Question 1

A good has an income elasticity of +0.5.An increase in income from $15,000 to $25,000 will lead to a

Accepted Answer

A) 2.5 percent increase in the quantity demanded of the good. 
B) 5 percent increase in the quantity demanded of the good. 
C) 5 percent decrease in the quantity demanded of the good. 
D) 25 percent decrease in the quantity demanded of the good. 
E) 25 percent increase in the quantity demanded of the good. 
A) 2.5 percent increase in the quantity demanded of the good. 
B) 5 percent increase in the quantity demanded of the good. 
C) 5 percent decrease in the quantity demanded of the good. 
D) 25 percent decrease in the quantity demanded of the good. 
E) 25 percent increase in the quantity demanded of the good.

Question 2

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

Accepted Answer

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

Question 3

The price of good A falls by 10 percent and quantity of good A demanded does not change.We conclude that the demand for good A is

Accepted Answer

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

Question 4

If good A is a complement of good B,then the cross elasticity of demand is

Accepted Answer

A) 12. 
B) infinity. 
C) positive. 
D) zero. 
E) negative. 
A) 12. 
B) infinity. 
C) positive. 
D) zero. 
E) negative.

Question 5

The price of gasoline rises by 25 percent and remains fixed at the new higher level.Choose the correct statement.

Accepted Answer

A) The demand for gasoline will increase after consumers adjust their consumption behaviour to the new higher price. 
B) The demand for gasoline will decrease after consumers adjust their consumption behaviour to the new higher price. 
C) Initially after the price change,the price elasticity of demand will be less elastic than it will be a few years after the price change. 
D) The price elasticity of demand for gasoline will decrease in the future. 
E) Initially after the price change,the price elasticity of demand will be more elastic than it will be a few years after the price change. 
A) The demand for gasoline will increase after consumers adjust their consumption behaviour to the new higher price. 
B) The demand for gasoline will decrease after consumers adjust their consumption behaviour to the new higher price. 
C) Initially after the price change,the price elasticity of demand will be less elastic than it will be a few years after the price change. 
D) The price elasticity of demand for gasoline will decrease in the future. 
E) Initially after the price change,the price elasticity of demand will be more elastic than it will be a few years after the price change.

Question 6

If the quantity of carrots demanded increases by a small percentage when income increases by a large amount,we know that the demand for carrots is

Accepted Answer

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

Question 7

The price elasticity of demand depends on

Accepted Answer

A) the units used to measure price and the units used to measure quantity. 
B) the units used to measure price but not the units used to measure quantity. 
C) the units used to measure quantity but not the units used to measure price. 
D) neither the units used to measure price nor the units used to measure quantity. 
E) the relative price of the good. 
A) the units used to measure price and the units used to measure quantity. 
B) the units used to measure price but not the units used to measure quantity. 
C) the units used to measure quantity but not the units used to measure price. 
D) neither the units used to measure price nor the units used to measure quantity. 
E) the relative price of the good.

Question 8

Long-run supply is

Accepted Answer

A) more elastic than momentary supply but less elastic than short-run supply. 
B) less elastic than momentary supply but more elastic than short-run supply. 
C) less elastic than both momentary and short-run supply. 
D) more elastic than both momentary and short-run supply. 
E) none of the above. 
A) more elastic than momentary supply but less elastic than short-run supply. 
B) less elastic than momentary supply but more elastic than short-run supply. 
C) less elastic than both momentary and short-run supply. 
D) more elastic than both momentary and short-run supply. 
E) none of the above.

Question 9

A decrease in tuition fees will decrease the university's total revenue if the price elasticity of demand for university education is

Accepted Answer

A) negative. 
B) greater than zero but less than 1. 
C) equal to 1. 
D) greater than 1. 
E) less than the elasticity of supply. 
A) negative. 
B) greater than zero but less than 1. 
C) equal to 1. 
D) greater than 1. 
E) less than the elasticity of supply.

Question 10

Suppose that a 20 percent increase in income increases the quantity of good A demanded from 19,200 to 20,800 units.The income elasticity of demand for good A is

Accepted Answer

A) 0.05. 
B) 0.8. 
C) 0.4. 
D) 1.2. 
E) 2.0. 
A) 0.05. 
B) 0.8. 
C) 0.4. 
D) 1.2. 
E) 2.0.

