Question 1

FIGURE 4- 2
-Refer to Figure 4- 2. The price elasticity of demand is constant as price changes in part(s)

Accepted Answer

A)  1. 
B)  2. 
C)  1, 2, and 3. 
D)  2, 3, and 4. 
E)  none of the above 
A)  1. 
B)  2. 
C)  1, 2, and 3. 
D)  2, 3, and 4. 
E)  none of the above

Question 2

FIGURE 4- 2
-Refer to Figure 4- 2. In part 1 of the figure, the elasticity of demand over the price range $12 to $14 is

Accepted Answer

A)  0. 
B)  less than 1. 
C)  1. 
D)  greater than 1. 
E)  infinity. 
A)  0. 
B)  less than 1. 
C)  1. 
D)  greater than 1. 
E)  infinity.

Question 3

If the income elasticity of demand for a good is 1.25, a 10 percent increase in income results in

Accepted Answer

A)  a 12.5 percent decrease in the quantity demanded. 
B)  a 125 percent increase in the quantity demanded. 
C)  a 12.5 percent increase in the quantity demanded. 
D)  a decrease in quantity demanded. 
E)  not enough information to answer this question. 
A)  a 12.5 percent decrease in the quantity demanded. 
B)  a 125 percent increase in the quantity demanded. 
C)  a 12.5 percent increase in the quantity demanded. 
D)  a decrease in quantity demanded. 
E)  not enough information to answer this question.

Question 4

FIGURE 4- 1
-Refer to Figure 4- 1, which shows two demand curves, one linear and the other a rectangular hyperbola. The price elasticity of demand is equal to one along the entire demand curve in

Accepted Answer

A)  diagram 2 only. 
B)  diagram 1 only. 
C)  both diagrams. 
D)  neither diagram. 
A)  diagram 2 only. 
B)  diagram 1 only. 
C)  both diagrams. 
D)  neither diagram.

Question 5

FIGURE 4- 3
-Refer to Figure 4- 3, which shows a demand shift and the short- run and long- run supply curves for some product. In the new long- run equilibrium at EL, producers' revenue

Accepted Answer

A)  could be higher or lower than at ES, depending on the price elasticity of demand. 
B)  could be higher or lower than at E0, depending on the price elasticity of demand. 
C)  is unambiguously higher than at ES. 
D)  is unambiguously lower than at ES. 
E)  is unambiguously lower than at E0. 
A)  could be higher or lower than at ES, depending on the price elasticity of demand. 
B)  could be higher or lower than at E0, depending on the price elasticity of demand. 
C)  is unambiguously higher than at ES. 
D)  is unambiguously lower than at ES. 
E)  is unambiguously lower than at E0.

Question 6

Which of the following illustrates elastic demand?

Accepted Answer

A)  a price elasticity of 1.0. 
B)  A 5 percent increase in price causes a 10 percent decrease in quantity demanded. 
C)  A 5 percent increase in price causes a 2.5 percent decrease in quantity demanded. 
D)  A 10 percent increase in price causes a 10 percent reduction in quantity demanded. 
E)  a price elasticity of 0.8. 
A)  a price elasticity of 1.0. 
B)  A 5 percent increase in price causes a 10 percent decrease in quantity demanded. 
C)  A 5 percent increase in price causes a 2.5 percent decrease in quantity demanded. 
D)  A 10 percent increase in price causes a 10 percent reduction in quantity demanded. 
E)  a price elasticity of 0.8.

Question 7

If household income increases by 50 percent and desired household expenditure on vacation travel increases by 15 percent, the price elasticity of demand for vacation travel is

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  positive. 
D)  unity. 
E)  not determinable from the information given. 
A)  elastic. 
B)  inelastic. 
C)  positive. 
D)  unity. 
E)  not determinable from the information given.

Question 8

FIGURE 4- 2
-Refer to Figure 4- 2. In part 1 of the figure, the elasticity of demand at $10 is

Accepted Answer

A)  0. 
B)  less than 1. 
C)  exactly 1. 
D)  greater than 1. 
E)  infinity. 
A)  0. 
B)  less than 1. 
C)  exactly 1. 
D)  greater than 1. 
E)  infinity.

