Microecon Ch. 5

Which of the following would cause a demand curve for a good to be price inelastic? A) There are a great number of substitutes for the good B) The good is inferior C) The good is a luxury D) The good is a necessity

D) The good is a necessity

If the income elasticity of demand for a good is negative, it must be: A) A luxury good B) A normal good C) An inferior good D) An elastic good

C) An inferior good

If the cross-price elasticity between two goods is negative, the two goods are likely to be: A) Luxuries B) Necessities C) Complements D) Substitutes

C) Complements

If an increase in the price of a good has no impact on the total revenue in that market, demand must be: A) Price inelastic B) Price elastic C) Unit price elastic D) All of the above

C) Unit price elastic

If consumers think that there are very few substitutes for a good, then: A) Supply would tend to be price elastic B) Supply would tend to be price inelastic C) Demand would tent to be price elastic D) Demand would tend to be price inelastic E) None of the above is true

D) Demand would tend to be price inelastic

Technological improvements in agriculture that shift the supply of agricultural commodities to the right tend to: A) Reduce total revenue to farmers as a whole because the demand for food is inelastic B) Reduce total revenue to farmers as a whole because the demand for food is elastic C) Increase total revenue to farmers as a whole because the demand for food is inelastic D) Increase total revenue to farmers as a whole because the demand for food is elastic

A) Reduce total revenue to farmers as a whole because the demand for food is inelastic

If a fisherman must sell all of his daily catch before it spoils for whatever price he is offered, once the fish are caught, the fisherman's price elasticity of supply for fresh fish is: A) Zero B) One C) Infinite D) Unable to be determined from this information

A) Zero

In general, a flatter demand curve is more likely to be: A) Price elastic B) Price inelastic C) Unit price elastic D) None of the above

A) Price elastic

If a supply curve for a good is price elastic, then: A) The quantity supplied is sensitive to change in the price of that good B) The quantity supplied is insensitive to changes in the price of that good C) The quantity demanded is sensitive to changes in the price of that good D) The quantity demanded is insensitive to changes in the price of that good

A) The quantity supplied is sensitive to change in the price of that good

If consumers always spend 15 percent of their income on food, then the income elasticity of demand for food is: A) 0.15 B) 1.00 C) 1.15 D) 1.50 E) None of the above

B) 1.00

If supply is price inelastic, the value of the price elasticity of supply must be: A) Zero B) less than 1 C) Greater than 1 D) Infinite E) None of the above

B) Less than 1

If a small percentage increase in the price of a good greatly reduces the quantity demanded for that good, the demand for that good is: A) Price inelastic B) Price elastic C) Unit price elastic D) Income inelastic E) Income elastic

B) Price elastic

If there is excess capacity in the production facility, it is likely that the firm's supply curve is: A) Price inelastic B) Price elastic C) Unit price elastic D) None of the above

B) Price elastic

In general, a steeper supply curve is more likely to be: A) Price elastic B) Price inelastic C) Unit price elastic D) None of the above

B) Price inelastic

Questions #16-#17 refer to handout ... If demand is linear ( a straight line), then the price elasticity of demand is: A) Constant along the demand curve B) Inelastic in the upper portion and elastic in the lower portion C) Elastic in the upper portion and inelastic in the lower portion D) Elastic throughout E) Inelastic throughout

C) Elastic in the upper portion and inelastic in the lower portion

The price elasticity of demand is defined as: A) The percentage change in price of a good divided by the percentage change in the quantity demanded of that good B) The percentage change in the income divided by the percentage change in quantity demanded C) The percentage change in the quantity demanded for a good divided by the percentage change in the price of that good D) The percentage change in the quantity demanded divided by the percentage change in income E) None of the above

C) The percentage change in the quantity demanded for a good divided by the percentage change in the price of that good

A decrease in supply (shift to the left) will increase total revenue in that market if: A) Supply is price elastic B) Supply is price inelastic C) Demand is price elastic D) Demand is price inelastic

D) Demand is price inelastic

The demand for which of the following is likely to be the most price elastic? A) Airline tickets B) Bus tickets C) Taxi rides D) Transportation

D) Transportation