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1. The market demand curve shows how the quantity demanded of a product, during a specified time period, changes as
the price of that product changes.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
2. The law of demand states that a lower price increases the amount of a commodity that people are willing to buy.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Supply and demand
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Supply and demand
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Knowledge
3. The demand curve depicts quantities demanded that have been gathered as prices have changed over time.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVES: DISC: Supply and demand
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Supply and demand
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
4. The quantity demanded in a market depends on many things, but the concept of elasticity focuses on the effect of
changes in the price of the good.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
6. Elasticity of demand equals the ratio of the percentage change in quantity demanded to the percentage change in the
price of the good.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Knowledge
7. Elasticity of demand equals the ratio of the percentage change in the price of a good to the percentage change in the
quantity demanded.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
8. Price elasticity of demand can be written as percentage change in Q divided by percentage change in P.
a. True
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
9. Elasticity of demand is calculated using percentage changes in both price and quantity.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
10. Price elasticity of demand is a numerical measure of how much quantity demanded rises as price falls or quantity
demanded falls as price rises.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
11. Elasticity computations related to demand carry a minus sign to show that the demand curve is negatively sloped.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Knowledge
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
12. The elasticity formula solves the units problem because percentages are unaffected by the units of measure.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
13. The price elasticity of demand measure is generally stated as an absolute value.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
18. A horizontal demand curve is perfectly elastic because a change in price will not induce a change in quantity
demanded.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
19. A horizontal demand curve is perfectly elastic because a change in price will induce an infinite change in quantity
demanded.
a. True
b. False
ANSWER: True
POINTS: 1
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
20. A straight-line demand curve has the same elasticity throughout its length.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
21. A straight-line demand curve has an elasticity that becomes smaller as we move from left to right along the schedule.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
23. The unit-elastic demand curve bends in the middle toward the origin of the graph and at either end moves closer to the
axes.
a. True
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
24. A demand curve with an elasticity of 1.0 is said to be an elastic demand curve.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
26. When the goods of competing companies are identical, consumers have no reason to prefer one product over the other
so the demand curve for each manufacturer will be perfectly elastic.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
27. Elasticity of demand is another way to measure slope.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
28. The difference between slope and elasticity is that slope measures absolute change and elasticity measures percentage
change.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
29. The slope of the demand curve conveys all the useful information about elasticity.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
30. The elasticity of a demand curve at any point can be ascertained by its steepness.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
31. The elasticity of a straight-line demand curve is the same as its slope.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
32. The elasticity of any demand curve is the same as its slope.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
33. As one moves down a straight-line demand curve, the elasticity increases.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
34. As one moves down a straight-line demand curve, the elasticity decreases.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
35. As one moves down a straight-line demand curve away from the vertical axis, demand becomes less elastic and then
inelastic.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Analysis
44. If price goes up 20 percent and quantity demanded declines by 10 percent, total revenue will rise.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Comprehension
45. If a demand curve is unit elastic, then P times Q will remain constant when P changes.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Analysis
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
46. A demand curve with unit elasticity can never touch either the vertical or horizontal axes.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Comprehension
47. If demand is unit elastic, then a 10 percent increase in the price will lead to a 10 percent increase in quantity
demanded.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Comprehension
48. If demand is unit elastic, then a 10 percent increase in price will lead to a 10 percent drop in quantity demanded.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Comprehension
49. A rise in price will always result in an increase in the total amount consumers spend on a product.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Comprehension
51. A price increase will always cause a firm's revenue to fall, because they will sell less of the good.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Comprehension
52. A tax on cigarettes can be expected to reduce teen smoking more than it reduces adult smoking.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Analysis
53. The elasticity of demand is determined partly by whether the good is a necessity or a luxury.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: What Determines Demand Elasticity?
KEYWORDS: BLOOM’S: Comprehension
55. If a product constitutes a large portion of a consumer's income, demand will be more inelastic.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: What Determines Demand Elasticity?
