Chapter 6 Quiz

Which of the following factors will make the demand for a product relatively elastic? A) there are few substitutes B) the time interval considered is long C) the good is considered a necessity D) purchases of the good require a small portion of consumers' budgets

B) the time interval considered is long

Suppose the price of a product rises and the total revenue of sellers increases.

No conclusion can be reached with respect to the elasticity of supply.

Which product is most likely to be the most price elastic? A) milk B) housing C) clothing D) automobiles

D) automobiles

What is the most likely effect of the development of rental movies and online movie streaming on the cinema industry? A) decreased costs of producing movies B) increased demand for movie tickets C) movie theater tickets become and inferior good D) increased price elasticity of demand for movie theater tickets

D) increased price elasticity of demand for movie theater tickets

For a linear demand curve:

Demand is elastic at relatively high prices.

It is argued that, with a rising demand for college education, if supply were to become more elastic, then college tuition costs would

Increase more slowly

Chuck has a price elasticity of demand for beer of 1.2. Suppose that the price of beer is increased by 10%. What will happen to the total amount chuck spends in beer?

It will decrease

The supply of cara will be more elastic the

Longer the time interval considered

The demand for a necessity whose cost is a small portion of one's total income is

Relatively price inelastic

Sony is considering a 10 percent price reduction on its color television sets. If the price-elasticity coefficient for the sets in this price range is 0.75, then the price cut will cause:

Sales quantity to increase but revenues to decrease

The demand for Cheerios cereal is more price-elastic than the demand for cereals as a whole. This is best explained by the fact that:

There are more substitutes for Cheerios than for cereals as a whole

The price elasticity of demand is generally

negative, but the minus sign is ignored.

If a college admits only a fixed number of applicants every year, then the school's supply curve for admissions is:

perfectly inelastic

The law of supply suggests that the price-elasticity of supply is

positive

The elasticity of demand for a product is likely to be greater

the greater the amount of time over which buyers adjust to a price change.