Question 1

If household expenditures on electricity remain constant when the price of electricity increases,the price elasticity for electricity is

Accepted Answer

A) one (demand is unit elastic). 
B) exactly zero. 
C) greater than one (demand is elastic). 
D) less than one (demand is inelastic). 
E) not determinable from the information given. 
A) one (demand is unit elastic). 
B) exactly zero. 
C) greater than one (demand is elastic). 
D) less than one (demand is inelastic). 
E) not determinable from the information given. A

Question 2

Consider the income elasticity of demand for turnips.An increase in income will

Accepted Answer

A) always increase the demand for turnips. 
B) decrease the demand for turnips if turnips have a very low price. 
C) increase the demand for turnips if turnips are normal goods. 
D) increase the demand for turnips if turnips are inferior goods. 
E) increase the supply of turnips. 
A) always increase the demand for turnips. 
B) decrease the demand for turnips if turnips have a very low price. 
C) increase the demand for turnips if turnips are normal goods. 
D) increase the demand for turnips if turnips are inferior goods. 
E) increase the supply of turnips. C

Question 3

The imposition of an excise tax usually causes the price paid by consumers to ,while the price received by sellers .

Accepted Answer

A) fall; remains unchanged 
B) rise; falls 
C) fall; falls 
D) rise; remains unchanged 
E) rise; rises 
A) fall; remains unchanged 
B) rise; falls 
C) fall; falls 
D) rise; remains unchanged 
E) rise; rises B

Question 4

Suppose the cross elasticity of demand for two goods,X and Y,is positive.If the price of Y falls,then quantity demanded will

Accepted Answer

A) rise for both goods. 
B) fall for X and rise for Y. 
C) fall for both goods. 
D) rise for X and fall for Y. 
E) remain the same for both goods. 
A) rise for both goods. 
B) fall for X and rise for Y. 
C) fall for both goods. 
D) rise for X and fall for Y. 
E) remain the same for both goods.

Question 5

Suppose that the quantity demanded of a good rises from 40 units to 60 units per month when the price falls from $1.05 to 95 cents per unit.The price elasticity of demand for this product is

Accepted Answer

A) 0.5 
B) 1.5 
C) 1.0 
D) 2.0 
E) 4.0 
A) 0.5 
B) 1.5 
C) 1.0 
D) 2.0 
E) 4.0

Question 6

The "economic incidence" of an excise tax illustrates

Accepted Answer

A) the political process for implementing a tax. 
B) the economic costs associated with avoiding the tax. 
C) who bears the burden of the tax. 
D) the legislative process through which it must be passed. 
E) who is legally responsible for paying it to the government. 
A) the political process for implementing a tax. 
B) the economic costs associated with avoiding the tax. 
C) who bears the burden of the tax. 
D) the legislative process through which it must be passed. 
E) who is legally responsible for paying it to the government.

Question 7

Rania is selling boxes of cookies door to door in her neighbourhood.At a price of $10 per box she sold 40 boxes per day.When the price was reduced to $4 per box she sold 100 boxes per day.Assuming that the demand conditions were unchanged,what is the price elasticity of demand for Rania's cookies?

Accepted Answer

A) - 1.7 
B) 0.85 
C) 0 
D) 1 
E) 1.17 
A) - 1.7 
B) 0.85 
C) 0 
D) 1 
E) 1.17

Question 8

An upward- sloping straight- line supply curve through the origin has an elasticity of

Accepted Answer

A) zero. 
B) greater than one. 
C) less than one. 
D) one. 
E) infinity. 
A) zero. 
B) greater than one. 
C) less than one. 
D) one. 
E) infinity.

Question 9

A perfectly horizontal demand curve shows that the price elasticity of demand is

Accepted Answer

A) zero. 
B) infinite. 
C) less than one. 
D) unity. 
E) not defined. 
A) zero. 
B) infinite. 
C) less than one. 
D) unity. 
E) not defined.

Question 10

The imposition of an excise tax will cause the least burden on consumers when demand is

Accepted Answer

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

Question 11

A demand curve that is the shape of a rectangular hyperbola

Accepted Answer

A) has the same elasticity as a straight- line demand curve. 
B) is elastic over the whole curve. 
C) is unit elastic over the whole curve. 
D) is inelastic over the whole curve. 
E) has an elasticity of 100% over the whole curve. 
A) has the same elasticity as a straight- line demand curve. 
B) is elastic over the whole curve. 
C) is unit elastic over the whole curve. 
D) is inelastic over the whole curve. 
E) has an elasticity of 100% over the whole curve.

Question 12

With a downward- sloping straight- line demand curve,price elasticity of demand is

Accepted Answer

A) rising continuously with price increases. 
B) decreasing continuously with price increases. 
C) constant everywhere on it. 
D) increasing to the midpoint of the curve and then decreasing. 
E) indeterminate. 
A) rising continuously with price increases. 
B) decreasing continuously with price increases. 
C) constant everywhere on it. 
D) increasing to the midpoint of the curve and then decreasing. 
E) indeterminate.

