Question 1

The demand curve is also the average-revenue curve.

Accepted Answer

A) True 
 B)False

Question 2

If the price elasticity of demand is 0.5, then we can say that demand is elastic.

Accepted Answer

A) True 
 B)False

Question 3

If demand for a product is unit elastic, then increasing the price of the product will leave total revenue unchanged.

Accepted Answer

A) True 
 B)False

Question 4

The price elasticity of demand depends on how readily and easily consumers can switch their purchases from one product to another.

Accepted Answer

A) True 
 B)False

Question 5

Price elasticity of demand shows

Accepted Answer

A)   that income is a function of demand.
B)   the degree of consumer sensitivity to price changes.
C)   shifts in demand in response to changes in consumer preferences.
D)   the extent to which a demand schedule changes in response to changes in consumer income and taste.
E)   that consumers are usually indifferent to changes in price.F) None of the above
G) A) and E)

Question 6

Some ink jet printers are very reasonably priced. However, replacement ink is very expensive. This is because once you purchase a printer, your demand for that brand of ink cartridges is very inelastic.

Accepted Answer

A) True 
 B)False

Question 7

If consumers have a long time period in which they can shop for a good, then the demand for that good will be more elastic than if they had only a short time to shop.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is a characteristic of an item that has price-elastic demand?

Accepted Answer

A)   A small number of competitors
B)   Many substitutes
C)   A short time period under consideration
D)   A product that accounts for a small percentage of consumers' incomes
E)   A necessity for survivalF) B) and D)
G) C) and D)

Question 9

As the price is raised along a straight-line demand curve, the demand curve becomes more elastic.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following characteristics of a product tends to make the elasticity of demand greater?

Accepted Answer

A)   The product is a necessity.
B)   The time period between the price change and the measurement of change in quantity demanded is relatively short.
C)   The product is relatively expensive.
D)   There are no good substitutes for the product.
E)   Consumers usually spend a small percentage of their income on the product.F) B) and E)
G) B) and D)

Question 11

The campus bookstore has reduced prices on pens and pencils in order to increase total revenue from sales of these items. Therefore, the manager of the campus bookstore believes that the demand for pens and pencils at the bookstore is

Accepted Answer

A)   inelastic.
B)   unit elastic.
C)   perfectly inelastic.
D)   elastic.
E)   unpredictable.F) A) and E)
G) A) and C)

Question 12

If the demand for American automobiles is more elastic in Europe than it is in the United States, we might expect

Accepted Answer

A)   the same price for autos in the United States and Europe.
B)   a higher price for autos in the United States than in Europe.
C)   a lower price for autos in the United States than in Europe.
D)   a less profitable price for autos in the United States than in Europe.
E)   a price in Europe that is less than the cost of producing the car in Europe.F) All of the above
G) A) and E)

Question 13

For a downward-sloping straight-line demand curve, the top portion of the curve is generally inelastic.

Accepted Answer

A) True 
 B)False

Question 14

If demand is unit elastic, a 25 percent increase in price will result in

Accepted Answer

A)   a 25 percent change in total revenue.
B)   no change in the quantity demanded.
C)   a 1 percent decrease in the quantity demanded.
D)   a 25 percent decrease in the quantity demanded.
E)   a 100 percent change in the quantity demanded.F) B) and C)
G) A) and E)

Question 15

What would be the consequences of a 10 percent decrease in price for a good whose price elasticity of demand is 5?

Accepted Answer

A)   A 50 percent decrease in quantity demanded
B)   A 5 percent increase in quantity demanded
C)   A 50 percent increase in quantity demanded
D)   A decrease in quantity demanded by 1/5
E)   An increase in quantity demanded by 1/5F) A) and B)
G) A) and C)

Question 16

After hurricane Katrina, gasoline prices around the country increased dramatically. Demand did not decrease much primarily because

Accepted Answer

A)   there are very few substitutes for the product.
B)   the cost of the product is a relatively small percentage of one's income.
C)   there is a long time period under consideration.
D)   the product is considered a luxury.
E)   there is a small amount of this product.F) All of the above
G) None of the above

