Question 1

The elasticity of supply measures how sensitive the supplycurve is to a change in price.

Accepted Answer

A) True 
 B)False

Question 2

If the price elasticity of demand for a product is 2 in absolutevalue, and the price elasticity of supply for the same product is 1, what is the predicted percent change in price from a 5percent fall in the supply?

Accepted Answer

A)  a 1.67 percent fall in price
B)  a 1.67 percent rise in price
C)  a 0.6 percent fall in price
D)  a 0.6 percent rise in priceE) All of the above
F) None of the above B

Question 3

A cross-price elasticity value that is negative will alwaysindicate goods that are substitutes.

Accepted Answer

A) True 
 B)False

Question 4

Tonya consumes 40 steaks a year when her yearly income is$40,000. After her income falls to $35,000 a year, she consumesonly 35 steaks a year. Calculate her income elasticity of demandfor steaks.

Accepted Answer

A)  -1
B)  1
C)  -12.5
D)  12.5E) A) and D)
F) A) and C)

Question 5

When the supply curve of slaves is perfectly ________, everyslave bought by the redeemers results in/is ________ held incaptivity.

Accepted Answer

A)  inelastic; more slaves
B)  inelastic; one less slave
C)  inelastic; redeemed at a lower price than expected
D)  elastic; redeemed at a higher price than expectedE) B) and C)
F) A) and D)

Question 6

Which of the following explains why local supply tends to bemore elastic than global supply?

Accepted Answer

A)  As price increases in a certain locale, it is often costly to transport more goods to that particular area, and hence supplyIs more elastic.
B)  Local suppliers are small in relation to the global market.
C)  The statement is false, local supply tends to be less elastic than global supply.
D)  As price increases in a certain locale, goods can be brought in from other areas, which is not possible on a global scale.(TrueAnswer ) CorrectE) All of the above
F) B) and C)

Question 7

Which one of the following products would tend to haveinelastic demand?

Accepted Answer

A)  luxury sedans
B)  candy
C)  crude oil
D)  Black Angus T-bone steakE) B) and C)
F) All of the above

Question 8

When the demand curve is inelastic, total revenues go down inproportion to a price increase.

Accepted Answer

A) True 
 B)False

Question 9

If the price of Good X rises from $4 to $5, and the quantitydemanded of Good X falls from 200 units to 180 units, the priceelasticity of demand is:

Accepted Answer

A)  2.1.
B)  0.47.
C)  1.4.
D)  0.4.E) B) and C)
F) A) and C)

Question 10

If Major League Baseball ticket prices rise by 15 percent, thenumber of tickets sold falls by 5 percent. The elasticity ofdemand is:

Accepted Answer

A)  -3.
B)  -1/3.
C)  -7.5.
D)  -0.75.E) C) and D)
F) B) and D) B

Question 11

If the price elasticity of demand for Good X is 1 in absolutevalue, which of the following is TRUE?
I. When the price of the good changes, the total revenue for theproduct does not change
II.A percentage drop in price will lead to an equal percentageincrease in quantity demanded
III. When the price of the product rises, total revenue alsoincreases.

Accepted Answer

A)  I only
B)  I and II only
C)  II and III only
D)  II onlyE) A) and D)
F) All of the above

Question 12

Good X and Good Y are related goods. When the price of GoodX rises by 5 percent, the quantity demanded for Good Y risesby 15 percent. Calculate the cross-price elasticity.

Accepted Answer

A)  3
B)  -3
C)  -0.3
D)  0.3E) A) and D)
F) B) and D)

Question 13

What happens to revenues when the demand curve is unitelastic and the price changes?

Accepted Answer

A)  Revenues increase when the price increases.
B)  Revenues remain unchanged.
C)  Revenues decrease when the price increases.
D)  The change in revenues cannot be estimated.E) All of the above
F) A) and B)

Question 14

If the demand curve is inelastic a price ________ causes a(n) ________ in revenues.

Accepted Answer

A)  decrease; decrease
B)  decrease; increase
C)  increase; decrease
D)  There is not enough information to answer.E) A) and B)
F) A) and C)

Question 15

If the supply of raw materials is ________, increasing theirproduction leads to ________ per-unit costs.