KEYWORDS: BLOOM’S: Comprehension
56. If there are many close substitutes available for a good, its elasticity of demand will be higher.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: What Determines Demand Elasticity?
KEYWORDS: BLOOM’S: Comprehension
57. Since an individual spends a small share of her income on salt, the elasticity of demand is likely to be low.
a. True
b. False
ANSWER: True
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Supply and demand
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Supply and demand
TOPICS: What Determines Demand Elasticity?
KEYWORDS: BLOOM’S: Comprehension
58. Elasticity of demand is likely to be higher for less-expensive goods, other things being equal.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: What Determines Demand Elasticity?
KEYWORDS: BLOOM’S: Comprehension
59. As a price change persists over a long period of time, we should expect the demand elasticity to fall.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: What Determines Demand Elasticity?
KEYWORDS: BLOOM’S: Comprehension
60. The ratio of the percentage change in quantity demanded to the percentage change in income is known as the cross
elasticity of demand.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity as a General Concept
KEYWORDS: BLOOM’S: Comprehension
61. Income elasticity of demand describes how change in income affects the quantity demanded of a good.
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity as a General Concept
KEYWORDS: BLOOM’S: Comprehension
62. Cross-elasticity of demand measures the responsiveness of the quantity demanded of one good to a change in the price
of another good.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity as a General Concept
KEYWORDS: BLOOM’S: Comprehension
63. If an increase in quantity demanded of a product reduces the quantity demanded of another, then the two goods are
said to be substitutes.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Supply and demand
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Supply and demand
TOPICS: Elasticity as a General Concept
KEYWORDS: BLOOM’S: Comprehension
64. Cross-elasticity of demand could be used to measure the responsiveness of the quantity demanded of swimming pools
to a change in the price of picnic tables.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity as a General Concept
KEYWORDS: BLOOM’S: Comprehension
65. A negative cross elasticity indicates that two goods are complements.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity as a General Concept
KEYWORDS: BLOOM’S: Comprehension
66. Two goods are substitutes if a decrease in the price of one raises the quantity demanded of the other.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Supply and demand
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Supply and demand
TOPICS: Elasticity as a General Concept
KEYWORDS: BLOOM’S: Comprehension
67. Two goods with a low cross elasticity of demand are competing in the same market.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity as a General Concept
KEYWORDS: BLOOM’S: Comprehension
68. Demand curves often do not remain stationary; they shift because of changes in other variables.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Easy
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
LEARNING OBJECTIVES: DISC: Supply and demand
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Supply and demand
TOPICS: Appendix How Can We Find a Legitimate Demand Curve from Historical Statistics?
KEYWORDS: BLOOM’S: Comprehension
70. A decrease in the price of a good will cause a movement along the demand schedule to a higher quantity demanded.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Supply and demand
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Supply and demand
TOPICS: Appendix How Can We Find a Legitimate Demand Curve from Historical Statistics?
KEYWORDS: BLOOM’S: Comprehension
72. A fall in the price of a competing product will produce an outward shift in the demand curve for most products.
a. True
b. False
ANSWER: False
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Supply and demand
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Supply and demand
TOPICS: Appendix How Can We Find a Legitimate Demand Curve from Historical Statistics?
KEYWORDS: BLOOM’S: Comprehension
73. Historical demand curves are always suspect because their demand curves are likely to have shifted over time.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVES: DISC: Supply and demand
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Supply and demand
TOPICS: The Time Period of the Demand Curve and Economic Decision Making
KEYWORDS: BLOOM’S: Comprehension
74. An accurate demand curve can be derived by examining the quantities of a good that are sold over time as the price
varies.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Supply and demand
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Supply and demand
TOPICS: Appendix: How Can We Find a Legitimate Demand Curve from Historical Statistics?