Question 9

The president of a major nickel- producing company says that an increase in the price of nickel would have no effect on the total amount spent on nickel. If this is true, the price elasticity of demand for nickel is

Accepted Answer

A)  not calculable from the information given. 
B)  infinitely elastic. 
C)  more than one. 
D)  less than zero. 
E)  exactly one. 
A)  not calculable from the information given. 
B)  infinitely elastic. 
C)  more than one. 
D)  less than zero. 
E)  exactly one.

Question 10

If the total expenditure on photocopiers increases when the price of photocopiers rises, the price elasticity of demand is

Accepted Answer

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

Question 11

Suppose the current level of output of some good is 100 units. If market demand is inelastic at that quantity, total expenditure on this product would be higher if output was

Accepted Answer

A)  kept constant. 
B)  maximized. 
C)  less than 100 units. 
D)  minimized. 
E)  greater than 100 units. 
A)  kept constant. 
B)  maximized. 
C)  less than 100 units. 
D)  minimized. 
E)  greater than 100 units.

Question 12

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

Question 13

Suppose that as the price of some product increases from $4.00 to $5.00 per unit the quantity supplied rises from 500 to 1000 units per month. The price elasticity of supply for this product is

Accepted Answer

A)  3.0. 
B)  1.0. 
C)  2.0. 
D)  0.33. 
E)  2.5. 
A)  3.0. 
B)  1.0. 
C)  2.0. 
D)  0.33. 
E)  2.5.

Question 14

If the total expenditure on perfume increases when the price of perfume falls, the price elasticity of demand is

Accepted Answer

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

Question 15

If demand is unit elastic at all prices, then the demand curve is

Accepted Answer

A)  a straight line. 
B)  perfectly horizontal. 
C)  a rectangular hyperbola. 
D)  a parabola. 
E)  upward sloping. 
A)  a straight line. 
B)  perfectly horizontal. 
C)  a rectangular hyperbola. 
D)  a parabola. 
E)  upward sloping.

Question 16

Suppose egg producers succeed in permanently raising the price of their product by 15 percent, and as a result the quantity demanded falls by 15 percent in the short run. In the long run we can expect the quantity demanded to fall by

Accepted Answer

A)  15 percent. 
B)  0 percent. 
C)  between 0 and 15 percent. 
D)  more than 15 percent. 
E)  100 percent. 
A)  15 percent. 
B)  0 percent. 
C)  between 0 and 15 percent. 
D)  more than 15 percent. 
E)  100 percent.

Question 17

For a normal good, the quantity demanded

Accepted Answer

A)  falls when income rises. 
B)  responds inversely to changes in income. 
C)  rises when income falls. 
D)  does not change when income rises or falls. 
E)  rises when income rises. 
A)  falls when income rises. 
B)  responds inversely to changes in income. 
C)  rises when income falls. 
D)  does not change when income rises or falls. 
E)  rises when income rises.

Question 18

FIGURE 4- 2
-Refer to Figure 4- 2. In part 1 of the figure, the elasticity of demand for prices below $10 is

Accepted Answer

A)  0. 
B)  less than 1. 
C)  1. 
D)  greater than 1. 
E)  infinity. 
A)  0. 
B)  less than 1. 
C)  1. 
D)  greater than 1. 
E)  infinity.

Question 19

Suppose a market is in equilibrium at price P0, and then an excise tax of t dollars per unit of the good is imposed. At a price of (P0 + t) there will be excess for the good unless the demand curve is .

Accepted Answer

A)  supply; vertical 
B)  demand; horizontal 
C)  demand; vertical 
D)  tax; unit elastic 
E)  supply; horizontal 
A)  supply; vertical 
B)  demand; horizontal 
C)  demand; vertical 
D)  tax; unit elastic 
E)  supply; horizontal

Question 20

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

Accepted Answer

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

FIGURE 4- 2 -Refer to Figure 4- 2. The price elasticity of demand is constant as price changes in part(s)

FIGURE 4- 2 -Refer to Figure 4- 2. In part 1 of the figure, the elasticity of demand over the price range $12 to $14 is

If the income elasticity of demand for a good is 1.25, a 10 percent increase in income results in

FIGURE 4- 1 -Refer to Figure 4- 1, which shows two demand curves, one linear and the other a rectangular hyperbola. The price elasticity of demand is equal to one along the entire demand curve in

FIGURE 4- 3 -Refer to Figure 4- 3, which shows a demand shift and the short- run and long- run supply curves for some product. In the new long- run equilibrium at EL, producers' revenue

Which of the following illustrates elastic demand?