Question 13

If the value of the price elasticity of demand is 0.6,demand is said to be

Accepted Answer

A) partially inelastic. 
B) partially elastic. 
C) inelastic. 
D) somewhat inelastic. 
E) elastic. 
A) partially inelastic. 
B) partially elastic. 
C) inelastic. 
D) somewhat inelastic. 
E) elastic.

Question 14

If the demand for a product has an income elasticity of - 3.4,we can conclude that

Accepted Answer

A) a decrease in income will lead to an increase in demand for the product. 
B) the product has a rising income- consumption curve. 
C) the product is a normal good. 
D) an increase in income will lead to an increase in demand for the product. 
E) the product is certainly a necessity. 
A) a decrease in income will lead to an increase in demand for the product. 
B) the product has a rising income- consumption curve. 
C) the product is a normal good. 
D) an increase in income will lead to an increase in demand for the product. 
E) the product is certainly a necessity.

Question 15

A value of infinity for the elasticity of supply of some product implies that

Accepted Answer

A) the supply curve is vertical. 
B) supply is very unresponsive to price. 
C) the supply curve is horizontal. 
D) the product will be supplied at any price. 
E) no product will be supplied at any price. 
A) the supply curve is vertical. 
B) supply is very unresponsive to price. 
C) the supply curve is horizontal. 
D) the product will be supplied at any price. 
E) no product will be supplied at any price.

Question 16

Consider an excise tax imposed on daily parking charges in the downtown of a small city.Before the imposition of the tax,equilibrium price and quantity are $15 and 100 cars parked.(P = $15,Q = 100).The city government imposes a tax of $3 per car parked per day.Market equilibrium adjusts to P = $16 and Q = 95.Which of the following statements about the burden of the tax is correct?

Accepted Answer

A) Supply is more elastic relative to demand and therefore more of the burden falls on the consumer. 
B) Supply is more elastic relative to demand and therefore more of the burden falls on the seller. 
C) Supply is less elastic relative to demand and therefore more of the burden falls on the consumer. 
D) Supply is less elastic relative to demand and therefore more of the burden falls on the seller. 
A) Supply is more elastic relative to demand and therefore more of the burden falls on the consumer. 
B) Supply is more elastic relative to demand and therefore more of the burden falls on the seller. 
C) Supply is less elastic relative to demand and therefore more of the burden falls on the consumer. 
D) Supply is less elastic relative to demand and therefore more of the burden falls on the seller.

Question 17

The price of apples at a local market rises from $2.95 to $3.05 per kilogram,and as a result the quantity of oranges that households purchase increases from 3950 to 4050 kilograms per week.The cross- price elasticity is

Accepted Answer

A) - 1.33. 
B) - 0.75. 
C) 1.5. 
D) 0.75. 
E) 1.33. 
A) - 1.33. 
B) - 0.75. 
C) 1.5. 
D) 0.75. 
E) 1.33.

Question 18

Consider two demand curves and the same price change for both.If the resulting percentage change in quantity demanded is greater for one (D1)than the other (D2),we can conclude

Accepted Answer

A) that D1 is elastic and D2 is inelastic. 
B) that D1 is inelastic and D2 is elastic. 
C) that D2 is more elastic than D1. 
D) that D1 is more elastic than D2. 
E) nothing about their relative elasticities. 
A) that D1 is elastic and D2 is inelastic. 
B) that D1 is inelastic and D2 is elastic. 
C) that D2 is more elastic than D1. 
D) that D1 is more elastic than D2. 
E) nothing about their relative elasticities.

Question 19

If two goods,X and Y,have a positive cross elasticity of demand,then we know that they

Accepted Answer

A) are both inferior goods. 
B) are both normal goods. 
C) are complements. 
D) each have a price elasticity greater than one. 
E) are substitutes. 
A) are both inferior goods. 
B) are both normal goods. 
C) are complements. 
D) each have a price elasticity greater than one. 
E) are substitutes.

Question 20

If the demand for some good fluctuates,but supply is constant,then which of the following combinations would generally yield the greatest quantity fluctuations?

Accepted Answer

A) large demand fluctuations and inelastic supply 
B) small demand fluctuations and unit elastic supply 
C) small demand fluctuations and elastic supply 
D) large demand fluctuations and elastic supply 
E) small demand fluctuations and inelastic supply 
A) large demand fluctuations and inelastic supply 
B) small demand fluctuations and unit elastic supply 
C) small demand fluctuations and elastic supply 
D) large demand fluctuations and elastic supply 
E) small demand fluctuations and inelastic supply

If household expenditures on electricity remain constant when the price of electricity increases,the price elasticity for electricity is

Consider the income elasticity of demand for turnips.An increase in income will

The imposition of an excise tax usually causes the price paid by consumers to ,while the price received by sellers .

