Question 1

If the price elasticity of demand for a product measures 0.45,then:

Accepted Answer

A) this good has many available substitutes. 
B) this good must be a non-essential good. 
C) this good is a high-priced good. 
D) a decrease in price will increase total revenue. 
E) this good is demand price inelastic. 
A) this good has many available substitutes. 
B) this good must be a non-essential good. 
C) this good is a high-priced good. 
D) a decrease in price will increase total revenue. 
E) this good is demand price inelastic.

Question 2

Good A has a price elasticity of demand of 0.27,while good B has a price elasticity of demand of 2.9.To raise the most tax revenue,the government should:

Accepted Answer

A)  place a unit tax on good A. 
B)  place a unit tax on good B. 
C)  raise the price elasticity of demand for good A. 
D)  subsidise the production of good B. 
E)  cut its spending for various social programs. 
A)  place a unit tax on good A. 
B)  place a unit tax on good B. 
C)  raise the price elasticity of demand for good A. 
D)  subsidise the production of good B. 
E)  cut its spending for various social programs.

Question 3

Exhibit 5-1 Demand curves
  
-In Exhibit 5-1,the demand curve between points b and c is:

Accepted Answer

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

Question 4

The short-run price elasticity of demand for airline travel is 0.05,while the long-run elasticity is 2.36.This means that a significant increase in airline ticket prices will cause airline companies to:

Accepted Answer

A) collect less revenue from short-notice travellers. 
B) collect more revenue from travellers who book well in advance. 
C) lose money on short-notice travellers. 
D) collect less revenue from travellers who book well in advance. 
E) lose many of its short-notice travellers. 
A) collect less revenue from short-notice travellers. 
B) collect more revenue from travellers who book well in advance. 
C) lose money on short-notice travellers. 
D) collect less revenue from travellers who book well in advance. 
E) lose many of its short-notice travellers.

Question 5

Exhibit 5-3 Supply and demand curves for good X
  
-In Exhibit 5-3,the price elasticity of supply for good X between points Y and E is:

Accepted Answer

A) 1/5 = 0.20. 
B) 5/3 = 1.66. 
C) 3/5 = 0.60. 
D) 1. 
A) 1/5 = 0.20. 
B) 5/3 = 1.66. 
C) 3/5 = 0.60. 
D) 1.

Question 6

Price elasticity of demand can be:

Accepted Answer

A) greater than 100 per cent. 
B) equal to 100 per cent. 
C) less than 1. 
D) less than 100 per cent. 
A) greater than 100 per cent. 
B) equal to 100 per cent. 
C) less than 1. 
D) less than 100 per cent.

Question 7

Avital and Joshua each have their own business selling lemonade in front of their houses.When they each charge 25 cents per glass,their total revenues are equal.However,when they each charge 40 cents per glass,Avital's revenues are bigger than Joshua's revenues.This is because:

Accepted Answer

A) Joshua faces a more inelastic demand curve. 
B) Avital faces a more elastic demand curve. 
C) Joshua faces a more elastic demand curve. 
D) Avital faces a less inelastic demand curve. 
E) there is a market failure. 
A) Joshua faces a more inelastic demand curve. 
B) Avital faces a more elastic demand curve. 
C) Joshua faces a more elastic demand curve. 
D) Avital faces a less inelastic demand curve. 
E) there is a market failure.

Question 8

If a farmer,lowers the price of his product from $15 to $5 and finds that sales increase from 500 to 1000 units per week,then the demand for the farmer's product in this range is:

Accepted Answer

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

Question 9

A lower price elasticity of demand coefficient occurs when:

Accepted Answer

A) the good has less substitutes. 
B) the fall in price is fully compensated by increase in quantity. 
C) the fall in price causes the total revenue to increase. 
D) there is a strong competition among producers. 
A) the good has less substitutes. 
B) the fall in price is fully compensated by increase in quantity. 
C) the fall in price causes the total revenue to increase. 
D) there is a strong competition among producers.

Question 10

Tax incidence depends on:

Accepted Answer

A) the nature of the tax. 
B) income elasticity of demand. 
C) the price elasticities of demand and supply. 
D) cross-price elasticity of supply. 
A) the nature of the tax. 
B) income elasticity of demand. 
C) the price elasticities of demand and supply. 
D) cross-price elasticity of supply.

