Question 1

Long-run supply is

Accepted Answer

A) more elastic than momentary supply but less elastic than short-run supply. 
B) less elastic than momentary supply but more elastic than short-run supply. 
C) less elastic than both momentary and short-run supply. 
D) more elastic than both momentary and short-run supply. 
E) none of the above. 
A) more elastic than momentary supply but less elastic than short-run supply. 
B) less elastic than momentary supply but more elastic than short-run supply. 
C) less elastic than both momentary and short-run supply. 
D) more elastic than both momentary and short-run supply. 
E) none of the above.

Question 2

Suppose Swiss Chalet in Moncton knows that the demand for their half-chicken meals is elastic.If the manager wants to increase total revenue from half-chicken meal sales,he should

Accepted Answer

A) lower the price of a half-chicken meal. 
B) not change the price of a half-chicken meal. 
C) raise the price of a half-chicken meal. 
D) decrease the supply of half-chicken meals. 
E) hire fewer employees. 
A) lower the price of a half-chicken meal. 
B) not change the price of a half-chicken meal. 
C) raise the price of a half-chicken meal. 
D) decrease the supply of half-chicken meals. 
E) hire fewer employees.

Question 3

When the price elasticity of demand is ________,demand for the good is perfectly inelastic.

Accepted Answer

A) equal to infinity 
B) greater than 1 
C) equal to 1 
D) between 1 and zero 
E) equal to zero 
A) equal to infinity 
B) greater than 1 
C) equal to 1 
D) between 1 and zero 
E) equal to zero

Question 4

Use the table below to answer the following questions.
Table 4.2.2
  
-Refer to Table 4.2.2.The income elasticity of demand for Jolt is

Accepted Answer

A) +0.67. 
B) -0.67. 
C) +1.5. 
D) -1.5. 
E) cannot be calculated because the price of Coke is not constant. 
A) +0.67. 
B) -0.67. 
C) +1.5. 
D) -1.5. 
E) cannot be calculated because the price of Coke is not constant.

Question 5

Fred's income increases from $1,950 per week to $2,050 per week.As a result,he decides to increase the number of movies he attends each month by 10 percent.Fred's demand for movies is

Accepted Answer

A) price elastic. 
B) price inelastic. 
C) income elastic. 
D) income inelastic. 
E) income inferior. 
A) price elastic. 
B) price inelastic. 
C) income elastic. 
D) income inelastic. 
E) income inferior.

Question 6

Use the figure below to answer the following questions.
   
Figure 4.1.2
-Figure 4.1.2 illustrates a linear demand curve.If the price falls from $4 to $2,

Accepted Answer

A) total revenue increases. 
B) total revenue decreases. 
C) total revenue remains unchanged. 
D) the quantity demanded increases by more than 10 percent. 
E) the percentage change in quantity demanded is more than the percentage change in price. 
A) total revenue increases. 
B) total revenue decreases. 
C) total revenue remains unchanged. 
D) the quantity demanded increases by more than 10 percent. 
E) the percentage change in quantity demanded is more than the percentage change in price.

Question 7

Suppose that a 20 percent increase in income increases the quantity of good A demanded from 19,200 to 20,800 units.The income elasticity of demand for good A is

Accepted Answer

A) 0.05. 
B) 0.8. 
C) 0.4. 
D) 1.2. 
E) 2.0. 
A) 0.05. 
B) 0.8. 
C) 0.4. 
D) 1.2. 
E) 2.0.

Question 8

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

Accepted Answer

A) complements;an increase;-1.5 
B) substitutes;a decrease;1.5 
C) substitutes;an increase;-0.67 
D) complements;a decrease;0.67 
E) complements;an increase;1.5 
A) complements;an increase;-1.5 
B) substitutes;a decrease;1.5 
C) substitutes;an increase;-0.67 
D) complements;a decrease;0.67 
E) complements;an increase;1.5

Question 9

Use the table below to answer the following questions.
Table 4.1.1
Demand schedule for good A.
  
-Refer to Table 4.1.1.The price elasticity of demand when the price rises from $6 a unit to $7 a unit is

Accepted Answer

A) 1.0. 
B) 2.0. 
C) 2.6. 
D) 0.5. 
E) 1.3. 
A) 1.0. 
B) 2.0. 
C) 2.6. 
D) 0.5. 
E) 1.3.

Question 10

The price elasticity of demand depends on

Accepted Answer

A) the units used to measure price and the units used to measure quantity. 
B) the units used to measure price but not the units used to measure quantity. 
C) the units used to measure quantity but not the units used to measure price. 
D) neither the units used to measure price nor the units used to measure quantity. 
E) the relative price of the good. 
A) the units used to measure price and the units used to measure quantity. 
B) the units used to measure price but not the units used to measure quantity. 
C) the units used to measure quantity but not the units used to measure price. 
D) neither the units used to measure price nor the units used to measure quantity. 
E) the relative price of the good.

Question 11

When the price of a good increased by 6 percent,the quantity demanded of it decreased 3 percent.Most likely,this good ________ and ________.

Accepted Answer

A) is a necessity;has poor substitutes 
B) has poor substitutes;is a luxury 
C) is a necessity;has good substitutes 
D) is a luxury;is narrowly defined 
E) is a luxury;has experienced a recent price change 
A) is a necessity;has poor substitutes 
B) has poor substitutes;is a luxury 
C) is a necessity;has good substitutes 
D) is a luxury;is narrowly defined 
E) is a luxury;has experienced a recent price change

Question 12

Use the table below to answer the following questions.
Table 4.2.2
  
-Refer to Table 4.2.2.All of the following statements regarding Jolt are true except

Accepted Answer

A) it has an elastic demand. 
B) it is an inferior good. 
C) it is a substitute for Coke. 
D) it has a negative cross elasticity of demand with respect to Coke. 
E) none of the above. 
A) it has an elastic demand. 
B) it is an inferior good. 
C) it is a substitute for Coke. 
D) it has a negative cross elasticity of demand with respect to Coke. 
E) none of the above.

Question 13

The price of apples falls by 5 percent and quantity of apples demanded increases by 6 percent.We conclude that the demand for apples is

Accepted Answer

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

Question 14

A horizontal supply curve

Accepted Answer

A) is impossible except in the long run. 
B) implies an elasticity of supply equal to zero. 
C) implies an elasticity of supply equal to infinity. 
D) indicates that suppliers are unwilling to produce the good. 
E) indicates there is a fixed quantity of the good that can be supplied. 
A) is impossible except in the long run. 
B) implies an elasticity of supply equal to zero. 
C) implies an elasticity of supply equal to infinity. 
D) indicates that suppliers are unwilling to produce the good. 
E) indicates there is a fixed quantity of the good that can be supplied.

Question 15

A rise in the price of good A shifts the

Accepted Answer

A) demand curve for good B rightward if the cross elasticity of demand between A and B is negative. 
B) demand curve for good B rightward if the cross elasticity of demand between A and B is positive. 
C) supply curve of B rightward if the cross elasticity of demand between A and B is negative. 
D) supply curve of B rightward if the cross elasticity of demand between A and B is positive. 
E) demand curve for B rightward if the income elasticity of demand for B is positive. 
A) demand curve for good B rightward if the cross elasticity of demand between A and B is negative. 
B) demand curve for good B rightward if the cross elasticity of demand between A and B is positive. 
C) supply curve of B rightward if the cross elasticity of demand between A and B is negative. 
D) supply curve of B rightward if the cross elasticity of demand between A and B is positive. 
E) demand curve for B rightward if the income elasticity of demand for B is positive.

Question 16

If Saudi Arabia argues that an increase in the supply of oil will decrease total revenue,then Saudi Arabia believes the demand for oil is

Accepted Answer

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

Question 17

If a 4 percent decrease in income (at a constant price)results in a 2 percent decrease in the consumption of dweedles then

Accepted Answer

A) the income elasticity of demand for dweedles is negative. 
B) dweedles are a necessity and a normal good. 
C) dweedles are a luxury and a normal good. 
D) dweedles are an inferior good. 
E) both A and D. 
A) the income elasticity of demand for dweedles is negative. 
B) dweedles are a necessity and a normal good. 
C) dweedles are a luxury and a normal good. 
D) dweedles are an inferior good. 
E) both A and D.

Question 18

A vertical supply curve

Accepted Answer

A) is impossible except in the long run. 
B) implies an elasticity of supply equal to zero. 
C) implies an elasticity of supply equal to infinity. 
D) indicates that suppliers are unwilling to produce the good. 
E) indicates a shortage of the good. 
A) is impossible except in the long run. 
B) implies an elasticity of supply equal to zero. 
C) implies an elasticity of supply equal to infinity. 
D) indicates that suppliers are unwilling to produce the good. 
E) indicates a shortage of the good.

Question 19

Use the figure below to answer the following question.
   
Figure 4.3.1
-The two supply curves in Figure 4.3.1 are parallel.Between $7 to $8,

Accepted Answer

A) S? is more elastic than S?. 
B) S? is more inelastic than S?. 
C) S? and S? have the same elasticity. 
D) S? is steeper than S?. 
E) S? is flatter than S?. 
A) S? is more elastic than S?. 
B) S? is more inelastic than S?. 
C) S? and S? have the same elasticity. 
D) S? is steeper than S?. 
E) S? is flatter than S?.

Question 20

When the price elasticity of demand is ________,demand for the good is inelastic.

Accepted Answer

A) equal to infinity 
B) greater than 1 
C) equal to 1 
D) between 1 and zero 
E) equal to zero 
A) equal to infinity 
B) greater than 1 
C) equal to 1 
D) between 1 and zero 
E) equal to zero

Exam 4: Elasticity

Long-run supply is

Suppose Swiss Chalet in Moncton knows that the demand for their half-chicken meals is elastic.If the manager wants to increase total revenue from half-chicken meal sales,he should

When the price elasticity of demand is ________,demand for the good is perfectly inelastic.

Use the table below to answer the following questions. Table 4.2.2 -Refer to Table 4.2.2.The income elasticity of demand for Jolt is

Fred's income increases from $1,950 per week to $2,050 per week.As a result,he decides to increase the number of movies he attends each month by 10 percent.Fred's demand for movies is

Use the figure below to answer the following questions. Figure 4.1.2 -Figure 4.1.2 illustrates a linear demand curve.If the price falls from $4 to $2,

Suppose that a 20 percent increase in income increases the quantity of good A demanded from 19,200 to 20,800 units.The income elasticity of demand for good A is

Use the table below to answer the following questions. Table 4.1.1 Demand schedule for good A. -Refer to Table 4.1.1.The price elasticity of demand when the price rises from $6 a unit to $7 a unit is

The price elasticity of demand depends on

When the price of a good increased by 6 percent,the quantity demanded of it decreased 3 percent.Most likely,this good ________ and ________.

Use the table below to answer the following questions. Table 4.2.2 -Refer to Table 4.2.2.All of the following statements regarding Jolt are true except

The price of apples falls by 5 percent and quantity of apples demanded increases by 6 percent.We conclude that the demand for apples is

A horizontal supply curve

A rise in the price of good A shifts the

If Saudi Arabia argues that an increase in the supply of oil will decrease total revenue,then Saudi Arabia believes the demand for oil is

If a 4 percent decrease in income (at a constant price)results in a 2 percent decrease in the consumption of dweedles then

A vertical supply curve

Use the figure below to answer the following question. Figure 4.3.1 -The two supply curves in Figure 4.3.1 are parallel.Between $7 to $8,

When the price elasticity of demand is ________,demand for the good is inelastic.

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

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

Monetary Policy

International Trade Policy

Filters

When the price of a good increased by 6 percent,the quantity demanded of it decreased 3 percent.Most likely,this good and .