Question 1

If a turnip is a normal good then

Accepted Answer

A) a small decrease in income increases the quantity of turnips demanded at the current price by a large amount. 
B) a large decrease in income increases the quantity of turnips demanded at the current price by a small amount. 
C) an increase in income increases the quantity demanded at the current price. 
D) an increase in income decreases the quantity demanded at the current price. 
E) an increase in price decreases the quantity demanded. 
A) a small decrease in income increases the quantity of turnips demanded at the current price by a large amount. 
B) a large decrease in income increases the quantity of turnips demanded at the current price by a small amount. 
C) an increase in income increases the quantity demanded at the current price. 
D) an increase in income decreases the quantity demanded at the current price. 
E) an increase in price decreases the quantity demanded.

Question 2

An economic measure that indicates when the demands for two or more goods are related is

Accepted Answer

A) the income elasticity of demand. 
B) the price elasticity of demand. 
C) the substitute elasticity of demand. 
D) the cross elasticity of demand. 
E) the normal elasticity of demand. 
A) the income elasticity of demand. 
B) the price elasticity of demand. 
C) the substitute elasticity of demand. 
D) the cross elasticity of demand. 
E) the normal elasticity of demand.

Question 3

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

Accepted Answer

A) 12. 
B) infinity. 
C) positive. 
D) zero. 
E) less than zero. 
A) 12. 
B) infinity. 
C) positive. 
D) zero. 
E) less than zero.

Question 4

If the demand for salmon in Cape Breton Nova Scotia is unit elastic,the price elasticity of demand for salmon equals

Accepted Answer

A) 1.0. 
B) 100.0. 
C) 0.10. 
D) zero. 
E) 10.0. 
A) 1.0. 
B) 100.0. 
C) 0.10. 
D) zero. 
E) 10.0.

Question 5

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

Accepted Answer

A) complements;an increase;-0.4 
B) complements;a decrease;0.4 
C) substitutes;an increase;-2.5 
D) substitutes;a decrease;2.5 
E) substitutes;a decrease;0.4 
A) complements;an increase;-0.4 
B) complements;a decrease;0.4 
C) substitutes;an increase;-2.5 
D) substitutes;a decrease;2.5 
E) substitutes;a decrease;0.4

Question 6

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

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 rise in price increases the quantity demanded by a smaller percentage. 
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 rise in price increases the quantity demanded by a smaller percentage.

Question 7

Business people speak about cross elasticity of demand without using the actual term.Which one of the following statements reflects cross elasticity of demand?

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) "Since the price of gasoline fell at the neighbouring station,my milk sales have been booming." 
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) "Since the price of gasoline fell at the neighbouring station,my milk sales have been booming."

Question 8

A union leader who claims that "higher wages increase living standards without causing unemployment" believes that the demand for labour is

Accepted Answer

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

If a turnip is a normal good then

An economic measure that indicates when the demands for two or more goods are related is

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

If the demand for salmon in Cape Breton Nova Scotia is unit elastic,the price elasticity of demand for salmon equals

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

Business people speak about cross elasticity of demand without using the actual term.Which one of the following statements reflects cross elasticity of demand?

A union leader who claims that "higher wages increase living standards without causing unemployment" believes that the demand for labour 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

If a turnip is a normal good then

An economic measure that indicates when the demands for two or more goods are related is

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

If the demand for salmon in Cape Breton Nova Scotia is unit elastic,the price elasticity of demand for salmon equals

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

Business people speak about cross elasticity of demand without using the actual term.Which one of the following statements reflects cross elasticity of demand?

A union leader who claims that "higher wages increase living standards without causing unemployment" believes that the demand for labour 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