KEYWORDS: BLOOM’S: Comprehension
75. If demand for a seller's product is elastic, a price increase will decrease total revenue.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Supply and demand
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Supply and demand
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Comprehension
76. If demand for a seller's product is elastic, a price decrease will increase total revenue.
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with a certain product or service or otherwise on a password-protected website for classroom use.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Supply and demand
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Supply and demand
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Comprehension
Multiple Choice
77. Elasticity
a. deals with percentage changes in price and quantity demanded.
b. employs percentage changes calculated in terms of average values of the prices and quantities at issue.
c. is generally stated in absolute value.
d. All of the above are correct.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
79. The formula for price elasticity of demand that is used in practice
a. usually drops all minus signs.
b. usually takes on different values at different points on the demand curve.
c. may calculate the percentage change in price between P1 and P2 as "(P2 − P1) as a percentage of (P1 + P2)/2."
d. All of the above are correct.
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with a certain product or service or otherwise on a password-protected website for classroom use.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
80. A correct formula (dropping all minus signs) for the calculation of the elasticity of demand between point Q1, P1 and
point Q2, P2 is
a. [(P2 − P1)/(P2 + P1)]/[(Q2 − Q1)/(Q2 + Q1)].
b. [(P2 − P1)/P1]/[(Q2 − Q1)/Q1].
c. [(Q2 − Q1)/(Q2 + Q1)]/[(P2 − P1)/(P2 + P1)].
d. [(Q2 − Q1)/Q2)]/[(P2 − P1)/P2].
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
81. At $6 per steak, consumers are willing to buy two steaks. At a price of $2, consumers are willing to buy six steaks.
The elasticity of the market demand curve between P = $6 and P = $2 (dropping all minus signs) is
a. 0.33.
b. 1.
c. 2.
d. 4.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
82. If the price of gasoline rises by 20 percent and consumption of gasoline falls 5 percent,
a. demand is elastic.
b. demand is unit-elastic.
c. demand is inelastic.
d. elasticity of demand cannot be calculated.
ANSWER: c
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with a certain product or service or otherwise on a password-protected website for classroom use.
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
84. Demand is said to be elastic when percentage changes in quantity demanded are
a. less than the percentage changes in price.
b. higher than the percentage changes in price.
c. equal to the percentage changes in price.
d. zero when price changes.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
Figure 6-1
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with a certain product or service or otherwise on a password-protected website for classroom use.
85. In Figure 6-1,
a. D1 is more elastic than D2 below P2 and less elastic above P2.
b. D1 is less elastic than D2 at all prices.
c. D2 is less elastic than D1 at all prices.
d. D2 is more elastic than D2 above P2 but less elastic below P2.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Analysis
Figure 6-2
86. In Figure 6-2, the price elasticity of demand (dropping all minus signs) is ____ between P = 4 and P = 6 than between
P = 10 and P = 12 because between the lower set of prices the percentage change in price is ____.
a. smaller; smaller
b. smaller; greater
c. greater; smaller
d. greater; greater
ANSWER: b
POINTS: 1
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Analysis
87. From Figure 6-2, we can infer that demand is ____ between P = 12 and P = 10 and ____ between P = 6 and P = 4.
a. elastic; elastic
b. elastic; inelastic
c. inelastic; elastic
d. inelastic; inelastic
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Analysis
Figure 6-3
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Analysis
90. In Figure 6-3(b), as price falls from $15 to $6, total expenditure
a. falls.
b. increases.
c. remains constant.
d. first falls and then increases.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Analysis
92. In Figure 6-4, total expenditure ____ as price falls from P = 12 to P = 10.
a. falls
b. stays constant
c. rises
d. rises by more than $12
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Analysis
93. If the elasticity of demand for cigarettes is 0.4, then an increase in the price of a pack of cigarettes from $5.00 to $6.00
would reduce quantities demanded by about
a. 7 percent.
b. 40 percent.
c. 42 percent.
d. 220 percent.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Analysis
94. If the price of apples decreases by 2 percent and causes apple consumption to increase by 4 percent, the price elasticity
of demand is ____, indicating the demand is ____.
