Complete Test Bank With Answers
Sample Questions Posted Below
1. Measures of elasticity enhance our ability to study the magnitudes of changes in quantities in response to changes in prices or income.
ANSWER: 
True 
DIFFICULTY: 
Easy 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Knowledge 
CUSTOM ID: 
001.05 – TF – MANK08 

2. Elasticity measures how responsive quantity is to changes in price.
ANSWER: 
True 
DIFFICULTY: 
Easy 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Knowledge 
CUSTOM ID: 
002.05 – TF – MANK08 

3. The price elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price.
ANSWER: 
True 
DIFFICULTY: 
Easy 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Knowledge 
CUSTOM ID: 
003.05 – TF – MANK08 

4. The price elasticity of demand is defined as the percentage change in price divided by the percentage change in quantity demanded.
ANSWER: 
False 
DIFFICULTY: 
Easy 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Knowledge 
CUSTOM ID: 
004.05 – TF – MANK08 

5. The demand for bread is likely to be more elastic than the demand for solidgold bread plates.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.081 – Determine whether a good is more elastic than another according to the determinants that affect the price elasticity of demand. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
005.05 – TF – MANK08 

6. In general, demand curves for necessities tend to be price elastic.
ANSWER: 
False 
DIFFICULTY: 
Easy 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
006.05 – TF – MANK08 

7. In general, demand curves for luxuries tend to be price elastic.
ANSWER: 
True 
DIFFICULTY: 
Easy 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
007.05 – TF – MANK08 

8. Goods with close substitutes tend to have more elastic demands than do goods without close substitutes.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.081 – Determine whether a good is more elastic than another according to the determinants that affect the price elasticity of demand. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
008.05 – TF – MANK08 

9. The demand for Rice Krispies is more elastic than the demand for cereal in general.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.081 – Determine whether a good is more elastic than another according to the determinants that affect the price elasticity of demand. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
009.05 – TF – MANK08 

10. The demand for soap is more elastic than the demand for Dove soap.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.081 – Determine whether a good is more elastic than another according to the determinants that affect the price elasticity of demand. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
010.05 – TF – MANK08 

11. Necessities tend to have inelastic demands, whereas luxuries tend to have elastic demands.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.081 – Determine whether a good is more elastic than another according to the determinants that affect the price elasticity of demand. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
011.05 – TF – MANK08 

12. The demand for desserts tends to be more inelastic than the demand for red velvet cake.
ANSWER: 
True 
DIFFICULTY: 
Easy 
LEARNING OBJECTIVES: 
ECON.MANK.081 – Determine whether a good is more elastic than another according to the determinants that affect the price elasticity of demand. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Knowledge 
CUSTOM ID: 
012.05 – TF – MANK08 

13. Demand is inelastic if the price elasticity of demand is greater than 1.
ANSWER: 
False 
DIFFICULTY: 
Easy 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Knowledge 
CUSTOM ID: 
013.05 – TF – MANK08 

14. Demand for a good is said to be inelastic if the quantity demanded increases substantially when the price falls by a small amount.
ANSWER: 
False 
DIFFICULTY: 
Easy 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Knowledge 
CUSTOM ID: 
014.05 – TF – MANK08 

15. Demand for a good is said to be inelastic if the quantity demanded increases slightly when the price falls by a large amount.
ANSWER: 
True 
DIFFICULTY: 
Easy 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Knowledge 
CUSTOM ID: 
015.05 – TF – MANK08 

16. The demand for gasoline will respond more to a change in price over a period of five weeks than over a period of five years.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.081 – Determine whether a good is more elastic than another according to the determinants that affect the price elasticity of demand. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
016.05 – TF – MANK08 

17. Even the demand for a necessity such as gasoline will respond to a change in price, especially over a longer time horizon.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.081 – Determine whether a good is more elastic than another according to the determinants that affect the price elasticity of demand. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
017.05 – TF – MANK08 

18. Suppose that when the price rises by 20% for a particular good, the quantity demanded of that good falls by 10%. The price elasticity of demand for this good is equal to 2.0.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Analysis 
CUSTOM ID: 
018.05 – TF – MANK08 

