Pay And Download
Complete Test Bank With Answers
Sample Questions Posted Below
1. A
_______
demand curve has a price elasticity of demand that is perfectly elastic.
a. vertical
b. rectangular hyperbola
c. horizontal
d. circular
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: ECON.16.5.5
–
NATIONAL STANDARDS: United States
–
Identify a demand curve as perfectly elastic or perfectly inelastic.
Analytic
–
BB-Legal
TOPICS: Price Elasticity of Demand
KEYWORDS: Knowledge
2. Suppose that a jewelry store found that when it increased prices by 10 percent, sales revenue increased by 3 percent.
Which of the following is true about the price elasticity of demand for the store’s goods?
a. Demand is perfectly inelastic.
b. Demand is inelastic, but not perfectly.
c. Demand is unitary classic.
d. Demand is elastic, but not perfectly.
e. Demand is perfectly elastic.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: ECON.16.5.5
NATIONAL STANDARDS: United States
–
–
Identify a demand curve as perfectly elastic or perfectly inelastic.
BB-Legal
Analytic
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: SA
–
3. Suppose the Pleasant Corporation cuts the price of its American Girl dolls by 10 percent, and as a result, the quantity of
the dolls sold increases by 25 percent. This indicates that the price elasticity of demand for the dolls over this range is:
a. 2.5.
b. 0.4.
c. 0.5.
d. 5.0.
ANSWER: a
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Reflective Thinking
S:
TOPICS: Price elasticity of demand
KEYWORDS: Application
OTHER: SA
Given data on demand, calculate the price elasticity of demand using the4. Suppose that Starbucks reduces the price of its premium coffee from $2.20 to $1.80 per cup, and as a result, the
quantity sold per day increased from 350 to 450. Over this price range, the price elasticity of demand for Starbucks coffee
is:
a. 0.40.
b. 0.80.
c. 1.25.
d. 2.50.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Reflective Thinking
S:
TOPICS: Price elasticity of demand
KEYWORDS: Application
OTHER: CA
Given data on demand, calculate the price elasticity of demand using the
5. Suppose you are the manager of a local water company, and you are instructed to get consumers to reduce their water
consumption by 10 percent. If the price elasticity of demand for water is 0.25, by how much would you have to raise the
price of water?
a. 10 percent
b. 25 percent
c. 40 percent
d. 100 percent
ANSWER: c
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
NATIONAL STANDAR
United States
–
Analytic
–
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Application
OTHER: CA
Given data on the price elasticity of demand, identify the effect of a price change
BB-Legal
6. Suppose you are on a committee seeking to increase revenue from your city’s bus system. If demand is _______, you
would recommend raising the fare.
a. perfectly elastic
b. elastic
c. unitary elastic
d. inelastic
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price changeNATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price Elasticity of Demand
KEYWORDS: Comprehension
7. A
_______
demand curve has a price elasticity of demand that is perfectly inelastic.
a. circular
b. horizontal
c. rectangular hyperbola
d. vertical
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: ECON.16.5.5
–
NATIONAL STANDARDS: United States
–
Identify a demand curve as perfectly elastic or perfectly inelastic.
Analytic
–
BB-Legal
TOPICS: Price Elasticity of Demand
KEYWORDS: Knowledge
8.
If the quantity of bread demanded rises 2 percent when the price of bread declines 10 percent, then the price elasticity of
demand is:
a. 0.2.
b. 1.
c. 2.
d. 10.
e. Cannot be determined.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Reflective Thinking
Given data on demand, calculate the price elasticity of demand using the
S:
TOPICS: Price Elasticity of Demand
KEYWORDS: Application
9. Suppose an increase in symphony tickets prices reduces the total revenue. This is evidence that demand is:
a. price elastic.
b. price inelastic.
c. unitary elastic.
d. perfectly elastic.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price changeNATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: SA
10. An increase in total revenue results occurs from which of the following?
a. Price decreases when demand is inelastic.
b. Price increases when demand is elastic.
c. Price decreases when demand is elastic.
d. ANSWER: c
Price increases when demand is unitary elastic.
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: SA
11. If the quantity demanded increases by 20 percent in response to a 10 percent decrease in price, demand is classified as:
a. unstable.
b. relatively inelastic.
c. relatively elastic.
d. of unitary elasticity.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECT
ECON.16.5.4
–
Given data on the price elasticity of demand, identify a region of the demand curve
IVES:
as elastic, inelastic, or unit elastic.
NATIONAL STANDA
United States
–
Analytic
–
BB-Legal
RDS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: SA
12. A local Krispy Kreme doughnut shop reduced the price of its doughnuts from $4 per dozen to $3.50 per dozen, and as
a result, the daily sales increased from 300 to 400 dozen. This indicates that the price elasticity of demand for the
doughnuts was:
a. elastic.
b. inelastic.
c. of unitary elasticity.
d. indeterminate; more information is needed to determine the price elasticity of demand.
ANSWER: a
POINTS: 1DIFFICULTY: Difficult
LEARNING OBJECT
ECON.16.5.4
–
Given data on the price elasticity of demand, identify a region of the demand curve
IVES:
as elastic, inelastic, or unit elastic.
NATIONAL STANDA
United States
–
Analytic
–
BB-Legal
RDS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: CA
13. If a demand curve for a good were completely vertical, it would be considered:
a. perfectly elastic.
b. perfectly inelastic.
c. of unitary elasticity.
d. relatively inelastic.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: ECON.16.5.5
–
Identify a demand curve as perfectly elastic or perfectly inelastic.
NATIONAL STANDARDS: United States
–
Analytic
–
BB-Legal
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: SA
14. If the demand for cigarettes is highly inelastic, this indicates that:
a. higher cigarette prices will increase the demand for cigarettes.
b. the price elasticity coefficient of cigarettes exceeds 1.
c. the price elasticity coefficient of cigarettes equals 1.
d. the quantity of cigarettes purchased by consumers is not very responsive to a change in the price of cigarettes.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJEC
ECON.16.5.1
–
Determine whether a good is more elastic than another according to the determinants
TIVES:
that affect the price elasticity of demand.
NATIONAL STAND
United States
–
Analytic
–
BB-Legal
ARDS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
15. The price elasticity of demand for gasoline measures the:
a. b. c. d. responsiveness of gasoline producers to changes in the quality of gasoline.
responsiveness of customers to changes in the price of gasoline.
responsiveness of consumer preferences to changes in the quality of gasoline.
both a and c above.
ANSWER: b
POINTS: 1DIFFICULTY: Easy
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
16. When demand is price inelastic:
a. b. c. d. price and total revenue move in the same direction.
price and total revenue move in the opposite direction.
total revenue increases whether price goes up or down.
total revenue decreases whether price goes up or down.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
17. If demand is inelastic, an increase in the price of a good will cause total revenue to:
a. fall.
b. remain constant since the decrease in quantity sold is exactly offset by the price increase.
c. rise.
d. rise if it is a normal good and fall if it is an inferior good.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: RE
18. Price elasticity of demand refers to the ratio of the:
a. percentage change in price of a good in response to a percentage change in quantity demanded.
b. percentage change in price of a good to a percentage increase in income.
c. percentage change in the quantity demanded of a good to a percentage change in its price.
d. none of the above.
ANSWER: cPOINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Given data on demand, calculate the price elasticity of demand using the
Analytic
–
BB-Legal
S:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
19. Price elasticity of demand is defined as the ratio of the:
a. percentage increase in price to an increase in quantity demanded.
b. unit change in quantity demanded to the dollar change in price.
c. maximum amount that consumers will pay to increase quantity.
d. percentage change in quantity demanded to the percentage change in price, other things being equal.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVE
ECON.16.5.2
–
Given data on demand, calculate the price elasticity of demand using the
S:
midpoint method.
NATIONAL STANDARD
United States
–
Analytic
–
BB-Legal
S:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
20. Price elasticity of demand refers to the:
a. percentage increase in price in response to a percentage increase in quantity demanded.
b. percentage decrease in price in response to a percentage increase in income.
c. minimum amount that consumers will pay for a percentage change in quantity demanded or supplied.
d. responsiveness of quantity demanded to a change in the price of a good.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVE
ECON.16.5.2
–
Given data on demand, calculate the price elasticity of demand using the
S:
midpoint method.
