Question 1

Suppose the quantity of root beer demanded decreases from 105,000 litres per week to 95,000 litres per week when the price rises by 5 percent.The price elasticity of demand

Accepted Answer

A) is 2.0. 
B) is 0.5. 
C) is 10. 
D) is inelastic. 
E) cannot be computed unless we know the original price and the new price. 
A) is 2.0. 
B) is 0.5. 
C) is 10. 
D) is inelastic. 
E) cannot be computed unless we know the original price and the new price.

Question 2

The demand for a good is perfectly elastic when the price elasticity of demand is

Accepted Answer

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

Question 3

If a 10 percent increase in income results in a 5 percent increase in quantity demanded,what is the income elasticity of demand?

Accepted Answer

A) 0.5 
B) -0.5 
C) 2.0 
D) -2.0 
E) 1.5 
A) 0.5 
B) -0.5 
C) 2.0 
D) -2.0 
E) 1.5

Question 4

All normal goods have

Accepted Answer

A) an income elasticity of demand greater than 1.0. 
B) a price elasticity of demand greater than 1.0. 
C) a negative price elasticity of demand. 
D) a positive income elasticity of demand. 
E) a negative cross elasticity of demand 
A) an income elasticity of demand greater than 1.0. 
B) a price elasticity of demand greater than 1.0. 
C) a negative price elasticity of demand. 
D) a positive income elasticity of demand. 
E) a negative cross elasticity of demand

Question 5

Which of the following will have the most elastic demand?

Accepted Answer

A) frozen desserts 
B) ice cream 
C) strawberry ice cream 
D) a banana split made with strawberry and chocolate ice cream 
E) a banana split with with Nestle strawberry and chocolate ice cream 
A) frozen desserts 
B) ice cream 
C) strawberry ice cream 
D) a banana split made with strawberry and chocolate ice cream 
E) a banana split with with Nestle strawberry and chocolate ice cream

Question 6

If a 10 percent rise in price leads to an 8 percent decrease in quantity demanded,the price elasticity of demand is

Accepted Answer

A) 0.8. 
B) 1.25. 
C) 8. 
D) 0.125. 
E) 80. 
A) 0.8. 
B) 1.25. 
C) 8. 
D) 0.125. 
E) 80.

Question 7

A horizontal supply curve

Accepted Answer

A) is impossible except in the long run. 
B) implies an elasticity of supply equal to zero. 
C) implies an elasticity of supply equal to infinity. 
D) indicates that suppliers are unwilling to produce the good. 
E) indicates there is a fixed quantity of the good that can be supplied. 
A) is impossible except in the long run. 
B) implies an elasticity of supply equal to zero. 
C) implies an elasticity of supply equal to infinity. 
D) indicates that suppliers are unwilling to produce the good. 
E) indicates there is a fixed quantity of the good that can be supplied.

Question 8

Use the table below to answer the following question.
Table 4.1.3
 $\begin{array}{lllll}
\hline &\text { Price of Jolt }&\text { Price of Coke }&\text { Income Level }&\text { Jolt Sales }\
\hline 2000 & \$ 1.00 / \mathrm{can} & \$ 1.00 / \mathrm{can} & \$ 25,000 & 15,000 \text { cases } \
2001 & \$ 1.00 / \mathrm{can} & \$ 1.40 / \mathrm{can} & \$ 25,000 & 25,000 \text { cases } \
2002 & \$ 1.00 / \mathrm{can} & \$ 1.40 / \mathrm{can} & \$ 35,000 & 15,000 \text { cases } \
2003 & \$ 1.40 / \mathrm{can} & \$ 1.40 / \mathrm{can} & \$ 35,000 & 5,000 \text { cases } \\hline
\end{array}$
-Refer to Table 4.1.3.The price elasticity of demand for Jolt is

Accepted Answer

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

Question 9

The price elasticity of demand for airplane travel one week 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 10

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

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 11

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 $13 to $11,

Accepted Answer

A) total revenue increases. 
B) total revenue decreases. 
C) total revenue remains unchanged. 
D) total revenue initially increases then decreases. 
E) total revenue initially decreases then increases. 
A) total revenue increases. 
B) total revenue decreases. 
C) total revenue remains unchanged. 
D) total revenue initially increases then decreases. 
E) total revenue initially decreases then increases.

Question 12

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 13

If the Canucks lower ticket prices and find that total revenue does not change,then the price elasticity of demand for tickets is

Accepted Answer

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

Question 14

Demand will be more elastic the

Accepted Answer

A) higher the income level. 
B) lower the income level. 
C) longer the passage of time after a price increase. 
D) fewer substitutes are available. 
E) smaller the fraction of income spent on the good. 
A) higher the income level. 
B) lower the income level. 
C) longer the passage of time after a price increase. 
D) fewer substitutes are available. 
E) smaller the fraction of income spent on the good.

Question 15

Suppose the demand curve for good X is horizontal.This shows that the demand for good X is

Accepted Answer

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

Question 16

Suppose the government of Nova Scotia wants to reduce the consumption of electricity by 5 percent.The price elasticity of demand for electricity is 0.40.You advise the Nova Scotia government to

Accepted Answer

A) raise the price of electricity by 12.5 percent. 
B) raise the price of electricity by 2 percent. 
C) lower the price of electricity by 12.5 percent. 
D) stay away from the market for electricity and let the market mechanism fix the problem. 
E) lower the price of electricity by 2 percent. 
A) raise the price of electricity by 12.5 percent. 
B) raise the price of electricity by 2 percent. 
C) lower the price of electricity by 12.5 percent. 
D) stay away from the market for electricity and let the market mechanism fix the problem. 
E) lower the price of electricity by 2 percent.

