Question 1

The price elasticity of demand for oranges ________ if the quantity is measured in pounds instead of kilograms and ________ if the price is measured in dollars instead of cents.

Accepted Answer

A) changes;changes 
B) changes;does not change 
C) does not change;changes 
D) does not change;does not change 
E) increases;decreases 
A) changes;changes 
B) changes;does not change 
C) does not change;changes 
D) does not change;does not change 
E) increases;decreases

Question 2

Fred's income increases from $1,950 per week to $2,050 per week.As a result,he decides to increase the number of movies he attends each month by 10 percent.Fred's demand for movies is

Accepted Answer

A) price elastic. 
B) price inelastic. 
C) income elastic. 
D) income inelastic. 
E) income inferior. 
A) price elastic. 
B) price inelastic. 
C) income elastic. 
D) income inelastic. 
E) income inferior.

Question 3

A sudden,end-of-summer heat wave increases the demand for air conditioners and catches suppliers with no reserve inventories.The momentary supply for air conditioners is

Accepted Answer

A) perfectly elastic. 
B) perfectly inelastic. 
C) elastic. 
D) shown by an upward-sloping curve. 
E) shown by a horizontal curve. 
A) perfectly elastic. 
B) perfectly inelastic. 
C) elastic. 
D) shown by an upward-sloping curve. 
E) shown by a horizontal curve.

Question 4

A price elasticity of demand of 2 means that a 10 percent increase in price will result in a

Accepted Answer

A) 2 percent decrease in quantity demanded. 
B) 20 percent decrease in quantity demanded. 
C) 5 percent decrease in quantity demanded. 
D) 2 percent increase in quantity demanded. 
E) 20 percent increase in quantity demanded. 
A) 2 percent decrease in quantity demanded. 
B) 20 percent decrease in quantity demanded. 
C) 5 percent decrease in quantity demanded. 
D) 2 percent increase in quantity demanded. 
E) 20 percent increase in quantity demanded.

Question 5

If a 10 percent increase in price results in an 18 percent increase in quantity supplied,the elasticity of supply is

Accepted Answer

A) 0.3. 
B) 0.6. 
C) 1.2. 
D) 1.8. 
E) 9.0. 
A) 0.3. 
B) 0.6. 
C) 1.2. 
D) 1.8. 
E) 9.0.

Question 6

Suppose a fall in the price of a good from $10 to $8 leads to an increase in quantity demanded from 20 to 24 units.The price elasticity of demand is

Accepted Answer

A) 1. 
B) 9/11. 
C) 11/9. 
D) 2.0. 
E) 4.5/11. 
A) 1. 
B) 9/11. 
C) 11/9. 
D) 2.0. 
E) 4.5/11.

Question 7

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

Accepted Answer

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

Question 8

Use the table below to answer the following question.
Table 4.1.5
 $$\begin{array} { c c } 
\text { Price } & \text { Quantity demanded } \
\text { (dollars per night) } & \text { (rooms per night) } \
200 & 10,000 \
250 & \mathbf { 8 , 0 0 0 } \
400 & 5,000 \
500 & \mathbf { 4 , 0 0 0 } \
\mathbf { 8 0 0 } & \mathbf { 2 , 5 0 0 }
\end{array}$$
-Refer to Table 4.1.5.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 9

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.

Question 10

In the market for farm crops momentary supply is ________.In the market for farm crops,short-run supply is ________.

Accepted Answer

A) less elastic than short-run supply;less elastic than long-run supply 
B) more elastic than short-run supply;more elastic than long-run supply 
C) negative;positive 
D) positive;negative 
E) perfectly elastic;perfectly inelastic 
A) less elastic than short-run supply;less elastic than long-run supply 
B) more elastic than short-run supply;more elastic than long-run supply 
C) negative;positive 
D) positive;negative 
E) perfectly elastic;perfectly inelastic

Question 11

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 between A and B is negative. 
B) demand curve for good B rightward if the cross elasticity of demand between A and B is positive. 
C) supply curve of B rightward if the cross elasticity of demand between A and B is negative. 
D) supply curve of B rightward if the cross elasticity of demand between A and B 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 between A and B is negative. 
B) demand curve for good B rightward if the cross elasticity of demand between A and B is positive. 
C) supply curve of B rightward if the cross elasticity of demand between A and B is negative. 
D) supply curve of B rightward if the cross elasticity of demand between A and B is positive. 
E) demand curve for B rightward if the income elasticity of demand for B is positive.