NATIONAL STANDARD
United States
–
Analytic
–
BB-Legal
S:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
21. If demand is price elastic, a decrease in price causes:
a. an increase in total revenue.
b. c. d. a decrease in total revenue.
no change in total revenue.
an increase in quantity, but anything can happen to revenue.ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: SA
22. If a decrease in the price of movie tickets increases the total revenue of movie theaters, this is evidence that demand is:
a. price elastic.
b. price inelastic.
c. unit elastic with respect to price.
d. perfectly inelastic.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: RE
23. A perfectly elastic demand curve has an elasticity coefficient of:
a. 0.
b. 1.
c. less than 1.
d. infinity.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Given data on demand, calculate the price elasticity of demand using the
Analytic
–
BB-Legal
S:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
24. Over the elastic portion of a demand curve, a decrease in price causes:
a. an increase in total revenue.
b. c. a decrease in total revenue.
no change in total revenue.d. an increase in quantity demanded, but anything can happen to revenue.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
25. Using the midpoints formula, what would be price elasticity of demand for a gallbladder operation if the number of
operations fell from 6,000 to 4,000 per week after its price increased from $6,000 to $10,000?
a. 0.25.
b. 0.50.
c. 0.80.
d. 1.25
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Reflective Thinking
Given data on demand, calculate the price elasticity of demand using the
S:
TOPICS: Price elasticity of demand
KEYWORDS: Application
OTHER: SA
26. If the percentage change in the quantity demanded of a good is less than the percentage change in price, price
elasticity of demand is:
a. elastic.
b. inelastic.
c. perfectly inelastic.
d. unitary elastic.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJEC
TIVES:
ECON.16.5.1
–
Determine whether a good is more elastic than another according to the determinants
that affect the price elasticity of demand.
NATIONAL STAND
United States
–
Analytic
–
BB-Legal
ARDS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
27. If the percentage change in the quantity demanded of a good is greater than the percentage change in price, priceelasticity of demand is:
a. elastic.
b. inelastic.
c. perfectly inelastic.
d. perfectly elastic.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJEC
TIVES:
ECON.16.5.1
–
Determine whether a good is more elastic than another according to the determinants
that affect the price elasticity of demand.
NATIONAL STAND
United States
–
Analytic
–
BB-Legal
ARDS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
28. If the percentage change in the quantity demanded of a good equals the percentage change in price, price elasticity of
demand is:
a. elastic.
b. inelastic.
c. perfectly elastic.
d. unitary elastic.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJEC
TIVES:
ECON.16.5.1
–
Determine whether a good is more elastic than another according to the determinants
that affect the price elasticity of demand.
NATIONAL STAND
United States
–
Analytic
–
BB-Legal
ARDS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
29. Along the elastic range of a demand curve, a decrease in price causes:
a. b. no change in total revenue.
a decrease in total revenue.
c. an increase in total revenue.
d. an unpredictable change in total revenue.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: KnowledgeOTHER: SA
30. If a decrease in the price of theater tickets increases the total revenue earned by the theater, this is evidence that
demand is:
a. price elastic.
b. price inelastic.
c. unitary elastic.
d. perfectly inelastic.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
NATIONAL STANDAR
United States
–
Analytic
–
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: SA
Given data on the price elasticity of demand, identify the effect of a price change
BB-Legal
31. Along the elastic range of a demand curve, a price change causes:
a. a change in total revenue in the opposite direction.
b. a change in total revenue in the same direction.
c. no change in total revenue.
d. an unpredictable change in the total revenue.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: SA
32. Suppose the president of a college argues that a 25 percent tuition increase will raise revenues for the college. It can be
concluded that the president thinks that demand to attend this college is:
a. elastic.
b. inelastic, but not perfectly inelastic.
c. unitary elastic.
d. perfectly elastic.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price changeNATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Analysis
OTHER: CA
33. Suppose Good Food’s supermarket raises the price of its steak and finds its total revenue from steak sales does not
change. This is evidence that price elasticity of demand for steak is:
a. perfectly elastic.
b. perfectly inelastic.
c. unitary elastic.
d. inelastic.
e. elastic.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: SA
–
BB-Legal
34. The price elasticity of demand for a vertical demand curve is:
a. perfectly elastic.
b. perfectly inelastic.
c. unitary elastic.
d. elastic.
e. inelastic.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: ECON.16.5.5
–
NATIONAL STANDARDS: United States
–
Identify a demand curve as perfectly elastic or perfectly inelastic.
Analytic
–
BB-Legal
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
35. The president of Tucker Motors says, “Lowering the price won’t sell a single additional Tucker car.” The president
believes that the price elasticity of demand is:
a. perfectly elastic.
b. perfectly inelastic.
c. unitary elastic.
d. elastic.
e. inelastic.
ANSWER: bPOINTS: 1
DIFFICULTY: Difficult
LEARNING OBJEC
TIVES:
ECON.16.5.1
–
Determine whether a good is more elastic than another according to the determinants
that affect the price elasticity of demand.
NATIONAL STAND
United States
–
Analytic
–
BB-Legal
ARDS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: CA
36. If the price elasticity of demand is computed for two products, and product A measures .79, and product B measures
1.6, then:
a. b. c. d. e. product A is more price elastic than product B.
product B is more price elastic than product A.
consumers are more sensitive to price changes in product A than in product B.
product B is more price inelastic than product A.
products A and B must be substitutes.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJEC
TIVES:
ECON.16.5.1
–
Determine whether a good is more elastic than another according to the determinants
that affect the price elasticity of demand.
NATIONAL STAND
United States
–
Analytic
–
BB-Legal
ARDS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: RE
37. Demand price elasticity measures:
a. how much supply will change as price changes.
b. how consumers change their purchases in response to a change in income.
c. how consumers change their purchases in response to a change in the price of a substitute good.
d. how consumers change their purchases in response to a change in the price of a product.
e. the change in price brought about by a change in consumer demand.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Given data on demand, calculate the price elasticity of demand using the
Analytic
–
BB-Legal
S:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
Exhibit 5-1 Demand curves38. In Exhibit 5-1, the demand curve between points a and b is:
a. price elastic.
b. price inelastic.
c. unit elastic.
d. perfectly elastic.
e. perfectly inelastic.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECT
ECON.16.5.4
–
Given data on the price elasticity of demand, identify a region of the demand curve
IVES:
as elastic, inelastic, or unit elastic.
NATIONAL STANDA
United States
–
Analytic
–
BB-Legal
RDS:
TOPICS: Price Elasticity of Demand Variations Along A Demand Curve
KEYWORDS: Comprehension
OTHER: CA
39. In Exhibit 5-1, the demand curve between points b and c is:
a. price elastic.
b. price inelastic.
c. unit elastic.
d. perfectly elastic.
e. perfectly inelastic.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECT
ECON.16.5.4
–
Given data on the price elasticity of demand, identify a region of the demand curve
IVES:
as elastic, inelastic, or unit elastic.
NATIONAL STANDA
United States
–
Analytic
–
BB-Legal
RDS:
TOPICS: Price Elasticity of Demand Variations Along A Demand Curve
KEYWORDS: Comprehension
OTHER: CA40. In Exhibit 5-1, between points a and b, the price elasticity of demand measures:
a. 0.67.
b. 1.5.
c. 2.0.
d. 1.56.
e. 1.0.
ANSWER: e
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJE
ECON.16.5.2
–
CTIVES:
method.
ECON.16.5.4
–
elastic, inelastic, or unit elastic.
NATIONAL STAN
United States
–
Reflective Thinking
DARDS:
Given data on demand, calculate the price elasticity of demand using the midpoint
Given data on the price elasticity of demand, identify a region of the demand curve as
TOPICS: OTHER: CA
Price Elasticity of Demand Variations Along A Demand Curve
41. In Exhibit 5-1, between points b and c, the price elasticity of demand measures
a. 4.27.
b. 1.5.
c. 1.56.
d. 0.636.
e. 0.425.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJE
ECON.16.5.2
–
CTIVES:
method.
ECON.16.5.4
–
elastic, inelastic, or unit elastic.
