Question 1

Suppose the Lethbridge Computer Company decides to increase the quantity of computers it sells by 6 percent.If the price elasticity of demand is 3.0,the company must

Accepted Answer

A) raise the price of a computer by 2.0 percent. 
B) raise the price of a computer by 0.5 percent. 
C) lower the price of a computer by 1.8 percent. 
D) lower the price of a computer by 2.0 percent. 
E) lower the price of a computer by 0.5 percent. 
A) raise the price of a computer by 2.0 percent. 
B) raise the price of a computer by 0.5 percent. 
C) lower the price of a computer by 1.8 percent. 
D) lower the price of a computer by 2.0 percent. 
E) lower the price of a computer by 0.5 percent.

Question 2

Which one of the following situations gives a price elasticity of demand of 5.0? A 10 percent rise in price is accompanied by a

Accepted Answer

A) 2 percent increase in quantity demanded. 
B) 5 percent decrease in quantity demanded. 
C) 2 percent decrease in quantity demanded. 
D) 50 percent decrease in quantity demanded. 
E) 50 percent increase in quantity demanded. 
A) 2 percent increase in quantity demanded. 
B) 5 percent decrease in quantity demanded. 
C) 2 percent decrease in quantity demanded. 
D) 50 percent decrease in quantity demanded. 
E) 50 percent increase in quantity demanded.

Question 3

When the price elasticity of demand is 2 and the price increases by 10 percent,the quantity demanded

Accepted Answer

A) decreases by 2 percent. 
B) decreases by 20 percent. 
C) decreases by 5 percent. 
D) increases by 2 percent. 
E) increases by 20 percent. 
A) decreases by 2 percent. 
B) decreases by 20 percent. 
C) decreases by 5 percent. 
D) increases by 2 percent. 
E) increases by 20 percent.

Question 4

Business owners are speaking about the price elasticity of demand without using the actual term.Which one of the following statements describes a good with a price elastic demand?

Accepted Answer

A) "A price cut won't help me.It won't increase sales,and I'll just get less money for each unit." 
B) "I don't think a price cut will make any difference to my bottom line.What I may gain from selling more I would lose on the lower price." 
C) "My customers are real bargain hunters.Since I set my prices just a few cents below my competitors,customers have flocked to the store,and sales are booming." 
D) "With the recent economic recovery,people have more income to spend and sales are booming,even at the previous prices." 
E) "A very cold winter has increased my sales of skates and hockey sticks." 
A) "A price cut won't help me.It won't increase sales,and I'll just get less money for each unit." 
B) "I don't think a price cut will make any difference to my bottom line.What I may gain from selling more I would lose on the lower price." 
C) "My customers are real bargain hunters.Since I set my prices just a few cents below my competitors,customers have flocked to the store,and sales are booming." 
D) "With the recent economic recovery,people have more income to spend and sales are booming,even at the previous prices." 
E) "A very cold winter has increased my sales of skates and hockey sticks."

Question 5

Use the table below to answer the following question.
Table 4.1.4
  
-Refer to Table 4.1.4.The demand for hotel rooms is ________ because ________.

Accepted Answer

A) inelastic;if the price is set low enough,total revenue will decrease 
B) elastic;if the price is set high enough,total revenue will decrease 
C) unit elastic;a price cut leaves total revenue unchanged.Total revenue never reaches a maximum 
D) decreasing as the price falls;the demand curve for hotel rooms is a straight-line demand curve 
E) inelastic;if the price is set low enough,total revenue will increase 
A) inelastic;if the price is set low enough,total revenue will decrease 
B) elastic;if the price is set high enough,total revenue will decrease 
C) unit elastic;a price cut leaves total revenue unchanged.Total revenue never reaches a maximum 
D) decreasing as the price falls;the demand curve for hotel rooms is a straight-line demand curve 
E) inelastic;if the price is set low enough,total revenue will increase

Question 6

Suppose Clyde always eats ice cream and chocolate syrup together.If the price of syrup increases by 10 percent,and the cross elasticity of demand is -2,his quantity of ice cream demanded

Accepted Answer

A) increases by 5 percent. 
B) increases by 20 percent. 
C) decreases by 5 percent. 
D) decreases by 20 percent. 
E) decreases by 2 percent. 
A) increases by 5 percent. 
B) increases by 20 percent. 
C) decreases by 5 percent. 
D) decreases by 20 percent. 
E) decreases by 2 percent.

