Filters
Question type
Study Flashcards

If a firm wanted to know whether the demand for its product was elastic, unit elastic, or inelastic, then the firm could


A) survey competitors and ask them what they think demand elasticity is for the product.
B) talk to its customers.
C) change price a little bit and observe what happens to total revenue.
D) not do anything as there is no way to find an elasticity value.

E) A) and D)
F) B) and C)

Correct Answer

verifed

verified

Suppose at the current price, the demand for copper is estimated at -3.14.What happens to sales revenue if the government imposes a price ceiling below the free market equilibrium price in the copper market?


A) Sales revenue falls.
B) Sales revenue rises.
C) Sales revenue remains unchanged because copper is a necessity for most industries.
D) It cannot be determined without information on prices.

E) All of the above
F) A) and D)

Correct Answer

verifed

verified

Economists use the concept of ________ to measure how one economic variable, such as quantity, responds to a change in another economic variable, such as price.


A) slope
B) efficiency
C) relativity
D) elasticity

E) B) and D)
F) All of the above

Correct Answer

verifed

verified

Suppose the demand for milk is relatively inelastic.What happens to sales revenue if the government imposes a price floor above the free-market equilibrium price in the market for milk?


A) Sales revenue falls.
B) Sales revenue rises.
C) Sales revenue remains unchanged.
D) It cannot be determined without information on prices.

E) A) and B)
F) B) and D)

Correct Answer

verifed

verified

When the price of tortilla chips rose by 10 percent, the quantity of tortilla chips sold fell 4 percent, and the sale of dips (like salsa and bean dip) fell 8 percent.This set of facts indicates that the cross-price elasticity between tortilla chips and dips is ________, so the two are ________.


A) 0.8; substitutes
B) -0.4; complements
C) -0.8; complements
D) 0.4; substitutes

E) A) and C)
F) None of the above

Correct Answer

verifed

verified

Figure 6-8 Figure 6-8 -Refer to Figure 6-8.Identify the two goods which are complements. A) Good X and Good Y B) Good Y and Good Z C) Good X and Good Z D) It is not possible to distinguish any relationship among the goods. -Refer to Figure 6-8.Identify the two goods which are complements.


A) Good X and Good Y
B) Good Y and Good Z
C) Good X and Good Z
D) It is not possible to distinguish any relationship among the goods.

E) A) and B)
F) All of the above

Correct Answer

verifed

verified

Figure 6-11 Figure 6-11 -Refer to Figure 6-11.What is the value of the price elasticity of supply between g and h? A) 20 percent B) 0.5 C) 2 D) 0.02 -Refer to Figure 6-11.What is the value of the price elasticity of supply between g and h?


A) 20 percent
B) 0.5
C) 2
D) 0.02

E) All of the above
F) C) and D)

Correct Answer

verifed

verified

Which of the following statements is true?


A) In general, if a product has few substitutes it will have an elastic demand.
B) The more time that passes the more inelastic the demand for a product becomes.
C) The demand curve for a necessity is more elastic than the demand curve for a luxury.
D) The more narrowly we define a market, the more elastic the demand for a product will be.

E) All of the above
F) C) and D)

Correct Answer

verifed

verified

Suppose that the price of a money clip increases from $0.75 to $0.90 and quantity supplied rises from 8,000 units to 10,000 units.Use the midpoint formula to calculate the price elasticity of supply.


A) 1.22
B) 1.0
C) 0.82
D) 0.07

E) B) and C)
F) C) and D)

Correct Answer

verifed

verified

Assume that a 50 percent gasoline tax led to a large increase in its price and only a small decrease in the quantity of gasoline demanded.Economic analysis would lead one to conclude that


A) gasoline should be taxed because the benefits of the tax would exceed the costs.
B) gasoline should not be taxed because the benefits are uncertain.
C) gasoline should not be taxed on ethical grounds since ethical benefits and costs can't be measured.
D) the benefits of taxing gasoline is a normative issue. Economic analysis can be used to contribute to discussion of this issue but cannot decide it.

E) A) and D)
F) A) and C)

Correct Answer

verifed

verified

Table 6-8 Table 6-8 The town of Bloomfield is well known for its basketball team.The price of basketball game tickets is determined by market forces.Table 6-8 above shows the demand and supply schedules for basketball games tickets. -Refer to Table 6-8.What is the numerical value of the price elasticity of supply? A) 1 B) greater than 0 but less than 1 C) 0 D) greater than 1 The town of Bloomfield is well known for its basketball team.The price of basketball game tickets is determined by market forces.Table 6-8 above shows the demand and supply schedules for basketball games tickets. -Refer to Table 6-8.What is the numerical value of the price elasticity of supply?


