Econ Chapter 20

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1.  145.   If the demand for good X is inelastic in the short run, then it will be __________ in the long run (as more time passes).
A.
B.
C.
D.
E.
2.     71.   When the price of cigarettes decreases by 6 percent, the quantity demanded increases by 2 percent. The price elasticity of demand for cigarettes is __________, making cigarettes an ____________ product.
A.
B.
C.
D.
E.
3.  113.   Refer to Exhibit 5-6. Let S1 be the supply curve of a firm. If S2 represents the supply curve of the same firm after the government imposes a per-unit tax, the tax is
A.
B.
C.
D.
4.     33.   If the cross elasticity of demand for good A with respect to good B is +2.7, then good A is
A.
B.
C.
D.
5.  125.   As the price of good X rises from $10 to $12 the result is a decrease in the quantity demanded of good X from 120 units to 100 units. The price elasticity of demand for good X is _____________ and total revenue __________ as the price of good X rises from $10 to $12.
A.
B.
C.
D.
6.  100.   If a small increase in the price of a good reduces quantity demanded to zero, demand is ________________ and the price elasticity of demand is
A.
B.
C.
D.
7.     59.   Refer to Exhibit 5-2. The market for good X is initially in equilibrium at $5. The government then places a tax on the producers of good X-in effect, taxing them on each unit of good X they sell. As a result, the supply curve
A.
B.
C.
D.
8.  166.   If demand is __________, price and total revenue are __________ related; if demand is __________, price and total revenue are directly related.
A.
B.
C.
D.
E.
9.  116.   Refer to Exhibit 5-6. Suppose the three equilibrium quantities are 700, 800, and 900, and the two other equilibrium prices are $2.20 and $2.75. What is the tax revenue collected from the tax that shifted S1 to S2 when D1 is the relevant demand curve?
A.
B.
C.
D.
10.  108.   Refer to Exhibit 5-5. Assume that the seller of X increases the price from $1.50 to $2.00, and this results in an increase in total revenue. Which of the graphs represents the demand curve for X?
A.
B.
C.
D.
11.     25.   Cross elasticity of demand is the percentage change in the quantity __________ of a good divided by the percentage change in __________.
A.
B.
C.
D.
E.
12.  168.   If supply is inelastic, it follows that
A.
B.
C.
D.
E.
13.     85.   Cross elasticity of demand measures the responsiveness of
A.
B.
C.
D.
E.
14.  168.   If supply is inelastic, it follows that
A.
B.
C.
D.
E.
15.       7.   Price falls from $1.80 to $1.70, and the quantity demanded rises from 110 units to 118 units. What is the price elasticity of demand between these two prices?
A.
B.
C.
D.
E.
16.  134.   If the price elasticity of demand for a good is zero, then demand is
A.
B.
C.
D.
E.
17.     60.   Refer to Exhibit 5-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S1 to S2. As a result, the equilibrium price
A.
B.
C.
D.
18.     57.   Refer to Exhibit 5-l. The demand curve D2 is
A.
B.
C.
D.
E.
19.     72.   If the demand for a good is elastic, then
A.
B.
C.
D.
E.
20.  120.   Refer to Exhibit 5-7. If the government is contemplating imposing a per-unit tax and it wants the tax to have as small a negative effect on consumers as possible, it should choose a good for which the market is depicted on graph
A.
B.
C.
D.
21.     28.   If goods A and B have a cross elasticity of demand that is positive, this is evidence that goods A and B are __________ goods.
A.
B.
C.
D.
22.    Price of Good A Quantity Demanded of Good A Quantity Supplied of Good A $5.50 5 55 $4.50 15 45 $3.50 25 35 $2.50 35 25 $1.50 45 15 $0.50 55 5 84.   Refer to Exhibit 5-3. When price decreases from $1.50 to $0.50, the price elasticity of supply is
A.
B.
C.
D.
23.  140.   Which of the following statements is true?
A.
B.
C.
D.
E.
24.  115.   Refer to Exhibit 5-6. Let S1 be the supply curve of a producer. If S2 is the supply curve of the same producer after the government imposes a per-unit tax, the share of the tax paid by the producer as compared to the share of the tax paid by consumers will be
A.