Question 12

If the demand curve for a good is a horizontal line,then the good has

Accepted Answer

A) zero income elasticity. 
B) price elasticity of demand equal to zero. 
C) infinite price elasticity of demand. 
D) a price elasticity of demand that is likely to rise in the short run. 
E) a price elasticity of demand that is likely to fall in the short run. 
A) zero income elasticity. 
B) price elasticity of demand equal to zero. 
C) infinite price elasticity of demand. 
D) a price elasticity of demand that is likely to rise in the short run. 
E) a price elasticity of demand that is likely to fall in the short run.

Question 13

The price of apples falls by 5 percent and quantity of apples demanded increases by 6 percent.We conclude that 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 14

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,we know the demand for A is elastic. 
B) if the total revenue from sales of A rises,we know the demand for A is elastic. 
C) if the total revenue from sales of A falls,we know the demand for A is elastic. 
D) total revenue will increase because the price of A must rise. 
E) total revenue must fall because the quantity bought and sold of A must fall. 
A) if the price of A rises,we know the demand for A is elastic. 
B) if the total revenue from sales of A rises,we know the demand for A is elastic. 
C) if the total revenue from sales of A falls,we know the demand for A is elastic. 
D) total revenue will increase because the price of A must rise. 
E) total revenue must fall because the quantity bought and sold of A must fall.

Question 15

When the price of a bicycle falls from $220 to $180 and other things remain the same I.the quantity of bicycles demanded increases from 150 to 250 an hour.
II.the quantity of skateboards demanded decreases from 125 to 75 an hour.
III.the quantity of bicycle helmets demanded increases from 170 to 230 an hour.
Bicycle helmets and bicycles are ________ because a fall in the price of a bicycle brings ________ in the quantity demanded of bicycle helmets.The cross elasticity of demand for bicycle helmets with respect to bicycles is ________.

Accepted Answer

A) complements;an increase;-1.5 
B) substitutes;a decrease;1.5 
C) substitutes;an increase;-0.67 
D) complements;a decrease;0.67 
E) complements;an increase;1.5 
A) complements;an increase;-1.5 
B) substitutes;a decrease;1.5 
C) substitutes;an increase;-0.67 
D) complements;a decrease;0.67 
E) complements;an increase;1.5

Question 16

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 17

The price elasticity of demand for purses is measured in

Accepted Answer

A) dollars. 
B) purses. 
C) dollars per purse. 
D) purses per dollar. 
E) none of the above. 
A) dollars. 
B) purses. 
C) dollars per purse. 
D) purses per dollar. 
E) none of the above.

Question 18

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

Accepted Answer

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

Question 19

If a 4 percent decrease in income (at a constant price)results in a 2 percent decrease in the consumption of dweedles then

Accepted Answer

A) the income elasticity of demand for dweedles is negative. 
B) dweedles are a necessity and a normal good. 
C) dweedles are a luxury and a normal good. 
D) dweedles are an inferior good. 
E) both A and D. 
A) the income elasticity of demand for dweedles is negative. 
B) dweedles are a necessity and a normal good. 
C) dweedles are a luxury and a normal good. 
D) dweedles are an inferior good. 
E) both A and D.

Question 20

Suppose that Simon Fraser University decides to raise tuition fees to increase the total revenue it receives from students.This policy works only if the demand for a Simon Fraser University education is

Accepted Answer

A) unit elastic. 
B) inelastic. 
C) elastic. 
D) greater than the demand for a University of Western Ontario education. 
E) perfectly elastic. 
A) unit elastic. 
B) inelastic. 
C) elastic. 
D) greater than the demand for a University of Western Ontario education. 
E) perfectly elastic.