A) 1
B) greater than 0 but less than 1
C) 0
D) greater than 1

E) A) and B)
F) All of the above

Correct Answer

verifed

verified

The cross-price elasticity of demand measures the


A) absolute change in the quantity demanded of one good divided by the absolute change in the price of another good.
B) percentage change in the quantity demanded of one good divided by the percentage change in the price of another good.
C) percentage change in the price of one good divided by the percentage change in the quantity demanded of another good.
D) percentage change in the quantity demanded of one good in one location divided by the price of the same good in another location.

E) A) and B)
F) C) and D)

Correct Answer

verifed

verified

Using cross-sectional data from the two Housing Assistance Supply Experiment (HASE) sites--Brown County, Wisconsin, and St.Joseph County, Indiana-- John Mulford of Rand Research estimates the long-run "permanent" income elasticity of housing expenditures to be 0.45 for owners.Using this information, what is likely to happen to housing expenditures if the government increases income transfers to recipients in HASE sites?


A) Housing expenditures will increase significantly.
B) Housing expenditures in HASE sites will fall significantly as recipients move out of these areas to higher-income areas.
C) Housing expenditures will increase, but not significantly.
D) Housing expenditures will decrease by a small amount.

E) A) and B)
F) A) and C)

Correct Answer

verifed

verified

If the demand for a product is perfectly inelastic, a decrease in the price of the product


A) will increase total revenue.
B) will decrease total revenue.
C) will not change total revenue.
D) any of the above are possible.

E) A) and C)
F) B) and C)

Correct Answer

verifed

verified

If the cross-price elasticity of demand for goods A and B is zero, this means the two goods are unrelated.

A) True
B) False

Correct Answer

verifed

verified

Suppose you are considering buying stock in the stock market, and your objective is to maximize your net worth.Furthermore, your study of the market reveals that the economy will be slowing down over the next several months.Under these conditions, it would be best to purchase stock in companies that produce


A) normal goods.
B) luxury goods.
C) inferior goods.
D) price elastic goods.

E) None of the above
F) C) and D)

Correct Answer

verifed

verified

With the increased usage of cell phone services, what has happened to the price elasticity of demand for land-line telephone services?


A) It has become more price inelastic.
B) It has become more price elastic.
C) It has become more income elastic.
D) The absolute value of the price elasticity coefficient has probably gone down.

E) A) and B)
F) None of the above

Correct Answer

verifed

verified

Supply is elastic whenever the value of the elasticity of supply is positive and greater than 1.

A) True
B) False

Correct Answer

verifed

verified

Suppose the supply curve for digital cameras shifts to the right.This will cause a relatively large decrease in the price of digital cameras if both demand and supply are inelastic.

A) True
B) False

Correct Answer

verifed

verified

If demand is perfectly elastic, the absolute value of the price elasticity coefficient is


A) infinity.
B) zero.
C) one.
D) equal to the absolute value of the slope of the demand curve.

E) A) and B)
F) All of the above

Correct Answer

verifed

verified

Showing 181 - 200 of 295

Related Exams

Exam 1

Economics: Foundations and Models

234 Questions

Exam 2

Trade-Offs, Comparative Advantage, and the Market System

258 Questions

Exam 3

Where Prices Come From: the Interaction of Demand and Supply

242 Questions

Exam 4

Economic Efficiency, Government Price Setting, and Taxes

208 Questions

Exam 5

Externalities, Environmental Policy, and Public Goods

263 Questions

Exam 7

The Economics of Health Care

171 Questions

Exam 8

Firms, the Stock Market, and Corporate Governance

264 Questions

Exam 9

Comparative Advantage and the Gains From International Trade

188 Questions

Exam 10

Consumer Choice and Behavioral Economics

300 Questions

Exam 11

Technology, Production, and Costs

328 Questions

Exam 12

Firms in Perfectly Competitive Markets

296 Questions

Exam 13

Monopolistic Competition: the Competitive Model in a More Realistic Setting

274 Questions

Exam 14

Oligopoly: Firms in Less Competitive Markets

259 Questions

Exam 15

Monopoly and Antitrust Policy

279 Questions

Exam 16

Pricing Strategy

261 Questions

Exam 17

The Markets for Labor and Other Factors of Production

281 Questions

Exam 18

Public Choice, Taxes, and the Distribution of Income

258 Questions

Show Answer