Question 1

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. B

Question 2

The elasticity of supply for a given commodity is calculated as

Accepted Answer

C

Question 3

If the price elasticity of demand for some good is 2.7, a 10 percent increase in the price results in

Accepted Answer

A)  a 27 percent increase in the quantity demanded. 
B)  There is not enough information to answer this question. 
C)  a 2.7 percent increase in the quantity demanded. 
D)  a 2.7 percent decrease in the quantity demanded. 
E)  a 27 percent decrease in the quantity demanded. 
A)  a 27 percent increase in the quantity demanded. 
B)  There is not enough information to answer this question. 
C)  a 2.7 percent increase in the quantity demanded. 
D)  a 2.7 percent decrease in the quantity demanded. 
E)  a 27 percent decrease in the quantity demanded. E

Question 4

The elasticity of supply for some product will tend to be larger

Accepted Answer

A)  the less time firms have to adjust to price changes. 
B)  the easier it is for firms to shift from the production of this product to another. 
C)  the lower is the elasticity of demand for the product. 
D)  the higher is the elasticity of demand for the product. 
E)  the harder it is for firms to shift from the production of this product to another. 
A)  the less time firms have to adjust to price changes. 
B)  the easier it is for firms to shift from the production of this product to another. 
C)  the lower is the elasticity of demand for the product. 
D)  the higher is the elasticity of demand for the product. 
E)  the harder it is for firms to shift from the production of this product to another.

Question 5

If a product's income elasticity of demand is -1.7, then we can conclude that

Accepted Answer

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

Question 6

Suppose the cross-elasticity of demand between two goods, X and Y, is negative. If the price of Xdecreases, the quantity demanded will

Accepted Answer

A)  not change. 
B)  fall for both goods. 
C)  fall for X and rise for Y. 
D)  rise for both goods. 
E)  rise for X and fall for Y. 
A)  not change. 
B)  fall for both goods. 
C)  fall for X and rise for Y. 
D)  rise for both goods. 
E)  rise for X and fall for Y.

Question 7

When the percentage change in quantity demanded is greater than the percentage change in price that brought it about, demand is said to be

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  unit elastic. 
D)  unelastic. 
E)  zero elastic. 
A)  elastic. 
B)  inelastic. 
C)  unit elastic. 
D)  unelastic. 
E)  zero elastic.

Question 8

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 9

The table below shows the demand schedule for museum admissions in a small city.   TABLE 4-1
-Refer to Figure 4-2. Demand is inelastic

Accepted Answer

A)  over section (b) of the demand curve in diagram 1. 
B)  over section (a) of the demand curve in diagram 1. 
C)  at the midpoint between sections (a) and (b) of the demand curve in diagram 1. 
D)  over the entire demand curve in diagram 3. 
E)  over the entire demand curve in diagram 1. 
A)  over section (b) of the demand curve in diagram 1. 
B)  over section (a) of the demand curve in diagram 1. 
C)  at the midpoint between sections (a) and (b) of the demand curve in diagram 1. 
D)  over the entire demand curve in diagram 3. 
E)  over the entire demand curve in diagram 1.

Question 10

Nancy's income has just risen from $950 per week to $1,050 per week. As a result, she decides todouble the number of movies she attends each week. Nancy's demand for movies is

Accepted Answer

A)  income elastic. 
B)  positively cross inelastic. 
C)  price elastic. 
D)  income inelastic. 
E)  price inelastic. 
A)  income elastic. 
B)  positively cross inelastic. 
C)  price elastic. 
D)  income inelastic. 
E)  price inelastic.

Question 11

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

Accepted Answer

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

Question 12

If the income elasticity of demand for some good is 2.4, a 10 percent increase in income results in

Accepted Answer

A)  a 240 percent decrease in quantity demanded. 
B)  a 240 percent increase in the quantity demanded. 
C)  a 24 percent increase in the quantity demanded. 
D)  a 24 percent decrease in quantity demanded. 
E)  a 2.4 percent increase in the quantity demanded. 
A)  a 240 percent decrease in quantity demanded. 
B)  a 240 percent increase in the quantity demanded. 
C)  a 24 percent increase in the quantity demanded. 
D)  a 24 percent decrease in quantity demanded. 
E)  a 2.4 percent increase in the quantity demanded.

Question 13

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

Question 14

Suppose the cross-elasticity of demand for two goods, domestic cheese and imported cheese, is positive. If the price of imported cheese falls, then quantity demanded will

Accepted Answer

A)  rise for domestic cheese and fall for imported cheese. 
B)  rise for both domestic and imported cheese. 
C)  fall for domestic cheese and rise for imported cheese. 
D)  fall for both domestic and imported cheese. 
E)  not enough information to answer this question. 
A)  rise for domestic cheese and fall for imported cheese. 
B)  rise for both domestic and imported cheese. 
C)  fall for domestic cheese and rise for imported cheese. 
D)  fall for both domestic and imported cheese. 
E)  not enough information to answer this question.

