Question 1

If the elasticity of demand for good ALPHA is 2.0,

Accepted Answer

A)  A 10% fall in the price of ALPHA will raise quantity demanded by 2%.
B)  A price increase will raise total revenue for sellers.
C)  A 17% increase in the price of ALPHA will lower quantity demanded by 17%.
D)  A 10% rise in the price of ALPHA will lower quantity demanded by 20%.E) A) and B)
F) A) and C)

Question 2

Demand is elastic

Accepted Answer

A)  when the percentage change in quantity is greater than the percentage change in price.
B)  when price increases lower total revenue.
C)  when price decreases raise total revenue.
D)  All of the choices are correct.E) All of the above
F) A) and B)

Question 3

Between 1996 and 2002,the sale of kosher foods almost quadrupled.During this period its elasticity of demand

Accepted Answer

A)  declined.
B)  stayed the same.
C)  rose.D) A) and B)
E) A) and C)

Question 4

If demand is elastic,then the elasticity of demand is

Accepted Answer

A)  zero.
B)  between zero and 1.
C)  1.
D)  more than 1.E) A) and B)
F) A) and C)

Question 5

-The curve in the above graph:

Accepted Answer

A)  can only be a perfectly inelastic demand curve.
B)  can only be a perfectly inelastic supply curve.
C)  may be either a perfectly inelastic demand curve or a perfectly inelastic supply curve.
D)  can be neither a perfectly inelastic demand curve nor a perfectly inelastic supply curve.E) A) and D)
F) A) and C)

Question 6

When two goods are complementary goods,as the price of one of the goods goes _____,the quantity demanded of the other goes _____.

Accepted Answer

A)  down;down
B)  up;up
C)  up;down
D)  down;neither up nor downE) B) and C)
F) A) and D)

Question 7

If price falls from $100 to $99 and quantity demanded rises from 2 to 3,the demand is

Accepted Answer

A)  0.03
B)  1.75
C)  25.7
D)  39.8E) C) and D)
F) A) and D)

Question 8

-How much is the tax?

Accepted Answer

A)  $1.35
B)  $1.65
C)  $2.00
D)  $3.00
E)  $4.00F) B) and C)
G) A) and B)

Question 9

If elasticity of demand is 5 and price is lowered from $100 to $98,by what percentage will quantity demanded rise?

Accepted Answer

The answer of If elasticity of demand is 5 and...

Question 10

Statement I: A perfectly inelastic supply curve and a perfectly inelastic demand curve are represented the same way on a graph.
Statement II: A tax increase will increase supply.

Accepted Answer

A)  Statement I is true and statement II is false.
B)  Statement II is true and statement I is false.
C)  Both statements are true.
D)  Both statements are false.E) All of the above
F) None of the above

Question 11

-How much revenue will the government raise each week from the tax?

Accepted Answer

A)  $8 million
B)  $10 million
C)  $20 million
D)  $40 million
E)  $80 millionF) C) and D)
G) B) and E)

Question 12

If the demand for table salt were perfectly inelastic at all prices,a decrease in supply would

Accepted Answer

A)  increase the price and decrease the quantity demanded.
B)  increase the price while not affecting the quantity demanded.
C)  reduce the quantity demanded to zero no matter what the initial price.
D)  have no effect on either price or quantity demanded.E) A) and B)
F) All of the above

Question 13

Which of the following characteristics would describe a product with an inelastic demand?

Accepted Answer

A)  The good is considered a necessity and many substitutes for the product exist.
B)  The good is considered a necessity and few substitutes for the product exist.
C)  The good is considered a luxury and many substitutes for the product exist.
D)  The good is considered a luxury and few substitutes for the product exist.E) None of the above
F) All of the above

Question 14

If the price of Snickers candy bars fall 10% and quantity demanded rises by 11%,demand is ________.

Accepted Answer

The answer of If the price of Snickers candy bars...

Question 15

A 15% decrease in the price of radios causes the quantity demanded to rise by 16%.The demand for radios is

Accepted Answer

A)  very elastic.
B)  slightly elastic.
C)  unit elastic.
D)  slightly inelastic.
E)  very inelastic.F) A) and E)
G) A) and B)

Question 16

In effect,a tax increase has the same effect as a ____.

Accepted Answer

The answer of In effect,a tax increase has the same...

Question 17

In the space provided in the graph above,draw a perfectly elastic demand curve D1,and a very elastic demand curve,D2.

Accepted Answer

The answer of In the space provided in the graph...

Question 18

The demand for Phillips gasoline is more _______ than the demand for gasoline in general because _________________________.

Accepted Answer

elastic;there are mo...

Question 19

A firm that changes its price and sees no change in the total revenues it receives is facing demand that is

Accepted Answer

A)  price inelastic.
B)  revenue inelastic.
C)  unit elastic.
D)  price elastic.E) None of the above
F) A) and C)

Question 20

Which of the following characteristics would describe a product with an inelastic demand?

Accepted Answer

A)  The good is considered a necessity and the price of the product is high relative to the buyer's income.
B)  The good is considered a necessity and the price of the product is low relative to the buyer's income.
C)  The good is considered a luxury and the price of the product is high relative to the buyer's income.
D)  The good is considered a luxury and the price of the product is low relative to the buyer's income.E) C) and D)
F) A) and B)

Exam 18: The Price Elasticities of Demand and Supply

If the elasticity of demand for good ALPHA is 2.0,

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The demand for Phillips gasoline is more _______ than the demand for gasoline in general because _________________________.

Correct Answerverifiedelastic;there are mo...View AnswerShow Answer

Demand is elastic

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-The curve in the above graph:

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A firm that changes its price and sees no change in the total revenues it receives is facing demand that is

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-How much revenue will the government raise each week from the tax?

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Which of the following characteristics would describe a product with an inelastic demand?

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Which of the following characteristics would describe a product with an inelastic demand?

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Statement I: A perfectly inelastic supply curve and a perfectly inelastic demand curve are represented the same way on a graph. Statement II: A tax increase will increase supply.

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If the price of Snickers candy bars fall 10% and quantity demanded rises by 11%,demand is ________.

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If demand is elastic,then the elasticity of demand is

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-How much is the tax?

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If the demand for table salt were perfectly inelastic at all prices,a decrease in supply would

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A 15% decrease in the price of radios causes the quantity demanded to rise by 16%.The demand for radios is

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When two goods are complementary goods,as the price of one of the goods goes _____,the quantity demanded of the other goes _____.

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In the space provided in the graph above,draw a perfectly elastic demand curve D1,and a very elastic demand curve,D2.

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In effect,a tax increase has the same effect as a ____.

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If elasticity of demand is 5 and price is lowered from $100 to $98,by what percentage will quantity demanded rise?

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If price falls from $100 to $99 and quantity demanded rises from 2 to 3,the demand is

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Between 1996 and 2002,the sale of kosher foods almost quadrupled.During this period its elasticity of demand

Correct AnswerverifiedShow Answer

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The demand for Phillips gasoline is more _ than the demand for gasoline in general because ___________________.

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elastic;there are mo...
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When two goods are complementary goods,as the price of one of the goods goes _,the quantity demanded of the other goes _.

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