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with a certain product or service or otherwise on a password-protected website for classroom use.
a. 2, elastic
b. 2, inelastic
c. 0.5, elastic
d. 0.5, inelastic
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Analysis
95. If a 10 percent rise in price leads to a reduction in quantity demanded of more than 10 percent,
a. demand is elastic.
b. demand is inelastic.
c. elasticity of demand is unitary.
d. None of the above is correct.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
96. All of the following observations concerning the elasticity formula are true except
a. the changes with which it deals is measured as a percentage change.
b. each of the percentage changes is calculated in terms of the average values.
c. the calculation considers both positive and negative signs.
d. each percentage change is taken as an "absolute value."
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
97. If the price elasticity of demand for radios is 2.5 (dropping the minus sign), then a 50 percent reduction in the price of
radios will lead to
a. the sale of 200 additional radios.
b. the sale of 125 percent more radios than before.
c. the sale of 150 percent more radios than before.
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with a certain product or service or otherwise on a password-protected website for classroom use.
d. the sale of 25 percent more radios than before.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPRPOG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Analysis
Figure 6-5
98. If the demand curve in Figure 6-5 is unit elastic, then total expenditure at A is ____ total expenditure at B.
a. greater than
b. less than
c. equal to
d. less elastic than
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
99. In Figure 6-5, if price falls from point A to point B along the unit-elastic demand curve,
a. total expenditure remains unchanged.
b. total expenditure increases.
c. total expenditure decreases.
d. total expenditure first increases and then declines.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Analysis
107. As we move down a straight-line demand curve, the price elasticity becomes
a. larger.
b. smaller.
c. larger, then smaller.
d. smaller, then larger.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Analysis
108. Along a straight-line demand curve (dropping all minus signs), the price elasticity of demand
a. gets larger as quantity demanded gets larger.
b. gets smaller as quantity demanded gets larger.
c. always equals one.
d. is constant (though not necessarily equal to one).
ANSWER: b
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Analysis
Figure 6-6
110. The purchase of premium cable channels is an "all or nothing" choice. Which graph in Figure 6-6 best illustrates the
cable market demand curve?
a. 1
b. 2
c. 3
d. 4
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOMS: Application
111. An article in the Wall Street Journal reports that "most cable TV operators are aware that cable is price sensitive, and
there comes a point where people won't pay the price." Which demand curve in Figure 6-6 best illustrates this situation?
a. 1
b. 2
c. 3
d. 4
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPRPOG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOMS: Application
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with a certain product or service or otherwise on a password-protected website for classroom use.
112. A craze for apples in Riverdale increases the quantity demanded at every price by five bushels. Between any two
prices, the new demand curve will be ____ the old demand curve.
a. more elastic than
b. less elastic than
c. equal in elasticity to
d. More information is needed to predict the relationship.
ANSWER: b
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Analysis
113. The emigration of some of Whoville's workers reduces the quantity of thingamabobs supplied at every price by 50.
The new supply curve will ____ the old supply curve.
a. be steeper and less elastic at every price than
b. have the same slope and the same elasticity at every price as
c. have the same slope and be more elastic at every price than
d. More information is needed to predict the relationship between the elasticities of the two supply curves.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Elasticity: The Measure of Responsiveness
KEYWORDS: BLOOM’S: Comprehension
116. A price cut will decrease the revenue a firm receives if the demand for its product is
a. elastic.
b. inelastic.
c. of unit elasticity.
d. straight elastic.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Comprehension
117. A price cut will increase the revenue a firm receives if the demand for its product is
a. elastic.
b. inelastic.
c. of unit elasticity.
d. straight elastic.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Comprehension
118. When Johanna cut prices in her jewelry store by 20 percent, the dollar value of her sales fell by 20 percent. This
indicates that
a. demand was elastic.
b. demand was inelastic.
c. demand was unit elastic.