19. Suppose that when the price rises by 10% for a particular good, the quantity demanded of that good falls by 20%. The price elasticity of demand for this good is equal to 2.0.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Analysis 
CUSTOM ID: 
019.05 – TF – MANK08 

20. If the price of calculators increases by 15% and the quantity demanded per week falls by 45% as a result, then the price elasticity of demand is 3.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Application 
CUSTOM ID: 
020.05 – TF – MANK08 

21. If we observe that when the price of chocolate increases by 10%, quantity demanded falls by 5%, then the demand for chocolate is price inelastic.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
021.05 – TF – MANK08 

22. If we observe that when the price of chocolate decreases by 10%, quantity demanded increases by 25%, then the demand for chocolate is price elastic.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
022.05 – TF – MANK08 

23. The flatter the demand curve that passes through a given point, the more inelastic the demand.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
023.05 – TF – MANK08 

24. The flatter the demand curve that passes through a given point, the more elastic the demand.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
024.05 – TF – MANK08 

25. A linear, downwardsloping demand curve has a constant elasticity but a changing slope.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
025.05 – TF – MANK08 

26. Price elasticity of demand along a linear, downwardsloping demand curve increases as price falls.
ANSWER: 
False 
DIFFICULTY: 
Challenging 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
026.05 – TF – MANK08 

27. Price elasticity of demand along a linear, downwardsloping demand curve decreases as price falls.
ANSWER: 
True 
DIFFICULTY: 
Challenging 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
027.05 – TF – MANK08 

28. The midpoint method is used to calculate elasticity between two points because it gives the same answer regardless of the direction of the change.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.256 – Given data on demand, calculate the price elasticity of demand using the midpoint method. 
TOPICS: 
Elasticity 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
028.05 – TF – MANK08 

29. An advantage of using the midpoint method to calculate the price elasticity of demand is that it uses the metric system.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.256 – Given data on demand, calculate the price elasticity of demand using the midpoint method. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Application 
CUSTOM ID: 
029.05 – TF – MANK08 

30. If demand is perfectly elastic, the demand curve is horizontal, and the price elasticity of demand equals 1.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
030.05 – TF – MANK08 

31. If demand is perfectly inelastic, the demand curve is vertical, and the price elasticity of demand equals 0.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
031.05 – TF – MANK08 

32. If the price elasticity of demand is equal to 0, then demand is unit elastic.
ANSWER: 
False 
DIFFICULTY: 
Easy 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Knowledge 
CUSTOM ID: 
032.05 – TF – MANK08 

33. If the price elasticity of demand is equal to 1, then demand is unit elastic.
ANSWER: 
True 
DIFFICULTY: 
Easy 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Knowledge 
CUSTOM ID: 
033.05 – TF – MANK08 

34. If we observe that when the price of chocolate increases by 10%, total revenue increases by 10%, then the demand for chocolate is unit price elastic.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.272 – Given data on the price elasticity of demand, identify the effect of a price change on total revenue. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
034.05 – TF – MANK08 

35. Along the elastic portion of a linear demand curve, total revenue rises as price rises.
ANSWER: 
False 
DIFFICULTY: 
Challenging 
LEARNING OBJECTIVES: 
ECON.MANK.272 – Given data on the price elasticity of demand, identify the effect of a price change on total revenue. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
035.05 – TF – MANK08 

36. If a firm is facing elastic demand, then the firm should decrease price to increase revenue.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.272 – Given data on the price elasticity of demand, identify the effect of a price change on total revenue. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Application 
CUSTOM ID: 
036.05 – TF – MANK08 

37. If a firm is facing inelastic demand, then the firm should decrease price to increase revenue.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.272 – Given data on the price elasticity of demand, identify the effect of a price change on total revenue. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Application 
CUSTOM ID: 
037.05 – TF – MANK08 

38. When demand is inelastic, a decrease in price increases total revenue.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.272 – Given data on the price elasticity of demand, identify the effect of a price change on total revenue. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
038.05 – TF – MANK08 

39. The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in income.
ANSWER: 
True 
DIFFICULTY: 
Easy 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Income elasticity of demand 
KEYWORDS: 
BLOOM’S: Knowledge 
CUSTOM ID: 
039.05 – TF – MANK08 