B.
C.
D.
25.  155.   For a normal good, __________ falls as income __________; for an inferior good, __________ rises as income __________.
A.
B.
C.
D.
26.     31.   If the price of good A decreases by 10 percent and the quantity demanded of good B decreases by 10 percent, this is evidence that A and B are
A.
B.
C.
D.
E.
27.     35.   If Jack bought 21 CDs last year when his income was $18,000 and he buys 23 CDs this year when his income is $20,000, then his income elasticity of demand is ______________ making CDs a(n) ______________ good for Jack.
A.
B.
C.
D.
E.
28.       5.   If the price of good X rises and the demand for good X is elastic, then the percentage __________ in quantity demanded is __________ the percentage rise in price, and total revenue __________.
A.
B.
C.
D.
E.
29.  110.   Refer to Exhibit 5-5. Which of the graphs represents a greater percentage change in quantity demanded than the percentage change in price?
A.
B.
C.
D.
30.  167.   If income elasticity of demand is 2.12, it means that quantity demanded will __________ by 2.12 percent for every __________ percent __________ in income.
A.
B.
C.
D.
E.
31.     26.   Cross elasticity of demand measures the responsiveness of changes in the quantity __________ of one good to changes in __________.
A.
B.
C.
D.
E.
32.     53.   The demand curve for good X is generally highly inelastic at and around the current price. If we assume that the supply curve is neither perfectly elastic nor perfectly inelastic, then who will pay the greater share of a tax placed on the production of good X?
A.
B.
C.
D.
33.  118.   Refer to Exhibit 5-7. Which of the graphs shows a perfectly elastic demand curve?
A.
B.
C.
D.
34.       1.   Price elasticity of demand is a measure of the responsiveness of quantity demanded to changes in
A.
B.
C.
D.
35.     12.   Suppose at a price of $4 and at a price of $6, John purchases 40 units of good X. Given this information, we know that
A.
B.
C.
D.
E.
36.  135.   If the seller of good X raises the price of good X, it follows that the total revenue of good X will __________, if demand is __________.
A.
B.
C.
D.
E.
37.     22.   A good will tend to have a low price elasticity of demand if
A.
B.
C.
D.
38.  165.   Which of the following statements is false?
A.
B.
C.
D.
39.     54.   The quantity supplied of land is constant regardless of price. Suppose a tax is imposed on the rental price of land. Who will pay the greater share of such a tax?
A.
B.
C.
D.
40.  Which of the following would result in higher price elasticity?
A.
B.
C.
D.
41.     56.   Refer to Exhibit 5-1. The demand curve D1 is
A.
B.
C.
D.
E.
42.       4.   If the price elasticity of demand for a given product is 7, this means that
A.
B.
C.
D.
E.
43.  If the price of good X rises and the demand for good X is inelastic, then the percentage fall in quantity demanded is __________ the percentage rise in price, and total revenue __________.
A.
B.
C.
D.
E.
44.     50.   Suppose a producer decides that if the price of her product is $9, the quantity supplied will be 1,000 units, and if the price is $11, the quantity supplied will be 1,300. The price elasticity of supply for the good is approximately
A.
B.
C.
D.
E.
45.  119.   Refer to Exhibit 5-7. Which of the graphs shows a perfectly inelastic demand curve?
A.
B.
C.
D.
46.     23.   The shorter the period of time consumers have to adjust to price changes, the __________ the __________ elasticity of demand.
A.
B.
C.
D.
47.     48.   Price elasticity of supply registers perfect inelasticity at the value of
A.
B.
C.
D.
48.  150.   Income elasticity of demand for an inferior good is
A.
B.
C.
D.
49.       2.   The price elasticity of demand is the ratio of the
A.
B.
C.
D.
50.     76.   If the demand for a good is unit elastic and the price of the good increases,
A.
B.
C.
D.
51.  130.   Which of the following defines elastic demand?
A.
B.
C.
D.
E.
52.  109.   Refer to Exhibit 5-5. For graph (3), if the seller of X raises the price from $1.50 to $2.00, the total revenue the seller receives will
A.
B.
C.
