Question 1

An increase in the price of tickets to a popular sporting event will increase total revenue if

Accepted Answer

A)  there are many substitutes for this form of entertainment.
B)  the ticket is considered to be a luxury.
C)  the buyers of the tickets are fanatic about the event.
D)  the fans are price conscious.

Question 2

Over a longer time period after a price change, the price elasticity of supply tends to decrease.

Accepted Answer

A) True 
 B)False

Question 3

Cross elasticity of demand measures how sensitive purchases of a specific product are to changes in

Accepted Answer

A)  the price of some other product.
B)  the price of that same product.
C)  income.
D)  the general price level.

Question 4

If the price-elasticity coefficient for a good is 1.75, the demand for that good is described as

Accepted Answer

A)  normal.
B)  elastic.
C)  inferior.
D)  inelastic.

Question 5

(Consider This)  Which of the following best explains the significant increases in the equilibrium prices for higher education in the United States since the 1980s?

Accepted Answer

A)  The demand for higher education is highly price inelastic, and the supply has decreased substantially.
B)  The demand for higher education is highly price elastic, and the supply has decreased substantially.
C)  The supply of higher education is highly price inelastic, and demand has increased substantially.
D)  The supply of higher education is highly price elastic, and demand has increased substantially.

Question 6

Considering the price-elasticity of demand for wheat, we would expect that if the supply of wheat increases, other factors constant, then wheat farmers' total revenues would

Accepted Answer

A)  increase because the demand is price-inelastic.
B)  decrease because the demand is price-inelastic.
C)  increase because the demand is price-elastic.
D)  decrease because the demand is price-elastic.

Question 7

The larger the coefficient of price elasticity of demand for a product, the

Accepted Answer

A)  larger the resulting price change for an increase in supply.
B)  more rapid the rate at which the marginal utility of that product diminishes.
C)  less competitive will be the industry supplying that product.
D)  smaller the resulting price change for an increase in supply.

Question 8

If changes in demand cause significant changes in equilibrium price, then supply must be quite inelastic.

Accepted Answer

A) True 
 B)False

Question 9

A supply curve that is parallel to the horizontal axis suggests that

Accepted Answer

A)  the industry is organized monopolistically.
B)  the relationship between price and quantity supplied is inverse.
C)  a change in demand will change price in the same direction.
D)  a change in demand will change the equilibrium quantity but not price.

Question 10

If quantity demanded is completely unresponsive to price changes, demand is

Accepted Answer

A)  perfectly inelastic.
B)  perfectly elastic.
C)  relatively inelastic.
D)  relatively elastic.

Question 11

The basic formula for the price elasticity of demand coefficient is

Accepted Answer

A)  absolute decline in quantity demanded/absolute increase in price.
B)  percentage change in quantity demanded/percentage change in price.
C)  absolute decline in price/absolute increase in quantity demanded.
D)  percentage change in price/percentage change in quantity demanded.

Question 12

A study of mass-transit systems in American cities revealed that in the long run, revenues generally decline after substantial fare increases.This would suggest that

Accepted Answer

A)  the demand for mass transit is price-elastic in the long run.
B)  the demand for mass transit is price-inelastic in the long run.
C)  mass-transit service deteriorates in the long run as price rises.
D)  there are few good substitutes for such systems in urban areas.

Question 13

Which of the following statements is not correct?

Accepted Answer

A)  If the relative change in price is greater than the relative change in the quantity demanded associated with it, demand is inelastic.
B)  In the range of prices in which demand is elastic, total revenue will diminish as price decreases.
C)  Total revenue will not change if price varies within a range where the elasticity coefficient is unity.
D)  Demand tends to be elastic at high prices and inelastic at low prices.

Question 14

The supply of tickets to a major sporting event held in an enclosed stadium, such as the Super Bowl or a World Series game, is perfectly inelastic.

Accepted Answer

A) True 
 B)False

Question 15

The price of season tickets to a performing arts theater decreases by 3 percent.As a result, the quantity demanded increases by 6 percent.The price elasticity of demand for season tickets is

Accepted Answer

A)  0.5.
B)  9.
C)  2.
D)   18.

Question 16

The cross elasticity of demand for product X with respect to the price of product Y is −1.2.It can be inferred that X and Y are

Accepted Answer

A)  substitute products.
B)  complementary products.
C)  luxury products.
D)  unrelated products.

Question 17

If demand for a product is elastic, the value of the price elasticity coefficient is

Accepted Answer

A)  zero.
B)  greater than one.
C)  equal to one.
D)  less than one.

Question 18

The price elasticity of demand is generally

Accepted Answer

A)  negative, but the minus sign is ignored.
B)  positive, but the plus sign is ignored.
C)  positive for normal goods and negative for inferior goods.
D)  positive because price and quantity demanded are inversely relateD.

Question 19

The demand for cocaine among addicts is relatively elastic.

Accepted Answer

A) True 
 B)False

Question 20

A negative income elasticity of demand coefficient indicates that

Accepted Answer

A)  the product is an inferior good.
B)  the product follows the law of demand.
C)  the product is a complementary good.
D)  the product is a substitute good.

Exam 6: Elasticity

The supply of tickets to a major sporting event held in an enclosed stadium, such as the Super Bowl or a World Series game, is perfectly inelastic.

Correct AnswerverifiedShow Answer

An increase in the price of tickets to a popular sporting event will increase total revenue if

Correct AnswerverifiedShow Answer

A study of mass-transit systems in American cities revealed that in the long run, revenues generally decline after substantial fare increases.This would suggest that

Correct AnswerverifiedShow Answer

Which of the following statements is not correct?

Correct AnswerverifiedShow Answer

Over a longer time period after a price change, the price elasticity of supply tends to decrease.

Correct AnswerverifiedShow Answer

The price of season tickets to a performing arts theater decreases by 3 percent.As a result, the quantity demanded increases by 6 percent.The price elasticity of demand for season tickets is

Correct AnswerverifiedShow Answer

The cross elasticity of demand for product X with respect to the price of product Y is −1.2.It can be inferred that X and Y are

Correct AnswerverifiedShow Answer

The larger the coefficient of price elasticity of demand for a product, the

Correct AnswerverifiedShow Answer

A negative income elasticity of demand coefficient indicates that

Correct AnswerverifiedShow Answer

(Consider This) Which of the following best explains the significant increases in the equilibrium prices for higher education in the United States since the 1980s?

Correct AnswerverifiedShow Answer

The demand for cocaine among addicts is relatively elastic.

Correct AnswerverifiedShow Answer

The basic formula for the price elasticity of demand coefficient is

Correct AnswerverifiedShow Answer

If changes in demand cause significant changes in equilibrium price, then supply must be quite inelastic.

Correct AnswerverifiedShow Answer

If quantity demanded is completely unresponsive to price changes, demand is

Correct AnswerverifiedShow Answer

A supply curve that is parallel to the horizontal axis suggests that

Correct AnswerverifiedShow Answer

Considering the price-elasticity of demand for wheat, we would expect that if the supply of wheat increases, other factors constant, then wheat farmers' total revenues would

Correct AnswerverifiedShow Answer

The price elasticity of demand is generally

Correct AnswerverifiedShow Answer

Cross elasticity of demand measures how sensitive purchases of a specific product are to changes in

Correct AnswerverifiedShow Answer

If demand for a product is elastic, the value of the price elasticity coefficient is

Correct AnswerverifiedShow Answer

If the price-elasticity coefficient for a good is 1.75, the demand for that good is described as

Correct AnswerverifiedShow Answer

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