NATIONAL STAN
United States
–
Reflective Thinking
DARDS:
Given data on demand, calculate the price elasticity of demand using the midpoint
Given data on the price elasticity of demand, identify a region of the demand curve as
TOPICS: KEYWORDS: Application
OTHER: CA
Price Elasticity of Demand Variations Along A Demand Curve
42. If demand price elasticity measures 2, this implies that consumers would:
a. buy twice as much of the product if the price drops 10 percent.
b. require a 2 percent drop in price to increase their purchases by 1 percent.
c. buy 2 percent more of the product in response to a 1 percent drop in price.
d. require at least a $2 increase in price before showing any response to the price increase.
e. buy twice as much of the product if the price drops 1 percent.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price changeNATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: CA
43. If the demand curve over a certain range is “price elastic,” this implies that the:
a. percentage change in the quantity demanded exceeds one.
b. percentage change in the quantity demanded exceeds the percentage change in product price.
c. percentage change in price exceeds the percentage change in quantity demanded.
d. product is non-reactive.
e. product has no good substitute.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: CA
44. If the demand curve is unit elastic, this implies that:
a. consumers do not react to a change in product price.
b. the good can only be purchased in units of 1.
c. this good has no good substitutes.
d. the good is a basic food staple.
e. the percentage change in the quantity demanded
=
ANSWER: e
the percentage change in product price.
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
DS:
United States
–
Analytic
–
BB-Legal
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
45. Which of the statements below does not describe a demand curve that is unit elastic?
a. The percentage change in the quantity demanded
=
percentage change in product price.
b. An increase in product price will not change total revenue.
c. The price elasticity of demand equals one.
d. A change in price does not change quantity demanded.
e. A decrease in product price will not change total revenue.
ANSWER: dPOINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: CA
46. Demand price elasticity is measured by the:
a. b. c. d. e. percentage change in income / percentage change in price.
percentage change in quantity demanded / percentage change in income.
percentage change in price / percentage change in quantity demanded.
percentage change in quantity demanded / percent change in price.
percentage change in total revenue / percentage change in price.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Given data on demand, calculate the price elasticity of demand using the
Analytic
–
BB-Legal
S:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
47. If Sam, the Pizza Man, lowers the price of his pizzas from $6 to $5 and finds that sales increase from 400 to 600
pizzas per week, then the demand for Sam’s pizzas in this range is:
a. price inelastic.
b. price elastic.
c. unit elastic.
d. cross elastic.
e. income inelastic.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJE
ECON.16.5.3
–
CTIVES:
total revenue.
ECON.16.5.4
–
elastic, inelastic, or unit elastic.
NATIONAL STAN
United States
–
Analytic
–
BB-Legal
DARDS:
Given data on the price elasticity of demand, identify the effect of a price change on
Given data on the price elasticity of demand, identify a region of the demand curve as
TOPICS: KEYWORDS: Analysis
OTHER: CA
Price Elasticity of Demand Variations Along A Demand Curve48. If Herbert, the hair stylist, raises the price of his cuts from $13 to $15 and finds the number of cuts falls from 300 to
260, then the demand for Herbert’s cuts in this range is:
a. price inelastic.
b. price elastic.
c. unit elastic.
d. cross elastic.
e. income inelastic.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJE
ECON.16.5.3
–
CTIVES:
total revenue.
ECON.16.5.4
–
elastic, inelastic, or unit elastic.
NATIONAL STAN
United States
–
Analytic
–
BB-Legal
DARDS:
Given data on the price elasticity of demand, identify the effect of a price change on
Given data on the price elasticity of demand, identify a region of the demand curve as
TOPICS: KEYWORDS: Analysis
OTHER: CA
Price Elasticity of Demand Variations Along A Demand Curve
49. If a 10 percent cut in price causes a 15 percent increase in sales, then:
a. total revenue will decrease.
b. c. d. e. demand is price inelastic in this range.
demand is price elastic in this range.
demand is unit elastic in this range.
total revenue will remain the same.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: CA
Given data on the price elasticity of demand, identify the effect of a price change
50. If Pete raises his price of muffins from $2 to $3 and his sales revenue increases from $35,000 to $38,000, then:
a. the demand for Pete’s muffins in this range is price elastic.
b. the demand for Pete’s muffins in this range is price inelastic.
c. the demand for Pete’s muffins in this range is unit elastic.
d. the percentage change in quantity demanded must exceed the percentage change in product price.
e. this is impossible since this would violate the law of demand.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJEECON.16.5.3
–
Given data on the price elasticity of demand, identify the effect of a price change onCTIVES: total revenue.
ECON.16.5.4
–
elastic, inelastic, or unit elastic.
NATIONAL STAN
United States
–
Analytic
–
BB-Legal
DARDS:
Given data on the price elasticity of demand, identify a region of the demand curve as
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: CA
51. You are part of a local community theater group. It is the goal of the group to increase the amount of revenue earned
through ticket sales. Mary says the obvious solution is to increase ticket prices. Is Mary correct?
a. b. c. d. e. Mary is correct if the demand for tickets is price inelastic.
Mary is incorrect if the demand for tickets is price inelastic.
Mary is correct. The increase in ticket prices will always increase revenue.
Mary is incorrect. The increase in ticket prices will never increase revenue.
Mary is incorrect. The way to increase revenue is to decrease ticket prices.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: SA
52. Elasticity measures how “sensitive” consumers are by measuring their change in
____
as the price of the product
changes.
a. attitude
b. income
c. quantity demanded
d. supply
e. taxes
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Given data on demand, calculate the price elasticity of demand using the
Analytic
–
BB-Legal
S:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
53. If the price elasticity of demand for a product measures .45,
a. this good has many available substitutes.b. this good must be a nonessential good.
c. this good is a high-priced good.
d. a decrease in price will increase total revenue.
e. this good is demand price inelastic.
ANSWER: e
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECT
ECON.16.5.4
–
Given data on the price elasticity of demand, identify a region of the demand curve
IVES:
as elastic, inelastic, or unit elastic.
NATIONAL STANDA
United States
–
Analytic
–
BB-Legal
RDS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: CA
54. If a straight-line demand curve slopes down, price elasticity will:
a. b. c. e. remain the same at all points on the demand curve.
change between any two points along the demand curve.
always be greater than 1.
d. always equal 1.
always be less than 1.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Analytic
–
BB-Legal
S:
TOPICS: Price elasticity of demand
KEYWORDS: Analysis
OTHER: CA
Given data on demand, calculate the price elasticity of demand using the
55. As one moves down a straight-line, down-sloping demand curve, price elasticity will:
a. change from elastic, to unit elastic, then to inelastic.
b. remain the same between any two points.
c. change from inelastic, to elastic, then to unit elastic.
d. change from unit elastic, to elastic, then to inelastic.
e. change from elastic, to inelastic, then to unit elastic.
ANSWER: a
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECT
ECON.16.5.4
–
Given data on the price elasticity of demand, identify a region of the demand curve
IVES:
as elastic, inelastic, or unit elastic.
NATIONAL STANDA
United States
–
Analytic
–
BB-Legal
RDS:
TOPICS: Price elasticity of demand
KEYWORDS: AnalysisOTHER: RE
56. Since it is always a negative number, economists use the convention of taking the absolute value of:
a. income elasticity of demand.
b. cross price elasticity of demand.
c. price elasticity of supply.
d. price elasticity of demand.
e. any elasticity calculation.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Given data on demand, calculate the price elasticity of demand using the
Analytic
–
BB-Legal
S:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
57. Leo’s Bakery reduces the price of wheat bread from $3 to $1 and finds that quantity demanded increases from 100 to
122 loaves. Leo calculates that his price elasticity of demand for wheat bread is:
a. 0.
b. 0.2.
c. 1.0.
d. 1.5.
e. 2.0
ANSWER: b
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Reflective Thinking
S:
TOPICS: Price elasticity of demand
KEYWORDS: Application
OTHER: CA
Given data on demand, calculate the price elasticity of demand using the
58. Tara buys four music cassettes when the price is $10 and two cassettes when the price is $14. Her price elasticity of
demand is:
a. 0.
b. 1.
c. 2.
d. 3.
e. 4.
ANSWER: c
POINTS: 1
DIFFICULTY: DifficultLEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Reflective Thinking
Given data on demand, calculate the price elasticity of demand using the
S:
TOPICS: Price elasticity of demand
KEYWORDS: Application
OTHER: CA
59. As price decreases and we move down further along a linear demand curve, the price elasticity of demand will:
a. decrease.
b. increase.
c. stay the same.
d. approach infinity.
e. increase or decrease.
ANSWER: a
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECT
ECON.16.5.4
–
Given data on the price elasticity of demand, identify a region of the demand curve
IVES:
as elastic, inelastic, or unit elastic.
