Question 1

Which one of the following must be true if demand is income elastic?

Accepted Answer

A) A large percentage increase in income will result in a small percentage increase in quantity demanded. 
B) A small percentage increase in income will result in a large percentage increase in quantity demanded. 
C) An increase in income will decrease the quantity demanded. 
D) The good is an inferior good. 
E) A percentage change in price will lead to a larger percentage change in quantity demanded. 
A) A large percentage increase in income will result in a small percentage increase in quantity demanded. 
B) A small percentage increase in income will result in a large percentage increase in quantity demanded. 
C) An increase in income will decrease the quantity demanded. 
D) The good is an inferior good. 
E) A percentage change in price will lead to a larger percentage change in quantity demanded.

Question 2

For which one of the following is demand likely to be most inelastic?

Accepted Answer

A) diamonds 
B) insulin for a diabetic 
C) potatoes 
D) gasoline 
E) books 
A) diamonds 
B) insulin for a diabetic 
C) potatoes 
D) gasoline 
E) books

Question 3

A perfectly vertical demand curve indicates that the price elasticity of demand for the good is

Accepted Answer

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

Question 4

If a price decrease results in an increase in total revenue,then demand is

Accepted Answer

A) inelastic. 
B) unit elastic. 
C) perfectly inelastic. 
D) equal to supply. 
E) elastic. 
A) inelastic. 
B) unit elastic. 
C) perfectly inelastic. 
D) equal to supply. 
E) elastic.

Question 5

Goods that can be produced using rare productive resources have a ________ elasticity of supply.The greater the amount of time available after a price change,the ________ is the elasticity of supply.

Accepted Answer

A) low;smaller 
B) high;greater 
C) high;smaller 
D) low;greater 
E) high;more inelastic 
A) low;smaller 
B) high;greater 
C) high;smaller 
D) low;greater 
E) high;more inelastic

Question 6

If Mr.Brown's income increases by 12 percent and as a result 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 7

If a rise in the price of good A from $100 to $120 results in an increase in quantity supplied from 10,000 to 12,000 units,then the elasticity of supply is

Accepted Answer

A) 0.625. 
B) 0.8. 
C) 1.25. 
D) 0.2. 
E) 1.0. 
A) 0.625. 
B) 0.8. 
C) 1.25. 
D) 0.2. 
E) 1.0.

Question 8

At a price of $15,Jack's quantity demanded of good A is the same as when the price rises to $16.Jack's demand for good A is

Accepted Answer

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

Question 9

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.

Question 10

Total revenue from the sale of a good will decrease if

Accepted Answer

A) income increases and the good is normal. 
B) its price rises and demand is elastic. 
C) its price rises and demand is inelastic. 
D) income falls and the good is an inferior good. 
E) its price falls and demand is elastic. 
A) income increases and the good is normal. 
B) its price rises and demand is elastic. 
C) its price rises and demand is inelastic. 
D) income falls and the good is an inferior good. 
E) its price falls and demand is elastic.

Question 11

When the quantity of coal is measured in kilograms instead of pounds,the demand for coal becomes

Accepted Answer

A) more elastic. 
B) less elastic. 
C) neither more nor less elastic. 
D) perfectly elastic. 
E) perfectly inelastic. 
A) more elastic. 
B) less elastic. 
C) neither more nor less elastic. 
D) perfectly elastic. 
E) perfectly inelastic.

Question 12

Fred's income increases from $800 per week to $1,200 per week.As a result,he decides to purchase 40 percent more bubble gum each week.The income elasticity of Fred's demand for bubble gum is

Accepted Answer

A) 0.40. 
B) 40. 
C) 1.0. 
D) 0.12. 
E) 10. 
A) 0.40. 
B) 40. 
C) 1.0. 
D) 0.12. 
E) 10.

Question 13

The price elasticity of demand is a units-free measure of the responsiveness of the ________ when all other influences on buying plans remain the same.

Accepted Answer

A) quantity demanded to a change in the price of a substitute or complement 
B) quantity demanded to a change in income 
C) quantity demanded of a good to a change in its price 
D) price to a change in quantity demanded 
E) none of the above 
A) quantity demanded to a change in the price of a substitute or complement 
B) quantity demanded to a change in income 
C) quantity demanded of a good to a change in its price 
D) price to a change in quantity demanded 
E) none of the above

Question 14

If the cross elasticity of demand between goods A and B is negative,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 15

If the cross elasticity of demand between beef and bison is 1.5,then a 3 percent increase in the price of beef will lead to

Accepted Answer

A) a 4.5 percent increase in the quantity of bison demanded. 
B) a 4.5 percent decrease in the quantity of bison demanded. 
C) a 2 percent increase in the quantity of bison demanded. 
D) a 2 percent decrease in the quantity of bison demanded. 
E) a 0.5 percent increase in the quantity of bison demanded. 
A) a 4.5 percent increase in the quantity of bison demanded. 
B) a 4.5 percent decrease in the quantity of bison demanded. 
C) a 2 percent increase in the quantity of bison demanded. 
D) a 2 percent decrease in the quantity of bison demanded. 
E) a 0.5 percent increase in the quantity of bison demanded.

Question 16

Suppose the Nunavut government decides to repair Iqaluit roads.One way to generate sufficient funds for this plan is to increase taxes on gasoline.The government will be able to raise total revenue from gasoline sales only if the demand for gasoline is

Accepted Answer

A) perfectly elastic. 
B) equal to the supply of gasoline. 
C) unit elastic. 
D) inelastic. 
E) elastic. 
A) perfectly elastic. 
B) equal to the supply of gasoline. 
C) unit elastic. 
D) inelastic. 
E) elastic.

