Question 1

A good has a price elasticity of demand equal to zero.As the price of the good falls,the

Accepted Answer

A) total revenue does not change. 
B) quantity demanded does not change. 
C) quantity demanded falls to zero. 
D) total revenue increases. 
E) quantity demanded increases. 
A) total revenue does not change. 
B) quantity demanded does not change. 
C) quantity demanded falls to zero. 
D) total revenue increases. 
E) quantity demanded increases.

Question 2

If the supply curve passes through the origin,then the price elasticity of supply is

Accepted Answer

A) zero. 
B) 1. 
C) -1. 
D) greater than 1. 
E) less than 1 but greater than zero. 
A) zero. 
B) 1. 
C) -1. 
D) greater than 1. 
E) less than 1 but greater than zero.

Question 3

The concept used by economists to indicate the responsiveness of the quantity demanded of a good to a change in its price is the

Accepted Answer

A) cross elasticity of demand. 
B) income elasticity of demand. 
C) substitute elasticity of demand. 
D) price elasticity of demand. 
E) elasticity of supply. 
A) cross elasticity of demand. 
B) income elasticity of demand. 
C) substitute elasticity of demand. 
D) price elasticity of demand. 
E) elasticity of supply.

Question 4

Tina and Brian work for the same recording company.Tina claims they would be better off by raising the price of their CDs,while Brian claims they would be better off by lowering the price.Choose the correct statement.

Accepted Answer

A) Tina thinks the demand for CDs has price elasticity of demand equal to zero,and Brian thinks price elasticity of demand equals 1. 
B) Tina thinks the demand for CDs has price elasticity of demand equal to 1,and Brian thinks price elasticity of demand equals zero. 
C) Tina thinks the demand for CDs is price elastic,and Brian thinks it is price inelastic. 
D) Tina thinks the demand for CDs is price inelastic,and Brian thinks it is price elastic. 
E) Tina and Brian both think the demand for CDs is unit elastic. 
A) Tina thinks the demand for CDs has price elasticity of demand equal to zero,and Brian thinks price elasticity of demand equals 1. 
B) Tina thinks the demand for CDs has price elasticity of demand equal to 1,and Brian thinks price elasticity of demand equals zero. 
C) Tina thinks the demand for CDs is price elastic,and Brian thinks it is price inelastic. 
D) Tina thinks the demand for CDs is price inelastic,and Brian thinks it is price elastic. 
E) Tina and Brian both think the demand for CDs is unit elastic.

Question 5

If Saudi Arabia argues that an increase in the supply of oil will decrease total revenue,then Saudi Arabia believes the demand for oil is

Accepted Answer

A) income inelastic. 
B) income elastic. 
C) elastic. 
D) inelastic. 
E) unit elastic. 
A) income inelastic. 
B) income elastic. 
C) elastic. 
D) inelastic. 
E) unit elastic.

Question 6

Suppose that the price elasticity of demand for bottled water in Sackville,New Brunswick is 1.5,and the price elasticity of demand for bottled water in Prince Albert,Saskatchewan is 0.8.The demand for bottled water in Sackville is ________ and demand for bottled water in Prince Albert is ________.

Accepted Answer

A) unit elastic;unit elastic 
B) perfectly elastic;inelastic 
C) inelastic;elastic 
D) elastic;inelastic 
E) elastic;unit elastic 
A) unit elastic;unit elastic 
B) perfectly elastic;inelastic 
C) inelastic;elastic 
D) elastic;inelastic 
E) elastic;unit elastic

Question 7

If Mr.Brown's income increases by 12 percent and his quantity demanded of music downloads increases by 4 percent,Mr.Brown's income elasticity of demand for music downloads is

Accepted Answer

A) 3.0. 
B) 0.33. 
C) -0.33. 
D) -3.0. 
E) 48.0. 
A) 3.0. 
B) 0.33. 
C) -0.33. 
D) -3.0. 
E) 48.0.

Question 8

Use the table below to answer the following questions.
Table 4.2.2  
-Refer to Table 4.2.2.All of the following statements regarding Jolt are true except

Accepted Answer

A) it has an elastic demand. 
B) it is an inferior good. 
C) it is a substitute for Coke. 
D) it has a negative cross elasticity of demand with respect to the price of Coke. 
E) it has a negative income elasticity of demand. 
A) it has an elastic demand. 
B) it is an inferior good. 
C) it is a substitute for Coke. 
D) it has a negative cross elasticity of demand with respect to the price of Coke. 
E) it has a negative income elasticity of demand.

Question 9

When the price elasticity of demand is ________,demand for the good is perfectly inelastic.

Accepted Answer

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

Question 10

If the cross elasticity of demand between two goods is -0.50,then a fall in the price of one good leads to a ________ shift of the ________ curve of the other good.

Accepted Answer

A) rightward;demand 
B) rightward;supply 
C) leftward;demand 
D) leftward;supply 
E) rightward;demand curve and the supply 
A) rightward;demand 
B) rightward;supply 
C) leftward;demand 
D) leftward;supply 
E) rightward;demand curve and the supply

Question 11

Figure 4.1.4
-Figure 4.1.4 shows the demand curve for pizza.At what price is the price elasticity of demand equal to 1?