40. The income elasticity of demand is defined as the percentage change in quantity demanded divided by the percentage change in price.
ANSWER: 
False 
DIFFICULTY: 
Easy 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Income elasticity of demand 
KEYWORDS: 
BLOOM’S: Knowledge 
CUSTOM ID: 
040.05 – TF – MANK08 

41. Normal goods have negative income elasticities of demand, while inferior goods have positive income elasticities of demand.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.268 – Given data on the income elasticity of demand, classify a good as either normal or inferior. 
TOPICS: 
Elasticity
Income elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
041.05 – TF – MANK08 

42. If the income elasticity of demand for a good is negative, then the good must be an inferior good.
ANSWER: 
True 
DIFFICULTY: 
Easy 
LEARNING OBJECTIVES: 
ECON.MANK.268 – Given data on the income elasticity of demand, classify a good as either normal or inferior. 
TOPICS: 
Elasticity
Income elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
042.05 – TF – MANK08 

43. If we observe that when consumers’ incomes rise by 10%, the quantity demanded of ice cream increases by 5%, then ice cream is an inferior good.
ANSWER: 
False 
DIFFICULTY: 
Challenging 
LEARNING OBJECTIVES: 
ECON.MANK.268 – Given data on the income elasticity of demand, classify a good as either normal or inferior. 
TOPICS: 
Elasticity
Income elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
043.05 – TF – MANK08 

44. If the crossprice elasticity of demand for two goods is negative, then the two goods are substitutes.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.267 – Given data on the crossprice elasticity of demand, classify two related goods as either substitutes of complements. 
TOPICS: 
Crossprice elasticity of demand
Elasticity 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
044.05 – TF – MANK08 

45. If the crossprice elasticity of demand for two goods is negative, then the two goods are complements.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.267 – Given data on the crossprice elasticity of demand, classify two related goods as either substitutes of complements. 
TOPICS: 
Crossprice elasticity of demand
Elasticity 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
045.05 – TF – MANK08 

46. Crossprice elasticity of demand measures how the quantity demanded of one good changes as the price of another good changes.
ANSWER: 
True 
DIFFICULTY: 
Easy 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Crossprice elasticity of demand
Elasticity 
KEYWORDS: 
BLOOM’S: Knowledge 
CUSTOM ID: 
046.05 – TF – MANK08 

47. Crossprice elasticity is used to determine whether goods are inferior or normal goods.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Crossprice elasticity of demand
Elasticity 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
047.05 – TF – MANK08 

48. Crossprice elasticity is used to determine whether goods are substitutes or complements.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Crossprice elasticity of demand
Elasticity 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
048.05 – TF – MANK08 

49. The crossprice elasticity of garlic salt and onion salt is 2, which indicates that garlic salt and onion salt are substitutes.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.267 – Given data on the crossprice elasticity of demand, classify two related goods as either substitutes of complements. 
TOPICS: 
Crossprice elasticity of demand
Elasticity 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
049.05 – TF – MANK08 

50. The crossprice elasticity of demand for bacon and eggs likely would be negative because bacon and eggs are complements for many people.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.267 – Given data on the crossprice elasticity of demand, classify two related goods as either substitutes of complements. 
TOPICS: 
Crossprice elasticity of demand
Elasticity 
KEYWORDS: 
BLOOM’S: Application 
CUSTOM ID: 
050.05 – TF – MANK08 

51. Supply and demand both tend to be more elastic in the long run and more inelastic in the short run.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
051.05 – TF – MANK08 

52. Price elasticity of supply measures how much the quantity supplied responds to changes in the price.
ANSWER: 
True 
DIFFICULTY: 
Easy 
LEARNING OBJECTIVES: 
ECON.MANK.090 – Evaluate the price elasticity of supply. 
TOPICS: 
Elasticity
Price elasticity of supply 
KEYWORDS: 
BLOOM’S: Knowledge 
CUSTOM ID: 
052.05 – TF – MANK08 

53. If the price elasticity of supply is 2 and the quantity supplied decreases by 6%, then the price must have decreased by 3%.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.090 – Evaluate the price elasticity of supply. 
TOPICS: 
Elasticity
Price elasticity of supply 
KEYWORDS: 
BLOOM’S: Application 
CUSTOM ID: 
053.05 – TF – MANK08 