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with a certain product or service or otherwise on a password-protected website for classroom use.
d. the demand curve was vertical.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Comprehension
119. In an attempt to raise sales, Hannah cut prices in her bookstore by 20 percent. If the dollar value of her sales
remained constant, that indicates
a. old customers bought no more books.
b. no new customers bought books.
c. the quantity of books sold increased 20 percent.
d. the demand curve is vertical.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Comprehension
120. The term "unit elasticity" is used to describe a situation in which a rise in price is accompanied by
a. a fall in total expenditure.
b. a rise in total expenditure.
c. constant total expenditure.
d. a unit decrease in total expenditure.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
NOTES: BLOOM’S: Knowledge
121. A demand curve to remain unit elastic along its entire length should
a. cross the X axis.
b. touch the X axis but not the Y axis.
c. never touch either the X or the Y axis.
d. touch the Y axis but not the X axis.
ANSWER: c
POINTS: 1
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with a certain product or service or otherwise on a password-protected website for classroom use.
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Comprehension
123. When Scuba, Inc., lowered the price of a tank of compressed air by 20 percent, it sold 10 percent more tankfuls. The
price elasticity for compressed air is
a. 2.
b. 1/2.
c. 1.
d. 20.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Analysis
124. Big Alice Ice Cream Parlor reduced its price of an ice cream cone from $1 to 90 cents. Sales consequently increased
from 1,000 cones per week to 1,050. The approximate price elasticity is
a. 0.20.
b. 0.46.
c. 2.16.
d. 5.00.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
Figure 6-7
125. In Figure 6-7, which total expenditure curve belongs to a demand curve that is unit elastic throughout?
a. 1
b. 2
c. 3
d. 4
ANSWER: c
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Analysis
126. Julia knows the price elasticity of movie rentals is 3. She knows, therefore, that if she raises her price from $2 to
$2.50, her rentals will drop by approximately
a. 150 percent.
b. 100 percent.
c. 75 percent.
d. 33 percent.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Comprehension
127. Tele-Com, Inc., the nation's largest cable TV company, tested the effect of a price reduction for the Disney Channel.
It lowered prices from $10.75 to $7.95 and found that the number of customers more than doubled. This means the
a. demand curve for the Disney Channel shifted to the right.
b. supply curve of the Disney Channel shifted to the left.
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
c. demand for the Disney Channel is elastic in this price range.
d. demand for the Disney Channel is inelastic in this price range.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Comprehension
Figure 6-8
128. Libya sold more crude oil in 1985 than it sold five years earlier, but revenues were 17 percent less. Which graph in
Figure 6-8 is consistent with this set of facts?
a. 1
b. 2
c. 3
d. 4
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Comprehension
129. To avoid an increase in the local property tax, Sullivan County, New York, proposed a 2 percent hotel tax, which
presumably would be passed on to tourists. The hotel industry argued that the tax would hurt hotel business. They are
really arguing that
a. tourist and convention demand is inelastic, so hotel bookings will decline.
b. tourist and convention demand is very elastic, so hotel bookings will decline.
c. they would prefer a property tax increase instead.
d. it is unfair to tax people who do not live in the area.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Comprehension
130. Suppose that the supply of insulin is perfectly elastic and the demand for insulin perfectly inelastic. Then the result of
an excise tax would be
a. a significant increase in government revenue and a significant decrease in the quantity consumed.
b. a significant decrease in the quantity consumed with no change in government revenue.
c. a significant increase in government revenue and no change in the quantity consumed.
d. no increase in government revenue and no change in the quantity consumed.
ANSWER: c
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Analysis
131. If the marginal cost of producing vanity license plates is virtually zero (by prison inmates with little else to do), then
states would maximize their profits on plate sales at the point on a linear demand curve where
a. demand is inelastic.
b. demand is elastic.
c. demand is unit elastic.
d. the demand curve crosses the horizontal axis.