NATIONAL STANDA
United States
–
Analytic
–
BB-Legal
RDS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: CA
60. 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:
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 demanded
ANSWER: c
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: CA
Given data on the price elasticity of demand, identify the effect of a price change
61. A health club sells 50 memberships when the monthly price is $60 and 70 memberships when the monthly price is
$40. The price elasticity of demand for memberships at this health club is (using the average values method):
a. 0.25.
b. 0.6.c. 1.0.
d. 1.1.
e. 0.83
ANSWER: e
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Reflective Thinking
Given data on demand, calculate the price elasticity of demand using the
S:
TOPICS: Price elasticity of demand
KEYWORDS: Application
OTHER: SA
62. Within different price ranges along a linear demand curve, elasticities are:
a. constant.
b. different.
c. equal.
d. the same as slope.
e. negative 1.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECT
ECON.16.5.4
–
Given data on the price elasticity of demand, identify a region of the demand curve
IVES:
as elastic, inelastic, or unit elastic.
NATIONAL STANDA
United States
–
Analytic
–
BB-Legal
RDS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
63. If demand for a good is price elastic, then the price elasticity will be:
a. equal to one.
b. equal to zero.
c. greater than one.
d. less than one.
e. less than zero.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Given data on demand, calculate the price elasticity of demand using the
Analytic
–
BB-Legal
S:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE64. An economist estimates that .67 is the price elasticity of demand for disposable diapers. This suggests that disposable
diaper producers could:
a. advertise more to raise the price elasticity of demand.
b. encourage more parents to use cloth diapers.
c. lower the price of disposable diapers to raise more revenue.
d. raise the price of disposable diapers to raise more revenue.
e. maximize revenues by staying at the current price.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
NATIONAL STANDAR
United States
–
Analytic
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: CA
Given data on the price elasticity of demand, identify the effect of a price change
–
BB-Legal
65. If demand is price elastic, then when price decreases, total revenue:
a. decreases.
b. increases.
c. does not change.
d. is less than one.
e. is negative.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
66. When a 2 percent increase in price generates a greater than 2 percent decrease in quantity demanded, then:
a. demand is price inelastic.
b. total revenue increases.
c. demand is positively sloped.
d. demand is unit elastic.
e. total revenue
ANSWER: e
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price changeNATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: CA
67. The short-run price elasticity of demand for airline travel is .05, while the long-run elasticity is 2.36. This means that a
significant increase in airline ticket prices will cause airline companies to:
a. collect less revenue from short-notice travelers.
b. collect more revenue from travelers who book well in advance.
c. d. lose money on short-notice travelers.
collect less revenue from travelers who book well in advance.
e. lose many of its short-notice travelers.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: CA
–
BB-Legal
68. On a part of the demand curve where the price elasticity of demand is less than 1, a decrease in price:
a. is impossible.
b. will increase total revenue.
c. will decrease total revenue.
d. raises the price elasticity of demand.
e. decreases quantity demanded.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: CA
69. A public transit company finds that when it reduces the price of a bus ticket, total revenues remain the same. One can
conclude from this that:
a. the demand curve is horizontal, reflecting infinite price elasticity.
b. the company sells the same number of bus tickets both before and after the price change.
c. the demand curve for bus tickets must have shifted to the right.
d. the firm is operating in a range of the demand curve that is unit elastic.e. the price should be lowered further so that a larger quantity can be sold.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJE
ECON.16.5.3
–
CTIVES:
total revenue.
ECON.16.5.4
–
elastic, inelastic, or unit elastic.
NATIONAL STAN
United States
–
Analytic
–
BB-Legal
DARDS:
Given data on the price elasticity of demand, identify the effect of a price change on
Given data on the price elasticity of demand, identify a region of the demand curve as
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: CA
70. It is Valentine’s Day and Jason is desperately looking all over town for a dozen roses to give to Judy. Most likely,
Jason’s price elasticity of demand is:
a. infinitely large.
b. negative.
c. equal to one.
d. greater than one.
e. less than one.
ANSWER: e
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECT
ECON.16.5.4
–
Given data on the price elasticity of demand, identify a region of the demand curve
IVES:
as elastic, inelastic, or unit elastic.
NATIONAL STANDA
United States
–
Analytic
BB-Legal
RDS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: SA
–
71. Sally is an average shopper, with average income. When she is in the store she buys a few items which cost more than
$20, several items which cost between $5 and $20, and many items which cost less than $1. The price elasticity of Sally’s
demand for these goods most likely ____.
a. b. c. d. e. increases as the price decreases
decreases as the price decreases
increases as the price increases
decreases as the price increases
remains constant over all price ranges
ANSWER: c
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVE
S:
ECON.16.5.2
–
midpoint method.
United States
–
Given data on demand, calculate the price elasticity of demand using the
Analytic
–
BB-Legal
S:
NATIONAL STANDARD
TOPICS: Price elasticity of demandKEYWORDS: Comprehension
OTHER: CA
72. Elasticity has which special meaning for economists?
a. b and c.
b. c. d. e. A ratio of percentage changes.
How easily prices adjust to market changes.
How price changes as quantities demanded change.
When consumers will no longer react to price changes.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Given data on demand, calculate the price elasticity of demand using the
Analytic
–
BB-Legal
S:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
73. Which statement about price elasticity of demand along a linear demand curve is true?
a. As the quantity demanded increases, so does the buyer’s sensitivity to price.
b. When price elasticity of demand is equal to 1, consumers are indifferent to subtle price changes.
c. The ratio of current price to quantity demanded is a good estimate of the elasticity of demand.
d. As the prices of goods increase, the elasticity of demand increases.
e. When an individual buys 4 units of a good his/her elasticity of demand for each unit increases.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJE
ECON.16.5.3
–
CTIVES:
total revenue.
ECON.16.5.4
–
elastic, inelastic, or unit elastic.
NATIONAL STAN
United States
–
Analytic
–
BB-Legal
DARDS:
Given data on the price elasticity of demand, identify the effect of a price change on
Given data on the price elasticity of demand, identify a region of the demand curve as
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
74. Looking at the relationship between elasticity and total revenue, we can see that ____.
a. b and c
b. c. d. e. when demand is unit elastic, small price changes don’t change total revenue
when a good is price inelastic, revenue increases when prices increase
when a good is price elastic, revenue increases when prices increase
total revenue is maximized when the elasticity has stopped changing
ANSWER: a
POINTS: 1DIFFICULTY: Difficult
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: CA
75. Which of the following statements is true?
a. b and d.
b. c. d. Total revenue is maximized when elasticity is one.
Goods are said to be price inelastic when the elasticity is greater than two.
Demand for milk is more elastic than demand for football tickets.
e. Demand for 5-cent candy is more elastic than demand for sweaters.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: SA
76. Larissa is a famous attorney with a great reputation in court. She charges her clients $300 for each hour she spends
working on their cases. If she earned $450,000 in hourly wages last year, and by raising her rates to $350 per hour her
income increased to $490,000 what can we say about the elasticity of demand for Larissa’s legal services?
It is approximately equal to 2.3.
It is approximately equal to 1.6.
It is approximately equal to 1.0.
It is approximately equal to 0.45.
It is approximately equal to 0.1.
a. b. c. d. e. ANSWER: d
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJE
ECON.16.5.2
CTIVES:
method.
ECON.16.5.3
total revenue.
–
–
NATIONAL STAN
United States
DARDS:
–
Reflective Thinking
TOPICS: Price elasticity of demand
KEYWORDS: Applictaion
OTHER: CA
Given data on demand, calculate the price elasticity of demand using the midpoint
Given data on the price elasticity of demand, identify the effect of a price change on
77. Dana is an art historian who needs to travel to Italy to do research. Art historians usually don’t have a lot of money,and therefore are very sensitive to price changes. Dana’s funding agency pays her a fixed amount to travel. At current
exchange rates, Dana can stay in Italy for 35 days. If the exchange rate improves by 10 percent, she can stay for 40 days.
What is Dana’s price elasticity of demand for days spent in Italy?
a. It is approximately equal to 2.3.
b. It is approximately equal to 1.6.
c. It is approximately equal to 1.4.
d. It is approximately equal to 0.4.
e. It is approximately equal to 0.1.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVE
S:
ECON.16.5.2
–
midpoint method.
United States
–
Reflective Thinking
S:
TOPICS: Price elasticity of demand
KEYWORDS: Application
OTHER: CA
Given data on demand, calculate the price elasticity of demand using the
NATIONAL STANDARD
Exhibit 5-2 Price and quantity demanded data
Price Quantity Demanded
5 20
4 25
3 30
2 35
1 40
78. The data in Exhibit 5-2 shows that price elasticity of demand is:
a. increasing as the price decreases.
b. decreasing as the price increases.
c. increasing as the quantity increases.
d. decreasing as the quantity decreases.
e. decreasing as the quantity increases.