Accepted Answer

A) $12.50 
B) $15.00 
C) $10.00 
D) $25.00 
E) zero 
A) $12.50 
B) $15.00 
C) $10.00 
D) $25.00 
E) zero

Question 12

Demand for a good is unit elastic.When price rises by 5 percent,total revenue

Accepted Answer

A) increases by 5 percent. 
B) decreases by 5 percent. 
C) does not change. 
D) increases by more than 5 percent. 
E) decreases by more than 5 percent. 
A) increases by 5 percent. 
B) decreases by 5 percent. 
C) does not change. 
D) increases by more than 5 percent. 
E) decreases by more than 5 percent.

Question 13

In 2003,when music downloading first took off,Universal Music slashed the average price of a CD from $21 to $15.The company expected the price cut to boost the quantity of CDs sold by 30 percent,other things remaining the same.If you are making the pricing decision at Universal Music,what would you do?

Accepted Answer

A) lower the price because demand is inelastic 
B) raise the price because demand is elastic 
C) raise the price because demand is inelastic 
D) lower the price because demand is elastic 
E) not change the price because demand is unit elastic 
A) lower the price because demand is inelastic 
B) raise the price because demand is elastic 
C) raise the price because demand is inelastic 
D) lower the price because demand is elastic 
E) not change the price because demand is unit elastic

Question 14

With higher fuel costs,airlines raise their average fare from $0.50 to $1.50 per passenger kilometre and the number of passenger kilometres decreases from 2.5 million a day to 1.5 million a day.When the price is $1 per passenger kilometre,the demand for air travel is

Accepted Answer

A) perfectly elastic. 
B) perfectly inelastic. 
C) unit elastic. 
D) elastic. 
E) inelastic. 
A) perfectly elastic. 
B) perfectly inelastic. 
C) unit elastic. 
D) elastic. 
E) inelastic.

Question 15

Sally's Ski Shoppe maximizes total revenue when the price elasticity of demand for skis is

Accepted Answer

A) greater than 10. 
B) greater than 1 but less than 10. 
C) zero. 
D) 1. 
E) -1. 
A) greater than 10. 
B) greater than 1 but less than 10. 
C) zero. 
D) 1. 
E) -1.

Question 16

Use the figure below to answer the following questions.   Figure 4.1.2
-Figure 4.1.2 illustrates a linear demand curve.If the price falls from $4 to $2,

Accepted Answer

A) total revenue increases. 
B) total revenue decreases. 
C) total revenue remains unchanged. 
D) the quantity demanded increases by more than 10 percent. 
E) the percentage change in quantity demanded is more than the percentage change in price. 
A) total revenue increases. 
B) total revenue decreases. 
C) total revenue remains unchanged. 
D) the quantity demanded increases by more than 10 percent. 
E) the percentage change in quantity demanded is more than the percentage change in price.

Question 17

If the price elasticity of demand is 2,then a 1 percent fall in price

Accepted Answer

A) doubles the quantity demanded. 
B) decreases the quantity demanded by half. 
C) increases the quantity demanded by 2 percent. 
D) decreases the quantity demanded by 2 percent. 
E) increases the quantity demanded by 0.5 percent. 
A) doubles the quantity demanded. 
B) decreases the quantity demanded by half. 
C) increases the quantity demanded by 2 percent. 
D) decreases the quantity demanded by 2 percent. 
E) increases the quantity demanded by 0.5 percent.

Question 18

Which one of the following illustrates an inelastic 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 infinity. 
D) A price elasticity of demand equal to 1.0. 
E) A price elasticity of demand equal to 2.0. 
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 infinity. 
D) A price elasticity of demand equal to 1.0. 
E) A price elasticity of demand equal to 2.0.

Question 19

The price of an apple falls by 5 percent and quantity of apples demanded increases by 6 percent.The demand for apples is

Accepted Answer

A) perfectly elastic. 
B) unit elastic. 
C) elastic. 
D) perfectly inelastic. 
E) inelastic. 
A) perfectly elastic. 
B) unit elastic. 
C) elastic. 
D) perfectly inelastic. 
E) inelastic.

Question 20

You are told that a 5 percent increase in the price of a good increases the quantity supplied by 10 percent after one month.Supply of this good is ________.This good is most likely produced using productive resources that are ________.

Accepted Answer

A) inelastic;plentiful or easily obtained 
B) decreasing;unique or rare 
C) elastic;plentiful or easily obtained 
D) unit elastic;unique or rare 
E) elastic;unique or rare 
A) inelastic;plentiful or easily obtained 
B) decreasing;unique or rare 
C) elastic;plentiful or easily obtained 
D) unit elastic;unique or rare 
E) elastic;unique or rare

A good has a price elasticity of demand equal to zero.As the price of the good falls,the

If the supply curve passes through the origin,then the price elasticity of supply is

The concept used by economists to indicate the responsiveness of the quantity demanded of a good to a change in its price is the

Tina and Brian work for the same recording company.Tina claims they would be better off by raising the price of their CDs,while Brian claims they would be better off by lowering the price.Choose the correct statement.