Question 11

Exhibit 5-1 Demand curves
  
-In Exhibit 5-1,between points b and c,the price elasticity of demand measures

Accepted Answer

A) 4.27. 
B) 1.5. 
C) 1.56. 
D) 0.636. 
E) 0.425. 
A) 4.27. 
B) 1.5. 
C) 1.56. 
D) 0.636. 
E) 0.425.

Question 12

Exhibit 5-2 Demand curves for silver

-Refer to Exhibit 5-2,Graph

Accepted Answer

A) 2.03. 
B) 0.67. 
C) 0.33. 
D) 2.54. 
A) 2.03. 
B) 0.67. 
C) 0.33. 
D) 2.54.

Question 13

A health club sells 100 memberships when the monthly price is $70 and 120 memberships when the monthly price is $60.The price elasticity of demand for memberships at this health club is (using the midpoint formula):

Accepted Answer

A) 0.25. 
B) 0.65. 
C) 1.18. 
D) 1. 
E) 0.83 
A) 0.25. 
B) 0.65. 
C) 1.18. 
D) 1. 
E) 0.83

Question 14

Price elasticity of demand measures:

Accepted Answer

A) the responsiveness of the quantity demanded of a good to a change in income. 
B) the responsiveness of the quantity demanded of a good to a change in consumers' preferences. 
C) the responsiveness of the quantity demanded of a good to a change in price. 
D) the reduction in the quantity demanded of a good when the price is reduced. 
A) the responsiveness of the quantity demanded of a good to a change in income. 
B) the responsiveness of the quantity demanded of a good to a change in consumers' preferences. 
C) the responsiveness of the quantity demanded of a good to a change in price. 
D) the reduction in the quantity demanded of a good when the price is reduced.

Question 15

The most important determinant of price elasticity of demand is:

Accepted Answer

A) the availability of substitutes. 
B) the higher the price of the good. 
C) the more of the budget is spent on the good. 
D) the longer the time the consumer has to adjust to price changes. 
A) the availability of substitutes. 
B) the higher the price of the good. 
C) the more of the budget is spent on the good. 
D) the longer the time the consumer has to adjust to price changes.

Question 16

As one moves down a straight-line,down-sloping demand curve,price elasticity will:

Accepted Answer

A) change from elastic to unit elastic, then to inelastic. 
B) remain the same between any two points. 
C) change from inelastic to elastic, then to unit elastic. 
D) change from unit elastic to elastic, then to inelastic. 
E) change from elastic to inelastic, then to unit elastic. 
A) change from elastic to unit elastic, then to inelastic. 
B) remain the same between any two points. 
C) change from inelastic to elastic, then to unit elastic. 
D) change from unit elastic to elastic, then to inelastic. 
E) change from elastic to inelastic, then to unit elastic.

Question 17

Demand sensitivity depends on all of the following except:

Accepted Answer

A) how low the price of the good is. 
B) the sensitivity of a firm's output to changes in its price. 
C) the consumer's income. 
D) the availability and closeness of substitutes. 
E) the amount of time a consumer has to adjust to price changes. 
A) how low the price of the good is. 
B) the sensitivity of a firm's output to changes in its price. 
C) the consumer's income. 
D) the availability and closeness of substitutes. 
E) the amount of time a consumer has to adjust to price changes.

Question 18

The price elasticity of demand coefficient for a good will be lower if which of the following occurs?

Accepted Answer

A) There are many substitutes for the good. 
B) The longer a price change persists. 
C) The less of the budget is spent on the good. 
D) The higher the price of complements. 
A) There are many substitutes for the good. 
B) The longer a price change persists. 
C) The less of the budget is spent on the good. 
D) The higher the price of complements.

Question 19

Using the midpoint formula,what would be the price elasticity of demand for a gallbladder operation if the number of operations fell from 7000 to 4000 per week after its price increased from $6000 to $15 000?

Accepted Answer

A) 0.254. 
B) 0.636. 
C) 0.801. 
D) 1.25. 
A) 0.254. 
B) 0.636. 
C) 0.801. 
D) 1.25.

Question 20

The tax incidence indicates that tax is always paid by sellers.

Accepted Answer

A) True 
 B)False

If the price elasticity of demand for a product measures 0.45,then:

Good A has a price elasticity of demand of 0.27,while good B has a price elasticity of demand of 2.9.To raise the most tax revenue,the government should:

Exhibit 5-1 Demand curves -In Exhibit 5-1,the demand curve between points b and c is:

The short-run price elasticity of demand for airline travel is 0.05,while the long-run elasticity is 2.36.This means that a significant increase in airline ticket prices will cause airline companies to:

Exhibit 5-3 Supply and demand curves for good X -In Exhibit 5-3,the price elasticity of supply for good X between points Y and E is:

Price elasticity of demand can be:

Avital and Joshua each have their own business selling lemonade in front of their houses.When they each charge 25 cents per glass,their total revenues are equal.However,when they each charge 40 cents per glass,Avital's revenues are bigger than Joshua's revenues.This is because:

If a farmer,lowers the price of his product from $15 to $5 and finds that sales increase from 500 to 1000 units per week,then the demand for the farmer's product in this range is:

A lower price elasticity of demand coefficient occurs when:

Tax incidence depends on:

Exhibit 5-1 Demand curves -In Exhibit 5-1,between points b and c,the price elasticity of demand measures

Exhibit 5-2 Demand curves for silver -Refer to Exhibit 5-2,Graph

A health club sells 100 memberships when the monthly price is $70 and 120 memberships when the monthly price is $60.The price elasticity of demand for memberships at this health club is (using the midpoint formula):

Price elasticity of demand measures:

The most important determinant of price elasticity of demand is:

As one moves down a straight-line,down-sloping demand curve,price elasticity will:

Demand sensitivity depends on all of the following except:

The price elasticity of demand coefficient for a good will be lower if which of the following occurs?

Using the midpoint formula,what would be the price elasticity of demand for a gallbladder operation if the number of operations fell from 7000 to 4000 per week after its price increased from $6000 to $15 000?

The tax incidence indicates that tax is always paid by sellers.

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

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Exam 5: Elasticity of demand and supply

If the price elasticity of demand for a product measures 0.45,then:

Good A has a price elasticity of demand of 0.27,while good B has a price elasticity of demand of 2.9.To raise the most tax revenue,the government should:

Exhibit 5-1 Demand curves -In Exhibit 5-1,the demand curve between points b and c is:

The short-run price elasticity of demand for airline travel is 0.05,while the long-run elasticity is 2.36.This means that a significant increase in airline ticket prices will cause airline companies to:

Exhibit 5-3 Supply and demand curves for good X -In Exhibit 5-3,the price elasticity of supply for good X between points Y and E is:

Price elasticity of demand can be:

Avital and Joshua each have their own business selling lemonade in front of their houses.When they each charge 25 cents per glass,their total revenues are equal.However,when they each charge 40 cents per glass,Avital's revenues are bigger than Joshua's revenues.This is because:

If a farmer,lowers the price of his product from $15 to $5 and finds that sales increase from 500 to 1000 units per week,then the demand for the farmer's product in this range is:

A lower price elasticity of demand coefficient occurs when:

Tax incidence depends on:

Exhibit 5-1 Demand curves -In Exhibit 5-1,between points b and c,the price elasticity of demand measures

Exhibit 5-2 Demand curves for silver -Refer to Exhibit 5-2,Graph

A health club sells 100 memberships when the monthly price is $70 and 120 memberships when the monthly price is $60.The price elasticity of demand for memberships at this health club is (using the midpoint formula):

Price elasticity of demand measures:

The most important determinant of price elasticity of demand is:

As one moves down a straight-line,down-sloping demand curve,price elasticity will:

Demand sensitivity depends on all of the following except:

The price elasticity of demand coefficient for a good will be lower if which of the following occurs?

Using the midpoint formula,what would be the price elasticity of demand for a gallbladder operation if the number of operations fell from 7000 to 4000 per week after its price increased from $6000 to $15 000?

The tax incidence indicates that tax is always paid by sellers.

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