Question 7

Use the table below to answer the following question.
Table 4.1.2  
-Refer to Table 4.1.2.The price elasticity of demand for Jolt

Accepted Answer

A) equals 1. 
B) equals 2.5. 
C) equals 3.0. 
D) equals 0.33. 
E) cannot be calculated because income is not constant. 
A) equals 1. 
B) equals 2.5. 
C) equals 3.0. 
D) equals 0.33. 
E) cannot be calculated because income is not constant.

Question 8

If the demand for salmon in Cape Breton,Nova Scotia,is unit elastic,the price elasticity of demand for salmon equals

Accepted Answer

A) 1.0. 
B) 100.0. 
C) 0.10. 
D) zero. 
E) 10.0. 
A) 1.0. 
B) 100.0. 
C) 0.10. 
D) zero. 
E) 10.0.

Question 9

The demand for a good is price inelastic if

Accepted Answer

A) a rise in price increases total revenue. 
B) a rise in price decreases total revenue. 
C) an increase in income decreases total revenue. 
D) an increase in income increases total revenue. 
E) the good is a luxury. 
A) a rise in price increases total revenue. 
B) a rise in price decreases total revenue. 
C) an increase in income decreases total revenue. 
D) an increase in income increases total revenue. 
E) the good is a luxury.

Question 10

When the price of a box of cereal is $5,the quantity demanded is 800 boxes.When the price of a box of cereal is $7,the quantity demanded is 400 boxes.Calculate the price elasticity of demand when the price of a box of cereal is $6.

Accepted Answer

A) 0.5 
B) 200 
C) 0.005 
D) 1.0 
E) 2.0 
A) 0.5 
B) 200 
C) 0.005 
D) 1.0 
E) 2.0

Question 11

Use the table below to answer the following question.
Table 4.1.2  
-Suppose a rise of 8 percent in the price of bison meat in Saskatchewan reduces the consumption of bison meat by 24 percent.Following the price change,consumers spend

Accepted Answer

A) more of their income on bison. 
B) the same amount of their income on bison as before. 
C) less of their income on bison. 
D) more on products that are complements of bison. 
E) zero dollars on bison meat. 
A) more of their income on bison. 
B) the same amount of their income on bison as before. 
C) less of their income on bison. 
D) more on products that are complements of bison. 
E) zero dollars on bison meat.

Question 12

There is an increase in the price of broccoli because of the disastrous weather that destroyed half of this year's spinach crop.Choose the statement that is correct.

Accepted Answer

A) The demand curve for broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is positive. 
B) The demand curve for broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is negative. 
C) The supply curve of broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is positive. 
D) The supply curve of broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is negative. 
E) The demand curve for broccoli shifted leftward and the cross elasticity of demand for broccoli with respect to the price of spinach is negative. 
A) The demand curve for broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is positive. 
B) The demand curve for broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is negative. 
C) The supply curve of broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is positive. 
D) The supply curve of broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is negative. 
E) The demand curve for broccoli shifted leftward and the cross elasticity of demand for broccoli with respect to the price of spinach is negative.

Question 13

When the price of a DVD is $9,the quantity supplied is 4,000.When the price of a DVD is $11,the quantity supplied is 6,000.What is the elasticity of supply when the price of a DVD is $10?

Accepted Answer

A) 0.5 
B) 0.8 
C) 1.0 
D) 2.0 
E) 20.0 
A) 0.5 
B) 0.8 
C) 1.0 
D) 2.0 
E) 20.0

Question 14

A given percentage rise in the price of a good is likely to result in a larger percentage decrease in the quantity of the good demanded

Accepted Answer

A) the shorter the passage of time since the price change. 
B) the larger the proportion of income spent on it. 
C) the more difficult it is to obtain good substitutes. 
D) the lower the price. 
E) all of the above. 
A) the shorter the passage of time since the price change. 
B) the larger the proportion of income spent on it. 
C) the more difficult it is to obtain good substitutes. 
D) the lower the price. 
E) all of the above.

