Question 1

The cross elasticity of demand for good A with respect to the price of good B is -1.5.A 10 percent rise in the price of good B will lead to

Accepted Answer

A) an increase of 1.5 percent in the quantity of A demanded. 
B) an increase of 15 percent in the quantity of A demanded. 
C) a decrease of 15 percent in the quantity of A demanded. 
D) an increase of 6.7 percent in the quantity of A demanded. 
E) a decrease of 6.7 percent in the quantity of A demanded. 
A) an increase of 1.5 percent in the quantity of A demanded. 
B) an increase of 15 percent in the quantity of A demanded. 
C) a decrease of 15 percent in the quantity of A demanded. 
D) an increase of 6.7 percent in the quantity of A demanded. 
E) a decrease of 6.7 percent in the quantity of A demanded. C

Question 2

If a 12 percent fall in price results in an 8 percent increase in quantity demanded,the price elasticity of demand equals

Accepted Answer

A) 0.96. 
B) 0.12. 
C) 0.67. 
D) 1.5. 
E) 0.8. 
A) 0.96. 
B) 0.12. 
C) 0.67. 
D) 1.5. 
E) 0.8. C

Question 3

If a large percentage drop in the price level results in a small percentage increase in the quantity demanded,

Accepted Answer

A) demand is inelastic. 
B) demand is elastic. 
C) demand is unit elastic. 
D) the price elasticity of demand is close to infinity. 
E) the price elasticity of demand is zero. 
A) demand is inelastic. 
B) demand is elastic. 
C) demand is unit elastic. 
D) the price elasticity of demand is close to infinity. 
E) the price elasticity of demand is zero. A

Question 4

Which of the following will have the most elastic demand?

Accepted Answer

A) frozen desserts 
B) ice cream 
C) strawberry ice cream 
D) a banana split made with strawberry and chocolate ice cream 
E) a banana split with Nestle strawberry and chocolate ice cream 
A) frozen desserts 
B) ice cream 
C) strawberry ice cream 
D) a banana split made with strawberry and chocolate ice cream 
E) a banana split with Nestle strawberry and chocolate ice cream

Question 5

If good A is a substitute for good B,then the cross elasticity of demand for good B with respect to the price of good A is

Accepted Answer

A) negative. 
B) equal to 1. 
C) positive. 
D) zero. 
E) equal to the cross elasticity of demand for good A with respect to the price of good B. 
A) negative. 
B) equal to 1. 
C) positive. 
D) zero. 
E) equal to the cross elasticity of demand for good A with respect to the price of good B.

Question 6

Demand is perfectly inelastic when

Accepted Answer

A) a good has perfect substitutes. 
B) an increase in supply does not change total revenue. 
C) a decrease in supply decreases total revenue. 
D) the price elasticity of demand is negative. 
E) an increase in supply does not change the equilibrium quantity. 
A) a good has perfect substitutes. 
B) an increase in supply does not change total revenue. 
C) a decrease in supply decreases total revenue. 
D) the price elasticity of demand is negative. 
E) an increase in supply does not change the equilibrium quantity.

Question 7

Which one of the following is true if demand is income inelastic?

Accepted Answer

A) The percentage change in income is greater than the percentage change in quantity demanded. 
B) The percentage change in income is smaller than the percentage change in quantity demanded. 
C) An increase in income decreases demand. 
D) The good is an inferior good. 
E) A rise in price increases the quantity demanded. 
A) The percentage change in income is greater than the percentage change in quantity demanded. 
B) The percentage change in income is smaller than the percentage change in quantity demanded. 
C) An increase in income decreases demand. 
D) The good is an inferior good. 
E) A rise in price increases the quantity demanded.

Question 8

When the price of a pair of gloves is $21,the quantity demanded is 600 pairs.When the price of a pair of gloves is $15,the quantity demanded is 1,000 pairs.Calculate the price elasticity of demand when the price of a pair of gloves is $18.

Accepted Answer

A) 1.5 
B) 0.67 
C) 66.7 
D) 0.015 
E) 1.0 
A) 1.5 
B) 0.67 
C) 66.7 
D) 0.015 
E) 1.0

Question 9

A unit elastic demand

Accepted Answer

A) means that the magnitude of the ratio of a change in quantity demanded to a change in price is equal to 1. 
B) means that the magnitude of the ratio of a percentage change in quantity demanded to a percentage change in price is equal to 1. 
C) means that the magnitude of the ratio of a change in price to a change in quantity demanded is equal to 1. 
D) is illustrated by a horizontal demand curve. 
E) is illustrated by a vertical demand curve. 
A) means that the magnitude of the ratio of a change in quantity demanded to a change in price is equal to 1. 
B) means that the magnitude of the ratio of a percentage change in quantity demanded to a percentage change in price is equal to 1. 
C) means that the magnitude of the ratio of a change in price to a change in quantity demanded is equal to 1. 
D) is illustrated by a horizontal demand curve. 
E) is illustrated by a vertical demand curve.

