Question 1

After downing three glasses of lemonade on a hot summer afternoon,Todd says,"You would have to pay me to drink another glass!" This statement best illustrates

Accepted Answer

A)  the law of demand.
B)  the substitutability among goods.
C)  the law of diminishing marginal utility.
D)  that chocolate candy bars are an inferior good.E) B) and C)
F) C) and D)

Question 2

If the price elasticity of demand for football tickets is estimated to be 4.5,then a 10 percent increase in football ticket prices would be expected to cause a

Accepted Answer

A)  4.5 percent decrease in quantity demanded.
B)  4.5 percent increase in quantity demanded.
C)  45 percent decrease in quantity demanded.
D)  45 percent increase in quantity demanded.
E)  450 percent increase in quantity demandedF) D) and E)
G) B) and C)

Question 3

You and your college roommate eat three packages of Ramen noodles each week.After graduation last month,both of you were hired at several times your college income.You still enjoy Ramen noodles very much and buy even more,but your roommate plans to buy fewer Ramen noodles in favor of foods she prefers more.When looking at income elasticity of demand for Ramen noodles,

Accepted Answer

A)  yours would be negative and your roommate's would be positive.
B)  yours would be positive and your roommate's would be negative.
C)  yours would be zero and your roommate's would approach infinity.
D)  yours would approach infinity and your roommate's would be zero.E) C) and D)
F) B) and D)

Question 4

Suppose Microsoft announces it is cutting the prices of some of its software titles (mainly games) by 25 percent.Assuming that Microsoft is seeking to increase revenues,it must believe that the elasticity of demand for these products is

Accepted Answer

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

Question 5

Other things equal,the demand for a good tends to be more inelastic when

Accepted Answer

A)  there are fewer available substitutes.
B)  a longer time period is considered.
C)  the good is considered a luxury good.
D)  the market for the good is more narrowly defined.E) A) and B)
F) None of the above

Question 6

Jack,a music major,is perusing Jill's notes for her economics class,where she has written that "total revenues will rise with price rises only if demand is elastic." Jack tells Jill this is nonsense because firms can always increase their revenues by raising price.How should Jill respond?

Accepted Answer

Jill should point out that her statement...

Question 7

Demand will be more elastic when

Accepted Answer

A)  the time the consumer has to adjust to price changes is short.
B)  the price of the good is low.
C)  the number of good substitutes is large.
D)  the consumption of the good is essential.E) B) and C)
F) C) and D)

Question 8

The price of product X increases from $35 to $40,and as a result,the quantity demanded decreases from 250 to 200.Over this price range,

Accepted Answer

A)  demand is elastic.
B)  demand is inelastic.
C)  demand is of unitary elasticity.
D)  there is insufficient information to determine the price elasticity of demand.E) A) and B)
F) B) and C)

Question 9

Sally is on her college golf team and only uses Titleist golf balls.She states: "I don't care what the price is,I will only buy Titleists." Is this a believable assertion?

Accepted Answer

Probably not.While another golf ball mig...

Question 10

If the demand for a product increases as the result of a decline in income,it can be concluded that the

Accepted Answer

A)  product is an inferior good.
B)  demand for the product is inelastic.
C)  price elasticity of demand for the product equals unity.
D)  demand for the product is elastic.E) B) and C)
F) A) and D)

Question 11

When a good is more broadly defined,

Accepted Answer

A)  the more substitutes it has so the more elastic is its demand.
B)  the fewer substitutes it has so the more elastic is its demand.
C)  the more substitutes it has so the less elastic is its demand.
D)  the fewer substitutes it has so the less elastic is its demand.E) All of the above
F) A) and C)

Question 12

Suppose a city that operates local electric and natural gas companies wants to raise revenues by increasing its rates for electricity and natural gas.The price rise will increase city revenues if the elasticity of demand for electricity and natural gas is

Accepted Answer

A)  inelastic.
B)  elastic.
C)  negative.
D)  equal to -1.E) A) and D)
F) A) and C)

Question 13

For a particular good,a 3 percent increase in price causes a 10 percent decrease in quantity demanded.Which of the following statements is most likely applicable to this good?