Suppose the cross elasticity of demand for two goods,X and Y,is positive.If the price of Y falls,then quantity demanded will

Suppose that the quantity demanded of a good rises from 40 units to 60 units per month when the price falls from $1.05 to 95 cents per unit.The price elasticity of demand for this product is

The "economic incidence" of an excise tax illustrates

Rania is selling boxes of cookies door to door in her neighbourhood.At a price of $10 per box she sold 40 boxes per day.When the price was reduced to $4 per box she sold 100 boxes per day.Assuming that the demand conditions were unchanged,what is the price elasticity of demand for Rania's cookies?

An upward- sloping straight- line supply curve through the origin has an elasticity of

A perfectly horizontal demand curve shows that the price elasticity of demand is

The imposition of an excise tax will cause the least burden on consumers when demand is

A demand curve that is the shape of a rectangular hyperbola

With a downward- sloping straight- line demand curve,price elasticity of demand is

If the value of the price elasticity of demand is 0.6,demand is said to be

If the demand for a product has an income elasticity of - 3.4,we can conclude that

A value of infinity for the elasticity of supply of some product implies that

The price of apples at a local market rises from $2.95 to $3.05 per kilogram,and as a result the quantity of oranges that households purchase increases from 3950 to 4050 kilograms per week.The cross- price elasticity is

Consider two demand curves and the same price change for both.If the resulting percentage change in quantity demanded is greater for one (D1)than the other (D2),we can conclude

If two goods,X and Y,have a positive cross elasticity of demand,then we know that they

If the demand for some good fluctuates,but supply is constant,then which of the following combinations would generally yield the greatest quantity fluctuations?

Economic Issues and Concepts

Economic Theories,data,and Graphs

Demand,supply,and Price

Markets in Action

Consumer Behaviour

Producers in the Short Run

Producers in the Long Run

Competitive Markets

Monopoly,cartels,and Price Discrimination

Imperfect Competition and Strategic Behaviour

Economic Efficiency and Public Policy

How Factor Markets Work

Labour Markets

Interest Rates and the Capital Market

Market Failures and Government Intervention

The Economics of Environmental Protection

Taxation and Public Expenditure

The Gains From International Trade

Trade Policy

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Exam 4: Elasticity

If household expenditures on electricity remain constant when the price of electricity increases,the price elasticity for electricity is

Consider the income elasticity of demand for turnips.An increase in income will

The imposition of an excise tax usually causes the price paid by consumers to ,while the price received by sellers .

Suppose the cross elasticity of demand for two goods,X and Y,is positive.If the price of Y falls,then quantity demanded will

Suppose that the quantity demanded of a good rises from 40 units to 60 units per month when the price falls from $1.05 to 95 cents per unit.The price elasticity of demand for this product is

The "economic incidence" of an excise tax illustrates

Rania is selling boxes of cookies door to door in her neighbourhood.At a price of $10 per box she sold 40 boxes per day.When the price was reduced to $4 per box she sold 100 boxes per day.Assuming that the demand conditions were unchanged,what is the price elasticity of demand for Rania's cookies?

An upward- sloping straight- line supply curve through the origin has an elasticity of

A perfectly horizontal demand curve shows that the price elasticity of demand is

The imposition of an excise tax will cause the least burden on consumers when demand is

A demand curve that is the shape of a rectangular hyperbola

With a downward- sloping straight- line demand curve,price elasticity of demand is

If the value of the price elasticity of demand is 0.6,demand is said to be

If the demand for a product has an income elasticity of - 3.4,we can conclude that

A value of infinity for the elasticity of supply of some product implies that

The price of apples at a local market rises from $2.95 to $3.05 per kilogram,and as a result the quantity of oranges that households purchase increases from 3950 to 4050 kilograms per week.The cross- price elasticity is

Consider two demand curves and the same price change for both.If the resulting percentage change in quantity demanded is greater for one (D1)than the other (D2),we can conclude

If two goods,X and Y,have a positive cross elasticity of demand,then we know that they

If the demand for some good fluctuates,but supply is constant,then which of the following combinations would generally yield the greatest quantity fluctuations?

Economic Issues and Concepts

Economic Theories,data,and Graphs

Demand,supply,and Price

Markets in Action

Consumer Behaviour

Producers in the Short Run

Producers in the Long Run

Competitive Markets

Monopoly,cartels,and Price Discrimination

Imperfect Competition and Strategic Behaviour

Economic Efficiency and Public Policy

How Factor Markets Work

Labour Markets

Interest Rates and the Capital Market

Market Failures and Government Intervention

The Economics of Environmental Protection

Taxation and Public Expenditure

The Gains From International Trade

Trade Policy

Filters