ANSWER: e
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: CA
Given data on the price elasticity of demand, identify the effect of a price change
79. Using Exhibit 5-2, what is the price elasticity of demand when the price falls from five dollars to four?
a. 1.
b. 1.25.
c. 0.8.d. 2.0.
e. 0.4.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Reflective Thinking
Given data on demand, calculate the price elasticity of demand using the
S:
TOPICS: Price elasticity of demand
KEYWORDS: Application
OTHER: SA
80. One of the reasons that price elasticities of demand are always stated as positive numbers is because:
a. b. c. d. e. the numerators and denominators of the formula are both negative.
the numerators and denominators of the formula are both positive.
price increases always lead to increases in quantity demanded.
price decreases always lead to decreases in quantity demanded.
price elasticities are always negative, so we ignore the sign.
ANSWER: e
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Given data on demand, calculate the price elasticity of demand using the
Analytic
–
BB-Legal
S:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
81. Avital and Joshua each have their own business selling lemonade in front of their houses. When they each charge 25
cents per glass, their total revenues are equal. However, when they each charge 40 cents per glass, Avital’s revenues are
bigger than Joshua’s revenues. This is because:
a. Joshua faces a more inelastic demand curve.
b. Avital faces a more elastic demand curve.
c. Joshua faces a more elastic demand curve.
d. Avital faces a less inelastic demand curve.
e. there is a market failure.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: ComprehensionOTHER: CA
82. The price elastic portion of the linear demand curve lies:
a. b and c.
b. above the point of unit elasticity.
c. anywhere to the left of current market prices.
d. below the point where total revenue is maximized.
e. at the intersection with the supply curve.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECT
ECON.16.5.4
–
Given data on the price elasticity of demand, identify a region of the demand curve
IVES:
as elastic, inelastic, or unit elastic.
NATIONAL STANDA
United States
–
Analytic
–
BB-Legal
RDS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
83. If a supplier faces a perfectly horizontal demand curve and sets his price slightly higher than the demand curve itself,
he can expect:
a. b. c. no change in his total revenues.
everyone to begin buying his product.
a complete loss of revenues.
d. a new demand curve.
e. a relative increase in income.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: CA
–
BB-Legal
Exhibit 5-3 Demand curves for gallons of orange juice
Price Albert Betty Carl Dana Edward
10 0 1 2 0 0
9 0 1.5 2 0.5 0
8 0 2 2 2 4
7 0 2.5 2 3.5 8
6 1 3 3 5 12
5 3 3.5 3 6.5 16
4 5 4 3 8 20
3 7 4.5 3 9.5 24
2 9 5 3 11 28
1 11 5.5 3 12.5 3284. Using Exhibit 5-3, whose elasticity of demand is greatest when the price falls from $7 to $6?
a. Albert
b. Betty
c. Carl
d. Dana
e. Edward
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Reflective Thinking
S:
TOPICS: Price elasticity of demand
KEYWORDS: Application
OTHER: CA
Given data on demand, calculate the price elasticity of demand using the
85. Using Exhibit 5-3, in general, whose demand for orange juice is the most inelastic?
a. Albert
b. Betty
c. Carl
d. Dana
e. Edward
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Reflective Thinking
Given data on demand, calculate the price elasticity of demand using the
S:
TOPICS: Price elasticity of demand
KEYWORDS: Application
OTHER: CA
86. Using Exhibit 5-3, in general, whose demand for orange juice is the most elastic?
a. Albert
b. Betty
c. Carl
d. Dana
e. Edward
ANSWER: e
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVE
S:
ECON.16.5.2
–
midpoint method.
Given data on demand, calculate the price elasticity of demand using theNATIONAL STANDARD
United States
–
Reflective Thinking
S:
TOPICS: Price elasticity of demand
KEYWORDS: Application
OTHER: CA
87. Using Exhibit 5-3, whose “quantity demanded” experiences the largest percentage increase when the price falls from
$2 to $1?
a. Albert
b. Betty
c. Carl
d. Dana
e. Edward
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: CA
88. If a revenue-maximizing firm is told that the price elasticity of demand is equal to one, it should:
a. raise prices 1 percent.
b. lower prices 1 percent.
c. raise prices until the elasticity becomes very high.
d. keep the price where it is.
e. lower prices until the elasticity becomes very high.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: CA
89. Another word for elasticity is:
a. responsiveness.
b. happiness.
c. bonus
d. profit.
e. surplus.ANSWER: a
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Analytic
–
S:
TOPICS: Price elasticity of demand
KEYWORDS: Knowlede
OTHER: RE
Given data on demand, calculate the price elasticity of demand using the
BB-Legal
90. Firms would like to know the price elasticity of demand for their products because it helps determine the effect of
price changes on the firms’:
a. property taxes.
b. competitors’ profits.
c. quantity supplied.
d. revenues.
e. total costs.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: SA
–
BB-Legal
91. If the price of Pepsi-Cola increases from 40 cents to 50 cents per bottle and the quantity demanded decreases from 100
bottles to 50 bottles, then according to the averaging equation, the value of price elasticity of demand for Pepsi-Cola is:
a. 0.5.
b. 0.25.
c. 1.
d. 3.
e. 2.
ANSWER: d
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Reflective Thinking
Given data on demand, calculate the price elasticity of demand using the
S:
TOPICS: Price elasticity of demand
KEYWORDS: Application
OTHER: SA92. If the value of the price elasticity of demand is 0.2, this means that:
a. a 20 percent decrease in price causes a 1 percent increase in quantity demanded.
b. a 0.2 percent decrease in price causes a 1 percent increase in quantity demanded.
c. a 5 percent decrease in price causes a 1 percent increase in quantity demanded.
d. a 0.2 percent decrease in price causes a 0.2 percent increase in quantity demanded.
e. a 100 percent decrease in price causes a 200 percent increase in quantity demanded.
ANSWER: c
POINTS: 1
DIFFICULTY: D
TOPICS: Price elasticity of demand
OTHER: CA
93. If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to
80 units, then demand is:
a. elastic.
b. inelastic.
c. of unitary elasticity.
d. 0.
e. inferior.
ANSWER: b
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
94. If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to
80 units, then according to the averaging equation, the value of price elasticity of demand in absolute terms is:
a. 0.33.
b. 2.33.
c. 0.25.
d. 3.
e. 0.66.
ANSWER: a
POINTS: 1
DIFFICULTY: D
TOPICS: Price elasticity of demand
OTHER: SA
95. If Stimpson University increases tuition in order to increase its revenue, it will:
a. b. not be successful if the demand curve slopes downward.
be successful if demand is elastic.
c. be successful if demand is inelastic.
d. be successful if supply is elastic.
e. be successful if supply is inelastic.
ANSWER: c
POINTS: 1DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
96. If New York City expects that an increase in bus fares will raise mass transit revenues, it must think that the demand
for bus travel is:
a. elastic.
b. unit elastic.
c. inelastic.
d. perfectly inelastic.
e. 10.
ANSWER: c
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
97. Which of the following describes a situation in which demand must be inelastic?
a. Total revenue decreases by 10 percent when the price of spats rises by 10 percent.
b. Total revenue decreases by less than 10 percent when the price of spats rises by 10 percent.
c. Total revenue increases by more than 10 percent when the price of spats rises by 10 percent.
d. Total revenue decreases by $10 when the price of spats rises by $10.
e. Total revenue decreases by more than $10 when the price of spats rises by $10.
ANSWER: c
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
98. Which of the following describes a situation in which demand must be elastic?
a. Total revenue increases by 15 percent when the price of corn dogs rises by 15 percent.
b. Total revenue increases by less than 15 percent when the price of corn dogs rises by 15 percent.
c. Total revenue decreases by more than 15 percent when the price of corn dogs rises by 15 percent.
d. Total revenue increases by $15 when the price of corn dogs rises by $15.
e. Total revenue increases by more than $15 when the price of corn dogs rises by $15.
ANSWER: c
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
99. A measure of sensitivity or responsiveness to changes in price or income is called:
a. elasticity.
b. technology.
c. supply and demand.
d. social pressure.e. kickback.
ANSWER: a
POINTS: 1
DIFFICULTY: E
TOPICS: Price elasticity of demand
OTHER: RE
100. Elasticity is a measure of:
a. the slope of a linear demand curve.
b. the slope of a supply curve.
c. relative responsiveness.
d. economic welfare.
e. consumer tastes.