Question 11

Fred's income increases from $840 per week to $1,160 per week.As a result,he decides to purchase 24 percent more bubble gum each week.The income elasticity of Fred's demand for bubble gum is

Accepted Answer

A) 0.32. 
B) 1.33. 
C) 24. 
D) 0.24. 
E) 0.75. 
A) 0.32. 
B) 1.33. 
C) 24. 
D) 0.24. 
E) 0.75.

Question 12

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

Question 13

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 14

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 15

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

Accepted Answer

A) the demands for A and B are independent. 
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 demands for A and B are independent. 
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

If a rise in the price of good A from $9 to $11 results in an increase in quantity supplied from 4,000 to 6,000 units,the elasticity of supply is

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 17

A unit elastic demand

Accepted Answer

A) means that the ratio of a change in quantity demanded to a change in price is equal to 1. 
B) means that the ratio of a percentage change in quantity demanded to a percentage change in price is equal to 1. 
C) means that 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 ratio of a change in quantity demanded to a change in price is equal to 1. 
B) means that the ratio of a percentage change in quantity demanded to a percentage change in price is equal to 1. 
C) means that 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 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 independent 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 independent goods.

Question 19

Supply is inelastic if

Accepted Answer

A) a small percentage change in price results in a large percentage change in quantity supplied. 
B) a large percentage change in price results in a small percentage change in quantity supplied. 
C) the good is a normal good. 
D) the good is an inferior good. 
E) the good has many substitutes. 
A) a small percentage change in price results in a large percentage change in quantity supplied. 
B) a large percentage change in price results in a small percentage change in quantity supplied. 
C) the good is a normal good. 
D) the good is an inferior good. 
E) the good has many substitutes.

Question 20

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.

A good has an income elasticity of +0.5.An increase in income from $15,000 to $25,000 will lead to a

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

The price of good A falls by 10 percent and quantity of good A demanded does not change.We conclude that the demand for good A is

If good A is a complement of good B,then the cross elasticity of demand is

The price of gasoline rises by 25 percent and remains fixed at the new higher level.Choose the correct statement.

If the quantity of carrots demanded increases by a small percentage when income increases by a large amount,we know that the demand for carrots is

The price elasticity of demand depends on

Long-run supply is

A decrease in tuition fees will decrease the university's total revenue if the price elasticity of demand for university education is

Suppose that a 20 percent increase in income increases the quantity of good A demanded from 19,200 to 20,800 units.The income elasticity of demand for good A is

Fred's income increases from $840 per week to $1,160 per week.As a result,he decides to purchase 24 percent more bubble gum each week.The income elasticity of Fred's demand for bubble gum 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 .

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

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

If a rise in the price of good A from $9 to $11 results in an increase in quantity supplied from 4,000 to 6,000 units,the elasticity of supply is

A unit elastic demand

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

Supply is inelastic if

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

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

A good has an income elasticity of +0.5.An increase in income from $15,000 to $25,000 will lead to a

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

The price of good A falls by 10 percent and quantity of good A demanded does not change.We conclude that the demand for good A is

If good A is a complement of good B,then the cross elasticity of demand is

The price of gasoline rises by 25 percent and remains fixed at the new higher level.Choose the correct statement.

If the quantity of carrots demanded increases by a small percentage when income increases by a large amount,we know that the demand for carrots is

The price elasticity of demand depends on

Long-run supply is

A decrease in tuition fees will decrease the university's total revenue if the price elasticity of demand for university education is

Suppose that a 20 percent increase in income increases the quantity of good A demanded from 19,200 to 20,800 units.The income elasticity of demand for good A is

Fred's income increases from $840 per week to $1,160 per week.As a result,he decides to purchase 24 percent more bubble gum each week.The income elasticity of Fred's demand for bubble gum 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 ________.

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

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

If a rise in the price of good A from $9 to $11 results in an increase in quantity supplied from 4,000 to 6,000 units,the elasticity of supply is

A unit elastic demand

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

Supply is inelastic if

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

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

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 .