If Saudi Arabia argues that an increase in the supply of oil will decrease total revenue,then Saudi Arabia believes the demand for oil is

Suppose that the price elasticity of demand for bottled water in Sackville,New Brunswick is 1.5,and the price elasticity of demand for bottled water in Prince Albert,Saskatchewan is 0.8.The demand for bottled water in Sackville is and demand for bottled water in Prince Albert is .

If Mr.Brown's income increases by 12 percent and his quantity demanded of music downloads increases by 4 percent,Mr.Brown's income elasticity of demand for music downloads is

Use the table below to answer the following questions. Table 4.2.2 -Refer to Table 4.2.2.All of the following statements regarding Jolt are true except

When the price elasticity of demand is ________,demand for the good is perfectly inelastic.

If the cross elasticity of demand between two goods is -0.50,then a fall in the price of one good leads to a shift of the curve of the other good.

Figure 4.1.4 -Figure 4.1.4 shows the demand curve for pizza.At what price is the price elasticity of demand equal to 1?

Demand for a good is unit elastic.When price rises by 5 percent,total revenue

With higher fuel costs,airlines raise their average fare from $0.50 to $1.50 per passenger kilometre and the number of passenger kilometres decreases from 2.5 million a day to 1.5 million a day.When the price is $1 per passenger kilometre,the demand for air travel is

Sally's Ski Shoppe maximizes total revenue when the price elasticity of demand for skis is

Use the figure below to answer the following questions. Figure 4.1.2 -Figure 4.1.2 illustrates a linear demand curve.If the price falls from $4 to $2,

If the price elasticity of demand is 2,then a 1 percent fall in price

Which one of the following illustrates an inelastic demand?

The price of an apple falls by 5 percent and quantity of apples demanded increases by 6 percent.The demand for apples is

You are told that a 5 percent increase in the price of a good increases the quantity supplied by 10 percent after one month.Supply of this good is .This good is most likely produced using productive resources that are .

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

A good has a price elasticity of demand equal to zero.As the price of the good falls,the

If the supply curve passes through the origin,then the price elasticity of supply is

The concept used by economists to indicate the responsiveness of the quantity demanded of a good to a change in its price is the

Tina and Brian work for the same recording company.Tina claims they would be better off by raising the price of their CDs,while Brian claims they would be better off by lowering the price.Choose the correct statement.

If Saudi Arabia argues that an increase in the supply of oil will decrease total revenue,then Saudi Arabia believes the demand for oil is

Suppose that the price elasticity of demand for bottled water in Sackville,New Brunswick is 1.5,and the price elasticity of demand for bottled water in Prince Albert,Saskatchewan is 0.8.The demand for bottled water in Sackville is ________ and demand for bottled water in Prince Albert is ________.

If Mr.Brown's income increases by 12 percent and his quantity demanded of music downloads increases by 4 percent,Mr.Brown's income elasticity of demand for music downloads is

Use the table below to answer the following questions. Table 4.2.2 -Refer to Table 4.2.2.All of the following statements regarding Jolt are true except

When the price elasticity of demand is ________,demand for the good is perfectly inelastic.

If the cross elasticity of demand between two goods is -0.50,then a fall in the price of one good leads to a ________ shift of the ________ curve of the other good.

Figure 4.1.4 -Figure 4.1.4 shows the demand curve for pizza.At what price is the price elasticity of demand equal to 1?

Demand for a good is unit elastic.When price rises by 5 percent,total revenue

With higher fuel costs,airlines raise their average fare from $0.50 to $1.50 per passenger kilometre and the number of passenger kilometres decreases from 2.5 million a day to 1.5 million a day.When the price is $1 per passenger kilometre,the demand for air travel is

Sally's Ski Shoppe maximizes total revenue when the price elasticity of demand for skis is

Use the figure below to answer the following questions. Figure 4.1.2 -Figure 4.1.2 illustrates a linear demand curve.If the price falls from $4 to $2,

If the price elasticity of demand is 2,then a 1 percent fall in price

Which one of the following illustrates an inelastic demand?

The price of an apple falls by 5 percent and quantity of apples demanded increases by 6 percent.The demand for apples is

You are told that a 5 percent increase in the price of a good increases the quantity supplied by 10 percent after one month.Supply of this good is ________.This good is most likely produced using productive resources that are ________.

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

Suppose that the price elasticity of demand for bottled water in Sackville,New Brunswick is 1.5,and the price elasticity of demand for bottled water in Prince Albert,Saskatchewan is 0.8.The demand for bottled water in Sackville is and demand for bottled water in Prince Albert is .

If the cross elasticity of demand between two goods is -0.50,then a fall in the price of one good leads to a shift of the curve of the other good.

You are told that a 5 percent increase in the price of a good increases the quantity supplied by 10 percent after one month.Supply of this good is .This good is most likely produced using productive resources that are .