Question 15

If an increase in the supply of good A increases the demand for good B,then

Accepted Answer

A) the cross elasticity of supply for good B with respect to the price of good A is positive. 
B) the elasticity of supply for good A is greater than 1. 
C) A and B are complements. 
D) A and B are substitutes. 
E) the demand for A is price elastic. 
A) the cross elasticity of supply for good B with respect to the price of good A is positive. 
B) the elasticity of supply for good A is greater than 1. 
C) A and B are complements. 
D) A and B are substitutes. 
E) the demand for A is price elastic.

Question 16

The demand for orange juice is price elastic.A severe frost,which destroys large quantities of oranges,

Accepted Answer

A) lowers the equilibrium price but increases total consumer spending on juice. 
B) decreases the equilibrium quantity and decreases total consumer spending on juice. 
C) decreases both the equilibrium quantity and the price of juice. 
D) raises the equilibrium price and increases total consumer spending on juice. 
E) raises the equilibrium price but leaves total consumer spending on juice unchanged. 
A) lowers the equilibrium price but increases total consumer spending on juice. 
B) decreases the equilibrium quantity and decreases total consumer spending on juice. 
C) decreases both the equilibrium quantity and the price of juice. 
D) raises the equilibrium price and increases total consumer spending on juice. 
E) raises the equilibrium price but leaves total consumer spending on juice unchanged.

Question 17

For which one of the following will demand be the most price inelastic?

Accepted Answer

A) milk 
B) Happy Cow brand milk 
C) Happy Cow brand milk in Regina 
D) Happy Cow brand milk at Ralph's Grocery Store in Regina 
E) All of the above will exhibit the same price elasticity of demand. 
A) milk 
B) Happy Cow brand milk 
C) Happy Cow brand milk in Regina 
D) Happy Cow brand milk at Ralph's Grocery Store in Regina 
E) All of the above will exhibit the same price elasticity of demand.

Question 18

A good has a price elasticity of demand equal to 2.If an increase in supply lowers its price from $1.20 to $0.80,the percentage change in quantity demanded is

Accepted Answer

A) an increase of 80 percent. 
B) a decrease of 80 percent. 
C) a decrease of 40 percent. 
D) an increase of 2 percent. 
E) an increase of 40 percent. 
A) an increase of 80 percent. 
B) a decrease of 80 percent. 
C) a decrease of 40 percent. 
D) an increase of 2 percent. 
E) an increase of 40 percent.

Question 19

When price rises from $1.50 to $2.50 a unit,the quantity supplied increases from 9,000 to 11,000 units.What is the elasticity of supply when the price is $2 a unit?

Accepted Answer

A) 0.4 
B) 0.8 
C) 2.5 
D) 4.0 
E) -0.4 
A) 0.4 
B) 0.8 
C) 2.5 
D) 4.0 
E) -0.4

Question 20

When the price of peanut butter rises by 4 percent,total revenue decreases by 8 percent.The demand for peanut butter is

Accepted Answer

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

Suppose the Lethbridge Computer Company decides to increase the quantity of computers it sells by 6 percent.If the price elasticity of demand is 3.0,the company must

Which one of the following situations gives a price elasticity of demand of 5.0? A 10 percent rise in price is accompanied by a

When the price elasticity of demand is 2 and the price increases by 10 percent,the quantity demanded

Business owners are speaking about the price elasticity of demand without using the actual term.Which one of the following statements describes a good with a price elastic demand?

Use the table below to answer the following question. Table 4.1.4 -Refer to Table 4.1.4.The demand for hotel rooms is because .

Suppose Clyde always eats ice cream and chocolate syrup together.If the price of syrup increases by 10 percent,and the cross elasticity of demand is -2,his quantity of ice cream demanded

Use the table below to answer the following question. Table 4.1.2 -Refer to Table 4.1.2.The price elasticity of demand for Jolt

If the demand for salmon in Cape Breton,Nova Scotia,is unit elastic,the price elasticity of demand for salmon equals

The demand for a good is price inelastic if

When the price of a box of cereal is $5,the quantity demanded is 800 boxes.When the price of a box of cereal is $7,the quantity demanded is 400 boxes.Calculate the price elasticity of demand when the price of a box of cereal is $6.