D.
53.     62.   Refer to Exhibit 5-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S1 to S2. What is the per-unit tax equal to?
A.
B.
C.
D.
E.
54.     90.   If elasticity of demand is 0.5, it follows that a _______ percent decrease in price causes a _______ percent increase in quantity demanded.
A.
B.
C.
D.
E.
55.     24.   The longer the period of time consumers have to adjust to price changes, the __________ the __________ elasticity of demand.
A.
B.
C.
D.
56.  122.   Refer to Exhibit 5-7. As a producer, if you had a choice, which of the depicted markets would you operate in?
A.
B.
C.
D.
57.  178.   The longer the period of time allowed for the producer of a good to adjust to a change in the price of the good, the ____________ the price elasticity of supply will be.  This statement assumes that the quantity supplied __________ be altered with time.
A.
B.
C.
D.
58.     75.   If the demand for a good is inelastic and the price of the good decreases,
A.
B.
C.
D.
59.  16.   For a certain good, when price falls from $20 to $19, quantity demanded rises from 5,000 to 5,700. The price elasticity of demand here is
A.
B.
C.
D.
60.     61.   Refer to Exhibit 5-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S1 to S2. As a result,
A.
B.
C.
D.
E.
61.     32.   If price rises and total revenue falls,
A.
B.
C.
D.
E.
62.       8.   If the percentage change in quantity demanded is greater than the percentage change in price, demand is
A.
B.
C.
D.
63.  121.   Refer to Exhibit 5-7. If the government wants to impose a per-unit tax in order to raise revenues, which of the depicted markets should it choose in order to maximize tax revenues?
A.
B.
C.
D.
64.     30.   If the price of good A decreases by 10 percent and the quantity demanded of good B increases by 10 percent, this is evidence that A and B are
A.
B.
C.
D.
65.     29.   If two goods are substitute goods,
A.
B.
C.
D.
66.     70.   When the price of diamond rings rises by 40 percent, the quantity demanded falls by 10 percent. The price elasticity of demand for diamond rings is ____________, making diamond rings an _______________ good (in this example).
A.
B.
C.
D.
67.    Price of Good A Quantity Demanded of Good A Quantity Supplied of Good A $5.50 5 55 $4.50 15 45 $3.50 25 35 $2.50 35 25 $1.50 45 15 $0.50 55 5 82.   Refer to Exhibit 5-3. When price decreases from $5.50 to $4.50, the price elasticity of supply is
A.
B.
C.
D.
E.
68.  105.   Refer to Exhibit 5-4. As a consequence of the depicted change in supply of X, the demand curve for Y shifted from D1 to D2. What is true of the cross elasticity of demand for Y?
A.
B.
C.
D.
69.     64.   Refer to Exhibit 5-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S1 to S2. Approximately what percentage of the tax do producers end up paying?
A.
B.
C.
D.
70.  114.   Refer to Exhibit 5-6. Let S1 be the supply curve of a producer. If S2 is the supply curve of the same producer after the government imposes a per-unit tax, the tax revenue generated will be
A.
B.
C.
D.
71.  181.   If most drivers are _____________ in their demand for driving, then as cars become more fuel-efficient ______________ greenhouse gases will be emitted.
A.
B.
C.
D.
E.
72.    Price of Good A Quantity Demanded of Good A Quantity Supplied of Good A $5.50 5 55 $4.50 15 45 $3.50 25 35 $2.50 35 25 $1.50 45 15 $0.50 55 5    77.   Refer to Exhibit 5-3. When price decreases from $5.50 to $4.50, the price elasticity of demand is
A.
B.
C.
D.
E.
73.     18.   The fewer substitutes for a good,
A.
B.
C.
D.
74.     11.   If quantity demanded is completely unresponsive to changes in price, demand is
A.
B.
C.
D.
E.
75.  117.   Refer to Exhibit 5-6. Suppose the three equilibrium quantities are 700, 800, and 900, and the two other equilibrium prices are $2.20 and $2.75. What is the change in total revenue when a per-unit tax shifts S1 to S2, given that D2 is the relevant demand curve?
A.
B.
C.
D.
E.