The price elasticity of demand for oranges if the quantity is measured in pounds instead of kilograms and if the price is measured in dollars instead of cents.

Fred's income increases from $1,950 per week to $2,050 per week.As a result,he decides to increase the number of movies he attends each month by 10 percent.Fred's demand for movies is

A sudden,end-of-summer heat wave increases the demand for air conditioners and catches suppliers with no reserve inventories.The momentary supply for air conditioners is

A price elasticity of demand of 2 means that a 10 percent increase in price will result in a

If a 10 percent increase in price results in an 18 percent increase in quantity supplied,the elasticity of supply is

Suppose a fall in the price of a good from $10 to $8 leads to an increase in quantity demanded from 20 to 24 units.The price elasticity of demand is

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

Use the table below to answer the following question. Table 4.1.5 Price Quantity demanded (dollars per night) (rooms per night) 200 10,000 250 400 5,000 500 -Refer to Table 4.1.5.The demand for hotel rooms is because .

Which one of the following illustrates an elastic demand?

In the market for farm crops momentary supply is .In the market for farm crops,short-run supply is .

A rise in the price of good A shifts the

If the demand curve for a good is a horizontal line,then the good has

The price of apples falls by 5 percent and quantity of apples demanded increases by 6 percent.We conclude that the demand for apples is

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

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

The price elasticity of demand for purses is measured in

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

If a 4 percent decrease in income (at a constant price)results in a 2 percent decrease in the consumption of dweedles then

Suppose that Simon Fraser University decides to raise tuition fees to increase the total revenue it receives from students.This policy works only if the demand for a Simon Fraser University education 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

Organizing Production

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 price elasticity of demand for oranges ________ if the quantity is measured in pounds instead of kilograms and ________ if the price is measured in dollars instead of cents.

Fred's income increases from $1,950 per week to $2,050 per week.As a result,he decides to increase the number of movies he attends each month by 10 percent.Fred's demand for movies is

A sudden,end-of-summer heat wave increases the demand for air conditioners and catches suppliers with no reserve inventories.The momentary supply for air conditioners is

A price elasticity of demand of 2 means that a 10 percent increase in price will result in a

If a 10 percent increase in price results in an 18 percent increase in quantity supplied,the elasticity of supply is

Suppose a fall in the price of a good from $10 to $8 leads to an increase in quantity demanded from 20 to 24 units.The price elasticity of demand is

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

Use the table below to answer the following question. Table 4.1.5 Price Quantity demanded (dollars per night) (rooms per night) 200 10,000 250 400 5,000 500 -Refer to Table 4.1.5.The demand for hotel rooms is ________ because ________.

Which one of the following illustrates an elastic demand?

In the market for farm crops momentary supply is ________.In the market for farm crops,short-run supply is ________.

A rise in the price of good A shifts the

If the demand curve for a good is a horizontal line,then the good has

The price of apples falls by 5 percent and quantity of apples demanded increases by 6 percent.We conclude that the demand for apples is

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

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

The price elasticity of demand for purses is measured in

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

If a 4 percent decrease in income (at a constant price)results in a 2 percent decrease in the consumption of dweedles then

Suppose that Simon Fraser University decides to raise tuition fees to increase the total revenue it receives from students.This policy works only if the demand for a Simon Fraser University education 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

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Filters

The price elasticity of demand for oranges if the quantity is measured in pounds instead of kilograms and if the price is measured in dollars instead of cents.

Use the table below to answer the following question. Table 4.1.5 Price Quantity demanded (dollars per night) (rooms per night) 200 10,000 250 400 5,000 500 -Refer to Table 4.1.5.The demand for hotel rooms is because .

In the market for farm crops momentary supply is .In the market for farm crops,short-run supply is .