Elasticities of Demand and Supply Practice Test

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• Fred's income has just risen from $940 per week to $1,060 per week. As a result, he decides to purchase 9 percent more steak per week. The income elasticity of Fred's demand for steak is
• If income rises from $28,500 to $31,500 and the income elasticity of widgets is 4, the elasticity value is
• If the price changes by 20 percent and the own-price elasticity of demand is 0.5, the quantity demanded changes by approximately
• If two goods A and B are complements, cross elasticity is:
• If price falls from 6 to 4 on a linear demand curve, total revenue will remain unchanged.
• If the price increases by 1% and quantity supplied increases by 2%, the elasticity of supply is 2.0, indicating supply is
• Demand is perfectly inelastic when changes in price cause no change in quantity demanded.
• If a shift in the demand curve that raises the price of oranges from $7 to $9 a bushel increases the quantity of oranges supplied from 4,000 bushels to 6,000 bushels, the statement that is true is
• A good whose income elasticity always exceeds 1.0 is typically classified as a
• Demand is income elastic if
• A good with income elasticity exactly 1 indicates that a 5% rise in income leads to a 5% rise in quantity demanded.
• The table gives the demand schedule for peas. Moving from point C to point D, the price elasticity of demand is:
• If a 1% decrease in the price of a pound of oranges results in a smaller percentage decrease in the quantity supplied, the market condition is
• The route from Dallas to Mexico City is served by more than one airline. The demand for tickets from American Airlines on that route is probably:
• Deb's income has just risen from $950 per week to $1,050 per week. As a result, she decides to increase the number of movies she attends each month by 5 percent. Her demand for movies is
• If a good's price elasticity of demand is exactly 1, total revenue remains constant when price changes.
• If the elasticity of supply is greater than 1, the supply is relatively
• A unit elastic demand means that a price change leaves total revenue unchanged.
• If a decrease in the price of Good B leads to an increase in the demand for Good A, A and B are
• In a given schedule, the price elasticity of demand is larger at point D than at point A.
• An income elasticity of 0.6 indicates the good is a normal good with income inelastic response.
• A 4% rise in price leads to an 8% rise in quantity supplied. The elasticity of supply is 2.0, which statement is true?
• If average incomes rise and the quantity demanded for widgets increases, widgets are
• If a price decrease results in your expenditure on a good decreasing, your demand must be
• When the price elasticity of demand is less than 1 in absolute value, demand is considered:
• The demand for food is most elastic in countries
• If goods A and B are complements, the cross elasticity of demand between A and B is
• If a 20 percent decline in price leads to a 10 percent increase in quantity demanded, the price elasticity of demand is:
• If the cross elasticity of demand between goods A and B is negative,
• Which statement is true about a demand curve with unit price elasticity at all prices?
• If the price falls from $8 to $6 on a linear demand curve, total revenue will
• On a route with multiple airlines, the demand for tickets from a single airline on that route is typically:
• If demand is price elastic, what is the result of a 1% decrease in price?
• The demand for movies is unit elastic if a 5 percent change in price leads to a 5 percent change in quantity demanded.
• Which description best matches a good with positive income elasticity between 0 and 1?
• The price elasticity of demand for a straight-line demand curve is:
• The income elasticity of demand is high for
• A good with a horizontal demand curve has a price elasticity of demand equal to:
• A 10 percent increase in income causes the quantity of apple juice demanded to increase from 18,800 to 21,200 gallons. The income elasticity of demand for apple juice is
• If a 4 percent rise in the price of peanut butter lowers the total revenue by 4 percent, the demand for peanut butter is
• If the cross-price elasticity of demand between two goods is positive, they are
• If a rise in the price of good 1 decreases the quantity of good 2 demanded:
• A negative cross elasticity of demand between two goods indicates they are
• An increase in subway fares in New York City will boost your expenditures on subway rides if
• If a rightward shift of the supply curve causes the price to fall by 6 percent and the quantity demanded to rise by 5 percent, the price elasticity of demand is approximately:
• When the price elasticity of demand equals zero, the demand curve is
• If demand is elastic, a decrease in price will cause total revenue to
• The cross elasticity of demand between Coca-Cola and Pepsi-Cola is
• A rise in the price of a product lowers the total revenue from the product if the demand for the product is
• Which statement describes perfectly inelastic demand?