ANSWER: c
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Analysis
133. A recent study on enrollment at a liberal arts college concluded that demand elasticity is 0.91. The administration is
considering a tuition increase to help balance the budget. The revenue-maximizing decision is to
a. decrease tuition, which should boost enrollment enough to balance the budget.
b. decrease tuition, which would bring in more revenue.
c. leave tuition as is-an increase would not help balance the budget.
d. increase tuition, which would bring in more revenue.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Analysis
134. The local symphony recently raised its price for tickets to their summer concerts in the park. At the end of the
summer season, the symphony was surprised to see that total revenue had actually decreased. The reason was that the
elasticity of demand for tickets was
a. unit elastic.
b. inelastic.
c. elastic.
d. Not enough information is given.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Comprehension
135. John's Bait Shop was surprised to learn that when it raised prices by 10 percent, total revenue was unaffected. This is
because the elasticity for bait is
a. unit elastic.
b. inelastic.
c. elastic.
d. Not enough information is given.
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Comprehension
137. If, as price increases by 10 percent, total revenue decreases by 10 percent demand is
a. elastic.
b. unit elastic.
c. inelastic.
d. perfectly inelastic.
ANSWER: a
POINTS: 1
DIFFICULTY: Difficult
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Analysis
138. When the price of penicillin tablets increases by $5 per dozen, the drug company's revenue increases by $6 million.
Its elasticity of demand (in absolute terms) must be
a. zero.
b. greater than one.
c. less than one.
d. infinitely large.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: Price Elasticity of Demand: Its Effect on Total Revenue and Total Expenditure
KEYWORDS: BLOOM’S: Analysis
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
139. The demand for Exxon gasoline is ____ the demand for all gasoline.
a. exactly as elastic as, and of a different slope from
b. more elastic than
c. less elastic than
d. exactly as elastic and of a different slope from
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: What Determines Demand Elasticity?
KEYWORDS: BLOOM’S: Comprehension
141. The price elasticity of demand for widgets at any particular price is determined by
a. whether widgets are luxuries or necessities.
b. how much of their budgets consumers spend on widgets.
c. whether there are any good substitutes for widgets.
d. All of the above are correct.
ANSWER: d
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: What Determines Demand Elasticity?
KEYWORDS: BLOOM’S: Analysis
143. A 10 percent increase in the cost of restaurant meals, which are a luxury, will most likely
a. increase the purchase of meals by 10 percent.
b. increase the purchase of meals by less than 10 percent.
c. decrease the purchase of meals by more than 10 percent.
d. decrease the purchase of meals by less than 10 percent.
ANSWER: c
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Supply and demand
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Supply and demand
TOPICS: What Determines Demand Elasticity?
KEYWORDS: BLOOM’S: Analysis
144. If both matches and automobile prices increase by 10 percent, consumers will likely buy
a. fewer matches and approximately the same quantity of automobiles.
b. approximately the same quantity of matches and fewer automobiles.
c. fewer matches and fewer automobiles.
d. approximately the same quantity of both matches and automobiles.
ANSWER: b
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Supply and demand
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Supply and demand
TOPICS: What Determines Demand Elasticity?
KEYWORDS: BLOOM’S: Comprehension
146. The demand for a new effective drug for the cure of AIDS would most likely be
a. elastic.
b. unit elastic.
c. perfectly elastic.
d. highly inelastic.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: What Determines Demand Elasticity?
KEYWORDS: BLOOM’S: Comprehension
147. Which of the following is more likely be the price elasticity of demand for anti-venom?
a. highly inelastic
b. unit elastic
c. elastic
d. perfectly elastic
ANSWER: a
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Analytic
ACCREDITING STANDARDS: Elasticity
TOPICS: What Determines Demand Elasticity?
