Question 1

-Based on the data in the table above, ice cream and cake are ________ goods.

Accepted Answer

A)  inferior 
B)  substitute 
C)  complementary 
D)  normal 
E)  Both answers B and D are correct. 
A)  inferior 
B)  substitute 
C)  complementary 
D)  normal 
E)  Both answers B and D are correct.

Question 2

Which of the following is most likely to have an income elasticity of demand that exceeds 1?

Accepted Answer

A)  Food 
B)  Telephone services 
C)  Airline travel 
D)  Alcoholic beverages 
E)  Tobacco 
A)  Food 
B)  Telephone services 
C)  Airline travel 
D)  Alcoholic beverages 
E)  Tobacco

Question 3

If the price elasticity of demand for a good is 2, then a 10 per cent increase in the price of that good ________ the quantity demanded by ________ per cent.

Accepted Answer

A)  increases; 20 
B)  decreases; 20 
C)  increases; 8 
D)  decreases; 10 
E)  decreases; 2 
A)  increases; 20 
B)  decreases; 20 
C)  increases; 8 
D)  decreases; 10 
E)  decreases; 2

Question 4

If the percentage change in the price of a good exceeds the percentage change in the quantity supplied, then the supply is

Accepted Answer

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

Question 5

When a firm raises the price of its product, what happens to its total revenue?

Accepted Answer

A)  If demand is elastic, total revenue decreases. 
B)  If demand is elastic, total revenue increases. 
C)  If demand is unit elastic, total revenue increases. 
D)  If demand is inelastic, total revenue decreases. 
E)  If demand is unit elastic, total revenue decreases. 
A)  If demand is elastic, total revenue decreases. 
B)  If demand is elastic, total revenue increases. 
C)  If demand is unit elastic, total revenue increases. 
D)  If demand is inelastic, total revenue decreases. 
E)  If demand is unit elastic, total revenue decreases.

-Based on the data in the table above, ice cream and cake are ________ goods.

Which of the following is most likely to have an income elasticity of demand that exceeds 1?

If the price elasticity of demand for a good is 2, then a 10 per cent increase in the price of that good the quantity demanded by per cent.

If the percentage change in the price of a good exceeds the percentage change in the quantity supplied, then the supply is

When a firm raises the price of its product, what happens to its total revenue?

Getting Started

The Australian and Global Economies

The Economic Problem

Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

Exam 5: Elasticities of Demand and Supply

-Based on the data in the table above, ice cream and cake are ________ goods.

Which of the following is most likely to have an income elasticity of demand that exceeds 1?

If the price elasticity of demand for a good is 2, then a 10 per cent increase in the price of that good ________ the quantity demanded by ________ per cent.

If the percentage change in the price of a good exceeds the percentage change in the quantity supplied, then the supply is

When a firm raises the price of its product, what happens to its total revenue?

Getting Started

The Australian and Global Economies

The Economic Problem

Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Taxes

Global Markets in Action

Externalities

Public Goods and Common Resources

Consumer Choice and Demand

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Markets for Factors of Production

Economic Inequality

Filters

If the price elasticity of demand for a good is 2, then a 10 per cent increase in the price of that good the quantity demanded by per cent.