Use the table below to answer the following question. Table 4.1.2 -Suppose a rise of 8 percent in the price of bison meat in Saskatchewan reduces the consumption of bison meat by 24 percent.Following the price change,consumers spend

There is an increase in the price of broccoli because of the disastrous weather that destroyed half of this year's spinach crop.Choose the statement that is correct.

When the price of a DVD is $9,the quantity supplied is 4,000.When the price of a DVD is $11,the quantity supplied is 6,000.What is the elasticity of supply when the price of a DVD is $10?

A given percentage rise in the price of a good is likely to result in a larger percentage decrease in the quantity of the good demanded

If an increase in the supply of good A increases the demand for good B,then

The demand for orange juice is price elastic.A severe frost,which destroys large quantities of oranges,

For which one of the following will demand be the most price inelastic?

A good has a price elasticity of demand equal to 2.If an increase in supply lowers its price from $1.20 to $0.80,the percentage change in quantity demanded is

When price rises from $1.50 to $2.50 a unit,the quantity supplied increases from 9,000 to 11,000 units.What is the elasticity of supply when the price is $2 a unit?

When the price of peanut butter rises by 4 percent,total revenue decreases by 8 percent.The demand for peanut butter is

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

Suppose the Lethbridge Computer Company decides to increase the quantity of computers it sells by 6 percent.If the price elasticity of demand is 3.0,the company must

Which one of the following situations gives a price elasticity of demand of 5.0? A 10 percent rise in price is accompanied by a

When the price elasticity of demand is 2 and the price increases by 10 percent,the quantity demanded

Business owners are speaking about the price elasticity of demand without using the actual term.Which one of the following statements describes a good with a price elastic demand?

Use the table below to answer the following question. Table 4.1.4 -Refer to Table 4.1.4.The demand for hotel rooms is ________ because ________.

Suppose Clyde always eats ice cream and chocolate syrup together.If the price of syrup increases by 10 percent,and the cross elasticity of demand is -2,his quantity of ice cream demanded

Use the table below to answer the following question. Table 4.1.2 -Refer to Table 4.1.2.The price elasticity of demand for Jolt

If the demand for salmon in Cape Breton,Nova Scotia,is unit elastic,the price elasticity of demand for salmon equals

The demand for a good is price inelastic if

When the price of a box of cereal is $5,the quantity demanded is 800 boxes.When the price of a box of cereal is $7,the quantity demanded is 400 boxes.Calculate the price elasticity of demand when the price of a box of cereal is $6.

Use the table below to answer the following question. Table 4.1.2 -Suppose a rise of 8 percent in the price of bison meat in Saskatchewan reduces the consumption of bison meat by 24 percent.Following the price change,consumers spend

There is an increase in the price of broccoli because of the disastrous weather that destroyed half of this year's spinach crop.Choose the statement that is correct.

When the price of a DVD is $9,the quantity supplied is 4,000.When the price of a DVD is $11,the quantity supplied is 6,000.What is the elasticity of supply when the price of a DVD is $10?

A given percentage rise in the price of a good is likely to result in a larger percentage decrease in the quantity of the good demanded

If an increase in the supply of good A increases the demand for good B,then

The demand for orange juice is price elastic.A severe frost,which destroys large quantities of oranges,

For which one of the following will demand be the most price inelastic?

A good has a price elasticity of demand equal to 2.If an increase in supply lowers its price from $1.20 to $0.80,the percentage change in quantity demanded is

When price rises from $1.50 to $2.50 a unit,the quantity supplied increases from 9,000 to 11,000 units.What is the elasticity of supply when the price is $2 a unit?

When the price of peanut butter rises by 4 percent,total revenue decreases by 8 percent.The demand for peanut butter is

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

Use the table below to answer the following question. Table 4.1.4 -Refer to Table 4.1.4.The demand for hotel rooms is because .