Accepted Answer

A)  inelastic; higher
B)  perfectly elastic; higher
C)  perfectly elastic; lower
D)  inelastic; lowerE) A) and C)
F) A) and B)

Question 16

Marge tutors English students-if she raises rates, her revenuesincrease. Brad tutors biology students-if he lowers rates, hisrevenues increase. Which of the following is TRUE?

Accepted Answer

A)  Marge's demand is elastic, and Brad's demand is inelastic.
B)  Marge's demand is inelastic, and Brad's demand is elastic.
C)  Marge's demand is elastic, and Brad's demand is elastic.
D)  Marge's demand is inelastic, and Brad's demand is inelastic.E) A) and C)
F) A) and D)

Question 17

1 B) S2 C) S3 D) S4 " class="answers-bank-image d-inline" rel="preload" > (Figure: Elasticity of Supply)  Refer to the figure. Which supplycurve is the most elastic?

Accepted Answer

A)  S1
B)  S2
C)  S3
D)  S4E) A) and B)
F) All of the above

Question 18

Suppose that large oil reserves are discovered off the coast ofCuba, and these reserves will increase the world's supply of oilby 2.5 percent. If the elasticity of demand and supply of oil are 0.50 and 0.40, respectively, what happens to the price of oil?

Accepted Answer

A)  It falls by 2.5 percent.
B)  It falls by 25 percent.
C)  It falls by 2.78 percent.
D)  It falls by 36 percent.E) A) and C)
F) B) and C)

Question 19

If the price of gasoline in this country were expected to rise dueto a permanent increase in the tax on gasoline, which of thefollowing would you expect to happen?

Accepted Answer

A)  The demand for gasoline would become more elastic.(True Answer ) Correct
B)  The demand for gasoline would decrease as a result of the higher price.
C)  Producers will have less of an incentive to supply gasoline as a result of the higher taxes.
D)  The elasticity of demand will not change since gasoline is a necessity good.E) A) and C)
F) B) and D) A

Question 20

Which factor would tend NOT to increase elasticity of supply?

Accepted Answer

A)  the long run
B)  global supply
C)  constant production costs
D)  local supplyE) All of the above
F) A) and B)

Exam 5: Elasticity

The elasticity of supply measures how sensitive the supplycurve is to a change in price.

Correct Answer
verified

If the price elasticity of demand for a product is 2 in absolutevalue, and the price elasticity of supply for the same product is 1, what is the predicted percent change in price from a 5percent fall in the supply?

Correct Answer
verified
B

A cross-price elasticity value that is negative will alwaysindicate goods that are substitutes.

Correct Answer
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Tonya consumes 40 steaks a year when her yearly income is$40,000. After her income falls to $35,000 a year, she consumesonly 35 steaks a year. Calculate her income elasticity of demandfor steaks.

Correct Answer
verified

When the supply curve of slaves is perfectly , everyslave bought by the redeemers results in/is held incaptivity.

Correct Answer
verified

Which of the following explains why local supply tends to bemore elastic than global supply?

Correct Answer
verified

Which one of the following products would tend to haveinelastic demand?

Correct Answer
verified

When the demand curve is inelastic, total revenues go down inproportion to a price increase.

Correct Answer
verified

If the price of Good X rises from $4 to $5, and the quantitydemanded of Good X falls from 200 units to 180 units, the priceelasticity of demand is:

Correct Answer
verified

If Major League Baseball ticket prices rise by 15 percent, thenumber of tickets sold falls by 5 percent. The elasticity ofdemand is:

Correct Answer
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B

Correct Answer
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Good X and Good Y are related goods. When the price of GoodX rises by 5 percent, the quantity demanded for Good Y risesby 15 percent. Calculate the cross-price elasticity.

Correct Answer
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What happens to revenues when the demand curve is unitelastic and the price changes?

Correct Answer
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If the demand curve is inelastic a price causes a(n) in revenues.

Correct Answer
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If the supply of raw materials is , increasing theirproduction leads to per-unit costs.

