Question 1

Whenever the elasticity value for a demand curve is greater than zero, then the demand is labeled as "elastic."

Accepted Answer

A) True 
 B)False

Question 2

Elasticity computations related to demand carry a minus sign to show that the demand curve is negatively sloped.

Accepted Answer

A) True 
 B)False

Question 3

The price elasticity of a vertical demand curve is always

Accepted Answer

A)  infinitely large.
B)  zero.
C)  one.
D)  increasing as price increases.E) C) and D)
F) B) and C)

Question 4

Figure 6-2 
-Using Figure 6-2, calculate the price elasticity of demand (dropping all minus signs)  between P = 4 and P = 6.

Accepted Answer

A)  3.0
B)  0.33
C)  0.40
D)  1.25E) All of the above
F) None of the above

Question 5

Figure 6-5 
-If the demand curve in Figure 6-5 is unit elastic, then total expenditure at A is ____ total expenditure at B.

Accepted Answer

A)  greater than
B)  less than
C)  equal to
D)  less elastic thanE) All of the above
F) C) and D)

Question 6

Along a perfectly elastic demand curve,

Accepted Answer

A)  the slope is always zero.
B)  the price elasticity of demand is 1.
C)  consumer purchases will not respond at all to a change in price.
D)  All of the responses are correct..E) A) and B)
F) B) and D)

Question 7

Two economists from Ohio University estimated that the demand curve for kerosene in Indonesia was such that a 10 percent increase in the price reduced the quantity demanded by 2.2 percent and that a 10 percent increase in the price of electricity increased the demand for kerosene by 1.6 percent.This indicates that (i)  the demand for kerosene is price inelastic and (ii)  kerosene and electricity are substitutes.Which of these two statements is correct?

Accepted Answer

A)  i and ii
B)  i not ii
C)  ii not i
D)  neither i nor iiE) A) and B)
F) All of the above

Question 8

Elasticity

Accepted Answer

A)  deals with percentage changes in price and quantity demanded.
B)  employs percentage changes calculated in terms of average values of the prices and quantities at issue.
C)  is generally stated in absolute value.
D)  All of the responses are correct.E) B) and C)
F) C) and D)

Question 9

If the price elasticity of demand for radios is 2.5 (dropping the minus sign) , then a 50 percent reduction in the price of radios will lead to

Accepted Answer

A)  the sale of 200 additional radios.
B)  the sale of 125 percent more radios than before.
C)  the sale of 150 percent more radios than before.
D)  the sale of 25 percent more radios than before.E) B) and C)
F) All of the above

Question 10

Using historical statistics is likely to produce accurate estimates of demand curves since such studies have large amounts of data to draw on.

Accepted Answer

A) True 
 B)False

Question 11

A good will tend to be more price elastic if it

Accepted Answer

A)  is a luxury good.
B)  has no close substitutes.
C)  is a small part of the household budget.
D)  is a necessity.E) B) and C)
F) A) and B)

Question 12

John's Bait Shop was surprised to learn that when it raised prices by 10 percent, total revenue was unaffected.This is because the elasticity for bait is

Accepted Answer

A)  unit elastic.
B)  inelastic.
C)  elastic.
D)  Not enough information is given.E) A) and C)
F) A) and B)

Question 13

If the marginal cost of producing vanity license plates is virtually zero (by prison inmates with little else to do) , then states would maximize their profits on plate sales at the point on a linear demand curve where

Accepted Answer

A)  demand is inelastic.
B)  demand is elastic.
C)  demand is unit elastic.
D)  the demand curve crosses the horizontal axis.E) A) and D)
F) All of the above

Question 14

Figure 6-4 
-Based on Figure 6-4, it can be determined that total expenditure ____ as price falls from P = 6 to P = 4.

Accepted Answer

A)  falls
B)  remains constant
C)  rises
D)  rises by more than $12E) C) and D)
F) None of the above

Question 15

For each pair of goods, explain which is more elastic: toothpicks vs.cars; electricity vs.yachts; IBM computers vs.Apple computers.

Accepted Answer

The more elastic are cars, yachts, and I...

Question 16

The demand for potatoes at current prices is likely to be

Accepted Answer

A)  elastic.
B)  inelastic.
C)  unit elastic.
D)  perfectly elastic.E) All of the above
F) A) and C)

Question 17

As one moves down a straight-line demand curve away from the vertical axis, demand becomes less elastic and then inelastic.

Accepted Answer

A) True 
 B)False

Question 18

If demand is elastic, an increase in price will decrease total revenue.

Accepted Answer

A) True 
 B)False

Question 19

When Johanna cut prices in her jewelry store by 20 percent, the dollar value of her sales fell by 20 percent.This indicates that

Accepted Answer

A)  demand was elastic.
B)  demand was inelastic.
C)  demand was unit elastic.
D)  the demand curve was vertical.E) B) and C)
F) None of the above

Question 20

If there are many close substitutes available for a good, its elasticity of demand will be higher.