Accepted Answer

A)  The relevant time horizon is short.
B)  The good is a necessity.
C)  The market for the good is broadly defined.
D)  There are many close substitutes for this good.E) None of the above
F) A) and C)

Question 14

The price elasticity of demand for gasoline measures the

Accepted Answer

A)  responsiveness of gasoline producers to changes in the quality of gasoline.
B)  responsiveness of customers to changes in the price of gasoline.
C)  responsiveness of consumer preferences to changes in the quality of gasoline.
D)  both a and c above.E) A) and D)
F) None of the above

Question 15

If Sarah's income rises by 20 percent,and,as a result,she purchases 40 percent more designer clothing,her income elasticity for designer clothing is

Accepted Answer

A)  0.5.
B)  1.0.
C)  2.0.
D)  Not enough information is given to answer this question.E) All of the above
F) B) and D)

Question 16

Table 7-1
 
-Refer to Table 7-1.When the price of the good is $1.00,the quantity demanded in this market would be

Accepted Answer

A)  42 units.
B)  31 units.
C)  24 units.
D)  14 units.E) All of the above
F) B) and C)

Question 17

All things equal,the price elasticity of supply

Accepted Answer

A)  will be greater in the short run than in the long run.
B)  will be greater in the long run than in the short run.
C)  is the same for the short run and the long run.
D)  approaches zero in the long run.E) C) and D)
F) A) and C)

Question 18

The market demand for an item is

Accepted Answer

A)  the sum of individual demands.
B)  steeper for any given price change than the individual demand curves.
C)  independent of the number of individuals in the market.
D)  determined by dividing the quantity demanded by each individual by the number of individuals in the market.E) B) and C)
F) C) and D)

Question 19

All things equal,the price elasticity of supply

Accepted Answer

A)  will be smaller in the short run than in the long run.
B)  will be smaller in the long run than in the short run.
C)  is the same for the short run and the long run.
D)  approaches zero in the long run.E) B) and D)
F) A) and D)

Question 20

If the price elasticity of demand is computed for two products,and product A measures .79,and product B measures 1.6,then:

Accepted Answer

A)  product A is more price elastic than product B.
B)  product B is more price elastic than product A.
C)  consumers are more sensitive to price changes in product A than in product B.
D)  product B is more price inelastic than product A.
E)  products A and B must be substitutes.F) A) and B)
G) A) and C)

Exam 20: Consumer Choice and Elasticity

Sally is on her college golf team and only uses Titleist golf balls.She states: "I don't care what the price is,I will only buy Titleists." Is this a believable assertion?

Correct Answer
verified
Probably not.While another golf ball mig...
View Answer

When a good is more broadly defined,

Correct Answer
verified

Table 7-1 -Refer to Table 7-1.When the price of the good is $1.00,the quantity demanded in this market would be

Correct Answer
verified

Other things equal,the demand for a good tends to be more inelastic when

Correct Answer
verified

If the demand for a product increases as the result of a decline in income,it can be concluded that the

Correct Answer
verified

If Sarah's income rises by 20 percent,and,as a result,she purchases 40 percent more designer clothing,her income elasticity for designer clothing is

Correct Answer
verified

If the price elasticity of demand is computed for two products,and product A measures .79,and product B measures 1.6,then:

Correct Answer
verified

Suppose a city that operates local electric and natural gas companies wants to raise revenues by increasing its rates for electricity and natural gas.The price rise will increase city revenues if the elasticity of demand for electricity and natural gas is

Correct Answer
verified

The price of product X increases from $35 to $40,and as a result,the quantity demanded decreases from 250 to 200.Over this price range,

Correct Answer
verified

The market demand for an item is

Correct Answer
verified

The price elasticity of demand for gasoline measures the

Correct Answer
verified

All things equal,the price elasticity of supply

Correct Answer
verified

Demand will be more elastic when

Correct Answer
verified

Jack,a music major,is perusing Jill's notes for her economics class,where she has written that "total revenues will rise with price rises only if demand is elastic." Jack tells Jill this is nonsense because firms can always increase their revenues by raising price.How should Jill respond?