KEYWORDS: BLOOM’S: Comprehension
148. When OPEC raises the price of petroleum, American expenditures on oil imports increase, suggesting that
a. the United States' elasticity of demand for imported oil is greater than one.
b. the United States' elasticity of demand for imported oil is less than one.
c. imported oil and domestically produced oil are complementary goods.
d. the short-run elasticity of demand for oil is greater than the long-run elasticity.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: DISC: Elasticity
NATIONAL STANDARDS: United States - BPROG: Reflective Thinking - BPROG: Analysis
ACCREDITING STANDARDS: Elasticity
TOPICS: What Determines Demand Elasticity?
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed
with a certain product or service or otherwise on a password-protected website for classroom use.
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Paris. Comme si la cité avait dû revêtir, dès cette époque, le
caractère cosmopolite qui la distingue aujourd'hui, on y voyait,
alignés le long de la chaussée ou espacés des deux côtés dans les
champs, des tombeaux qui emmenaient la pensée aux extrémités
les plus opposées du monde ancien. Les inscriptions y parlaient les
deux langues de la civilisation, et le voyageur s'acheminait à travers
des avenues funéraires qui faisaient passer tour à tour sous ses
yeux les monuments du paganisme romain, les édicules étranges de
Mithra, et les chastes et sobres emblèmes de la foi chrétienne. Là
dormait, au milieu de plusieurs de ses successeurs, l'évêque de
Paris, saint Prudence, et l'on veut que les chrétiens des premiers
âges y aient possédé une catacombe où ils célébraient les sacrés
mystères, et qui s'élevait sur les ruines d'un ancien sanctuaire de
Diane, la déesse des forêts[317].
[316] Voir tome I, p. 103.
[317] Lebeuf, Histoire de la ville et de tout le diocèse de Paris, nouvelle édition,
Paris, 1883, t. I, pp. 228 et suiv.; Saintyves, Vie de sainte Geneviève, pp. 101, 130,
295; Franklin, dans Paris à travers les âges, IX, p. 2
Plus d'une fois, le regard de Clovis et de Clotilde s'était arrêté sur ce
tranquille horizon, des hauteurs duquel semblait descendre jusqu'à
eux, à travers le murmure des verdoyants ombrages, la solennelle
invitation de la mort. L'idée leur sourit d'y répondre en préparant là-
haut la place de leur dernière demeure, à l'abri d'un sanctuaire qui
serait le monument durable de leur foi commune, et qui dresserait
au-dessus de toute la vallée le signe glorieux de la résurrection.
Toujours le souvenir de Clotilde a été associé à celui de Clovis dans
l'histoire de cet édifice sacré[318]; il n'est guère douteux qu'elle en ait
suggéré la première idée au roi. Un chroniqueur parisien du huitième
siècle, dont les souvenirs locaux ont souvent une grande valeur
historique, attribue formellement cette initiative à Clotilde. Il est vrai
que, d'après lui, c'était dans la pensée du couple royal une église
votive, qui devait être bâtie si le roi revenait victorieux de la guerre
d'Aquitaine[319]. Ce qui est certain, c'est que la construction n'en fut
commencée que dans les dernières années, puisqu'elle n'était pas
achevée lorsque Clovis mourut.
[318] Grégoire de Tours, ii, 43: Basilica sanctorum Apostolorum quam cum
Chrodechilde regina ipse construxerat.—Le même, iv, 1: Nam basilicam illam ipsa
construxerat.
[319] Liber historiæ, c. 17.
Bientôt l'église surgit du sol, appuyée sur une crypte qui devait
recevoir les sépultures royales, et offrant aux regards l'aspect des
primitives basiliques. Elle pouvait avoir, nous dit un historien, deux
cents pieds de long sur cinquante à soixante de large[321]. L'intérieur
en était non voûté, mais lambrissé à la manière antique; de riches
mosaïques ainsi que des peintures murales en animaient les parois.