ANSWER: c
POINTS: 1
DIFFICULTY: E
TOPICS: Price elasticity of demand
OTHER: RE
101. Consider the market for bicycles. If a dealer cuts prices by 10 percent and sells 20 percent more bikes, then demand
for bicycles is:
a. inelastic, and total revenue will increase.
b. elastic, and total revenue will increase.
c. inelastic, and total revenue will decrease.
d. elastic, and total revenue will decrease.
e. unit elastic, and total revenue will remain the same.
ANSWER: b
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
102. The percentage change in the quantity demanded of film divided by the percentage change in the price of cameras
indicates:
a. the price elasticity of demand for film.
b. the price elasticity of demand for cameras.
c. the price elasticity of supply for film.
d. the price elasticity of supply for cameras.
e. nothing, because the two goods fall into the broadly defined category of photographic equipment.
ANSWER: a
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: RE
103. Governments can use price elasticity of demand to estimate how changes in excise tax rates will affect:a. income.
b. prices.
c. tax revenues.
d. government spending.
e. profits.
ANSWER: c
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: CA
Exhibit 5-4 Demand curves for silver
104. Assume that a wealthy buyer, Mr. Hunt, declares that he will purchase any amount of silver at a price of $125 an
ounce. In Exhibit 5-4, which graph illustrates the shape of the demand curve for silver?
a. Graph A.
b. Graph B.
c. Graph C.
d. Graph D.ANSWER: a
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
105. If the quantity of concert tickets sold decreases by 10 percent when the price increases by 5 percent, the price
elasticity of demand over this range of the demand curve is:
a. price elastic.
b. price inelastic.
c. perfectly inelastic.
d. unitary elastic.
ANSWER: a
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
106. Suppose the quantity demanded of steak is 200 million pounds per year when the price is $6 per pound and 400
million pounds per year when the price is $2 per pound. The price elasticity of demand for steak over this range is:
a. elastic.
b. inelastic.
c. unitary elastic.
d. perfectly elastic.
e. perfectly inelastic.
ANSWER: b
POINTS: 1
DIFFICULTY: D
TOPICS: Price elasticity of demand
OTHER: CA
107. Suppose the Good Food supermarket increases the price of a pound of bananas from $.75 to $1.25 and finds that the
quantity of bananas it sells per month drops from 1,500 to 1,000. The price elasticity of demand coefficient for bananas in
this price range is:
a. 0.80.
b. 3.00.
c. 2.00.
d. 0.50.
ANSWER: a
POINTS: 1
DIFFICULTY: D
TOPICS: Price elasticity of demand
OTHER: CA
108. Suppose the quantity demanded is 1,000 million bushels of peaches per year when the price is $3 per bushel and
1,500 million bushels when the price is $1 per bushel. The price elasticity of demand in this range of the demand curve is:
a. elastic.b. inelastic.
c. unitary elastic.
d. infinitely elastic.
ANSWER: b
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: CA
109. If a 5 percent decrease in the price of a good produces a 5 percent increase in the quantity demanded, the price
elasticity of demand is:
a. perfectly elastic.
b. perfectly inelastic.
c. elastic.
d. inelastic.
e. unitary elastic.
ANSWER: e
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
110. Suppose there is no change in total revenue when the price changes. The demand curve for this good is:
a. perfectly elastic.
b. perfectly inelastic.
c. elastic.
d. inelastic.
e. unitary elastic.
ANSWER: e
POINTS: 1
DIFFICULTY: E
TOPICS: Price elasticity of demand
OTHER: RE
111. Any change in price along a perfectly inelastic demand curve produces:
a. b. c. d. greater change in the quantity demanded.
less change in the quantity demanded.
no change in the quantity demanded.
infinite change in the quantity demanded.
ANSWER: c
POINTS: 1
DIFFICULTY: E
TOPICS: Price elasticity of demand
OTHER: RE
112. A perfectly elastic demand curve has a price elasticity of demand coefficient of:a. zero.
b. 1.
c. d. greater than 1, but less than infinity.
less than 1, but greater than zero.
e. infinity.
ANSWER: e
POINTS: 1
DIFFICULTY: D
TOPICS: Price elasticity of demand
OTHER: RE
113. A demand curve that has constant price elasticity of demand coefficient equals to 1 at all points is a(n):
a. rectangular hyperbola.
b. downward-sloping straight line.
c. upward-sloping straight line.
d. none of the above.
ANSWER: a
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: RE
Exhibit 5-5 Demand curve for computers
114. In Exhibit 5-5, if the area OABC equals the area ODEF, the demand curve is:
a. elastic.
b. inelastic.
c. unitary elastic.
d. nonelastic.
ANSWER: c
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demandOTHER: SA
115. In Exhibit 5-5, the change in total revenue resulting from a change in price from A to D indicates that the demand
curve is:
a. elastic.
b. inelastic.
c. unitary elastic.
d. nonelastic.
ANSWER: a
POINTS: 1
DIFFICULTY: D
TOPICS: Price elasticity of demand
OTHER: CA
116. In Exhibit 5-5, the total revenue at point B on the demand curve equals:
a. OA.
b. CB.
c. AB.
d. OABC.
e. None of the above.
ANSWER: d
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
117. In Exhibit 5-5, the total revenue at point E on the demand curve equals:
a. OD.
b. FE.
c. DE.
d. ODEF.
e. None of the above.
ANSWER: d
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
118. You are on a campus committee which sets the ticket prices for basketball games. The committee wants to increase
the total money generated from ticket sales. When should the committee choose to lower its ticket prices?
a. Always.
b. Never.
c. When demand for basketball tickets is elastic.
d. When demand for basketball tickets is inelastic.
ANSWER: c
POINTS: 1DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
119. A 10 percent rise in the price of housing reduces the quantity demanded of housing by 3 percent. We can conclude
that the demand for housing is:
a. inelastic.
b. elastic.
c. unitary elastic.
d. perfectly elastic.
ANSWER: a
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
120. Suppose an oil company wants to make its total revenue as large as possible. It should charge a price at which the
demand for oil is:
a. elastic.
b. unitary elastic.
c. inelastic.
d. perfectly inelastic.
ANSWER: b
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: RE
121. If a decrease in the price of football tickets increases the total revenue of the athletic department, this is evidence that
demand is:
a. price elastic.
b. price inelastic.
c. unit elastic with respect to price.
d. perfectly inelastic.
ANSWER: a
POINTS: 1
DIFFICULTY: E
TOPICS: Price elasticity of demand
OTHER: SA
122. If the percentage change in the quantity demanded of a good is greater than the percentage change in price, price
elasticity of demand is:
a. elastic.
b. inelastic.
c. perfectly inelastic.
d. perfectly elastic.
ANSWER: aPOINTS: 1
DIFFICULTY: E
TOPICS: Price elasticity of demand
OTHER: RE
123. Suppose the president of a textbook publisher argues that a 10 percent increase in the price of textbooks will raise
total revenue for the publisher. It can be concluded that the company president thinks that demand for textbooks is:
a. unitary elastic.
b. inelastic.
c. elastic.
d. perfectly inelastic.
ANSWER: b
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
124. If the quantity of tickets to the fair sold decreases by 10 percent when the price increases by 5 percent, the price
elasticity of demand over this range of the demand curve is:
a. price elastic.
b. price inelastic.
c. perfectly inelastic.
d. unitary elastic.
ANSWER: a
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
125. There is no change in total revenue when the demand curve for a good is:
a. unitary elastic.
b. perfectly inelastic.
c. elastic.
d. inelastic.
e. perfectly elastic.
ANSWER: a
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
126. If a good has a price elasticity of demand coefficient less than one, then:
a. this good has an elastic demand.
b. this good has an inelastic demand.
c. a 10 percent increase in the price will result in a greater than 10 percent decrease in the quantity demanded.
d. the demand curve will be vertical.ANSWER: b
POINTS: 1
DIFFICULTY: E
TOPICS: Price elasticity of demand
OTHER: RE
127. If the price elasticity of demand coefficient equals 2 then:
a. a 7 percent decrease in the price will result in a 14 percent decrease in the quantity demanded.
b. a price decrease will increase total revenue.
c. the good has an inelastic demand.
d. there is likely few substitutes, a short time period under consideration, or this good accounts for a relatively
small percentage of consumers’ budgets.