Correct Answer
verified
Jill should point out that her statement...
View Answer

Correct Answer
verified

If the price elasticity of demand for football tickets is estimated to be 4.5,then a 10 percent increase in football ticket prices would be expected to cause a

Correct Answer
verified

For a particular good,a 3 percent increase in price causes a 10 percent decrease in quantity demanded.Which of the following statements is most likely applicable to this good?

Correct Answer
verified

After downing three glasses of lemonade on a hot summer afternoon,Todd says,"You would have to pay me to drink another glass!" This statement best illustrates

Correct Answer
verified

Suppose Microsoft announces it is cutting the prices of some of its software titles (mainly games) by 25 percent.Assuming that Microsoft is seeking to increase revenues,it must believe that the elasticity of demand for these products is

Correct Answer
verified

All things equal,the price elasticity of supply

Correct Answer
verified

Exam 20: Consumer Choice and Elasticity

Sally is on her college golf team and only uses Titleist golf balls.She states: "I don't care what the price is,I will only buy Titleists." Is this a believable assertion?

Correct AnswerverifiedProbably not.While another golf ball mig...View AnswerShow Answer

When a good is more broadly defined,

Correct AnswerverifiedShow Answer

Table 7-1 -Refer to Table 7-1.When the price of the good is $1.00,the quantity demanded in this market would be

Correct AnswerverifiedShow Answer

Other things equal,the demand for a good tends to be more inelastic when

Correct AnswerverifiedShow Answer

If the demand for a product increases as the result of a decline in income,it can be concluded that the

Correct AnswerverifiedShow Answer

If Sarah's income rises by 20 percent,and,as a result,she purchases 40 percent more designer clothing,her income elasticity for designer clothing is

Correct AnswerverifiedShow Answer

If the price elasticity of demand is computed for two products,and product A measures .79,and product B measures 1.6,then:

Correct AnswerverifiedShow Answer

Suppose a city that operates local electric and natural gas companies wants to raise revenues by increasing its rates for electricity and natural gas.The price rise will increase city revenues if the elasticity of demand for electricity and natural gas is

Correct AnswerverifiedShow Answer

The price of product X increases from $35 to $40,and as a result,the quantity demanded decreases from 250 to 200.Over this price range,

Correct AnswerverifiedShow Answer

The market demand for an item is

Correct AnswerverifiedShow Answer

The price elasticity of demand for gasoline measures the

Correct AnswerverifiedShow Answer

All things equal,the price elasticity of supply

Correct AnswerverifiedShow Answer

Demand will be more elastic when

Correct AnswerverifiedShow Answer

Jack,a music major,is perusing Jill's notes for her economics class,where she has written that "total revenues will rise with price rises only if demand is elastic." Jack tells Jill this is nonsense because firms can always increase their revenues by raising price.How should Jill respond?

Correct AnswerverifiedJill should point out that her statement...View AnswerShow Answer

Correct AnswerverifiedShow Answer

If the price elasticity of demand for football tickets is estimated to be 4.5,then a 10 percent increase in football ticket prices would be expected to cause a

Correct AnswerverifiedShow Answer

For a particular good,a 3 percent increase in price causes a 10 percent decrease in quantity demanded.Which of the following statements is most likely applicable to this good?

Correct AnswerverifiedShow Answer

After downing three glasses of lemonade on a hot summer afternoon,Todd says,"You would have to pay me to drink another glass!" This statement best illustrates

Correct AnswerverifiedShow Answer

Suppose Microsoft announces it is cutting the prices of some of its software titles (mainly games) by 25 percent.Assuming that Microsoft is seeking to increase revenues,it must believe that the elasticity of demand for these products is

Correct AnswerverifiedShow Answer

All things equal,the price elasticity of supply

Correct AnswerverifiedShow Answer

Correct Answer
verified
Probably not.While another golf ball mig...
View Answer

Correct Answer
verified

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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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
verified
Jill should point out that her statement...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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