76.  160.   Price elasticity of supply, and price elasticity of demand, are likely to be __________ in the __________ than in the __________.
A.
B.
C.
D.
E.
77.     58.   Refer to Exhibit 5-l. The demand curve D3 is
A.
B.
C.
D.
E.
78.     10.   If the percentage change in quantity demanded is equal to the percentage change in price, demand is
A.
B.
C.
D.
E.
79.  111.   Refer to Exhibit 5-5. For graph (1), what is the price elasticity of demand going between $2.00 and $1.50?
A.
B.
C.
D.
80.     65.   Refer to Exhibit 5-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X as shown by the shift of S1 to S2. What is an expression for the tax revenue raised?
A.
B.
C.
D.
E.
81.  Which of the following would result in higher price elasticity?
A.
B.
C.
D.
82.     16.   For a certain good, when price falls from $20 to $19, quantity demanded rises from 5,000 to 5,700. The price elasticity of demand here is
A.
B.
C.
D.
83.     21.   Vernon spends the following percentages of his budget on the following goods: 23 percent on good A, 11 percent on good B, 1 percent on good C, and 3 percent on good D. For which good is price elasticity of demand the highest, ceteris paribus?
A.
B.
C.
D.
84.  If the price of good X falls and the demand for good X is unit elastic, then the percentage rise in quantity demanded is __________ the percentage fall in price, and total revenue __________.
A.
B.
C.
D.
E.
85.  The price elasticity of demand is lowest for which of the following goods?
A.
B.
C.
D.
E.
86.    Price of Good A Quantity Demanded of Good A Quantity Supplied of Good A $5.50 5 55 $4.50 15 45 $3.50 25 35 $2.50 35 25 $1.50 45 15 $0.50 55 5 79.   Refer to Exhibit 5-3. If price decreases from $5.50 to $4.50, total revenue along the demand curve
A.
B.
C.
D.
E.
87.       9.   If the percentage change in quantity demanded is less than the percentage change in price, demand is
A.
B.
C.
D.
88.     20.   Which of the following statements is false?
A.
B.
C.
D.
89.     74.   If the demand for a good is perfectly inelastic, then
A.
B.
C.
D.
E.
90.  112.   Refer to Exhibit 5-5. For graph (3), what is the price elasticity of demand going between $2.00 and $1.50?
A.
B.
C.
D.
91.     63.   Refer to Exhibit 5-2. The market for good X is initially in equilibrium at $5. The government then places a per-unit tax on good X, as shown by the shift of S1 to S2. Approximately what percentage of the tax do consumers end up paying?
A.
B.
C.
D.
E.
92.     95.   If a 7 percent increase in the price of a commodity results in a 12 percent increase in the quantity supplied, supply is said to be
A.
B.
C.
D.
E.
93.       3.   If quantity demanded rises by 10 percent as price falls by 7 percent, the price elasticity of demand equals
A.
B.
C.
D.
94.     55.   Suppose the demand for a particular good is perfectly inelastic and the government decides to impose a tax on the production of this good. Who will pay the greater share of such a tax?
A.
B.
C.
D.
95.  164.   Which of the following statements represents a correct and sequentially accurate economic explanation?
A.
B.
C.
D.
96.  For a certain good, when price rises from $90 to $95, quantity demanded falls from 90,000 to 85,000. The price elasticity of demand here is _____________, making the demand for this good ____________ in the price range between $90 and $95.
A.
B.
C.
D.
97.    Price of Good A Quantity Demanded of Good A Quantity Supplied of Good A $5.50 5 55 $4.50 15 45 $3.50 25 35 $2.50 35 25 $1.50 45 15 $0.50 55 5    78.   Refer to Exhibit 5-3. When price decreases from $4.50 to $3.50, the price elasticity of demand is
A.
B.
C.
D.
E.
98.    Price of Good A Quantity Demanded of Good A Quantity Supplied of Good A $5.50 5 55 $4.50 15 45 $3.50 25 35 $2.50 35 25 $1.50 45 15 $0.50 55 5    80.   Refer to Exhibit 5-3. If price increases from $2.50 to $3.50, total revenue along the demand curve
A.
B.
C.
D.
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