ANSWER: b
POINTS: 1
DIFFICULTY: D
TOPICS: Price elasticity of demand
OTHER: CA
128. Which of the following statements is true?
a. If the income elasticity of demand is less than zero, the good is an inferior good.
b. Only if the demand curve is vertical will sellers raise the price by the full amount of a tax.
c. Two goods are substitutes if the cross-elasticity of demand coefficient is positive.
d. A price elasticity of supply coefficient equal to 1.5 means the product exhibits an elastic supply and a 10
percent increase in the price will increase the quantity supplied by 15 percent.
e. All of the above.
ANSWER: e
POINTS: 1
DIFFICULTY: D
TOPICS: Price elasticity of demand
OTHER: CA
Exhibit 5-6 Demand curve for concert tickets
129. In Exhibit 5-6, suppose promoters charge a price of $30 per ticket. How much total revenue will their sales generate?a. $300,000.
b. $400,000.
c. $500,000.
d. $600,000.
ANSWER: a
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
130. In Exhibit 5-6, if promoters lower their ticket price form $30 to $20, then:
a. b. c. d. they will receive less money from their ticket sales.
people will continue to buy the same number of tickets.
customers will spend less total money on concert tickets.
both ticket sales and total revenue will rise.
ANSWER: d
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
131. In Exhibit 5-6, the demand curve for concert tickets shown above is classified as:
a. inelastic.
b. elastic.
c. unitary elastic.
d. cross elastic.
ANSWER: b
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
Exhibit 5-7 Demand curve for concert tickets132. According to Exhibit 5-7, the demand for concert tickets is:
a. inelastic.
b. elastic.
c. unitary elastic.
d. perfectly elastic.
ANSWER: a
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
133. In Exhibit 5-7, If promoters charge a price of $10 per ticket, then their total revenue is:
a. $240,000.
b. $300,000.
c. $333,333.
d. $800,000.
ANSWER: b
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
134. In Exhibit 5-7, if promoters raise their prices from $10 to $40 per ticket, then their total revenue will:
a. increase.
b. decrease.
c. remain unchanged.
d. react unpredictably.
ANSWER: a
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
135. Which of the following factors is associated with products with a highly price elastic demand?
a. Few close substitutes.
b. d. A very short time period for consumers to respond to price changes.
c. Many very close substitutes.
A per unit price that is only a very small portion of most peoples’ budgets.
ANSWER: c
POINTS: 1
DIFFICULTY: E
TOPICS: Determinants of price elasticity
OTHER: RE
136. The demand for a product is likely to be more elastic:a. b. c. d. the smaller the share of the total budget spent on the product.
when more complementary products are available.
in the short run than in the long run.
when more good substitutes for the product are available.
ANSWER: d
POINTS: 1
DIFFICULTY: M
TOPICS: OTHER: RE
Determinants of price elasticity of demand
137. Other things constant, the price elasticity of demand for a product will be smaller (more inelastic) if:
a. b. c. d. people spend a large share of their income on the product.
people spend an insignificant share of their income on the product.
the population in the market area is large.
there are many good substitutes for the product.
ANSWER: b
POINTS: 1
DIFFICULTY: M
TOPICS: OTHER: RE
Determinants of price elasticity of demand
138. A product would be more demand price elastic:
a. b. c. d. e. the shorter the time the consumer has to adjust to price changes.
the lower the price of the good.
the fewer the number of good substitutes.
the less the essential nature of the good.
if the supply is more price elastic.
ANSWER: d
POINTS: 1
DIFFICULTY: M
TOPICS: OTHER: SA
Determinants of price elasticity of demand
139. A product would be more demand price inelastic:
a. b. c. d. e. the shorter the time the consumer has to adjust to price changes.
the higher the price of the good.
the more the number of good substitutes.
the less the essential nature of the good.
if the supply is more price elastic.
ANSWER: a
POINTS: 1
DIFFICULTY: M
TOPICS: OTHER: SA
Determinants of price elasticity of demand
140. The longer the time period under study,a. the more elastic is the price elasticity of demand.
b. the less sensitive consumers will be to price changes.
c. the less adjustment consumers will make to price changes.
d. the more inelastic is the price elasticity of demand.
e. the more likely any given price cut will result in a smaller reaction by the consumer.
ANSWER: a
POINTS: 1
DIFFICULTY: E
TOPICS: Determinants of price elasticity of demand
OTHER: RE
141. Demand sensitivity depends on all of the following except:
a. b. how low is the price of the good.
the sensitivity of firms’ output to changes in its price.
c. the consumer’s income.
d. e. the availability and closeness of substitutes.
the amount of time a consumer has to adjust to price changes.
ANSWER: b
POINTS: 1
DIFFICULTY: D
TOPICS: OTHER: CA
Determinants of price elasticity of demand
142. In the short run, consumers typically
____
a. are very responsive
b. are more demand sensitive
c. are less demand sensitive
d. do not respond at all
e. overreact
ANSWER: c
POINTS: 1
DIFFICULTY: M
TOPICS: OTHER: SA
to price changes (when compared to the long run).
Determinants of price elasticity of demand
143. Which of the following events would increase the price elasticity of demand for Chicago Bears tickets that sell at a
price of $20?
a. b and c.
b. c. d. e. The Bears are having a successful season.
The visiting team is having a successful season.
The Bears have been defeated in their previous seven games.
The weather on game day will be warm.
ANSWER: d
POINTS: 1
DIFFICULTY: M
TOPICS: Determinants of price elasticity of demandOTHER: CA
144. The price elasticity of demand for a particular good is influenced by which of the following factors?
a. b and c.
b. d. e. The income of the buyers.
c. The availability of substitutes.
The level of competition among sellers.
How many uses the good has.
ANSWER: a
POINTS: 1
DIFFICULTY: M
TOPICS: OTHER: SA
Determinants of price elasticity of demand
145. Demand sensitivity depends on all of the following except:
a. b. how low is the price of the good.
the sensitivity of firms’ output to changes in its price.
c. the consumer’s income.
d. e. the availability and closeness of substitutes.
the amount of time a consumer has to adjust to price changes.
ANSWER: b
POINTS: 1
DIFFICULTY: D
TOPICS: OTHER: CA
Determinants of price elasticity of demand
146. In the long run, price elasticities of demand are usually ____.
a. less than they are in the short run because people can adjust
b. the same as they are in the short run because tastes don’t change
c. greater than they are in the short run because prices rise over time
d. less than they are in the short run because real prices fall over time
e. greater than they are in the short run because consumers have time to adjust
ANSWER: e
POINTS: 1
DIFFICULTY: M
TOPICS: OTHER: SA
Determinants of price elasticity of demand
147. A lower price elasticity of demand coefficient occurs when:
a. many substitutes exist.
b. the quantity demanded is more responsive.
c. few substitutes exist.
d. the market is broadly defined.
ANSWER: c
POINTS: 1
DIFFICULTY: DTOPICS: OTHER: CA
Determinants of price elasticity of demand
148. The price elasticity of demand coefficient for a good will be greater:
a. if close substitutes exist.
b. if minor complements exist.
c. in the short-run.
d. if a small portion of the budget will be spent on it.
ANSWER: a
POINTS: 1
DIFFICULTY: E
TOPICS: OTHER: RE
Determinants of price elasticity of demand
149. Which of the following goods is likely to have the most elastic demand curve?
a. Tobacco products.
b. Gasoline.
c. Medical care.
d. Honda automobiles.
ANSWER: d
POINTS: 1
DIFFICULTY: M
TOPICS: OTHER: SA
Determinants of price elasticity of demand
150. If the price elasticity of demand is elastic, then:
a. Ed
<
1.
b. c. d. consumers are relatively not very responsive to a price increase.
an increase in the price will increase total revenue.
there are likely a large number of substitute products available.
ANSWER: d
POINTS: 1
DIFFICULTY: M
TOPICS: OTHER: SA
Determinants of price elasticity of demand
151. Which of the following statements is not true?
a. Price elasticity of demand for basic foods is low.
b. When price elasticity of demand is very high, we say there is brand loyalty.
c. The availability and price of substitutes affect the elasticity of demand for a good or service.
d. When goods have very low prices, the elasticity of demand is usually quite low.
e. Elasticities increase as the price of the good increases.
ANSWER: b
POINTS: 1
DIFFICULTY: D
TOPICS: Determinants of price elasticity of demandOTHER: CA
152. In differentiating between the short- and long-run elasticities, when economists talk about short-run elasticities,
a. b and c.
b. c. d. e. there is no need to mention short versus long run.
the only issues are price and quantity.
short-run elasticities are usually higher.
short-run elasticities are usually lower.