Question 10

Demand will be more inelastic the

Accepted Answer

A) lower the price of the good. 
B) smaller the quantity demanded of the good. 
C) longer the passage of time after a price increase. 
D) fewer substitutes for the good that are available. 
E) larger the fraction of income spent on the good. 
A) lower the price of the good. 
B) smaller the quantity demanded of the good. 
C) longer the passage of time after a price increase. 
D) fewer substitutes for the good that are available. 
E) larger the fraction of income spent on the good.

Question 11

Use the table below to answer the following questions.
Table 4.2.2  
-Refer to Table 4.2.2.The income elasticity of demand for Jolt is

Accepted Answer

A) +0.67. 
B) -0.67. 
C) +1.5. 
D) -1.5. 
E) zero. 
A) +0.67. 
B) -0.67. 
C) +1.5. 
D) -1.5. 
E) zero.

Question 12

The demand for good A is unit elastic if

Accepted Answer

A) a 5 percent fall in the price of A results in an infinite increase in the quantity of A demanded. 
B) a 5 percent rise in the price of A results in a 10 percent decrease in the quantity of A demanded. 
C) any increase in the price of A results in a 1 percent decrease in the quantity of A demanded. 
D) a 5 percent rise in the price of A results in no change in the quantity of A demanded. 
E) a 5 percent rise in the price of A results in a 5 percent decrease in the quantity of A demanded. 
A) a 5 percent fall in the price of A results in an infinite increase in the quantity of A demanded. 
B) a 5 percent rise in the price of A results in a 10 percent decrease in the quantity of A demanded. 
C) any increase in the price of A results in a 1 percent decrease in the quantity of A demanded. 
D) a 5 percent rise in the price of A results in no change in the quantity of A demanded. 
E) a 5 percent rise in the price of A results in a 5 percent decrease in the quantity of A demanded.

Question 13

Suppose there is an increase in the cost of resources used in the production of good A.Then

Accepted Answer

A) if the price of A rises,the demand for A is elastic. 
B) if the total revenue from sales of A increases,the demand for A is elastic. 
C) if the total revenue from sales of A decreases,the demand for A is elastic. 
D) total revenue increases because the price of A rises. 
E) total revenue decreases because the quantity bought and sold of A decreases. 
A) if the price of A rises,the demand for A is elastic. 
B) if the total revenue from sales of A increases,the demand for A is elastic. 
C) if the total revenue from sales of A decreases,the demand for A is elastic. 
D) total revenue increases because the price of A rises. 
E) total revenue decreases because the quantity bought and sold of A decreases.

Question 14

A rise in the price of good A shifts the

Accepted Answer

A) demand curve for good B rightward if the cross elasticity of demand for good B with respect to the price of A is negative. 
B) demand curve for good B rightward if the cross elasticity of demand for good B with respect to the price of A is positive. 
C) supply curve of B rightward if the cross elasticity of demand for good B with respect to the price of A is negative. 
D) supply curve of B rightward if the cross elasticity of demand for good B with respect to the price of A is positive. 
E) demand curve for B rightward if the income elasticity of demand for B is positive. 
A) demand curve for good B rightward if the cross elasticity of demand for good B with respect to the price of A is negative. 
B) demand curve for good B rightward if the cross elasticity of demand for good B with respect to the price of A is positive. 
C) supply curve of B rightward if the cross elasticity of demand for good B with respect to the price of A is negative. 
D) supply curve of B rightward if the cross elasticity of demand for good B with respect to the price of A is positive. 
E) demand curve for B rightward if the income elasticity of demand for B is positive.

Question 15

The price elasticity of demand for airplane travel one week in advance of the departure date is most likely to be

Accepted Answer

A) negative. 
B) equal to zero. 
C) between zero and 1. 
D) equal to 1. 
E) greater than 1. 
A) negative. 
B) equal to zero. 
C) between zero and 1. 
D) equal to 1. 
E) greater than 1.

Question 16

When the price elasticity of demand is ________,demand for the good is unit elastic.

Accepted Answer

A) positive 
B) greater than 1 
C) equal to 1 
D) between 1 and zero 
E) equal to zero 
A) positive 
B) greater than 1 
C) equal to 1 
D) between 1 and zero 
E) equal to zero

Question 17

If a 10 percent rise in the price of goods leads to a 10 percent decrease in quantity demanded,the demand curve for this good

Accepted Answer

A) is vertical. 
B) is horizontal. 
C) has slope equal to -1. 
D) is a straight line with slope equal to -10. 
E) is downward sloping and bowed toward the origin. 
A) is vertical. 
B) is horizontal. 
C) has slope equal to -1. 
D) is a straight line with slope equal to -10. 
E) is downward sloping and bowed toward the origin.