Accepted Answer

A) True 
 B)False

Exam 6: Demand and Elasticity

Figure 6-4 -Based on Figure 6-4, it can be determined that total expenditure ____ as price falls from P = 6 to P = 4.

Correct Answer
verified

Correct Answer
verified

If demand is elastic, an increase in price will decrease total revenue.

Correct Answer
verified

Along a perfectly elastic demand curve,

Correct Answer
verified

John's Bait Shop was surprised to learn that when it raised prices by 10 percent, total revenue was unaffected.This is because the elasticity for bait is

Correct Answer
verified

Elasticity computations related to demand carry a minus sign to show that the demand curve is negatively sloped.

Correct Answer
verified

Elasticity

Correct Answer
verified

A good will tend to be more price elastic if it

Correct Answer
verified

If there are many close substitutes available for a good, its elasticity of demand will be higher.

Correct Answer
verified

As one moves down a straight-line demand curve away from the vertical axis, demand becomes less elastic and then inelastic.

Correct Answer
verified

The demand for potatoes at current prices is likely to be

Correct Answer
verified

Using historical statistics is likely to produce accurate estimates of demand curves since such studies have large amounts of data to draw on.

Correct Answer
verified

The price elasticity of a vertical demand curve is always

Correct Answer
verified

Figure 6-2 -Using Figure 6-2, calculate the price elasticity of demand (dropping all minus signs) between P = 4 and P = 6.

Correct Answer
verified

If the price elasticity of demand for radios is 2.5 (dropping the minus sign) , then a 50 percent reduction in the price of radios will lead to

Correct Answer
verified

When Johanna cut prices in her jewelry store by 20 percent, the dollar value of her sales fell by 20 percent.This indicates that

Correct Answer
verified

Figure 6-5 -If the demand curve in Figure 6-5 is unit elastic, then total expenditure at A is ____ total expenditure at B.

Correct Answer
verified

For each pair of goods, explain which is more elastic: toothpicks vs.cars; electricity vs.yachts; IBM computers vs.Apple computers.

Correct Answer
verified
The more elastic are cars, yachts, and I...
View Answer

If the marginal cost of producing vanity license plates is virtually zero (by prison inmates with little else to do) , then states would maximize their profits on plate sales at the point on a linear demand curve where

Correct Answer
verified

Whenever the elasticity value for a demand curve is greater than zero, then the demand is labeled as "elastic."

Correct Answer
verified

Exam 6: Demand and Elasticity

Figure 6-4 -Based on Figure 6-4, it can be determined that total expenditure ____ as price falls from P = 6 to P = 4.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If demand is elastic, an increase in price will decrease total revenue.

Correct AnswerverifiedShow Answer

Along a perfectly elastic demand curve,

Correct AnswerverifiedShow Answer

John's Bait Shop was surprised to learn that when it raised prices by 10 percent, total revenue was unaffected.This is because the elasticity for bait is

Correct AnswerverifiedShow Answer

Elasticity computations related to demand carry a minus sign to show that the demand curve is negatively sloped.

Correct AnswerverifiedShow Answer

Elasticity

Correct AnswerverifiedShow Answer

A good will tend to be more price elastic if it

Correct AnswerverifiedShow Answer

If there are many close substitutes available for a good, its elasticity of demand will be higher.

Correct AnswerverifiedShow Answer

As one moves down a straight-line demand curve away from the vertical axis, demand becomes less elastic and then inelastic.

Correct AnswerverifiedShow Answer

The demand for potatoes at current prices is likely to be

Correct AnswerverifiedShow Answer

Using historical statistics is likely to produce accurate estimates of demand curves since such studies have large amounts of data to draw on.

Correct AnswerverifiedShow Answer

The price elasticity of a vertical demand curve is always

Correct AnswerverifiedShow Answer

Figure 6-2 -Using Figure 6-2, calculate the price elasticity of demand (dropping all minus signs) between P = 4 and P = 6.

Correct AnswerverifiedShow Answer

If the price elasticity of demand for radios is 2.5 (dropping the minus sign) , then a 50 percent reduction in the price of radios will lead to

Correct AnswerverifiedShow Answer

When Johanna cut prices in her jewelry store by 20 percent, the dollar value of her sales fell by 20 percent.This indicates that

Correct AnswerverifiedShow Answer

Figure 6-5 -If the demand curve in Figure 6-5 is unit elastic, then total expenditure at A is ____ total expenditure at B.

Correct AnswerverifiedShow Answer

For each pair of goods, explain which is more elastic: toothpicks vs.cars; electricity vs.yachts; IBM computers vs.Apple computers.

Correct AnswerverifiedThe more elastic are cars, yachts, and I...View AnswerShow Answer

If the marginal cost of producing vanity license plates is virtually zero (by prison inmates with little else to do) , then states would maximize their profits on plate sales at the point on a linear demand curve where

Correct AnswerverifiedShow Answer

Whenever the elasticity value for a demand curve is greater than zero, then the demand is labeled as "elastic."

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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The more elastic are cars, yachts, and I...
View Answer

Correct Answer
verified

Correct Answer
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