• On a straight-line downward-sloping demand curve with an intercept of 100 units, the elasticity at the midpoint (50 units) is:
• A leftward shift of the supply curve of cookies raises the price from 10 cents to 20 cents and decreases the quantity demanded from 700,000 to 500,000. What can you conclude about the elasticity of demand for cookies?
• An elasticity of supply of 2.0 means a percentage change in price leads to a
• In the short run when production inputs are fixed, the elasticity of supply tends to be
• Unit elastic demand means a change in price leads to no change in total revenue.
• A perfectly elastic demand implies that any increase in price will cause quantity demanded dropping to zero.
• If lowering price causes total revenue to rise, what can be said about the price elasticity of demand?
• Demand is inelastic if elasticity is less than 1.
• A shift of the oil supply curve raises the price from $10 to $30 per barrel and reduces the quantity demanded from 40 million to 23 million barrels a day. What can you conclude about the elasticity of demand for oil?
• If a 10 percent increase in price leads to a 20 percent decrease in quantity demanded, the elasticity of demand is
• Which statement correctly describes a good whose income elasticity is always greater than 1 across income ranges?
• The price elasticity of demand can range between
• Of the following, which one is most likely to have a negative income elasticity of demand?
• An increase in Abigail's income decreases her demand for cassette tapes. What type of good are cassette tapes?
• If the price elasticity of demand is infinite, the demand curve is
• The elasticity of demand for Gateway computers is probably:
• If a 10 percent decrease in price raises quantity demanded by 20 percent, the price elasticity of demand is:
• If price increases by 10 percent and quantity demanded decreases by 60 percent, the price elasticity of demand is:
• Which statement is true about the price elasticity of demand?
• If the quantity of new cars increases by 10 percent and the price elasticity of demand for new cars is 1.25, the price will fall by
• A perfectly elastic supply curve has elasticity of supply equal to
• If the cross-price elasticity between two goods is zero, the goods are
• Suppose the price of peaches rises from $5.50 to $6.60 per unit and the quantity demanded falls from 12,500 to 11,250 units. The price elasticity of demand is approximately:
• Compared to a steep demand curve, a flatter demand curve indicates
• Aglets are the metal or plastic tips on shoelaces. The demand for aglets is probably:
• Which good is likely to have the least elastic demand?
• To say that turnips are inferior goods means that the income elasticity
• On a linear demand curve that intersects both axes, which statement is true about elasticity as price falls and quantity increases?
• A product with many substitutes tends to have higher elasticity than a product with few substitutes.
• A fall in the price of X from $12 to $8 causes an increase in the quantity of Y demanded from 900 to 1,100 units. What is the cross elasticity of demand between X and Y?
• When the price of good B rises and the quantity demanded of good A also increases, A and B are
• For the cabbage example, the percent change in price is approximately -9.5 percent and the percent change in quantity demanded is approximately +12.8 percent. The elasticity is closest to:
• The demand for a good is elastic if
• The price elasticity of demand is 5.0 if a 10 percent increase in price results in a ________ decrease in the quantity demanded.
• The income elasticity of demand is the percentage change in
• Which statement about a straight-line demand curve is true?
• Cross-price elasticity for widgets and McBoover devices when McBoover price falls from $11 to $9 and widgets demand increases is
• An income elasticity of demand equal to 1.2 indicates the good is
• A good whose income elasticity is always greater than 1 across income ranges is best described as a
• A horizontal supply curve indicates an elasticity of supply that equals
• If the cross elasticity of demand between two goods is positive, the goods are
• A fall in the price of lemons from $10.50 to $9.50 per bushel increases the quantity demanded from 19,200 to 20,800 bushels. The price elasticity of demand is approximately:
• An income elasticity of demand of 0.5 indicates the good is
• Which statement best describes a normal good with income elasticity between 0 and 1?
