Question 1

When the price elasticity of demand is ________,demand for the good is perfectly 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 2

A vertical 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 a shortage of the good. 
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 a shortage of the good.

Question 3

When the price of a good increased by 5 percent,the quantity demanded of it decreased 10 percent.The price elasticity of demand is ________.A price rise will ________ total revenue.

Accepted Answer

A) 2.0;decrease 
B) 0.5;decrease 
C) 2.0;increase 
D) 0.5;increase 
E) -2.0;decrease 
A) 2.0;decrease 
B) 0.5;decrease 
C) 2.0;increase 
D) 0.5;increase 
E) -2.0;decrease

Question 4

If the demand for a good is unit elastic,then a 5 percent increase in price results in

Accepted Answer

A) a 5 percent increase in total revenue. 
B) a 5 percent decrease in total revenue. 
C) no change in total revenue. 
D) an increase in total revenue greater than 5 percent. 
E) an increase in total revenue less than 5 percent. 
A) a 5 percent increase in total revenue. 
B) a 5 percent decrease in total revenue. 
C) no change in total revenue. 
D) an increase in total revenue greater than 5 percent. 
E) an increase in total revenue less than 5 percent.

Question 5

The quantity of apples demanded decreases by 8 percent when the price rises by 8 percent.The demand for apples is

Accepted Answer

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

Question 6

Preferences for brussels sprouts increase.The price of brussels sprouts will not change if the price elasticity of

Accepted Answer

A) demand is 0. 
B) demand is 1. 
C) supply is 0. 
D) supply is 1. 
E) supply is infinity. 
A) demand is 0. 
B) demand is 1. 
C) supply is 0. 
D) supply is 1. 
E) supply is infinity.

Question 7

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

Accepted Answer

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

Question 8

If an increase in the supply of good A decreases 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 9

If the cross elasticity of demand between two goods is -0.56,then a fall in the price of one good leads to a ________ shift in the ________ curve of the other good.

Accepted Answer

A) rightward;demand 
B) rightward;supply 
C) leftward;demand 
D) leftward;supply 
E) rightward;demand curve and the supply 
A) rightward;demand 
B) rightward;supply 
C) leftward;demand 
D) leftward;supply 
E) rightward;demand curve and the supply

Question 10

Suppose the Lethbridge Computer Company decides to increase the quantity of computers it sells by 6 percent.If the price elasticity of demand is 3.5,the company must

Accepted Answer

A) raise the price of a computer by 1.714 percent. 
B) raise the price of a computer by 0.21 percent. 
C) lower the price of a computer by 0.21 percent. 
D) lower the price of a computer by 1.714 percent. 
E) lower the price of a computer by 0.58 percent. 
A) raise the price of a computer by 1.714 percent. 
B) raise the price of a computer by 0.21 percent. 
C) lower the price of a computer by 0.21 percent. 
D) lower the price of a computer by 1.714 percent. 
E) lower the price of a computer by 0.58 percent.

Question 11

If the demand for good Z is perfectly inelastic,then the demand curve for good Z is

Accepted Answer

A) vertical. 
B) horizontal. 
C) upward sloping. 
D) downward sloping. 
E) initially upward sloping and then downward sloping. 
A) vertical. 
B) horizontal. 
C) upward sloping. 
D) downward sloping. 
E) initially upward sloping and then downward sloping.

Question 12

If a 10 percent rise in the price of goods leads to a 10 percent decrease in quantity demanded,the demand curve for this good

Accepted Answer

A) is vertical. 
B) is horizontal. 
C) has slope equal to 1. 
D) is a straight line with slope equal to 10. 
E) none of the above. 
A) is vertical. 
B) is horizontal. 
C) has slope equal to 1. 
D) is a straight line with slope equal to 10. 
E) none of the above.

Question 13

Use the table below to answer the following questions.
Table 4.2.1
 $\begin{array}{cccc}
\hline &\text { Quantity Demanded }&\text { Price }&\text { Income }\
\text { Year }&\text { (units) }&\text { (dollars) }&\text { (dollars) }\
\hline 2007 & 25,000 & 1 & 4,000 \
2008 & 15,000 & 3 & 4,000 \
2009 & 5,000 & 3 & 6,000\\hline 
\end{array}$
-Consider the information in Table 4.2.1.Select the best statement.