On y avait accès, du côté occidental, par un triple portique orné,
comme l'intérieur, de mosaïques et de peintures représentant des
scènes de l'Ancien et du Nouveau Testament[322]. A côté de l'église
s'élevèrent de spacieux bâtiments conventuels pour la demeure des
chanoines réguliers qui devaient la desservir. Un vaste territoire,
longeant les jardins du palais et allant d'un côté jusqu'à la Seine et
de l'autre jusqu'à la Bièvre, forma la seconde enceinte de cette
fondation vraiment royale. La plus grande partie en était occupée par
des closeries et des vignobles à travers lesquels circulaient
d'ombreux sentiers de noyers et d'amandiers chantés au douzième
siècle, en vers agréables, par le poète Jean de Hautefeuille. Le
douaire assigné au monastère était considérable: il comprenait
Nanterre, Rosny, Vanves, Fossigny, Choisy, et la terre connue sous
le nom de fief de Sainte-Clotilde[323].
[321] Viallon, Vie de Clovis le Grand, pp. 448 et suiv.
[322] Vita sanctæ Genovefæ, xi, 53 (Kohler): Miracula sanctæ Genovefæ; cf. du
Molinet, Histoire de sainte Geneviève et de son église royale et apostolique à
Paris, manuscrit de la bibliothèque Sainte-Geneviève, livre III, chap. ii.
[323] Du Molinet, o. c., livre III, chap. iii, suivi par les autres historiens de sainte
Geneviève. Le livre de du Molinet, resté inédit, est un travail excellent, qu'il n'y
aurait plus intérêt à publier toutefois, parce que la meilleure partie en a passé
depuis dans les travaux consacrés au même sujet.
Clovis ne vécut pas assez longtemps pour voir l'achèvement de
cette fondation grandiose; c'est Clotilde qui la mit sous toit et qui en
termina les dépendances[324]. Il paraîtrait toutefois, si l'on en croit le
chroniqueur parisien auquel nous avons déjà fait des emprunts, que
le roi put encore assister à la consécration de l'église. Cet écrivain
ajoute que Clovis pria le pape de lui envoyer des reliques des saints
Pierre et Paul, parce qu'il voulait en faire les patrons du nouveau
sanctuaire, et qu'à cette occasion il fit tenir au souverain pontife de
riches cadeaux[325]. C'est probablement alors aussi qu'il lui envoya
une superbe couronne d'or, garnie de pierres précieuses, qu'on
appelait «le Règne»[326]. Plusieurs historiens du moyen âge ont
parlé de cette couronne qui mérite une mention ici, puisqu'elle fut le
premier hommage de la royauté très chrétienne à l'Église
universelle.
[324] Vita sancti Genovefæ, xi, 53 (Kohler).
[325] C'est ce que dit une note d'un des manuscrits du Liber historiæ, c. 17. Dans
tous les cas, elle se trompe tout au moins sur le nom du pape, qu'elle appelle
Hormisdas. Hormisdas ne monta sur le trône de saint Pierre qu'en 514, trois ans
après la mort de Clovis. Peut-être faut-il garder le nom d'Hormisdas, et remplacer
celui de Clovis par celui de Clotilde?
[326] Eodem tempore venit regnus cum gemmis preciosis a rege Francorum
Cloduveum christianum, donum beato Petro apostolo. Liber Pontificalis, éd.
Duchesne, t. I, p. 271. Ce passage, écrit au sixième siècle, a passé en substance
dans le Vita sancti Remigii de Hincmar, Acta Sanctorum, p. 156, F, et de là dans
Sigebert de Gembloux, Chronicon (dom Bouquet, III, p. 337). M. l'abbé Duchesne
écrit à ce sujet, o. c., p. 274: «Clovis mourut trois ans avant l'avènement du pape
Hormisdas. Il est possible que l'envoi du regnus ou couronne votive, dont il est ici
question, ait souffert quelque retard. Du reste, le nom de Clovis n'est attesté ici
que par les manuscrits de la seconde édition; l'abrégé Félicien coupe la phrase
après Francorum.» Cf. A. de Valois, I, pp. 270 et 299; dans ce dernier passage, il
fait dire à ses sources que Clovis envoya la couronne qu'il avait reçue d'Anastase.