• A demand curve with unit elasticity at all prices is best described as
• If a demand curve is perfectly inelastic, the price elasticity of demand is
• If the price elasticity of demand for oil is 0.1, in order to lower the price by 20 percent, the quantity supplied must be increased by
• The cross elasticity of demand measures the responsiveness of the quantity demanded of a good to changes in the prices of:
• For a linear demand curve, elasticity tends to be higher at higher prices and lower at lower prices.
• If at a given moment, producers cannot change the quantity supplied regardless of price, the momentary supply elasticity is
• The elasticity of supply measures the responsiveness of
• On a straight-line downward-sloping demand curve, moving toward the vertical intercept causes elasticity to
• Compared with the overall market for automobiles, the demand for a specific car model like the Honda Accord is typically:
• Which statement best explains why elasticity varies along a straight-line demand curve?
• A good with a vertical demand curve has zero elasticity.
• Moving up along a linear demand curve, the price elasticity of demand
• If two goods A and B are substitutes, cross elasticity is:
• In a scenario where the price of oil rises from $10 to $15 per barrel and the quantity demanded falls from 40 million to 15 million barrels a day, the demand for oil is
• If substitutability between Northwest timber and Southeast timber is high, the cross elasticity of demand between timber from the two regions is ______ and the own-price elasticity of demand for Northwest timber is ______.
• If price increases and quantity supplied rises moderately, the supply is considered
• If a product has many close substitutes, its price elasticity of demand tends to be
• A rise in the price of good A will shift the
• The price elasticity of demand depends on the units used to measure price and quantity.
• A cross-price elasticity of -0.5 indicates that the two goods are
• With perfectly inelastic demand, a rise in price leaves quantity demanded unchanged, so total revenue:
• A good with perfectly elastic demand is best described by which statement?
• On a straight-line downward-sloping demand curve, where is the maximum elasticity located?
• With price rising from $1 to $2 and quantity rising from 80 to 320, the elasticity consistent with the data is about 1.8 for which of the following?
• What defines unit elastic demand?
• If the price of snow peas falls from $4.00 to $3.00 a bushel, total revenue will:
• A good with income elasticity greater than 1 is typically called a
• Goods with no substitutes tend to have price elasticity that is
• In the price range from 6 to 8 and from 8 to 6, elasticity status is both elastic.
• A 10 percent increase in income causes the quantity of orange juice demanded to increase from 19,200 to 20,800 gallons. The income elasticity of demand for orange juice is
• When demand is elastic, lowering the price will typically cause total revenue to
• For a straight-line demand curve intercepting the quantity axis at 200 units, the elasticity equals 1 at a quantity of
• What does the price elasticity of demand measure?
• If the cross elasticity of demand between two goods is zero, the goods are
• If the price elasticity of demand equals 1, as its price rises, total revenue will
• A shift of the oil supply curve raises the price from $10 to $15 per barrel and reduces the quantity demanded from 40 million to 15 million barrels a day. What can you conclude about the demand for oil?
• If the cross elasticity of demand between goods A and B is positive,
• Compared with the overall market for computers, the elasticity of demand for Gateway computers is likely to be:
• A product is likely to have a price elasticity of demand greater than 1 when which condition holds?
• If the elasticity is between 0 and 1, demand is
• If a rise in the price of oranges from $7 to $9 a bushel, caused by a shift of the demand curve, increases the quantity of bushels supplied from 4,500 to 5,500 bushels, the correct interpretation is
• If the price increases and total revenue falls, the demand for the good is
• Cross elasticity of demand is zero means the two goods are
• The slope of a demand curve depends on which units are used to measure price and quantity.
• On a linear demand curve, elasticity is higher at higher prices than at lower prices.
• A 10 percent increase in income has caused a 5 percent decrease in the quantity demanded. The income elasticity is
• If an increase in the price of Good B leads to an increase in the demand for Good A, A and B are
• If demand is unit elastic, a 5% increase in price results in what change in total revenue?
• Joan's income has just risen from $940 per week to $1,060 per week. As a result, she decides to purchase 12 percent more lettuce per week. The income elasticity of Joan's demand for lettuce is
• A demand curve with unit elasticity at all prices is described as
• Which of the following indicates inelastic demand?