Accepted Answer

A) The income elasticity of demand is -2.5. 
B) The income elasticity of demand is 2.5. 
C) The income elasticity of demand is -3.33. 
D) The income elasticity of demand is 3.33. 
E) We cannot calculate the income elasticity of demand because both income and price are changing at the same time. 
A) The income elasticity of demand is -2.5. 
B) The income elasticity of demand is 2.5. 
C) The income elasticity of demand is -3.33. 
D) The income elasticity of demand is 3.33. 
E) We cannot calculate the income elasticity of demand because both income and price are changing at the same time.

Question 14

The demand for corn increases.As a result,the price of corn ________,and the less elastic the supply of corn,the ________ will be the effect on the price.

Accepted Answer

A) falls;smaller 
B) falls;greater 
C) rises;smaller 
D) rises;greater 
E) None of the above because the change in the price is effected by the price elasticity of demand. 
A) falls;smaller 
B) falls;greater 
C) rises;smaller 
D) rises;greater 
E) None of the above because the change in the price is effected by the price elasticity of demand.

Question 15

A technological breakthrough lowers the cost of photocopiers.If the demand for photocopiers is price inelastic,we predict that photocopier sales

Accepted Answer

A) fall and total revenue increases. 
B) fall and total revenue decreases. 
C) rise and total revenue increases. 
D) rise and total revenue decreases. 
E) rise,but changes in total revenue will depend on elasticity of supply. 
A) fall and total revenue increases. 
B) fall and total revenue decreases. 
C) rise and total revenue increases. 
D) rise and total revenue decreases. 
E) rise,but changes in total revenue will depend on elasticity of supply.

Question 16

If the price elasticity of demand is zero,then demand is

Accepted Answer

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

Question 17

If a 10 percent increase in income results in a 10 percent decrease in the consumption of widgets,then

Accepted Answer

A) the price elasticity of demand for widgets equals 1. 
B) the income elasticity of demand for widgets is negative. 
C) the income elasticity of demand for widgets equals 1. 
D) widgets are a normal good. 
E) the price elasticity demand for widgets is negative. 
A) the price elasticity of demand for widgets equals 1. 
B) the income elasticity of demand for widgets is negative. 
C) the income elasticity of demand for widgets equals 1. 
D) widgets are a normal good. 
E) the price elasticity demand for widgets is negative.

Question 18

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

Accepted Answer

A) is elastic. 
B) is inelastic. 
C) is unit elastic. 
D) has a price elasticity equal to 1/2. 
E) has a price elasticity equal to 2. 
A) is elastic. 
B) is inelastic. 
C) is unit elastic. 
D) has a price elasticity equal to 1/2. 
E) has a price elasticity equal to 2.

Question 19

Use the table below to answer the following questions.
Table 4.2.2
 $$\begin{array} { c c c c c } 
\hline& \text { Price of Jolt } & \text { Price of Coke } & \text { Income Level } & \text { Jolt Sales } \
\hline 2006 & \$ 1.00 / \text { can } & \$ 1.00 / \text { can } & \$ 25,000 & 15,000 \text { cases } \
2007 & \$ 1.00 / \text { can } & \$ 1.40 / \text { can } & \$ 25,000 & 25,000 \text { cases } \
2008 & \$ 1.00 / \text { can } & \$ 1.40 / \text { can } & \$ 35,000 & 15,000 \text { cases } \
2009 & \$ 1.40 / \text { can } & \$ 1.40 / \text { can } & \$ 35,000 & 5,000 \text { cases } \
\hline
\end{array}$$
-Refer to Table 4.2.2.The income elasticity of demand for Jolt is

Accepted Answer

A) +0.67. 
B) -0.67. 
C) +1.5. 
D) -1.5. 
E) cannot be calculated because the price of Coke is not constant. 
A) +0.67. 
B) -0.67. 
C) +1.5. 
D) -1.5. 
E) cannot be calculated because the price of Coke is not constant.

Question 20

When the price of a good increased by 6 percent,the quantity demanded of it decreased 3 percent.Most likely,this good ________ and ________.