Question 17

Suppose the price of a television set rises by 10 percent.Which one of the following would we expect to be the most elastic following such a price change?

Accepted Answer

A) the momentary supply of television sets 
B) the short-run supply of television sets 
C) the long-run supply of television sets 
D) the momentary demand for television sets 
E) the normal demand for television sets 
A) the momentary supply of television sets 
B) the short-run supply of television sets 
C) the long-run supply of television sets 
D) the momentary demand for television sets 
E) the normal demand for television sets

Question 18

A negative value for

Accepted Answer

A) price elasticity of supply implies an upward-sloping supply curve. 
B) cross elasticity of demand implies that the goods are complements. 
C) price elasticity of demand implies an inferior good. 
D) income elasticity of demand implies a normal good. 
E) income elasticity of demand implies an error in your calculation. 
A) price elasticity of supply implies an upward-sloping supply curve. 
B) cross elasticity of demand implies that the goods are complements. 
C) price elasticity of demand implies an inferior good. 
D) income elasticity of demand implies a normal good. 
E) income elasticity of demand implies an error in your calculation.

Question 19

The income elasticity of demand equals the percentage change in ________ other things remaining the same.

Accepted Answer

A) price divided by the percentage change in income 
B) price divided by the percentage change in quantity demanded 
C) income divided by the percentage change in quantity demanded 
D) quantity demanded divided by the percentage change in price 
E) quantity demanded divided by the percentage change in income 
A) price divided by the percentage change in income 
B) price divided by the percentage change in quantity demanded 
C) income divided by the percentage change in quantity demanded 
D) quantity demanded divided by the percentage change in price 
E) quantity demanded divided by the percentage change in income

Question 20

The demand for good A is unit elastic if

Accepted Answer

A) a 5 percent fall in the price of A results in an infinite increase in the quantity of A demanded. 
B) a 5 percent rise in the price of A results in a 10 percent decrease in the quantity of A demanded. 
C) any increase in the price of A results in a 1 percent decrease in the quantity of A demanded. 
D) a 5 percent rise in the price of A results in no change in the quantity of A demanded. 
E) a 5 percent rise in the price of A results in a 5 percent decrease in the quantity of A demanded. 
A) a 5 percent fall in the price of A results in an infinite increase in the quantity of A demanded. 
B) a 5 percent rise in the price of A results in a 10 percent decrease in the quantity of A demanded. 
C) any increase in the price of A results in a 1 percent decrease in the quantity of A demanded. 
D) a 5 percent rise in the price of A results in no change in the quantity of A demanded. 
E) a 5 percent rise in the price of A results in a 5 percent decrease in the quantity of A demanded.

Suppose the quantity of root beer demanded decreases from 105,000 litres per week to 95,000 litres per week when the price rises by 5 percent.The price elasticity of demand

The demand for a good is perfectly elastic when the price elasticity of demand is

If a 10 percent increase in income results in a 5 percent increase in quantity demanded,what is the income elasticity of demand?

All normal goods have

Which of the following will have the most elastic demand?

If a 10 percent rise in price leads to an 8 percent decrease in quantity demanded,the price elasticity of demand is

A horizontal supply curve

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

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

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 $13 to $11,

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

If the Canucks lower ticket prices and find that total revenue does not change,then the price elasticity of demand for tickets is

Demand will be more elastic the

Suppose the demand curve for good X is horizontal.This shows that the demand for good X is

Suppose the government of Nova Scotia wants to reduce the consumption of electricity by 5 percent.The price elasticity of demand for electricity is 0.40.You advise the Nova Scotia government to

Suppose the price of a television set rises by 10 percent.Which one of the following would we expect to be the most elastic following such a price change?

A negative value for

The income elasticity of demand equals the percentage change in ________ other things remaining the same.

The demand for good A is unit elastic if

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

Suppose the quantity of root beer demanded decreases from 105,000 litres per week to 95,000 litres per week when the price rises by 5 percent.The price elasticity of demand

The demand for a good is perfectly elastic when the price elasticity of demand is

If a 10 percent increase in income results in a 5 percent increase in quantity demanded,what is the income elasticity of demand?

All normal goods have

Which of the following will have the most elastic demand?

If a 10 percent rise in price leads to an 8 percent decrease in quantity demanded,the price elasticity of demand is

A horizontal supply curve

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

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

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 $13 to $11,

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

If the Canucks lower ticket prices and find that total revenue does not change,then the price elasticity of demand for tickets is

Demand will be more elastic the

Suppose the demand curve for good X is horizontal.This shows that the demand for good X is

Suppose the government of Nova Scotia wants to reduce the consumption of electricity by 5 percent.The price elasticity of demand for electricity is 0.40.You advise the Nova Scotia government to

Suppose the price of a television set rises by 10 percent.Which one of the following would we expect to be the most elastic following such a price change?

A negative value for

The income elasticity of demand equals the percentage change in ________ other things remaining the same.

The demand for good A is unit elastic if

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