Question 17

Total revenue is more likely to rise when the price falls if

Accepted Answer

A) there are few substitutes for the good. 
B) a low proportion of income is spent on the good. 
C) some extended period of time passes. 
D) all of the above. 
E) none of the above. 
A) there are few substitutes for the good. 
B) a low proportion of income is spent on the good. 
C) some extended period of time passes. 
D) all of the above. 
E) none of the above.

Question 18

Business people speak about price elasticity of demand without using the actual term.Which one of the following statements reflects elastic demand for a good?

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) none of the above 
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) none of the above

Question 19

Suppose Swiss Chalet in Moncton knows that the demand for their half-chicken meals is elastic.If the manager wants to increase total revenue from half-chicken meal sales,he should

Accepted Answer

A) lower the price of a half-chicken meal. 
B) not change the price of a half-chicken meal. 
C) raise the price of a half-chicken meal. 
D) decrease the supply of half-chicken meals. 
E) hire fewer employees. 
A) lower the price of a half-chicken meal. 
B) not change the price of a half-chicken meal. 
C) raise the price of a half-chicken meal. 
D) decrease the supply of half-chicken meals. 
E) hire fewer employees.

Question 20

If a large percentage fall in the price of good A results in a small percentage decrease in the quantity supplied,then

Accepted Answer

A) demand is elastic. 
B) demand is inelastic. 
C) demand is income inelastic. 
D) supply is inelastic. 
E) supply is elastic. 
A) demand is elastic. 
B) demand is inelastic. 
C) demand is income inelastic. 
D) supply is inelastic. 
E) supply is elastic.

Which one of the following must be true if demand is income elastic?

For which one of the following is demand likely to be most inelastic?

A perfectly vertical demand curve indicates that the price elasticity of demand for the good is

If a price decrease results in an increase in total revenue,then demand is

Goods that can be produced using rare productive resources have a elasticity of supply.The greater the amount of time available after a price change,the is the elasticity of supply.

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

If a rise in the price of good A from $100 to $120 results in an increase in quantity supplied from 10,000 to 12,000 units,then the elasticity of supply is

At a price of $15,Jack's quantity demanded of good A is the same as when the price rises to $16.Jack's demand for good A is

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

Total revenue from the sale of a good will decrease if

When the quantity of coal is measured in kilograms instead of pounds,the demand for coal becomes

Fred's income increases from $800 per week to $1,200 per week.As a result,he decides to purchase 40 percent more bubble gum each week.The income elasticity of Fred's demand for bubble gum is

The price elasticity of demand is a units-free measure of the responsiveness of the ________ when all other influences on buying plans remain the same.

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

If the cross elasticity of demand between beef and bison is 1.5,then a 3 percent increase in the price of beef will lead to

Suppose the Nunavut government decides to repair Iqaluit roads.One way to generate sufficient funds for this plan is to increase taxes on gasoline.The government will be able to raise total revenue from gasoline sales only if the demand for gasoline is

Total revenue is more likely to rise when the price falls if

Business people speak about price elasticity of demand without using the actual term.Which one of the following statements reflects elastic demand for a good?

Suppose Swiss Chalet in Moncton knows that the demand for their half-chicken meals is elastic.If the manager wants to increase total revenue from half-chicken meal sales,he should

If a large percentage fall in the price of good A results in a small percentage decrease in the quantity supplied,then

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

Which one of the following must be true if demand is income elastic?

For which one of the following is demand likely to be most inelastic?

A perfectly vertical demand curve indicates that the price elasticity of demand for the good is

If a price decrease results in an increase in total revenue,then demand is

Goods that can be produced using rare productive resources have a ________ elasticity of supply.The greater the amount of time available after a price change,the ________ is the elasticity of supply.

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

If a rise in the price of good A from $100 to $120 results in an increase in quantity supplied from 10,000 to 12,000 units,then the elasticity of supply is

At a price of $15,Jack's quantity demanded of good A is the same as when the price rises to $16.Jack's demand for good A is

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

Total revenue from the sale of a good will decrease if

When the quantity of coal is measured in kilograms instead of pounds,the demand for coal becomes

Fred's income increases from $800 per week to $1,200 per week.As a result,he decides to purchase 40 percent more bubble gum each week.The income elasticity of Fred's demand for bubble gum is

The price elasticity of demand is a units-free measure of the responsiveness of the ________ when all other influences on buying plans remain the same.

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

If the cross elasticity of demand between beef and bison is 1.5,then a 3 percent increase in the price of beef will lead to

Suppose the Nunavut government decides to repair Iqaluit roads.One way to generate sufficient funds for this plan is to increase taxes on gasoline.The government will be able to raise total revenue from gasoline sales only if the demand for gasoline is

Total revenue is more likely to rise when the price falls if

Business people speak about price elasticity of demand without using the actual term.Which one of the following statements reflects elastic demand for a good?

Suppose Swiss Chalet in Moncton knows that the demand for their half-chicken meals is elastic.If the manager wants to increase total revenue from half-chicken meal sales,he should

If a large percentage fall in the price of good A results in a small percentage decrease in the quantity supplied,then

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

Goods that can be produced using rare productive resources have a elasticity of supply.The greater the amount of time available after a price change,the is the elasticity of supply.