ECON MICRO 5th Edition by William A. McEachern - Test Bank Instant Download - Complete Test Bank With Answers Sample Questions Are Posted Below True / False 1. If demand is inelastic, the percentage change in price is greater than the resulting percentage change in quantity demanded. a. True …
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ECON MICRO 5th Edition by William A. McEachern – Test Bank
Instant Download – Complete Test Bank With Answers
Sample Questions Are Posted Below
| True / False |
1. If demand is inelastic, the percentage change in price is greater than the resulting percentage change in quantity demanded.
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2. If demand is elastic, a decrease in price leads to a decrease in total revenue.
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3. Total revenue is maximized where demand is inelastic.
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4. As price decreases along a linear demand curve, the price elasticity of demand decreases.
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5. Elasticity rises as price falls along a linear downward-sloping demand curve.
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6. Price elasticity is 1 at the midpoint of a linear downward-sloping demand curve.
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7. Total revenue is the same for every price-quantity combination along a unit-elastic demand curve.
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8. The availability of substitutes makes the demand for a good less elastic.
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9. The demand for firewood is likely to be more elastic in the summer than in the winter.
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10. The greater the availability of close substitutes for a product, the greater the price elasticity of demand for that product.
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11. The larger the proportion of a consumer’s budget that is spent on a product, the more the consumer will demand a substitute.
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12. As consumers have a longer time period to respond, the demand for a product typically becomes more inelastic.
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13. The ability of increasing quantity supplied in response to a higher price is identical across industries.
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14. If the demand curve shifts, but the supply curve does not, and the price remains the same, supply must be perfectly inelastic.
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15. Any supply curve that is a straight line passing through the graph’s origin is unit elastic.
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16. If income rises and the demand for a product remains unchanged, the income elasticity of demand for that product is unit elastic.
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17. Both the income elasticity of demand and the cross-price elasticity of demand coefficients can take on negative, zero, or positive values.
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18. Necessities and luxuries are both types of normal goods.
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19. A normal good is defined as a product for which quantity demanded increases as price decreases.
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20. When the cross-price elasticity of demand between two products is positive, the two goods are said to be substitutes.
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21. Cross-price elasticity measures the responsiveness of the price of good A to a change in the price of good B.
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22. Substitutes are pairs of goods that have a positive cross-price elasticity of demand.
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| Multiple Choice |
23. Which of the following is assumed to be constant while calculating the price elasticity of demand?
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24. The price elasticity of demand is defined as:
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25. The price elasticity of demand is useful because it measures the responsiveness of _____ to changes in _____.
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26. The price elasticity of demand is calculated as:
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27. The price elasticity of demand is typically negative because:
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28. If the price of Pepsi-Cola increases from 40 cents to 50 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the value of the price elasticity of demand for Pepsi-Cola is:
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| 29. Table 5.1 shows the change in the quantity demanded for a product as a result of a change in the price of the product. Use the information in the table below to calculate the value of the price elasticity of demand.
Table 5.1
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30. If the price elasticity of demand is −0.5, then a:
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| 31. Table 5.2 shows the change in the quantity demanded for Good A and Good B as a result of the change in their price. Use the information in the table below to calculate the price elasticity of demand for Good A.
Table 5.2
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| 32. Table 5.2 shows the change in the quantity demanded for Good A and Good B as a result of the change in their price. Use the information in the table below to calculate the value of the price elasticity of demand for Good B.
Table 5.2
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| 33. Table 5.3 shows the quantity supplied and the quantity demanded for restaurant meals at different prices. Use the information in the table below to calculate the value of the price elasticity of demand for restaurant meals.
Table 5.3
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34. 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 the value of the price elasticity of demand is:
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35. Another word for elasticity is _____.
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36. Elasticity measures:
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37. Demand is inelastic only if the price elasticity of demand has an absolute value:
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38. Demand is unit elastic whenever
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39. Demand is inelastic if:
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40. Unit-elastic demand occurs when:
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41. Elasticity is always _____.
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42. If a 5 percent increase in price leads to an 8 percent decrease in quantity demanded, demand is:
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43. If an increase in the price of a product from $100 to $200 per unit leads to a decrease in the quantity demanded from 10 to 8 units, then demand is:
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44. If the price of Pepsi-Cola increases from 50 cents to 60 cents per can and the quantity demanded decreases from 100 cans to 50 cans, then the demand for Pepsi-Cola is:
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45. 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 the demand is:
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46. The price elasticity of demand for milk when quantity is measured in gallons will be _____ the price elasticity when quantity is measured in quarts.
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47. Wheat farmers in Kansas would benefit from a devastating crop failure in North Dakota (another major wheat-producing state) if the U.S. demand for wheat is:
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48. When agricultural production increases, the total amount paid for agricultural products tends to:
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49. Suppose consumers spent $42 million on Christmas trees last year, when the average tree cost was $30. This year they spend $42 million, when the average tree costs $25. Assume that everything else remains constant. This data suggests that:
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50. A government-imposed price floor above the market price of milk would increase consumers’ expenditures on milk only if _____.
