Economics Chapter 4 2 The Amount That Firm Receives From

78. The amount that a firm receives from the sale of goods and services is:

79. If a manager multiplies the quantity sold by the price paid for each unit, the manager calculates:

80. An increase in price:

81. A decrease in price causes:

82. An increase in price causes:

83. A decrease in price:

84. When the quantity effect outweighs the price effect:

85. A price increase will cause an increase in total revenue when:

86. Demand for a good is inelastic if:

87. Demand for a good is inelastic if:

88. The price elasticity of demand for eggs is 0.27. Therefore, an increase in the price of eggs will cause:

89. When price was 10, quantity demanded was 50. When price decreased to 8, quantity demanded

increased to 60. Therefore, when price decreased, total revenue

90. When price was 10, quantity demanded was 50. When price increased to 12, quantity demanded

decreased to 40. Therefore, when price increased, total revenue

91. When price was 5, quantity demanded was 10. When price increased to 6, quantity demanded

decreased to 9. Therefore, when price increased, total revenue

92. When price was 6, quantity demanded was 10. When price decreased to 5, quantity demanded

increased to 13. Therefore, when price decreased, total revenue

93. If increasing the admission charge for National Parks increases the National Park Service’s total

revenue, then the demand for National Park visits is:

94. If total revenue increases when price increases:

95. If the quantity effect outweighs the price effect of a price increase, then demand is:

96. Elasticity along a demand curve:

97. Demand tends to be more elastic when:

98. A linear demand curve:

99. A linear demand curve has a:

100. Price elasticity of supply:

101. The percentage change in the quantity supplied of a good or service when its price changes by one

percent is:

102. Which elasticity measures producers’ responsiveness to a change in price?

103. The price elasticity of supply tells us:

104. Suppose when the price of coffee beans goes from $1 to $1.20 per pound, production increases

from 90 million pounds of coffee beans to 110 million pounds per year. Using the mid-point method, the

percentage change in quantity supplied is:

105. Suppose when the price of shoe laces goes from $1 to $2 per pair, production increases from 95

million pairs to 105 million pairs per year. Using the mid-point method, the price elasticity of supply is:

106. Suppose when the price of pizza goes from $8 to $12 per pie, production increases from 2,500 pies

to 4,000 pies per month. Using the mid-point method, the percentage change in price is:

107. Suppose when the price of pineapples goes from $5 to $3 per pineapple, production decreases from

3,500 pineapples to 2,000 pineapples per year. Using the mid-point method, the percentage change in

price would be:

108. Suppose when the price of novels goes from $15 to $20 per book, production increases from 760

million books to 840 million books per year. Using the mid-point method, the price elasticity of supply is:

109. A determinant of the price elasticity of supply that is also a determinant of the price elasticity of

demand is:

110. Determinants of the price elasticity of supply are:

111. A baker of chocolate chip cookies is likely to have a ______________ price elasticity of supply than

does the seller of rare baseball cards due to ______________.

112. A rare coin dealer is likely to have a _______________ price elasticity of supply than does a coffee

shop due to ____________________.

113. A tavern is likely to have a ______________________ price elasticity of supply than does an

antiques dealer due to ______________________.

114. A corn farmer is likely to have a _____________ price elasticity of supply than does a tree farmer

due to ________________.

115. An automobile manufacturing plant is likely to have a ______________ price elasticity of supply than

a bread bakery due to _________________.

116. The price elasticity of supply is __________ elastic over time because ___________.

117. Cross-price elasticity refers to:

118. For many consumers, bacon and eggs are complements. Therefore, egg producers monitor the

price of bacon because the cross elasticity between bacon and eggs is

119. Gasoline and motel rooms are complements for many consumers. When the price of gasoline

declines, consumers take longer vacations and rent more motel rooms. Therefore, the cross price

elasticity between gasoline and motel rooms is

120. How much the demand for one good changes in response to a change in the price of a different

good is measured by:

121. If the price of a cup of Dunkin’ Donuts coffee increases while the price of a Starbucks latte is

unchanged, we expect the number of lattes purchased at Starbucks to:

122. If the price of a Domino’s pizza decreases while the price of a Pizza Hut pizza is unchanged, then

probably the demand for Pizza Hut pizza:

123. If two goods are substitutes, then their cross-price elasticity of demand is

124. Considering the concept of cross-price elasticity, if two goods are substitutes:

125. Considering the concept of cross-price elasticity, if two goods are complements:

126. When two goods are complements, their cross-price elasticity of demand is:

127. Coke and Pepsi probably have a:

128. Whether a cross-price elasticity of demand is positive or negative indicates whether the:

129. The cross-price elasticity of two goods is 2. This tells us the two goods are:

130. The cross-price elasticity of demand for peanut butter and jelly is likely:

131. If the cross-price elasticity of two goods is 0.25, then we know that these goods are:

132. If the price of jelly increases 10 percent and the amount of peanut butter purchased decreases 20

percent, then the cross-price elasticity of these goods is:

133. If the price of butter increases 5 percent and the amount of margarine purchased increases 25

percent, then the cross-price elasticity of these goods is:

134. If the price of cereal increases by 10 percent and the amount of milk demanded decreases by 2

percent, then the cross-price elasticity of these goods is:

135. Which pair of goods is likely to have the largest positive cross-price elasticity?

136. Which pair of goods is most likely to have a negative cross-price elasticity?

137. Income elasticity of demand describes:

138. Ray just got a raise, and decided to splurge on a fancy dinner to celebrate. The change to Ray’s

demand for fancy dinners could be measured by the:

139. When consumers’ incomes decline during a recession, they increase their consumption of instant

coffee and reduce their consumption of other beverages. Therefore, instant coffee:

140. Bob got laid off six months ago. He used to go to the movies once a month, but he’s only been twice

because he lost his job. This type of behavior can be measured using:

141. Income elasticity will be positive for:

142. A good with an income elasticity of 0.4 is:

143. A good with an income elasticity of 2.3 is:

144. If a good has an income elasticity of 0.18, then it is:

145. If a good has an income elasticity of 1.83, then it:

146. It is likely that ______________ has an income elasticity less than 1, and _____________ have an

income elasticity more than 1.

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Chapter 04 Test Bank Summary