• If the quantity axis for coal is changed from pounds to kilograms, the price elasticity of demand for coal becomes
• Cross-price elasticity of demand for widgets and McBoover devices when McBoover price rises from $9 to $11 and widgets demand increases is
• If the price rises by 5% and quantity supplied rises by 7%, the elasticity is 1.4, which statement is true?
• Which formula defines price elasticity of demand?
• Which best describes what the elasticity of supply measures?
• Which statement best defines elastic supply?
• Goods whose income elasticities are negative are called
• A rise in the price of cabbage from $14 to $18 per bushel, caused by a shift of the demand curve, increases the quantity supplied from 4,000 to 6,000 bushels. The elasticity of supply is
• Which of the following is likely to have the smallest price elasticity of demand?
• If goods are complements, definitely their:
• If the income elasticity of demand for a good is greater than 1, the good is a
• Which factor tends to increase the price elasticity of demand for a good?
• If demand is elastic, a decrease in price will generally lead to a(n) ______ in total revenue.
• If income elasticity is negative, the good is
• The cross elasticity of demand between apples and oranges is defined as:
• Producers' total revenue will decrease if price rises and demand is elastic.
• As income rises, the share of income spent on food in the United States
• A product with no close substitutes is likely to have price elasticity of demand that is
• If the quantity demanded of root beer declines from 103,000 gallons per week to 97,000 gallons per week as the price increases by 10 percent, the price elasticity of demand is approximately:
• The cross elasticity of demand measures the responsiveness of the quantity demanded of a particular good to changes in the prices of:
• If a 1 percent decrease in the price of squash results in a larger percentage decrease in the quantity supplied, the supply is
• If a 5 percent increase in the price results in a 9 percent increase in quantity supplied, the elasticity of supply is
• A vertical supply curve indicates an elasticity of supply that equals
• A shift of the supply curve of oil raises the price of oil from $9.50 a barrel to $10.50 a barrel and reduces the quantity demanded from 41 million to 39 million barrels a day. The price elasticity of demand for oil is:
• If cross elasticity between two goods is negative, the goods are
• When demand is unit elastic, a price change leads to an approximately proportional opposite change in quantity demanded, causing total revenue to
• If a 5 percent increase in price leads to a 3 percent increase in quantity supplied, the elasticity of supply is
• On a linear demand curve, the price range from 8 to 6 is elastic; in the range 4 to 2 it is inelastic.
• The more substitutes available for a product,
• Which statement defines unit elastic demand?
• If a small price change leads to a larger percentage change in quantity demanded, the elasticity is:
• A 10 percent decrease in income decreases the quantity demanded of compact discs by 3 percent. The income elasticity of demand for compact discs is
• A fall in the price of cabbage from $10.50 to $9.50 per bushel increases the quantity demanded from 18,800 to 21,200 bushels. The price elasticity of demand (in magnitude) is closest to:
• A product that is highly responsive to price changes has
• What happens to total revenue at the unit-elastic point on a straight-line demand curve?
• Which statement about unit independence is true?
• In the price range from $8 to $6, the demand is price elastic.
• A necessity with few substitutes tends to have which level of price elasticity of demand?
• A 10 percent decrease in the price of a Pepsi decreases the demand for a Coca-Cola by 50 percent. The cross elasticity of demand between Pepsi and Coca-Cola is
• A straight-line demand curve with negative slope intersects the horizontal axis at 200 units. The point where elasticity equals 1 corresponds to a quantity of
• A fall in the price of X from $12 to $8 causes an increase in the quantity of Y demanded from 900 to 1,100 units. X and Y are
• If a good's income elasticity is positive, which statement is true?
• The price elasticity of demand for snow peas between $6.00 and $7.00 per bushel is:
• When a price falls, a proportionately larger rise in quantity demanded causes total expenditure to
• Producers' total revenue will increase if price rises and demand is inelastic.
• A product with infinite elasticity has a horizontal demand curve.
• If the income elasticity of demand for a good is 0, the quantity demanded will
• A good with income elasticity greater than 0 but less than 1 is generally classified as which type of good?
• If a fall in the price of good A increases the quantity demanded of good B, A and B are
• For a linear demand curve, elasticity is greater in the higher price range (8-10) than in the lower price range (2-4).