Question 18

If the cross elasticity of demand between goods A and B is positive,then

Accepted Answer

A) the demands for A and B are both price elastic. 
B) the demands for A and B are both price inelastic. 
C) A and B are complements. 
D) A and B are substitutes. 
E) A and B are inferior goods. 
A) the demands for A and B are both price elastic. 
B) the demands for A and B are both price inelastic. 
C) A and B are complements. 
D) A and B are substitutes. 
E) A and B are inferior goods.

Question 19

Suppose the price of a television set rises by 10 percent.Which one of the following would we expect to be the most elastic following such a price change?

Accepted Answer

A) the momentary supply of television sets 
B) the short-run supply of television sets 
C) the long-run supply of television sets 
D) the momentary demand for television sets 
E) the normal demand for television sets 
A) the momentary supply of television sets 
B) the short-run supply of television sets 
C) the long-run supply of television sets 
D) the momentary demand for television sets 
E) the normal demand for television sets

Question 20

Which one of the following illustrates an elastic demand?

Accepted Answer

A) A 10 percent rise in price leads to a 5 percent decrease in quantity demanded. 
B) A 10 percent rise in price leads to a 20 percent decrease in quantity demanded. 
C) A price elasticity of demand equal to 0.2. 
D) A price elasticity of demand equal to 1.0. 
E) A price elasticity of demand equal to zero. 
A) A 10 percent rise in price leads to a 5 percent decrease in quantity demanded. 
B) A 10 percent rise in price leads to a 20 percent decrease in quantity demanded. 
C) A price elasticity of demand equal to 0.2. 
D) A price elasticity of demand equal to 1.0. 
E) A price elasticity of demand equal to zero.

The cross elasticity of demand for good A with respect to the price of good B is -1.5.A 10 percent rise in the price of good B will lead to

If a 12 percent fall in price results in an 8 percent increase in quantity demanded,the price elasticity of demand equals

If a large percentage drop in the price level results in a small percentage increase in the quantity demanded,

Which of the following will have the most elastic demand?

If good A is a substitute for good B,then the cross elasticity of demand for good B with respect to the price of good A is

Demand is perfectly inelastic when

Which one of the following is true if demand is income inelastic?

When the price of a pair of gloves is $21,the quantity demanded is 600 pairs.When the price of a pair of gloves is $15,the quantity demanded is 1,000 pairs.Calculate the price elasticity of demand when the price of a pair of gloves is $18.

A unit elastic demand

Demand will be more inelastic the

Use the table below to answer the following questions. Table 4.2.2 -Refer to Table 4.2.2.The income elasticity of demand for Jolt is

The demand for good A is unit elastic if

Suppose there is an increase in the cost of resources used in the production of good A.Then

A rise in the price of good A shifts the

The price elasticity of demand for airplane travel one week in advance of the departure date is most likely to be

When the price elasticity of demand is ________,demand for the good is unit elastic.

If a 10 percent rise in the price of goods leads to a 10 percent decrease in quantity demanded,the demand curve for this good

If the cross elasticity of demand between goods A and B is positive,then

Suppose the price of a television set rises by 10 percent.Which one of the following would we expect to be the most elastic following such a price change?

Which one of the following illustrates an elastic demand?

What Is Economics

The Economic Problem

Demand and Supply

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

Exam 4: Elasticity

The cross elasticity of demand for good A with respect to the price of good B is -1.5.A 10 percent rise in the price of good B will lead to

If a 12 percent fall in price results in an 8 percent increase in quantity demanded,the price elasticity of demand equals

If a large percentage drop in the price level results in a small percentage increase in the quantity demanded,

Which of the following will have the most elastic demand?

If good A is a substitute for good B,then the cross elasticity of demand for good B with respect to the price of good A is

Demand is perfectly inelastic when

Which one of the following is true if demand is income inelastic?

When the price of a pair of gloves is $21,the quantity demanded is 600 pairs.When the price of a pair of gloves is $15,the quantity demanded is 1,000 pairs.Calculate the price elasticity of demand when the price of a pair of gloves is $18.

A unit elastic demand

Demand will be more inelastic the

Use the table below to answer the following questions. Table 4.2.2 -Refer to Table 4.2.2.The income elasticity of demand for Jolt is

The demand for good A is unit elastic if

Suppose there is an increase in the cost of resources used in the production of good A.Then

A rise in the price of good A shifts the

The price elasticity of demand for airplane travel one week in advance of the departure date is most likely to be

When the price elasticity of demand is ________,demand for the good is unit elastic.

If a 10 percent rise in the price of goods leads to a 10 percent decrease in quantity demanded,the demand curve for this good

If the cross elasticity of demand between goods A and B is positive,then

Suppose the price of a television set rises by 10 percent.Which one of the following would we expect to be the most elastic following such a price change?

Which one of the following illustrates an elastic demand?

What Is Economics

The Economic Problem

Demand and Supply

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, preferences, and Choices

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters