Question 1

Which one of the following will yield a measured price elasticity of demand of 5.0? A 10 percent rise in price results in a

Accepted Answer

A) 10 percent decrease in quantity demanded. 
B) 5 percent decrease in quantity demanded. 
C) 2 percent decrease in quantity demanded. 
D) 50 percent decrease in quantity demanded. 
E) 0.5 percent decrease in quantity demanded. 
A) 10 percent decrease in quantity demanded. 
B) 5 percent decrease in quantity demanded. 
C) 2 percent decrease in quantity demanded. 
D) 50 percent decrease in quantity demanded. 
E) 0.5 percent decrease in quantity demanded.

Question 2

If a 10 percent increase in price results in an 18 percent increase in quantity supplied,the elasticity of supply is

Accepted Answer

A) 0.3. 
B) 0.6. 
C) 1.2. 
D) 1.8. 
E) 9.0. 
A) 0.3. 
B) 0.6. 
C) 1.2. 
D) 1.8. 
E) 9.0.

Question 3

The elasticity of supply for airplane travel one year in advance of the departure date is most likely to be

Accepted Answer

A) substantially lower than -1. 
B) between -1 and zero. 
C) between zero and 1. 
D) around 1. 
E) substantially greater than 1. 
A) substantially lower than -1. 
B) between -1 and zero. 
C) between zero and 1. 
D) around 1. 
E) substantially greater than 1.

Question 4

A good has a price elasticity of demand equal to 2.If new imports lower its price from $1.20 to $0.80,the percentage change in quantity demanded will be

Accepted Answer

A) an increase of 80 percent. 
B) a decrease of 80 percent. 
C) a decrease of 40 percent. 
D) an increase of 2 percent. 
E) an increase of 40 percent. 
A) an increase of 80 percent. 
B) a decrease of 80 percent. 
C) a decrease of 40 percent. 
D) an increase of 2 percent. 
E) an increase of 40 percent.

Question 5

If a 12 percent fall in price results in an 8 percent increase in quantity demanded,the price elasticity of demand equals

Accepted Answer

A) 0.96. 
B) 0.12. 
C) 0.67. 
D) 1.5. 
E) 0.8. 
A) 0.96. 
B) 0.12. 
C) 0.67. 
D) 1.5. 
E) 0.8.

Question 6

The cross elasticity of demand for good A with respect to the price of good B is -1.5.A 10 percent rise in the price of good B will lead to

Accepted Answer

A) an increase of 1.5 percent in the quantity of A demanded. 
B) an increase of 15 percent in the quantity of A demanded. 
C) a decrease of 15 percent in the quantity of A demanded. 
D) an increase of 6.7 percent in the quantity of A demanded. 
E) a decrease of 6.7 percent in the quantity of A demanded. 
A) an increase of 1.5 percent in the quantity of A demanded. 
B) an increase of 15 percent in the quantity of A demanded. 
C) a decrease of 15 percent in the quantity of A demanded. 
D) an increase of 6.7 percent in the quantity of A demanded. 
E) a decrease of 6.7 percent in the quantity of A demanded.

Question 7

At a price of $15,Jack's quantity demanded of good A is the same as when the price rises to $16.Jack's demand for good A is

Accepted Answer

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

Question 8

If a price decrease results in an increase in total revenue,then demand is

Accepted Answer

A) inelastic. 
B) unit elastic. 
C) perfectly inelastic. 
D) equal to supply. 
E) elastic. 
A) inelastic. 
B) unit elastic. 
C) perfectly inelastic. 
D) equal to supply. 
E) elastic.

Question 9

If the cross elasticity of demand between goods A and B is positive,then

Accepted Answer

A) the demands for A and B are both price elastic. 
B) the demands for A and B are both price inelastic. 
C) A and B are complements. 
D) A and B are substitutes. 
E) A and B are independent goods. 
A) the demands for A and B are both price elastic. 
B) the demands for A and B are both price inelastic. 
C) A and B are complements. 
D) A and B are substitutes. 
E) A and B are independent goods.

Question 10

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 11

The demand for orange juice is price elastic.A severe frost,which destroys large quantities of oranges will

Accepted Answer

A) lower the equilibrium price but increase total consumer spending on juice. 
B) decrease the equilibrium quantity and decrease total consumer spending on juice. 
C) decrease both the equilibrium quantity and the price of juice. 
D) raise the equilibrium price as well as total consumer spending for juice. 
E) raise the equilibrium price but leave total consumer spending for juice constant. 
A) lower the equilibrium price but increase total consumer spending on juice. 
B) decrease the equilibrium quantity and decrease total consumer spending on juice. 
C) decrease both the equilibrium quantity and the price of juice. 
D) raise the equilibrium price as well as total consumer spending for juice. 
E) raise the equilibrium price but leave total consumer spending for juice constant.

Question 12

The price elasticity of demand is a units-free measure of the responsiveness of the ________ when all other influences on buying plans remain the same.

Accepted Answer

A) quantity demanded to a change in the price of a substitute or complement 
B) quantity demanded to a change in income 
C) quantity demanded of a good to a change in its price 
D) price to a change in quantity demanded 
E) none of the above 
A) quantity demanded to a change in the price of a substitute or complement 
B) quantity demanded to a change in income 
C) quantity demanded of a good to a change in its price 
D) price to a change in quantity demanded 
E) none of the above

Question 13

A fall in the price of a good from $10.50 to $9.50 results in an increase in the quantity demanded from 18,800 to 21,200 units.The price elasticity of demand is

Accepted Answer

A) 0.8. 
B) 1.25. 
C) 1.2. 
D) 8.0. 
E) 2.4. 
A) 0.8. 
B) 1.25. 
C) 1.2. 
D) 8.0. 
E) 2.4.