Question 15

The table below shows the demand schedule for museum admissions in a small city.   TABLE 4-1
-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 16

Suppose the market supply curve for some good is upward sloping. If the imposition of an excise tax causes no change in the equilibrium quantity sold in the market, the good's demand curve must be , meaning that the burden of the tax has fallen completely on the .

Accepted Answer

A)  unit elastic; government 
B)  vertical; firms 
C)  horizontal; consumers 
D)  horizontal; firms 
E)  vertical; consumers 
A)  unit elastic; government 
B)  vertical; firms 
C)  horizontal; consumers 
D)  horizontal; firms 
E)  vertical; consumers

Question 17

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

Accepted Answer

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

Question 18

If the total revenue of producers rises for an initial cut in the price of their product but falls for further reductions in price, the price elasticity of demand for the product

Accepted Answer

A)  is zero. 
B)  declines as price falls. 
C)  rises and then falls. 
D)  is unity. 
E)  rises as price falls. 
A)  is zero. 
B)  declines as price falls. 
C)  rises and then falls. 
D)  is unity. 
E)  rises as price falls.

Question 19

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

Accepted Answer

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

Question 20

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).

Which of the following illustrates elastic demand?

The elasticity of supply for a given commodity is calculated as

If the price elasticity of demand for some good is 2.7, a 10 percent increase in the price results in

The elasticity of supply for some product will tend to be larger

If a product's income elasticity of demand is -1.7, then we can conclude that

Suppose the cross-elasticity of demand between two goods, X and Y, is negative. If the price of Xdecreases, the quantity demanded will

When the percentage change in quantity demanded is greater than the percentage change in price that brought it about, demand is said to be

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

The table below shows the demand schedule for museum admissions in a small city. TABLE 4-1 -Refer to Figure 4-2. Demand is inelastic

Nancy's income has just risen from $950 per week to $1,050 per week. As a result, she decides todouble the number of movies she attends each week. Nancy's demand for movies is

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

If the income elasticity of demand for some good is 2.4, a 10 percent increase in income results in

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

Suppose the cross-elasticity of demand for two goods, domestic cheese and imported cheese, is positive. If the price of imported cheese falls, then quantity demanded will

The table below shows the demand schedule for museum admissions in a small city. TABLE 4-1 -Refer to Figure 4-2. In part 1 of the figure, the elasticity of demand over the price range $12 to $14 is

Suppose the market supply curve for some good is upward sloping. If the imposition of an excise tax causes no change in the equilibrium quantity sold in the market, the good's demand curve must be , meaning that the burden of the tax has fallen completely on the .

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

If the total revenue of producers rises for an initial cut in the price of their product but falls for further reductions in price, the price elasticity of demand for the product

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

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

Economic Issues and Concepts

Economic Theories, Data, and Graphs

Demand, Supply, and Price

Markets in Action

Consumer Behaviour

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Producers in the Long Run

Competitive Markets

Monopoly, Cartels, and Price Discrimination

Imperfect Competition

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Exam 4: Elasticity

Which of the following illustrates elastic demand?

The elasticity of supply for a given commodity is calculated as

If the price elasticity of demand for some good is 2.7, a 10 percent increase in the price results in

The elasticity of supply for some product will tend to be larger

If a product's income elasticity of demand is -1.7, then we can conclude that

Suppose the cross-elasticity of demand between two goods, X and Y, is negative. If the price of Xdecreases, the quantity demanded will

When the percentage change in quantity demanded is greater than the percentage change in price that brought it about, demand is said to be

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

The table below shows the demand schedule for museum admissions in a small city. TABLE 4-1 -Refer to Figure 4-2. Demand is inelastic

Nancy's income has just risen from $950 per week to $1,050 per week. As a result, she decides todouble the number of movies she attends each week. Nancy's demand for movies is

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

If the income elasticity of demand for some good is 2.4, a 10 percent increase in income results in

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

Suppose the cross-elasticity of demand for two goods, domestic cheese and imported cheese, is positive. If the price of imported cheese falls, then quantity demanded will

The table below shows the demand schedule for museum admissions in a small city. TABLE 4-1 -Refer to Figure 4-2. In part 1 of the figure, the elasticity of demand over the price range $12 to $14 is

Suppose the market supply curve for some good is upward sloping. If the imposition of an excise tax causes no change in the equilibrium quantity sold in the market, the good's demand curve must be , meaning that the burden of the tax has fallen completely on the .

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

If the total revenue of producers rises for an initial cut in the price of their product but falls for further reductions in price, the price elasticity of demand for the product

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

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

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

Filters