accepted Answer

A)   Price falls and demand is inelastic.
B)   Price falls and supply is elastic.
C)   Price rises and demand is inelastic.
D)   Price rises and demand is elastic.

Question 6

We would expect:

Accepted Answer

A)   the demand for Coca-Cola to be less price elastic than the demand for soft drinks in general.
B)   the demand for Coca-Cola to be more price elastic than the demand for soft drinks in general.
C)   no relationship between the price elasticity of demand for Coca-Cola and the price elasticity of demand for soft drinks in general.
D)   none of these to hold true.

Question 7

For an increase in demand,the price effect is smallest and the quantity effect is largest:

Accepted Answer

A)   when supply is least elastic.
B)   in the long run.
C)   in the short run.
D)   in the immediate market period.

Question 8

A cross elasticity of demand coefficient of +2.5 indicates that the two products are substitutes.

Accepted Answer

A) True 
 B)False

Question 9

Suppose the income elasticity of demand for toys is +2.00.This means that:

Accepted Answer

A)   a 10 percent increase in income will increase the purchase of toys by 20 percent.
B)   a 10 percent increase in income will increase the purchase of toys by 2 percent.
C)   a 10 percent increase in income will decrease the purchase of toys by 2 percent.
D)   toys are an inferior good.

Question 10

The price elasticity of demand for beef is about 0.60.Other things equal,this means that a 20 percent increase in the price of beef will cause the quantity of beef demanded to:

Accepted Answer

A)   increase by approximately 12 percent.
B)   decrease by approximately 12 percent.
C)   decrease by approximately 32 percent.
D)   decrease by approximately 26 percent.

Question 11

Antiques tend to have highly inelastic supply curves.

Accepted Answer

A) True 
 B)False

Question 12

Suppose the price elasticity coefficients of demand are 1.43,0.67,1.11,and 0.29 for products W,X,Y,and Z respectively.A 1 percent decrease in price will increase total revenue in the case(s) of:

Accepted Answer

A)   W and Y.
B)   Y and Z.
C)   X and Z.
D)   Z and W.

Question 13

Suppose Aiyanna's Pizzeria currently faces a linear demand curve and is charging a very high price per pizza and doing very little business.Aiyanna now decides to lower pizza prices by 5 percent per week for an indefinite period of time.We can expect that each successive week:

Accepted Answer

A)   demand will become more price elastic.
B)   price elasticity of demand will not change as price is lowered.
C)   demand will become less price elastic.
D)   the elasticity of supply will increase.

Question 14

Suppose the supply of product X is perfectly inelastic.If there is an increase in the demand for this product,equilibrium price:

Accepted Answer

A)   will decrease but equilibrium quantity will increase.
B)   and quantity will both decrease.
C)   will increase,but equilibrium quantity will decline.
D)   will increase,but equilibrium quantity will be unchanged.

Exam 6: Elasticity

The larger the coefficient of price elasticity of demand for a product,the:

Correct Answer
verified

Antiques tend to have highly inelastic supply curves.

Correct Answer
verified

Generally speaking,the demand for luxury goods is more price elastic than is the demand for necessities.

Correct Answer
verified

The price elasticity of demand for beef is about 0.60.Other things equal,this means that a 20 percent increase in the price of beef will cause the quantity of beef demanded to:

Correct Answer
verified

A cross elasticity of demand coefficient of +2.5 indicates that the two products are substitutes.

Correct Answer
verified

In which of the following instances will total revenue decline?

Correct Answer
verified

Suppose the supply of product X is perfectly inelastic.If there is an increase in the demand for this product,equilibrium price:

Correct Answer
verified

For an increase in demand,the price effect is smallest and the quantity effect is largest:

Correct Answer
verified

We would expect:

Correct Answer
verified

Suppose the price elasticity coefficients of demand are 1.43,0.67,1.11,and 0.29 for products W,X,Y,and Z respectively.A 1 percent decrease in price will increase total revenue in the case(s) of:

Correct Answer
verified

In which of the following cases will total revenue increase?

Correct Answer
verified

Suppose Aiyanna's Pizzeria currently faces a linear demand curve and is charging a very high price per pizza and doing very little business.Aiyanna now decides to lower pizza prices by 5 percent per week for an indefinite period of time.We can expect that each successive week:

Correct Answer
verified

(Consider This) Which of the following best explains the significant increases in the equilibrium prices for higher education in the United States since the 1980s?

Correct Answer
verified

Suppose the income elasticity of demand for toys is +2.00.This means that:

Correct Answer
verified

Exam 6: Elasticity

The larger the coefficient of price elasticity of demand for a product,the:

Correct AnswerverifiedShow Answer

Antiques tend to have highly inelastic supply curves.

Correct AnswerverifiedShow Answer

Generally speaking,the demand for luxury goods is more price elastic than is the demand for necessities.

Correct AnswerverifiedShow Answer

The price elasticity of demand for beef is about 0.60.Other things equal,this means that a 20 percent increase in the price of beef will cause the quantity of beef demanded to:

Correct AnswerverifiedShow Answer

A cross elasticity of demand coefficient of +2.5 indicates that the two products are substitutes.

Correct AnswerverifiedShow Answer

In which of the following instances will total revenue decline?

Correct AnswerverifiedShow Answer

Suppose the supply of product X is perfectly inelastic.If there is an increase in the demand for this product,equilibrium price:

Correct AnswerverifiedShow Answer

For an increase in demand,the price effect is smallest and the quantity effect is largest:

Correct AnswerverifiedShow Answer

We would expect:

Correct AnswerverifiedShow Answer

Suppose the price elasticity coefficients of demand are 1.43,0.67,1.11,and 0.29 for products W,X,Y,and Z respectively.A 1 percent decrease in price will increase total revenue in the case(s) of:

Correct AnswerverifiedShow Answer

In which of the following cases will total revenue increase?

Correct AnswerverifiedShow Answer

Suppose Aiyanna's Pizzeria currently faces a linear demand curve and is charging a very high price per pizza and doing very little business.Aiyanna now decides to lower pizza prices by 5 percent per week for an indefinite period of time.We can expect that each successive week:

Correct AnswerverifiedShow Answer

(Consider This) Which of the following best explains the significant increases in the equilibrium prices for higher education in the United States since the 1980s?

Correct AnswerverifiedShow Answer

Suppose the income elasticity of demand for toys is +2.00.This means that:

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified