Question 1

A perfectly elastic demand curve has a price elasticity of demand coefficient of:

Accepted Answer

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

Question 2

If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units,then according to the averaging equation,the value of price elasticity of demand in absolute terms is:

Accepted Answer

A) 0.33. 
B) 2.33. 
C) 0.25. 
D) 3. 
E) 0.66. 
A) 0.33. 
B) 2.33. 
C) 0.25. 
D) 3. 
E) 0.66. A

Question 3

The number of music CDs purchased increased by 50 per cent when consumer income increased by 10 per cent.Assuming other factors are held constant,music CDs would be classified as:

Accepted Answer

A) inferior goods. 
B) normal goods. 
C) Giffen goods. 
D) social goods. 
A) inferior goods. 
B) normal goods. 
C) Giffen goods. 
D) social goods. B

Question 4

The long-run price elasticity of demand is usually larger than the short-run price elasticity of demand because:

Accepted Answer

A) demand curves tend to become steeper over time. 
B) economists take the absolute value of long-run price elasticities but not of short-run elasticities. 
C) people have more time to find substitute goods. 
D) incomes tend to rise over time. 
E) supply curves change over time. 
A) demand curves tend to become steeper over time. 
B) economists take the absolute value of long-run price elasticities but not of short-run elasticities. 
C) people have more time to find substitute goods. 
D) incomes tend to rise over time. 
E) supply curves change over time.

Question 5

If an excise tax is placed on a product that has a perfectly inelastic demand,then:

Accepted Answer

A) the entire tax will be paid by the consumer. 
B) the entire tax will be paid by the producer. 
C) the consumer and producer will each pay a share of the tax. 
D) the incidence of the tax cannot be determined unless we know the coefficient of price elasticity of supply. 
E) the tax is progressive. 
A) the entire tax will be paid by the consumer. 
B) the entire tax will be paid by the producer. 
C) the consumer and producer will each pay a share of the tax. 
D) the incidence of the tax cannot be determined unless we know the coefficient of price elasticity of supply. 
E) the tax is progressive.

Question 6

The price elasticity of demand for a particular good is influenced by which of the following factors?

Accepted Answer

A) The availability of inputs to produce the good. 
B) The income of the sellers. 
C) The availability of substitutes. 
D) The level of competition among sellers. 
A) The availability of inputs to produce the good. 
B) The income of the sellers. 
C) The availability of substitutes. 
D) The level of competition among sellers.

Question 7

A study of consumers in an area found that as family income increased from $25 000 per year to $35 000 per year and other factors held constant,the number of houses purchased increased from 7000 per year to 11 000 per year.This finding indicates an income elasticity of demand coefficient for housing over this family income range of:

Accepted Answer

A) 0.22. 
B) 0.75. 
C) 1.33. 
D) 4.50. 
A) 0.22. 
B) 0.75. 
C) 1.33. 
D) 4.50.

Question 8

If a 10 per cent price increase causes the quantity demanded for a good to decrease by 5 per cent,demand is elastic.

Accepted Answer

A) True 
 B)False

Question 9

If the short-run price elasticity of demand for hospital care is 0.27,then the long-run price elasticity is expected to be:

Accepted Answer

A) greater than 0.27. 
B) greater than 1. 
C) less than 0.27. 
D) equal to 0.27. 
E) less than zero. 
A) greater than 0.27. 
B) greater than 1. 
C) less than 0.27. 
D) equal to 0.27. 
E) less than zero.

Question 10

The price elasticity of demand formula includes:

Accepted Answer

A) percentage change in quantity demanded. 
B) percentage change in quantity supplied. 
C) difference in quantity demanded. 
D) difference in price. 
A) percentage change in quantity demanded. 
B) percentage change in quantity supplied. 
C) difference in quantity demanded. 
D) difference in price.

Question 11

If demand for a good is price elastic,it must also be income elastic.

Accepted Answer

A) True 
 B)False

Question 12

The price elasticity coefficient of demand is:

Accepted Answer

A) negatively related to the percentage of one's budget spent on a good or service. 
B) not related to the availability of good substitutes for a good or service. 
C) related to the availability of good complements for a good or service. 
D) higher the longer a price change persists. 
A) negatively related to the percentage of one's budget spent on a good or service. 
B) not related to the availability of good substitutes for a good or service. 
C) related to the availability of good complements for a good or service. 
D) higher the longer a price change persists.

Question 13

If the price elasticity of demand for football tickets is estimated to be 4.5,then a 10 per cent increase in football ticket prices would be expected to cause a:

Accepted Answer

A) 4.5 per cent decrease in quantity demanded. 
B) 4.5 per cent increase in quantity demanded. 
C) 45 per cent decrease in quantity demanded. 
D) 45 per cent increase in quantity demanded. 
A) 4.5 per cent decrease in quantity demanded. 
B) 4.5 per cent increase in quantity demanded. 
C) 45 per cent decrease in quantity demanded. 
D) 45 per cent increase in quantity demanded.

Question 14

If a tripling of price triples the quantity of a good supplied,the price elasticity of supply for this good is:

Accepted Answer

A) 3. 
B) 300. 
C) 1. 
D) -1. 
E) -3. 
A) 3. 
B) 300. 
C) 1. 
D) -1. 
E) -3.

Question 15

If the demand is elastic,the total revenue test of price elasticity will show:

Accepted Answer

A) decrease in revenue and price decrease. 
B) increase in revenue and price decrease. 
C) increase in revenue and price increase. 
D) decrease in revenue and price increase. 
A) decrease in revenue and price decrease. 
B) increase in revenue and price decrease. 
C) increase in revenue and price increase. 
D) decrease in revenue and price increase.

Question 16

The price-elastic portion of the linear demand curve lies:

Accepted Answer

A) in the high price range. 
B) anywhere to the left of current market prices. 
C) below the point where total revenue is maximised. 
D) at the intersection with the supply curve. 
A) in the high price range. 
B) anywhere to the left of current market prices. 
C) below the point where total revenue is maximised. 
D) at the intersection with the supply curve.

Question 17

Inelastic demand is a change of less than 10% in quantity demanded in response to a 1% change in price.

Accepted Answer

A) True 
 B)False

Question 18

The major determinants of price elasticity of demand are:

Accepted Answer

A) availability of complements. 
B) availability of substitutes. 
C) availability of normal goods. 
D) availability of supply. 
A) availability of complements. 
B) availability of substitutes. 
C) availability of normal goods. 
D) availability of supply.

Question 19

Which of the statements below does not describe a demand curve that is unit elastic?

Accepted Answer

A) The percentage change in the quantity demanded equals the percentage change in product price. 
B) An increase in product price will not change total revenue. 
C) The price elasticity of demand equals one. 
D) A change in price does not change quantity demanded. 
E) A decrease in product price will not change total revenue. 
A) The percentage change in the quantity demanded equals the percentage change in product price. 
B) An increase in product price will not change total revenue. 
C) The price elasticity of demand equals one. 
D) A change in price does not change quantity demanded. 
E) A decrease in product price will not change total revenue.

Question 20

Tax incidence means that:

Accepted Answer

A) government increases tax. 
B) the tax was lifted from a particular good. 
C) no more tax will be imposed on a particular good. 
D) the share of the tax is paid by producers or sellers. 
A) government increases tax. 
B) the tax was lifted from a particular good. 
C) no more tax will be imposed on a particular good. 
D) the share of the tax is paid by producers or sellers.

A perfectly elastic demand curve has a price elasticity of demand coefficient of:

If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units,then according to the averaging equation,the value of price elasticity of demand in absolute terms is:

The number of music CDs purchased increased by 50 per cent when consumer income increased by 10 per cent.Assuming other factors are held constant,music CDs would be classified as:

The long-run price elasticity of demand is usually larger than the short-run price elasticity of demand because:

If an excise tax is placed on a product that has a perfectly inelastic demand,then:

The price elasticity of demand for a particular good is influenced by which of the following factors?

If a 10 per cent price increase causes the quantity demanded for a good to decrease by 5 per cent,demand is elastic.

If the short-run price elasticity of demand for hospital care is 0.27,then the long-run price elasticity is expected to be:

The price elasticity of demand formula includes:

If demand for a good is price elastic,it must also be income elastic.

The price elasticity coefficient of demand is:

If the price elasticity of demand for football tickets is estimated to be 4.5,then a 10 per cent increase in football ticket prices would be expected to cause a:

If a tripling of price triples the quantity of a good supplied,the price elasticity of supply for this good is:

If the demand is elastic,the total revenue test of price elasticity will show:

The price-elastic portion of the linear demand curve lies:

Inelastic demand is a change of less than 10% in quantity demanded in response to a 1% change in price.

The major determinants of price elasticity of demand are:

Which of the statements below does not describe a demand curve that is unit elastic?

Tax incidence means that:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters

Exam 5: Elasticity of demand and supply

A perfectly elastic demand curve has a price elasticity of demand coefficient of:

If an increase in the price of a product from $1 to $2 per unit leads to a decrease in the quantity demanded from 100 to 80 units,then according to the averaging equation,the value of price elasticity of demand in absolute terms is:

The number of music CDs purchased increased by 50 per cent when consumer income increased by 10 per cent.Assuming other factors are held constant,music CDs would be classified as:

The long-run price elasticity of demand is usually larger than the short-run price elasticity of demand because:

If an excise tax is placed on a product that has a perfectly inelastic demand,then:

The price elasticity of demand for a particular good is influenced by which of the following factors?

If a 10 per cent price increase causes the quantity demanded for a good to decrease by 5 per cent,demand is elastic.

If the short-run price elasticity of demand for hospital care is 0.27,then the long-run price elasticity is expected to be:

The price elasticity of demand formula includes:

If demand for a good is price elastic,it must also be income elastic.

The price elasticity coefficient of demand is:

If the price elasticity of demand for football tickets is estimated to be 4.5,then a 10 per cent increase in football ticket prices would be expected to cause a:

If a tripling of price triples the quantity of a good supplied,the price elasticity of supply for this good is:

If the demand is elastic,the total revenue test of price elasticity will show:

The price-elastic portion of the linear demand curve lies:

Inelastic demand is a change of less than 10% in quantity demanded in response to a 1% change in price.

The major determinants of price elasticity of demand are:

Which of the statements below does not describe a demand curve that is unit elastic?

Tax incidence means that:

Thinking like an economist

Production possibilities and opportunity cost

Market demand and supply

Markets in action

Production costs

Perfect competition

Monopoly

Monopolistic competition and oligopoly

Policy issues: resource taxes and climate change

Measuring the size of the economy

Business cycles and economic growth

Inflation and unemployment

A simple model of the macro economy

The monetary and financial system

Macroeconomic policy I: monetary policy

Macroeconomic policy II: fiscal policy

International trade and finance

Applying graphs to economics

Filters