Accepted Answer

A) is a necessity;has poor substitutes 
B) has poor substitutes;is a luxury 
C) is a necessity;has good substitutes 
D) is a luxury;is narrowly defined 
E) is a luxury;has experienced a recent price change 
A) is a necessity;has poor substitutes 
B) has poor substitutes;is a luxury 
C) is a necessity;has good substitutes 
D) is a luxury;is narrowly defined 
E) is a luxury;has experienced a recent price change

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

A vertical supply curve

When the price of a good increased by 5 percent,the quantity demanded of it decreased 10 percent.The price elasticity of demand is .A price rise will total revenue.

If the demand for a good is unit elastic,then a 5 percent increase in price results in

The quantity of apples demanded decreases by 8 percent when the price rises by 8 percent.The demand for apples is

Preferences for brussels sprouts increase.The price of brussels sprouts will not change if the price elasticity of

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

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

If the cross elasticity of demand between two goods is -0.56,then a fall in the price of one good leads to a shift in the curve of the other good.

Suppose the Lethbridge Computer Company decides to increase the quantity of computers it sells by 6 percent.If the price elasticity of demand is 3.5,the company must

If the demand for good Z is perfectly inelastic,then the demand curve for good Z is

If a 10 percent rise in the price of goods leads to a 10 percent decrease in quantity demanded,the demand curve for this good

Use the table below to answer the following questions. Table 4.2.1 Quantity Demanded Price Income Year (units) (dollars) (dollars) 2007 25,000 1 4,000 2008 15,000 3 4,000 2009 5,000 3 6,000 -Consider the information in Table 4.2.1.Select the best statement.

The demand for corn increases.As a result,the price of corn ,and the less elastic the supply of corn,the will be the effect on the price.

A technological breakthrough lowers the cost of photocopiers.If the demand for photocopiers is price inelastic,we predict that photocopier sales

If the price elasticity of demand is zero,then demand is

If a 10 percent increase in income results in a 10 percent decrease in the consumption of widgets,then

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

When the price of a good increased by 6 percent,the quantity demanded of it decreased 3 percent.Most likely,this good and .

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

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

A vertical supply curve

When the price of a good increased by 5 percent,the quantity demanded of it decreased 10 percent.The price elasticity of demand is ________.A price rise will ________ total revenue.

If the demand for a good is unit elastic,then a 5 percent increase in price results in

The quantity of apples demanded decreases by 8 percent when the price rises by 8 percent.The demand for apples is

Preferences for brussels sprouts increase.The price of brussels sprouts will not change if the price elasticity of

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

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

If the cross elasticity of demand between two goods is -0.56,then a fall in the price of one good leads to a ________ shift in the ________ curve of the other good.

Suppose the Lethbridge Computer Company decides to increase the quantity of computers it sells by 6 percent.If the price elasticity of demand is 3.5,the company must

If the demand for good Z is perfectly inelastic,then the demand curve for good Z is

If a 10 percent rise in the price of goods leads to a 10 percent decrease in quantity demanded,the demand curve for this good

Use the table below to answer the following questions. Table 4.2.1 Quantity Demanded Price Income Year (units) (dollars) (dollars) 2007 25,000 1 4,000 2008 15,000 3 4,000 2009 5,000 3 6,000 -Consider the information in Table 4.2.1.Select the best statement.

The demand for corn increases.As a result,the price of corn ________,and the less elastic the supply of corn,the ________ will be the effect on the price.

A technological breakthrough lowers the cost of photocopiers.If the demand for photocopiers is price inelastic,we predict that photocopier sales

If the price elasticity of demand is zero,then demand is

If a 10 percent increase in income results in a 10 percent decrease in the consumption of widgets,then

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

When the price of a good increased by 6 percent,the quantity demanded of it decreased 3 percent.Most likely,this good ________ and ________.

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

When the price of a good increased by 5 percent,the quantity demanded of it decreased 10 percent.The price elasticity of demand is .A price rise will total revenue.

If the cross elasticity of demand between two goods is -0.56,then a fall in the price of one good leads to a shift in the curve of the other good.

The demand for corn increases.As a result,the price of corn ,and the less elastic the supply of corn,the will be the effect on the price.

When the price of a good increased by 6 percent,the quantity demanded of it decreased 3 percent.Most likely,this good and .