Question 14

The income elasticity of demand equals the percentage change in ________ other things remaining the same.

Accepted Answer

A) price divided by the percentage change in income 
B) price divided by the percentage change in quantity demanded 
C) income divided by the percentage change in quantity demanded 
D) quantity demanded divided by the percentage change in price 
E) quantity demanded divided by the percentage change in income 
A) price divided by the percentage change in income 
B) price divided by the percentage change in quantity demanded 
C) income divided by the percentage change in quantity demanded 
D) quantity demanded divided by the percentage change in price 
E) quantity demanded divided by the percentage change in income

Question 15

Use the figure below to answer the following questions.
   
Figure 4.1.2
-Factors that influence the elasticity of demand include

Accepted Answer

A) the closeness of substitutes. 
B) the price of complements but not the price of substitutes. 
C) income. 
D) preferences. 
E) the price of substitutes and complements. 
A) the closeness of substitutes. 
B) the price of complements but not the price of substitutes. 
C) income. 
D) preferences. 
E) the price of substitutes and complements.

Question 16

Use the table below to answer the following questions.
Table 4.1.1
Demand schedule for good A.
  
-Refer to Table 4.1.1.Demand is unit elastic when the price falls from

Accepted Answer

A) $8 to $7. 
B) $7 to $6. 
C) $6 to $5. 
D) $5 to $4. 
E) $4 to $3. 
A) $8 to $7. 
B) $7 to $6. 
C) $6 to $5. 
D) $5 to $4. 
E) $4 to $3.

Question 17

A unit elastic demand

Accepted Answer

A) means that the ratio of a change in quantity demanded to a change in price is equal to 1. 
B) means that the ratio of a percentage change in quantity demanded to a percentage change in price is equal to 1. 
C) means that the ratio of a change in price to a change in quantity demanded is equal to 1. 
D) is illustrated by a horizontal demand curve. 
E) is illustrated by a vertical demand curve. 
A) means that the ratio of a change in quantity demanded to a change in price is equal to 1. 
B) means that the ratio of a percentage change in quantity demanded to a percentage change in price is equal to 1. 
C) means that the ratio of a change in price to a change in quantity demanded is equal to 1. 
D) is illustrated by a horizontal demand curve. 
E) is illustrated by a vertical demand curve.

Question 18

The demand for a good is price elastic if

Accepted Answer

A) a rise in price results in an increase in total revenue. 
B) a fall in price results in a decrease in total revenue. 
C) a rise in price results in a decrease in total revenue. 
D) the good is a necessity. 
E) the demand for the good is very insensitive to changes in price. 
A) a rise in price results in an increase in total revenue. 
B) a fall in price results in a decrease in total revenue. 
C) a rise in price results in a decrease in total revenue. 
D) the good is a necessity. 
E) the demand for the good is very insensitive to changes in price.

Question 19

Suppose the demand curve for good X is horizontal.This shows that the demand for good X is

Accepted Answer

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

Question 20

Use the figure below to answer the following questions.
   
Figure 4.1.2
-Suppose this coming winter France will have unusually bad weather,and that next year's wine crop will be substantially reduced.Select the best statement.

Accepted Answer

A) The French wine supply will increase as price rises. 
B) If the demand for French wine is elastic, wine producers will experience an increase in total revenue. 
C) The initial change in the market will create a surplus of French wine. 
D) In the final equilibrium, price and quantity will be higher. 
E) none of the above 
A) The French wine supply will increase as price rises. 
B) If the demand for French wine is elastic, wine producers will experience an increase in total revenue. 
C) The initial change in the market will create a surplus of French wine. 
D) In the final equilibrium, price and quantity will be higher. 
E) none of the above

Exam 4: Elasticity

Which one of the following will yield a measured price elasticity of demand of 5.0? A 10 percent rise in price results in a

If a 10 percent increase in price results in an 18 percent increase in quantity supplied,the elasticity of supply is

The elasticity of supply for airplane travel one year in advance of the departure date is most likely to be

A good has a price elasticity of demand equal to 2.If new imports lower its price from $1.20 to $0.80,the percentage change in quantity demanded will be

If a 12 percent fall in price results in an 8 percent increase in quantity demanded,the price elasticity of demand equals

The cross elasticity of demand for good A with respect to the price of good B is -1.5.A 10 percent rise in the price of good B will lead to

At a price of $15,Jack's quantity demanded of good A is the same as when the price rises to $16.Jack's demand for good A is

If a price decrease results in an increase in total revenue,then demand is

If the cross elasticity of demand between goods A and B is positive,then

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

The demand for orange juice is price elastic.A severe frost,which destroys large quantities of oranges will

The price elasticity of demand is a units-free measure of the responsiveness of the ________ when all other influences on buying plans remain the same.

A fall in the price of a good from $10.50 to $9.50 results in an increase in the quantity demanded from 18,800 to 21,200 units.The price elasticity of demand is

The income elasticity of demand equals the percentage change in ________ other things remaining the same.

Use the figure below to answer the following questions. Figure 4.1.2 -Factors that influence the elasticity of demand include

Use the table below to answer the following questions. Table 4.1.1 Demand schedule for good A. -Refer to Table 4.1.1.Demand is unit elastic when the price falls from

A unit elastic demand

The demand for a good is price elastic if

Suppose the demand curve for good X is horizontal.This shows that the demand for good X is

Use the figure below to answer the following questions. Figure 4.1.2 -Suppose this coming winter France will have unusually bad weather,and that next year's wine crop will be substantially reduced.Select the best statement.

What Is Economics?

The Economic Problem

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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

Measuring GDP and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: The Keynesian Model

Canadian Inflation, Unemployment, and Business Cycle

Fiscal Policy

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