Question 1

The amount that a firm receives from the sale of goods and services is:

Accepted Answer

A)  total profit.
B)  total revenue.
C)  total cost.
D)  total benefit.E) A) and C)
F) None of the above

Question 2

If a good has a less elastic demand curve:

Accepted Answer

A)  then a small percentage change in price will cause a large change in quantity demanded.
B)  then any percentage change in price will take a long time to cause a response in quantity demanded.
C)  then a large percentage change in price will cause a small change in quantity demanded.
D)  then any percentage change in price will cause an almost immediate response in quantity demanded.E) B) and D)
F) A) and B)

Question 3

A good that has a unit elastic demand:

Accepted Answer

A)  has a perfectly horizontal demand curve.
B)  has a perfectly vertical demand curve.
C)  has a measured elasticity greater than 1.
D)  None of these is true.E) None of the above
F) B) and C)

Question 4

Which pair of goods is likely to have the largest positive cross-price elasticity?

Accepted Answer

A)  Peanut butter and jelly
B)  Butter and margarine
C)  Ramen noodles and a Rolex watch
D)  Cross-price elasticity is always negative,and simply reported in absolute value.E) A) and B)
F) B) and C)

Question 5

Ben & Jerry's ice cream is _________________ than all ice cream 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;it has less available substitutes
D)  more price elastic;it has less available substitutesE) None of the above
F) C) and D)

Question 6

Suppose when the price of movie tickets is $5,the quantity demanded is 500,and when the price is $7,the quantity demanded is 300.Using the mid-point method,the price elasticity of demand is:

Accepted Answer

A)  1.51.
B)  0.66.
C)  151 percent.
D)  66 percent.E) A) and D)
F) A) and C)

Question 7

Assuming elasticity is reported in absolute value,an elastic demand has a measured elasticity:

Accepted Answer

A)  greater than one.
B)  less than one.
C)  of exactly one.
D)  greater than zero and less than one.E) A) and C)
F) B) and D)

Question 8

If a good has a highly elastic demand curve,then:

Accepted Answer

A)  a small percentage change in price will cause a large change in quantity demanded.
B)  a small percentage change in price will cause virtually no change in quantity demanded.
C)  a large percentage change in price will cause a small change in quantity demanded.
D)  any percentage change in price will cause an almost immediate response in quantity demanded.E) A) and D)
F) C) and D)

Question 9

Which pair of goods is most likely to have a negative cross-price elasticity?

Accepted Answer

A)  All cross-price elasticities are negative,but often reported in absolute value.
B)  Peanut butter and jelly.
C)  Butter and margarine.
D)  Milk and filet mignon.E) B) and C)
F) A) and B)

Question 10

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

Accepted Answer

A)  the good is price elastic.
B)  total revenue will rise.
C)  the measured elasticity must be more than 1.
D)  All of these are true.E) B) and C)
F) A) and C)

Question 11

It is most likely for which of the following to have an income elasticity greater than 1?

Accepted Answer

A)  Deli meat
B)  Store brand cola
C)  Gold earrings
D)  MilkE) A) and B)
F) C) and D)

Question 12

In general,the more elastic a demand curve is:

Accepted Answer

A)  the flatter it will be.
B)  the steeper it will be.
C)  the more bowed-in it will be.
D)  the faster it will shift when price changes.E) A) and D)
F) None of the above

Question 13

If the price of a DVD decreases by 50 percent,the quantity demanded increases by 75 percent.The price elasticity of demand is:

Accepted Answer

A)  1.5 and is elastic.
B)  1.5 and is inelastic.
C)  0.67 and is elastic.
D)  0.67 and is inelastic.E) A) and C)
F) None of the above

Question 14

The calculated price elasticity of demand:

Accepted Answer

A)  is always a negative number,although many times is reported as an absolute value.
B)  is sometimes a negative number,depending on the magnitude of response.
C)  is always a positive number,because price and quantity are directly related in terms of demand.
D)  can be positive or negative,but is always reported as an absolute value.E) A) and D)
F) B) and D)

Question 15

The cross-price elasticity of demand for peanut butter and jelly is likely:

Accepted Answer

A)  a negative number.
B)  a positive number.
C)  a very high positive number.
D)  1.E) A) and C)
F) B) and D)

Question 16

A good that has an income elasticity of 0.4 is:

Accepted Answer

A)  a luxury good.
B)  a normal good.
C)  an inferior good.
D)  a substitute good.E) None of the above
F) A) and B)

Question 17

A good is inelastic if:

Accepted Answer

A)  total revenue decreases as a result of a price increase.
B)  the quantity effect outweighs the price effect of a price increase.
C)  the measured elasticity is greater than 1.
D)  None of these is true.E) All of the above
F) A) and D)

Question 18

A subway ride is ___________________ than a car 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;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) C) and D)
F) B) and D)

Question 19

A decrease in price:

Accepted Answer

A)  causes a decrease in revenue due to the quantity effect.
B)  causes an increase in revenue due to the price effect.
C)  does not necessarily have to experience a quantity effect when the demand curve is downward sloping.
D)  None of these is true.E) A) and D)
F) B) and D)

Question 20

Considering the concept of cross-price elasticity,when two goods are substitutes:

Accepted Answer

A)  an increase in the price of one will cause an increase in the quantity demanded of the other.
B)  an increase in the price of one will cause a decrease in the quantity demanded of the other.
C)  a decrease in the price of one will cause an increase in the quantity demanded of the other.
D)  Any of these may be true.E) A) and B)
F) A) and D)

Exam 4: Elasticity

A good that has a unit elastic demand:

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Considering the concept of cross-price elasticity,when two goods are substitutes:

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The cross-price elasticity of demand for peanut butter and jelly is likely:

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In general,the more elastic a demand curve is:

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The calculated price elasticity of demand:

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It is most likely for which of the following to have an income elasticity greater than 1?

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Assuming elasticity is reported in absolute value,an elastic demand has a measured elasticity:

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The amount that a firm receives from the sale of goods and services is:

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Suppose when the price of movie tickets is $5,the quantity demanded is 500,and when the price is $7,the quantity demanded is 300.Using the mid-point method,the price elasticity of demand is:

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Which pair of goods is most likely to have a negative cross-price elasticity?

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Ben & Jerry's ice cream is _________________ than all ice cream because _______________.

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A decrease in price:

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If a good has a highly elastic demand curve,then:

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A subway ride is ___________________ than a car because ___________________.

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A good is inelastic if:

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A good that has an income elasticity of 0.4 is:

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Which pair of goods is likely to have the largest positive cross-price elasticity?

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

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If a good has a less elastic demand curve:

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If the price of a DVD decreases by 50 percent,the quantity demanded increases by 75 percent.The price elasticity of demand is:

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Ben & Jerry's ice cream is ___ than all ice cream because _.

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A subway ride is _ than a car because _.

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