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51. The price elasticity of demand helps determine the effect of price changes on a firm’s:
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52. Which of the following determines a firm’s revenue when it changes the price of its product?
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| 53. Table 5.4 shows the price and quantity combinations for a product. The demand for the good is _____, and an increase in the price of the product from $40 to $60 per unit will _____ total revenue.
Table 5.4
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54. If a firm raises the price of its product, its total revenue will:
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55. If a price reduction leads to an increase in total revenue, demand is:
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56. If demand is price elastic, total revenue is:
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57. If city officials expect that an increase in bus fares will raise mass transit revenues, they must think that the demand for bus travel is _____.
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58. A university administration’s decision to raise tuition in order to increase revenue will be successful if:
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59. If demand is unit elastic, a price reduction will:
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60. The demand for a good is elastic if:
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61. Which of the following describes a situation in which demand must be inelastic?
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62. One group of people uses New York City subways only during rush hour to travel to and from work. Another group uses them only in midday for leisure activity. If New York City wants to increase transit fares with the smallest possible reduction in revenue, for which group should it increase the fare?
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63. The total revenue from selling trucks is equal to:
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| 64. Figure 5.1 shows the demand curve for a firm. In the figure below, the total revenue at point a is _____.
Figure 5.1
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65. Suppose the price elasticity of demand for your economics textbook is −1. If the publisher raises the price by 5 percent:
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66. Identify a statement that is true about a linear demand curve.
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67. Along a linear demand curve, as the price increases from zero:
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| 68. Figure 5.2 shows a demand curve. D, the demand curve in the figure below is an example of a(n):
Figure 5.2.
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69. Which of the following statements is not true?
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| 70. Figure 5.3 shows a linear demand curve. Between points A and B, the demand is:
Figure 5.3
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| 71. Figure 5.3 shows a linear demand curve. Between points B and C, the demand is:
Figure 5.3
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| 72. Figure 5.3 shows a linear demand curve. Between points C and D, the demand is:
Figure 5.3
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| 73. Figure 5.3 shows a linear demand curve. As you move from point A to point B along the demand curve, total revenue _____ and the demand is _____.
Figure 5.3
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| 74. Figure 5.3 shows a linear demand curve. As you move from point B to point C along the demand curve, total revenue _____ and the demand is _____.
Figure 5.3
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75. The total revenue curve that corresponds to a downward-sloping linear demand curve:
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| 76. Figure 5.4 shows a downward-sloping linear demand curve. In the figure below, demand is unit elastic:
Figure 5.4
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| 77. Figure 5.4 shows a downward-sloping linear demand curve. Between points b and c in the figure below, price decreases by $1, quantity demanded increases by 10, _____.
Figure 5.4
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| 78. Figure 5.4 shows a downward-sloping linear demand curve. Which of the following is true between points g and h in the figure below?
Figure 5.4
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| 79. Figure 5.5 shows the total revenue curve for a firm. Which of the following statements is true in the range of the total revenue curve labeled A?
Figure 5.5
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| 80. Figure 5.5 shows the total revenue curve for a firm. Which of the following statements is true in the range of the total revenue curve labeled B?
Figure 5.5.
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| 81. Figure 5.5 shows the total revenue curve for a firm. Which of the following statements is true at a quantity of 10?
Figure 5.5
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| 82. Figure 5.5 shows the total revenue curve for a firm. Which of the following is not true in the range of the total revenue curve labeled A?
Figure 5.5
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83. A perfectly elastic demand curve is:
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84. If a firm facing a perfectly elastic demand curve raises its price, then:
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85. A perfectly inelastic demand curve is:
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86. For which of the following products is the consumer’s demand curve most likely to be vertical?
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87. John spends exactly the same dollar amount on candy bars each week, regardless of their price. John’s demand curve for candy bars is:
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| 88. Figure 5.6 shows a vertical demand curve. The demand in the figure below is:
Figure 5.6
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| 89. Figure 5.6 shows a vertical demand curve. The price elasticity of demand in the figure below is _____.
Figure 5.6
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90. If Joe says that nothing comes close to a Pepsi, his demand for Pepsi is likely to be:
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91. Given the availability of California oranges, the demand for Florida oranges will:
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92. The value of the price elasticity of demand for a good with no close substitutes tends to be:
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93. Demand is more elastic:
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94. Which of the following does not determine a good’s price elasticity of demand?
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95. Which of the following is a possible reason for the price elasticity of demand for cigarettes being large for young smokers?
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96. For which of the following is demand most likely to be perfectly inelastic?