Correct Answer
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Marge tutors English students-if she raises rates, her revenuesincrease. Brad tutors biology students-if he lowers rates, hisrevenues increase. Which of the following is TRUE?

Correct Answer
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(Figure: Elasticity of Supply) Refer to the figure. Which supplycurve is the most elastic?

Correct Answer
verified

Suppose that large oil reserves are discovered off the coast ofCuba, and these reserves will increase the world's supply of oilby 2.5 percent. If the elasticity of demand and supply of oil are 0.50 and 0.40, respectively, what happens to the price of oil?

Correct Answer
verified

If the price of gasoline in this country were expected to rise dueto a permanent increase in the tax on gasoline, which of thefollowing would you expect to happen?

Correct Answer
verified
A

Which factor would tend NOT to increase elasticity of supply?

Correct Answer
verified

Exam 5: Elasticity

The elasticity of supply measures how sensitive the supplycurve is to a change in price.

Correct AnswerverifiedShow Answer

If the price elasticity of demand for a product is 2 in absolutevalue, and the price elasticity of supply for the same product is 1, what is the predicted percent change in price from a 5percent fall in the supply?

Correct AnswerverifiedB

A cross-price elasticity value that is negative will alwaysindicate goods that are substitutes.

Correct AnswerverifiedShow Answer

Tonya consumes 40 steaks a year when her yearly income is$40,000. After her income falls to $35,000 a year, she consumesonly 35 steaks a year. Calculate her income elasticity of demandfor steaks.

Correct AnswerverifiedShow Answer

When the supply curve of slaves is perfectly ________, everyslave bought by the redeemers results in/is ________ held incaptivity.

Correct AnswerverifiedShow Answer

Which of the following explains why local supply tends to bemore elastic than global supply?

Correct AnswerverifiedShow Answer

Which one of the following products would tend to haveinelastic demand?

Correct AnswerverifiedShow Answer

When the demand curve is inelastic, total revenues go down inproportion to a price increase.

Correct AnswerverifiedShow Answer

If the price of Good X rises from $4 to $5, and the quantitydemanded of Good X falls from 200 units to 180 units, the priceelasticity of demand is:

Correct AnswerverifiedShow Answer

If Major League Baseball ticket prices rise by 15 percent, thenumber of tickets sold falls by 5 percent. The elasticity ofdemand is:

Correct AnswerverifiedB

Correct AnswerverifiedShow Answer

Good X and Good Y are related goods. When the price of GoodX rises by 5 percent, the quantity demanded for Good Y risesby 15 percent. Calculate the cross-price elasticity.

Correct AnswerverifiedShow Answer

What happens to revenues when the demand curve is unitelastic and the price changes?

Correct AnswerverifiedShow Answer

If the demand curve is inelastic a price ________ causes a(n) ________ in revenues.

Correct AnswerverifiedShow Answer

If the supply of raw materials is ________, increasing theirproduction leads to ________ per-unit costs.

Correct AnswerverifiedShow Answer

Marge tutors English students-if she raises rates, her revenuesincrease. Brad tutors biology students-if he lowers rates, hisrevenues increase. Which of the following is TRUE?

Correct AnswerverifiedShow Answer

(Figure: Elasticity of Supply) Refer to the figure. Which supplycurve is the most elastic?

Correct AnswerverifiedShow Answer

Suppose that large oil reserves are discovered off the coast ofCuba, and these reserves will increase the world's supply of oilby 2.5 percent. If the elasticity of demand and supply of oil are 0.50 and 0.40, respectively, what happens to the price of oil?

Correct AnswerverifiedShow Answer

If the price of gasoline in this country were expected to rise dueto a permanent increase in the tax on gasoline, which of thefollowing would you expect to happen?

Correct AnswerverifiedA

Which factor would tend NOT to increase elasticity of supply?

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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B

Correct Answer
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Correct Answer
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When the supply curve of slaves is perfectly , everyslave bought by the redeemers results in/is held incaptivity.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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B

Correct Answer
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Correct Answer
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Correct Answer
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If the demand curve is inelastic a price causes a(n) in revenues.

Correct Answer
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If the supply of raw materials is , increasing theirproduction leads to per-unit costs.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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A

Correct Answer
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