ANSWER: e
POINTS: 1
DIFFICULTY: D
TOPICS: OTHER: CA
Determinants of price elasticity of demand
153. A lower price elasticity of demand coefficient occurs when:
a. many substitutes exist.
b. the quantity demanded is more responsive.
c. few substitutes exist.
d. the market is broadly defined.
ANSWER: c
POINTS: 1
DIFFICULTY: M
TOPICS: OTHER: SA
Determinants of price elasticity of demand
154. The price elasticity of demand coefficient for a good will be greater:
a. if close substitutes exist.
b. if minor complements exist.
c. in the short-run.
d. if a small portion of the budget will be spent on it.
ANSWER: a
POINTS: 1
DIFFICULTY: M
TOPICS: OTHER: RE
Determinants of price elasticity of demand
155. The price elasticity of demand coefficient for a good will be lower:
a. b. c. if there are few substitutes for the good.
if expenditure on it is a small part of one’s budget.
both a and b are true.
d. neither a nor b are true.
ANSWER: c
POINTS: 1
DIFFICULTY: M
TOPICS: OTHER: SA
Determinants of price elasticity of demand156. Which of the following is true for a lower price elasticity of demand coefficient?
a. b. The market is broadly defined.
The quantity demanded is more responsive.
c. Few substitutes exist.
d. Many substitutes exist.
e. All of the above.
ANSWER: c
POINTS: 1
DIFFICULTY: E
TOPICS: OTHER: RE
Determinants of price elasticity of demand
Exhibit 5-8 Supply and demand curves for good X
157. As shown in Exhibit 5-8, the price elasticity of demand for good X between points E and Z is:
a. 3/13
=
0.23.
b. 13/3
=
4.33.
c. 1/3
=
0.33.
d. 1.
ANSWER: a
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
Exhibit 5-9 Supply and demand curves for good X158. As shown in Exhibit 5-9, the price elasticity of demand for good X between points E and B is:
a. 3/7
=
0.43.
b. 7/3
=
2.33.
c. 1/2
=
0.50.
d. 1.
ANSWER: a
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
159. As shown in Exhibit 5-9, the price elasticity of demand for good X between points E and D is:
a. 1/5
=
0.20.
b. 3/7
=
0.43.
c. 1/2
=
0.50.
d. 1.
ANSWER: d
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
160. The price elasticity of demand measures consumer responsiveness to a price change.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVE
S:
NATIONAL STANDARD
ECON.16.5.2
–
midpoint method.
United States
–
Analytic
–
S:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
Given data on demand, calculate the price elasticity of demand using the
BB-LegalOTHER: RE
161. If the price elasticity of demand for a good is elastic, then consumers are relatively unresponsive with respect to the
quantity purchased when the price changes.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
NATIONAL STANDAR
United States
–
Analytic
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: SA
Given data on the price elasticity of demand, identify the effect of a price change
–
BB-Legal
162. If the price elasticity of demand coefficient equals 2, this means a 10 percent increase in price will result in a 20
percent decrease in the quantity demanded.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: SA
163. If the managers of the bus system found that revenues increase when fares are raised, they would conclude that price
elasticity demand for subway service is inelastic.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: SA
164. A horizontal demand curve indicates perfectly elastic demand.a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: ECON.16.5.5
–
NATIONAL STANDARDS: United States
–
Identify a demand curve as perfectly elastic or perfectly inelastic.
Analytic
–
BB-Legal
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
165. Price elasticity remains constant along a straight-line demand curve.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECT
ECON.16.5.4
–
Given data on the price elasticity of demand, identify a region of the demand curve
IVES:
as elastic, inelastic, or unit elastic.
NATIONAL STANDA
United States
–
Analytic
–
BB-Legal
RDS:
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
166. If demand is perfectly inelastic, then the demand curve will be vertical.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: ECON.16.5.5
–
NATIONAL STANDARDS: United States
–
Identify a demand curve as perfectly elastic or perfectly inelastic.
Analytic
–
BB-Legal
TOPICS: Price elasticity of demand
KEYWORDS: Knowledge
OTHER: RE
167. If a 10 percent price increase causes the quantity demanded for a good to decrease by 20 percent, demand is elastic.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJEC
TIVES:
ECON.16.5.1
–
that affect the price elasticity of demand.
Determine whether a good is more elastic than another according to the determinantsNATIONAL STAND
ARDS:
United States
–
Analytic
–
BB-Legal
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: SA
168. If a 10 percent price increase causes the quantity demanded for a good to decrease by 5 percent, demand is elastic.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJEC
TIVES:
ECON.16.5.1
–
Determine whether a good is more elastic than another according to the determinants
that affect the price elasticity of demand.
NATIONAL STAND
United States
–
Analytic
–
BB-Legal
ARDS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: SA
169. If a 10 percent price increase causes the quantity demanded for a good to decrease by 10 percent, demand is unitary
elastic.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJEC
TIVES:
ECON.16.5.1
–
Determine whether a good is more elastic than another according to the determinants
that affect the price elasticity of demand.
NATIONAL STAND
United States
–
Analytic
–
BB-Legal
ARDS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: SA
170. If the demand curve for a good is elastic, consumers will spend more on that good when its price increases.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: KnowledgeOTHER: SA
171. Suppose an economist found that total revenues increase for the bus system when fares were raised, the conclusion is
that the price elasticity demand for subway services over the range of fare increase is inelastic.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIV
ES:
ECON.16.5.3
–
on total revenue.
Given data on the price elasticity of demand, identify the effect of a price change
NATIONAL STANDAR
United States
–
Analytic
–
BB-Legal
DS:
TOPICS: Price elasticity of demand
KEYWORDS: Comprehension
OTHER: SA
172. A horizontal demand curve is perfectly elastic.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: E
TOPICS: Price elasticity of demand
OTHER: RE
173. If a good has a price elasticity of demand coefficient greater than 1, total revenue can be increased by raising the
price.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: SA
174. Other factors held constant, if there are few close substitutes for a good, demand is more elastic for it.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: RE
175. If the demand for a product is inelastic, then a price increase will result in a decrease in total revenue.
a. Trueb. False
ANSWER: False
POINTS: 1
DIFFICULTY: M
TOPICS: Price elasticity of demand
OTHER: RE
176. Necessities have a much smaller price elasticity of demand, ceteris paribus, than goods that have many close
substitutes.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: M
TOPICS: OTHER: RE
Determinants of price elasticity of demand
177. The fewer the substitutes for a good the greater will be the value of the price elasticity of demand coefficient.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: E
TOPICS: OTHER: RE
Determinants of price elasticity of demand
178. Goods with few available substitutes tend to have inelastic demand curves.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: M
TOPICS: OTHER: RE
Determinants of price elasticity of demand
179. What does the “price elasticity of demand” measure? What does a price elasticity of demand coefficient of 1.2 mean?
Does the product have an elastic, unitary elastic or inelastic demand?
ANSWER: The price elasticity of demand measures buyer responsiveness to a price change. If the price elasticity of
demand coefficient equals 1.2, this means that for every 1 percent change in price there will be a 1.2 percent
change in the quantity demanded in the opposite direction. This implies that consumers are relatively
responsive to a change in the price and therefore the demand for this product is elastic.
POINTS: 1
180. What happens to total revenue given a price increase and demand is inelastic? Why?ANSWER: Total revenue will rise if the price rises and demand is inelastic. This is because the percentage increase in
the price exceeds the percentage decrease in the quantity demanded. Indeed, whenever, the demand is
inelastic this means buyers are relatively unresponsive to a change in the price. Therefore, total revenue rises
when price rises.
POINTS: 1
181. What are the characteristics of the product that has an inelastic demand?
ANSWER: A product that has an inelastic demand has few substitutes, accounts for a relatively small share of buyers’
budget, and there is a relatively short time frame under consideration.
POINTS: 1
Add a review
Be the first to review “Survey of Economics 9th Edition by Irvin B. Tucker – Test Bank”
Related products
-
Health Assessment In Nursing 6th By Janet R. Weber – Test Bank
Original price was: $35.00.$25.00Current price is: $25.00. -
Pediatric Primary Care 6th Edition Burns Test Bank
Original price was: $35.00.$25.00Current price is: $25.00. -
Beckmann and Ling’s Obstetrics and Gynecology Nursing 8th Edition – Test Bank
Original price was: $35.00.$25.00Current price is: $25.00. -
Advanced Health Assessment and Diagnostic Reasoning 4th Edition Rhoads – Test Bank
Original price was: $35.00.$25.00Current price is: $25.00.
There are no reviews yet.