54. Supply is said to be inelastic if the quantity supplied responds substantially to changes in the price and elastic if the quantity supplied responds only slightly to price.
ANSWER: 
False 
DIFFICULTY: 
Easy 
LEARNING OBJECTIVES: 
ECON.MANK.090 – Evaluate the price elasticity of supply. 
TOPICS: 
Elasticity
Price elasticity of supply 
KEYWORDS: 
BLOOM’S: Knowledge 
CUSTOM ID: 
054.05 – TF – MANK08 

55. Supply tends to be more elastic in the short run and more inelastic in the long run.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.090 – Evaluate the price elasticity of supply. 
TOPICS: 
Elasticity
Price elasticity of supply 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
055.05 – TF – MANK08 

56. When the price of knee braces increased by 25 percent, the Brace Yourself Company increased its quantity supplied of knee braces per week by 75 percent. BYC’s price elasticity of supply of knee braces is 0.33.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.090 – Evaluate the price elasticity of supply. 
TOPICS: 
Elasticity
Price elasticity of supply 
KEYWORDS: 
BLOOM’S: Application 
CUSTOM ID: 
056.05 – TF – MANK08 

57. If a supply curve is horizontal, then supply is said to be perfectly elastic, and the price elasticity of supply approaches infinity.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.090 – Evaluate the price elasticity of supply. 
TOPICS: 
Elasticity
Price elasticity of supply 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
057.05 – TF – MANK08 

58. If we observe that when the price of ice cream rises by 10%, ice cream manufacturers increase the quantity supplied of ice cream by 20%, then the price elasticity of supply is 2.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.090 – Evaluate the price elasticity of supply. 
TOPICS: 
Elasticity
Price elasticity of supply 
KEYWORDS: 
BLOOM’S: Analysis 
CUSTOM ID: 
058.05 – TF – MANK08 

59. If a tshirt manufacturer supplies 1,000 tshirts per week when the price of tshirts is $10 and supplies 1,200 tshirts per week when the price of tshirts is $12, the price elasticity of supply is 2.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.090 – Evaluate the price elasticity of supply. 
TOPICS: 
Elasticity
Price elasticity of supply 
KEYWORDS: 
BLOOM’S: Analysis 
CUSTOM ID: 
059.05 – TF – MANK08 

60. A government program that reduces land under cultivation hurts farmers but helps consumers.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.071 – Determine the effects of an event using the supply and demand model. 
TOPICS: 
Supply and demand 
KEYWORDS: 
BLOOM’S: Application 
CUSTOM ID: 
060.05 – TF – MANK08 

61. A government program that pays farmers not to plant corn on part of their land can help farmers not only through the subsidy payments to farmers who participate in the program but also by raising the market price of corn.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.083 – Determine which basic supply terminology complements the given scenario. 
TOPICS: 
Supply and demand 
KEYWORDS: 
BLOOM’S: Analysis 
CUSTOM ID: 
061.05 – TF – MANK08 

62. A discovery that increases wheat yields per acre hurts farmers by increasing supply and lowering their total revenues.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.272 – Given data on the price elasticity of demand, identify the effect of a price change on total revenue. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Analysis 
CUSTOM ID: 
062.05 – TF – MANK08 

63. A discovery that increases wheat yields per acre helps farmers by increasing both supply and total revenues.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.272 – Given data on the price elasticity of demand, identify the effect of a price change on total revenue. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Analysis 
CUSTOM ID: 
063.05 – TF – MANK08 

64. OPEC failed to maintain a high price of oil in the long run, partly because both the supply of oil and the demand for oil are more elastic in the long run than in the short run.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity 
KEYWORDS: 
BLOOM’S: Application 
CUSTOM ID: 
064.05 – TF – MANK08 

65. The OPEC oil cartel has difficulty maintaining high prices in the long run because the supply of oil is more inelastic in the long run than in the short run.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.090 – Evaluate the price elasticity of supply. 
TOPICS: 
Elasticity
Price elasticity of supply 
KEYWORDS: 
BLOOM’S: Application 
CUSTOM ID: 
065.05 – TF – MANK08 