Question 17

Figure 4.2
 
-Refer to Figure 4.2. The demand curve B is most likely to have a price elasticity of demand that

Accepted Answer

A)   is greater than 1 for the whole curve
B)   is less than 1 for the whole curve.
C)   is constant.
D)   could be greater than, less than, or equal to 1.
E)   is equal to 1 for the whole curve.F) A) and C)
G) A) and D)

Question 18

If product X is a luxury, and for product Y there are no close substitutes, then we should expect the price elasticities of demand for X and Y to be relatively

Accepted Answer

A)   elastic and inelastic, respectively.
B)   inelastic and elastic, respectively.
C)   elastic for both.
D)   inelastic for both.
E)   difficult, if not impossible, to determine from the information given.F) A) and E)
G) D) and E)

Question 19

If a consumer is spending a large portion of his or her income on a particular good, then the demand for the good will be inelastic.

Accepted Answer

A) True 
 B)False

Question 20

If a product has an elastic demand, then we can expect

Accepted Answer

A)   total revenue to rise if price falls.
B)   a price increase to increase total revenue.
C)   a smaller percentage change in the quantity demanded given some percentage change in the price.
D)   the absolute value of the elasticity of demand coefficient to be less than 1.
E)   that there are few substitutes for this product.F) A) and D)
G) None of the above

Exam 4: The Firm and the Consumer

If a consumer is spending a large portion of his or her income on a particular good, then the demand for the good will be inelastic.

Correct AnswerverifiedShow Answer

The campus bookstore has reduced prices on pens and pencils in order to increase total revenue from sales of these items. Therefore, the manager of the campus bookstore believes that the demand for pens and pencils at the bookstore is

Correct AnswerverifiedShow Answer

After hurricane Katrina, gasoline prices around the country increased dramatically. Demand did not decrease much primarily because

Correct AnswerverifiedShow Answer

The price elasticity of demand depends on how readily and easily consumers can switch their purchases from one product to another.

Correct AnswerverifiedShow Answer

If a product has an elastic demand, then we can expect

Correct AnswerverifiedShow Answer

Price elasticity of demand shows

Correct AnswerverifiedShow Answer

If the price elasticity of demand is 0.5, then we can say that demand is elastic.

Correct AnswerverifiedShow Answer

Some ink jet printers are very reasonably priced. However, replacement ink is very expensive. This is because once you purchase a printer, your demand for that brand of ink cartridges is very inelastic.

Correct AnswerverifiedShow Answer

If demand for a product is unit elastic, then increasing the price of the product will leave total revenue unchanged.

Correct AnswerverifiedShow Answer

If product X is a luxury, and for product Y there are no close substitutes, then we should expect the price elasticities of demand for X and Y to be relatively

Correct AnswerverifiedShow Answer

Which of the following characteristics of a product tends to make the elasticity of demand greater?

Correct AnswerverifiedShow Answer

Figure 4.2 -Refer to Figure 4.2. The demand curve B is most likely to have a price elasticity of demand that

Correct AnswerverifiedShow Answer

If the demand for American automobiles is more elastic in Europe than it is in the United States, we might expect

Correct AnswerverifiedShow Answer

For a downward-sloping straight-line demand curve, the top portion of the curve is generally inelastic.

Correct AnswerverifiedShow Answer

Which of the following is a characteristic of an item that has price-elastic demand?

Correct AnswerverifiedShow Answer

If demand is unit elastic, a 25 percent increase in price will result in

Correct AnswerverifiedShow Answer

The demand curve is also the average-revenue curve.

Correct AnswerverifiedShow Answer

What would be the consequences of a 10 percent decrease in price for a good whose price elasticity of demand is 5?

Correct AnswerverifiedShow Answer

As the price is raised along a straight-line demand curve, the demand curve becomes more elastic.

Correct AnswerverifiedShow Answer

If consumers have a long time period in which they can shop for a good, then the demand for that good will be more elastic than if they had only a short time to shop.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified