Question 1

Below are two sets of prices and their related quantities demanded?
  
-Refer to Table 4.10 to answer this question. What is the price elasticity for the product represented by Set I?

Accepted Answer

A)  0.002. 
B)  0.5. 
C)  2.3. 
D)  400. 
A)  0.002. 
B)  0.5. 
C)  2.3. 
D)  400.

Question 2

Suppose that average incomes decreased from $38,000 to $36,000, and the quantity demanded of a product increased from 45 to 55. What type of product must this be?

Accepted Answer

A)  Substitute product. 
B)  Inferior product. 
C)  Luxury product. 
D)  Necessity. 
E)  Superior product. 
A)  Substitute product. 
B)  Inferior product. 
C)  Luxury product. 
D)  Necessity. 
E)  Superior product.

Question 3

$$\begin{array} { c c } 
\text { Price } & \text { Quantity Demanded } \
1 & 20 \
2 & 18 \
3 & 16 \
4 & 14 \
5 & 12 \
6 & 10 \
7 & 8 \
8 & 6 \
9 & 4 \
10 & 2
\end{array}$$
-Refer to the information above to answer this question. At what price is the seller's total revenue maximized?

Accepted Answer

A)  $1. 
B)  $10. 
C)  $5 or $6. 
D)  $4 or $7. 
E)  $5. 
A)  $1. 
B)  $10. 
C)  $5 or $6. 
D)  $4 or $7. 
E)  $5.

Question 4

Answer the following questions with respect to elasticity:
A) Define the term 'price elasticity of demand'.
B) Name three forms it can take.
C) What does it mean if a calculation of the price elasticity of demand turns out to be less than one?

Accepted Answer

a) Price elasticity of demand is the res

Question 5

What is the formula used to calculate elasticity of supply?

Accepted Answer

A)  Change in price divided by change in quantity supplied 
B)  Change in quantity supplied divided by change in price 
C)  Percentage change in price divided by percentage change in quantity supplied 
D)  Percentage change in quantity supplied divided by percentage change in price 
A)  Change in price divided by change in quantity supplied 
B)  Change in quantity supplied divided by change in price 
C)  Percentage change in price divided by percentage change in quantity supplied 
D)  Percentage change in quantity supplied divided by percentage change in price

Question 6

$\begin{array}{c}
\begin{array}{c}
 \text {Price}\
14\
16\
18\
20\
22 
\end{array}
\begin{array}{c}
\text {Quantity Demanded}\
220 \
200 \
180 \
160 \
140 
\end{array}
\end{array}$

-Refer to the information above to answer this question. What is the elasticity of demand in the $14 to $16 range?

Accepted Answer

A)  0.02. 
B)  0.7. 
C)  1.4. 
D)  2.1. 
A)  0.02. 
B)  0.7. 
C)  1.4. 
D)  2.1.

Question 7

$$\begin{array} { c c } 
\text { Price } & \text { Quantity Demanded } \
1 & 20 \
2 & 18 \
3 & 16 \
4 & 14 \
5 & 12 \
6 & 10 \
7 & 8 \
8 & 6 \
9 & 4 \
10 & 2
\end{array}$$
-Refer to the information above to answer this question. What are the elasticity coefficients for the price ranges $1 to $2 and $9 to $10, respectively?

Accepted Answer

A)  0.22 and 2 
B)  2 and 0.22 
C)  0.16 and 6.33 
D)  6.33 and 0.15 
A)  0.22 and 2 
B)  2 and 0.22 
C)  0.16 and 6.33 
D)  6.33 and 0.15

Question 8

What is a normal good?

Accepted Answer

A)  It is a good whose income elasticity of demand is less than zero. 
B)  It is a good whose demand will rise as income rises. 
C)  It is a good that has many substitutes. 
D)  It is a necessity. 
A)  It is a good whose income elasticity of demand is less than zero. 
B)  It is a good whose demand will rise as income rises. 
C)  It is a good that has many substitutes. 
D)  It is a necessity.

Question 9

$$\begin{array} { c c } 
\text { Price } & \text { Quantity Demanded } \
1 & 20 \
2 & 18 \
3 & 16 \
4 & 14 \
5 & 12 \
6 & 10 \
7 & 8 \
8 & 6 \
9 & 4 \
10 & 2
\end{array}$$
-Refer to the information above to answer this question. Which of the following statements is correct?

Accepted Answer

A)  Demand is inelastic if the price changes from $5 to $7. 
B)  Demand is inelastic if the price changes from $4 to $7. 
C)  Demand is inelastic if the price changes from $6 to $10. 
D)  Demand is unitary elastic if the price changes from $1 to $10. 
E)  None of the choices are correct. 
A)  Demand is inelastic if the price changes from $5 to $7. 
B)  Demand is inelastic if the price changes from $4 to $7. 
C)  Demand is inelastic if the price changes from $6 to $10. 
D)  Demand is unitary elastic if the price changes from $1 to $10. 
E)  None of the choices are correct.

Question 10

What will happen to the quantity demanded if the price elasticity of demand is 2 and price increases by 10%?

Accepted Answer

A)  It increases by 10%. 
B)  It decreases by 5%. 
C)  It decreases by 20%. 
D)  It increases by 20%. 
A)  It increases by 10%. 
B)  It decreases by 5%. 
C)  It decreases by 20%. 
D)  It increases by 20%.

Question 11

-Refer to the graph above to answer this question. What is the supply elasticity of S1 in the $2.50 to $4.00 range?

Accepted Answer

A)  0.23. 
B)  0.92. 
C)  1.08. 
D)  2.17. 
A)  0.23. 
B)  0.92. 
C)  1.08. 
D)  2.17.

Question 12

A major determinant of demand elasticity is the number of complementary products available.

Accepted Answer

A) True 
 B)False

Question 13

Below are some data on price, income and demand for five different time periods.
 $$\begin{array} { l l c c c c } 
\text { Year } & \text { Income } & \text { Price of X } & \begin{array} { l } 
\text { Quantity } \
\text { Demanded } \
\text { of } \mathbf { X}
\end{array} & \text { Price of Y } & \begin{array} { l } 
\text { Quantity } \
\text { Demanded } \
\text { of Y }
\end{array} \
1 & \$ 40000 & \$ 140 & 50 & \$ 40 & 200 \
2 & 40000 & 150 & 40 & 40 & 160 \
3 & 40000 & 150 & 30 & 70 & 140 \
4 & 50000 & 150 & 40 & 70 & 160 \
5 & 50000 & 160 & 50 & 90 & 200
\end{array}$$
-Refer to the information above to answer this question. What is the price elasticity of demand for product Y between years 3 and 4?

Accepted Answer

A)  0.89. 
B)  1.13. 
C)  2.67. 
D)  None of the choices are correct. 
A)  0.89. 
B)  1.13. 
C)  2.67. 
D)  None of the choices are correct.

Question 14

Below are two sets of prices and their related quantities demanded?
  
-Refer to Table 4.10 to answer this question. What is the price elasticity for the product represented by Set II?

Accepted Answer

A)  0.16. 
B)  0.71. 
C)  1.4. 
D)  6.25. 
A)  0.16. 
B)  0.71. 
C)  1.4. 
D)  6.25.

Question 15

Suppose the supply curve is perfectly inelastic and the equilibrium price is $5 and equilibrium quantity is 7. If the government impose an excise tax of $1 per unit, what will be the new price and quantity traded? What is the total tax revenue and who pays the tax?

Accepted Answer

P = $5
Q = 7
Tax rev

Question 16

What has happened to price if the price elasticity of demand is 2 and quantity demanded increases by 10%?

Accepted Answer

A)  It increases by 10%. 
B)  It decreases by 5%. 
C)  It decreases by 20%. 
D)  It increases by 20%. 
A)  It increases by 10%. 
B)  It decreases by 5%. 
C)  It decreases by 20%. 
D)  It increases by 20%.

Below are two sets of prices and their related quantities demanded? -Refer to Table 4.10 to answer this question. What is the price elasticity for the product represented by Set I?

Suppose that average incomes decreased from $38,000 to $36,000, and the quantity demanded of a product increased from 45 to 55. What type of product must this be?