66. Drug interdiction, which reduces the supply of drugs, may decrease drugrelated crime because the demand for drugs is inelastic.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Application 
CUSTOM ID: 
066.05 – TF – MANK08 

67. Drug interdiction, which reduces the supply of drugs, will likely be a less effective policy than educating consumers to reduce their demand for drugs because the drug interdiction policy will lower drug prices and reduce the quantity of drugs demanded.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.071 – Determine the effects of an event using the supply and demand model. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Application 
CUSTOM ID: 
067.05 – TF – MANK08 

68. A “Just Say No” drug education policy that successfully educates consumers to reduce their demand for drugs will lower drug prices and reduce the quantity of drugs demanded.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.071 – Determine the effects of an event using the supply and demand model. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Application 
CUSTOM ID: 
068.05 – TF – MANK08 

69. Necessities tend to have elastic demands, whereas luxuries tend to have inelastic demands.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.081 – Determine whether a good is more elastic than another according to the determinants that affect the price elasticity of demand. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
069.05 – TF – MANK08 

70. Demand is elastic if the price elasticity of demand is greater than 1.
ANSWER: 
True 
DIFFICULTY: 
Easy 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Knowledge 
CUSTOM ID: 
070.05 – TF – MANK08 

71. If we observe that when the price of chocolate candy bars increases by 10%, quantity demanded decreases total by 10%, then the demand for chocolate candy bars is unit price elastic.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.091 – Evaluate various demand elasticities. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
071.05 – TF – MANK08 

72. If a firm that produces honey is facing elastic demand, then the firm would decrease price to increase revenue.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.272 – Given data on the price elasticity of demand, identify the effect of a price change on total revenue. 
TOPICS: 
Elasticity
Price elasticity of demand 
KEYWORDS: 
BLOOM’S: Application 
CUSTOM ID: 
072.05 – TF – MANK08 

73. Normal goods have positive income elasticities of demand, while inferior goods have negative income elasticities of demand.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.268 – Given data on the income elasticity of demand, classify a good as either normal or inferior. 
TOPICS: 
Elasticity
Income elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
073.05 – TF – MANK08 

74. If we observe that when a consumer’s income rises by 10%, the quantity demanded of chocolate candy bars increases by 15%, then chocolate candy bars are are a normal good for that consumer.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.268 – Given data on the income elasticity of demand, classify a good as either normal or inferior. 
TOPICS: 
Elasticity
Income elasticity of demand 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
074.05 – TF – MANK08 

75. If the crossprice elasticity of demand for two goods is negative, then the two goods are substitutes.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.267 – Given data on the crossprice elasticity of demand, classify two related goods as either substitutes of complements. 
TOPICS: 
Crossprice elasticity of demand
Elasticity 
KEYWORDS: 
BLOOM’S: Comprehension 
CUSTOM ID: 
075.05 – TF – MANK08 

76. If the price elasticity of supply is 0.5 and the quantity supplied decreases by 6%, then the price must have decreased by 3%.
ANSWER: 
False 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.090 – Evaluate the price elasticity of supply. 
TOPICS: 
Elasticity
Price elasticity of supply 
KEYWORDS: 
BLOOM’S: Application 
CUSTOM ID: 
076.05 – TF – MANK08 

77. Helen’s Honey Hut supplies 20 jars of honey per week when the price of honey is $6 per jar and supplies 30 jars per week when the price of is $8 per jar, so the price elasticity of supply over this price range is 1.4.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.090 – Evaluate the price elasticity of supply. 
TOPICS: 
Elasticity
Price elasticity of supply 
KEYWORDS: 
BLOOM’S: Analysis 
CUSTOM ID: 
077.05 – TF – MANK08 

78. A government program that reduces land under cultivation can help farmers by raising prices but hurts consumers.
ANSWER: 
True 
DIFFICULTY: 
Moderate 
LEARNING OBJECTIVES: 
ECON.MANK.071 – Determine the effects of an event using the supply and demand model. 
TOPICS: 
Supply and demand 
KEYWORDS: 
BLOOM’S: Application 
CUSTOM ID: 
078.05 – TF – MANK08 

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