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97. A good that is defined broadly has:
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98. The demand for Olin skis is likely to be:
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99. The demand curve for a good that has many perfect substitutes is likely to be:
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100. A successful advertising campaign is most likely to:
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101. As DVDs become popular substitutes for video cassettes, demand for video cassettes is likely to:
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102. Luis wonders why commercials appear more frequently at the end of a TV movie than at the beginning. Carol says that this pattern can be explained by the:
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103. A good that takes up a very large percentage of a consumer’s budget will tend to have:
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104. All other things constant, if a _____ proportion of a consumer’s budget is spent on a good, the demand for the good will be more _____ and a consumer will purchase a substitute instead.
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105. Given the proportion of a consumer’s income spent on various goods, the demand for _____ is likely to be the most price inelastic.
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106. The demand for flour is:
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107. Which of the following goods will have a higher price elasticity of demand?
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108. If people have more time to adjust to a price change, the price elasticity of demand for that good is likely to:
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| 109. Figure 5.7 shows four demand curves. The demand curve that best illustrates how consumers will respond to a change in price over a very long time period is:
Figure 5.7
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110. If an increase in price from $1 to $2 per unit leads to an increase in quantity supplied from 20 to 100 units, then the value of the price elasticity of supply is:
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111. If price increases from $45 to $55, the market quantity supplied increases from 20 units per week to 30 units per week. The price elasticity of supply is:
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112. If the price elasticity of supply in the kiwi fruit industry equals 1, supply is:
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113. If an increase in price from $1.20 to $2 per unit leads to an increase in quantity supplied from 20 to 100 units, then:
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114. The supply of paintings by Van Gogh is most likely to be:
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115. The supply of a product will be more elastic if:
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| 116. Table 5.5 shows the quantity supplied and the quantity demanded for restaurant meals at different prices. Use the information in the table below to calculate the price elasticity of supply for restaurant meals.
Table 5.5
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117. A common determinant of both the price elasticity of demand and the price elasticity of supply for a product is:
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118. One determinant of the price elasticity of supply is:
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119. If supply is perfectly elastic, the supply curve is:
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| 120. Figure 5.8 shows a horizontal line. The curve shown in the figure below could represent a:
Figure 5.8
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121. The supply curve for dorm rooms on a university campus is likely to be:
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| 122. Figure 5.9 shows three upward-sloping linear supply curves. Which of the following supply curves is the most elastic and which is the least elastic between the prices of $5 and $6?
Figure 5.9
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| 123. Figure 5.10 shows two upward-sloping linear supply curves that pass through the origin. The price elasticity of supply between $10 and $20 on the supply curve S is _____.
Figure 5.10
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| 124. Figure 5.10 shows two upward-sloping linear supply curves that pass through the origin. The price elasticity of supply between $20 and $40 on the supply curve S’ is _____.
Figure 5.10
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| 125. Figure 5.10 shows two upward-sloping linear supply curves that pass through the origin. Which supply curve is more elastic in the figure below?
Figure 5.10
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126. Inferior goods have an income elasticity of demand that is:
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| 127. Table 5.6 shows the change in the quantity demanded for Good A and Good B as a result of a change in income. Use the information in the table below to calculate the value of the income elasticity of demand for Good A.
Table 5.6
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| 128. Table 5.6 shows the change in the quantity demanded for Good A and Good B as a result of a change in income. Use the information in the table below to calculate the value of the income elasticity of demand for Good B.
Table 5.6
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129. Goods with an income elasticity of demand greater than 1 are called:
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130. As the economy recovers from a recession, we should expect that the:
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131. Demand for a necessity, such as food, is:
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132. Income elasticity of demand is greater than zero for all of the following except:
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133. For which of the following goods is the value of income elasticity most likely to be negative?
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134. An inferior good is:
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135. In order to prove that macaroni is an inferior good, we could test the _____ of macaroni and get a _____.
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136. A 5 percent increase in income leads to a 10 percent increase in the quantity demanded for a service. This service is a(n) _____ good, and the demand is _____.
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137. If the income elasticity of demand for a service is 0.6, then a 5 percent increase in income will generate a _____ in quantity demanded.
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138. Economists distinguish between normal and inferior goods using:
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139. Luxury goods are:
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140. The value of the cross-price elasticity of demand between golf balls and golf clubs is:
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141. The cross-price elasticity of demand measures the:
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142. The cross-price elasticity of demand between milk and soft drinks is likely to be:
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143. If the cross-price elasticity of demand is −3, then:
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144. If an increase in the price of peanut butter causes a decline in the demand for jelly, then:
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145. A 10 percent increase in the price of root beer causes a 5 percent increase in the quantity demanded of orange soda. This means that:
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146. The cross-price elasticity of demand is used to determine whether:
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147. The percentage change in the demand for film divided by the percentage change in the price of cameras indicates:
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148. The cross-price elasticity of demand between pancakes and waffles is positive. This indicates all of the following except one. Which is the exception?
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149. In order to prove that Coca Cola and 7-Up are substitutes, one should test the _____ and get a _____.
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150. If the cross-price elasticity of demand between Good x and Good y is 0.4, then:
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Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
Original price was: $30.00.$20.00Current price is: $20.00.