Price Quantity Demanded 1 20 2 18 3 16 4 14 5 12 6 10 7 8 8 6 9 4 10 2 -Refer to the information above to answer this question. At what price is the seller's total revenue maximized?

Answer the following questions with respect to elasticity: A) Define the term 'price elasticity of demand'. B) Name three forms it can take. C) What does it mean if a calculation of the price elasticity of demand turns out to be less than one?

What is the formula used to calculate elasticity of supply?

Price 14 16 18 20 22 Quantity Demanded 220 200 180 160 140 -Refer to the information above to answer this question. What is the elasticity of demand in the $14 to $16 range?

Price Quantity Demanded 1 20 2 18 3 16 4 14 5 12 6 10 7 8 8 6 9 4 10 2 -Refer to the information above to answer this question. What are the elasticity coefficients for the price ranges $1 to $2 and $9 to $10, respectively?

What is a normal good?

Price Quantity Demanded 1 20 2 18 3 16 4 14 5 12 6 10 7 8 8 6 9 4 10 2 -Refer to the information above to answer this question. Which of the following statements is correct?

What will happen to the quantity demanded if the price elasticity of demand is 2 and price increases by 10%?

-Refer to the graph above to answer this question. What is the supply elasticity of S₁ in the $2.50 to $4.00 range?

A major determinant of demand elasticity is the number of complementary products available.

Below are two sets of prices and their related quantities demanded? -Refer to Table 4.10 to answer this question. What is the price elasticity for the product represented by Set II?

Suppose the supply curve is perfectly inelastic and the equilibrium price is $5 and equilibrium quantity is 7. If the government impose an excise tax of $1 per unit, what will be the new price and quantity traded? What is the total tax revenue and who pays the tax?

What has happened to price if the price elasticity of demand is 2 and quantity demanded increases by 10%?

The Economic Problem

Demand and Supply: an Introduction

Demand and Supply: an Elaboration

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters

Exam 4: Elasticity

Below are two sets of prices and their related quantities demanded? -Refer to Table 4.10 to answer this question. What is the price elasticity for the product represented by Set I?

Suppose that average incomes decreased from $38,000 to $36,000, and the quantity demanded of a product increased from 45 to 55. What type of product must this be?

Price Quantity Demanded 1 20 2 18 3 16 4 14 5 12 6 10 7 8 8 6 9 4 10 2 -Refer to the information above to answer this question. At what price is the seller's total revenue maximized?

Answer the following questions with respect to elasticity: A) Define the term 'price elasticity of demand'. B) Name three forms it can take. C) What does it mean if a calculation of the price elasticity of demand turns out to be less than one?

What is the formula used to calculate elasticity of supply?

Price 14 16 18 20 22 Quantity Demanded 220 200 180 160 140 -Refer to the information above to answer this question. What is the elasticity of demand in the $14 to $16 range?

Price Quantity Demanded 1 20 2 18 3 16 4 14 5 12 6 10 7 8 8 6 9 4 10 2 -Refer to the information above to answer this question. What are the elasticity coefficients for the price ranges $1 to $2 and $9 to $10, respectively?

What is a normal good?

Price Quantity Demanded 1 20 2 18 3 16 4 14 5 12 6 10 7 8 8 6 9 4 10 2 -Refer to the information above to answer this question. Which of the following statements is correct?

What will happen to the quantity demanded if the price elasticity of demand is 2 and price increases by 10%?

-Refer to the graph above to answer this question. What is the supply elasticity of S1 in the $2.50 to $4.00 range?

A major determinant of demand elasticity is the number of complementary products available.

Below are two sets of prices and their related quantities demanded? -Refer to Table 4.10 to answer this question. What is the price elasticity for the product represented by Set II?

Suppose the supply curve is perfectly inelastic and the equilibrium price is $5 and equilibrium quantity is 7. If the government impose an excise tax of $1 per unit, what will be the new price and quantity traded? What is the total tax revenue and who pays the tax?

What has happened to price if the price elasticity of demand is 2 and quantity demanded increases by 10%?

The Economic Problem

Demand and Supply: an Introduction

Demand and Supply: an Elaboration

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters

-Refer to the graph above to answer this question. What is the supply elasticity of S₁ in the $2.50 to $4.00 range?