If household income increases by 50 percent and desired household expenditure on vacation travel increases by 15 percent, the price elasticity of demand for vacation travel is

FIGURE 4- 2 -Refer to Figure 4- 2. In part 1 of the figure, the elasticity of demand at $10 is

The president of a major nickel- producing company says that an increase in the price of nickel would have no effect on the total amount spent on nickel. If this is true, the price elasticity of demand for nickel is

If the total expenditure on photocopiers increases when the price of photocopiers rises, the price elasticity of demand is

Suppose the current level of output of some good is 100 units. If market demand is inelastic at that quantity, total expenditure on this product would be higher if output was

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

Suppose that as the price of some product increases from $4.00 to $5.00 per unit the quantity supplied rises from 500 to 1000 units per month. The price elasticity of supply for this product is

If the total expenditure on perfume increases when the price of perfume falls, the price elasticity of demand is

If demand is unit elastic at all prices, then the demand curve is

Suppose egg producers succeed in permanently raising the price of their product by 15 percent, and as a result the quantity demanded falls by 15 percent in the short run. In the long run we can expect the quantity demanded to fall by

For a normal good, the quantity demanded

FIGURE 4- 2 -Refer to Figure 4- 2. In part 1 of the figure, the elasticity of demand for prices below $10 is

Suppose a market is in equilibrium at price P0, and then an excise tax of t dollars per unit of the good is imposed. At a price of (P0 + t) there will be excess for the good unless the demand curve is .

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

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

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

Exam 4: Elasticity

FIGURE 4- 2 -Refer to Figure 4- 2. The price elasticity of demand is constant as price changes in part(s)

FIGURE 4- 2 -Refer to Figure 4- 2. In part 1 of the figure, the elasticity of demand over the price range $12 to $14 is

If the income elasticity of demand for a good is 1.25, a 10 percent increase in income results in

FIGURE 4- 1 -Refer to Figure 4- 1, which shows two demand curves, one linear and the other a rectangular hyperbola. The price elasticity of demand is equal to one along the entire demand curve in

FIGURE 4- 3 -Refer to Figure 4- 3, which shows a demand shift and the short- run and long- run supply curves for some product. In the new long- run equilibrium at EL, producers' revenue

Which of the following illustrates elastic demand?

If household income increases by 50 percent and desired household expenditure on vacation travel increases by 15 percent, the price elasticity of demand for vacation travel is

FIGURE 4- 2 -Refer to Figure 4- 2. In part 1 of the figure, the elasticity of demand at $10 is

The president of a major nickel- producing company says that an increase in the price of nickel would have no effect on the total amount spent on nickel. If this is true, the price elasticity of demand for nickel is

If the total expenditure on photocopiers increases when the price of photocopiers rises, the price elasticity of demand is

Suppose the current level of output of some good is 100 units. If market demand is inelastic at that quantity, total expenditure on this product would be higher if output was

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

Suppose that as the price of some product increases from $4.00 to $5.00 per unit the quantity supplied rises from 500 to 1000 units per month. The price elasticity of supply for this product is

If the total expenditure on perfume increases when the price of perfume falls, the price elasticity of demand is

If demand is unit elastic at all prices, then the demand curve is

Suppose egg producers succeed in permanently raising the price of their product by 15 percent, and as a result the quantity demanded falls by 15 percent in the short run. In the long run we can expect the quantity demanded to fall by

For a normal good, the quantity demanded

FIGURE 4- 2 -Refer to Figure 4- 2. In part 1 of the figure, the elasticity of demand for prices below $10 is

Suppose a market is in equilibrium at price P0, and then an excise tax of t dollars per unit of the good is imposed. At a price of (P0 + t) there will be excess for the good unless the demand curve is .

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

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

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