Question 1

On a part of the demand curve where the price elasticity of demand is less than 1,a decrease in price:

Accepted Answer

A) is impossible. 
B) will increase total revenue. 
C) decreases quantity demanded. 
D) raises the price elasticity of demand. 
E) will reduce total revenue. 
A) is impossible. 
B) will increase total revenue. 
C) decreases quantity demanded. 
D) raises the price elasticity of demand. 
E) will reduce total revenue.

Question 2

In the long run,price elasticities of demand are usually:

Accepted Answer

A) less than they are in the short run because people can adjust. 
B) the same as they are in the short run because tastes don't change. 
C) greater than they are in the short run because prices rise over time. 
D) less than they are in the short run because real prices fall over time. 
E) greater than they are in the short run because consumers have time to adjust. 
A) less than they are in the short run because people can adjust. 
B) the same as they are in the short run because tastes don't change. 
C) greater than they are in the short run because prices rise over time. 
D) less than they are in the short run because real prices fall over time. 
E) greater than they are in the short run because consumers have time to adjust.

Question 3

If a straight-line demand curve slopes down,price elasticity will not:

Accepted Answer

A) remain the same at all points on the demand curve. 
B) change between any two points along the demand curve. 
C) always be greater than one. 
D) always equal one. 
E) always be less than one. 
A) remain the same at all points on the demand curve. 
B) change between any two points along the demand curve. 
C) always be greater than one. 
D) always equal one. 
E) always be less than one.

Question 4

Price elasticity of supply measures the responsiveness of the quality of supplied good to a change in price.

Accepted Answer

A) True 
 B)False

Question 5

Exhibit 5-2 Demand curves for silver

-Refer to Exhibit 5-2,Graph

Accepted Answer

A) 0.1. 
B) 0.3. 
C) 6. 
D) 2.5. 
A) 0.1. 
B) 0.3. 
C) 6. 
D) 2.5.

Question 6

Exhibit 5-2 Demand curves for silver

-Refer to Exhibit 5-2.Assume that a wealthy buyer,Mr Hunt,declares that he will purchase any amount of silver at a price of $125 an ounce.In Exhibit 5-2,which graph illustrates the shape of the demand curve for silver?

Accepted Answer

A)  Graph A. 
B)  Graph B. 
C)  Graph C. 
D)  Graph D. 
A)  Graph A. 
B)  Graph B. 
C)  Graph C. 
D)  Graph D.

Question 7

The income elasticity of demand for shoes is estimated to be 1.5.We can conclude that shoes:

Accepted Answer

A) have a relatively steep demand curve. 
B) have a relatively flat demand curve. 
C) are a normal good. 
D) are an inferior good. 
A) have a relatively steep demand curve. 
B) have a relatively flat demand curve. 
C) are a normal good. 
D) are an inferior good.

Question 8

Along a straight-line demand curve,the elasticity of demand:

Accepted Answer

A) is unitary elastic. 
B) is more elastic as the price falls. 
C) different at every point along the curve. 
D) is perfectly elastic. 
E) is perfectly inelastic. 
A) is unitary elastic. 
B) is more elastic as the price falls. 
C) different at every point along the curve. 
D) is perfectly elastic. 
E) is perfectly inelastic.

Question 9

If a 1 per cent decrease in the price of product A brings about a 3 per cent increase in the sales of product B,then:

Accepted Answer

A) products A and B are complementary. 
B) the cross elasticity of demand between these two products is positive. 
C) products A and B are substitutes. 
D) the demand for these products is inelastic. 
E) the total revenue earned from product A will decrease. 
A) products A and B are complementary. 
B) the cross elasticity of demand between these two products is positive. 
C) products A and B are substitutes. 
D) the demand for these products is inelastic. 
E) the total revenue earned from product A will decrease.

Question 10

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

Accepted Answer

A) 0.125. 
B) 1 
C) 1.352 
D) .714 
A) 0.125. 
B) 1 
C) 1.352 
D) .714

Question 11

Using supply and demand analysis,which of the following is true?

Accepted Answer

A) The burden of a tax on production cannot be determined on the basis of who actually pays the tax. 
B) The burden of a tax on production is always split evenly between consumers and sellers. 
C) Consumers bear the entire burden of a per unit tax on production. 
D) Sellers bear the entire burden of a per unit tax on production. 
A) The burden of a tax on production cannot be determined on the basis of who actually pays the tax. 
B) The burden of a tax on production is always split evenly between consumers and sellers. 
C) Consumers bear the entire burden of a per unit tax on production. 
D) Sellers bear the entire burden of a per unit tax on production.

Question 12

The less important the good in everyday consumption and the less percentage of budget is spent on the good:

Accepted Answer

A) the greater will be the price elasticity of the good. 
B) the greater will be the effect of the price increase on the decrease in the demand. 
C) the smaller will be the price elasticity of the good. 
D) the smaller will be the effect of the price increase on the increase in the demand. 
A) the greater will be the price elasticity of the good. 
B) the greater will be the effect of the price increase on the decrease in the demand. 
C) the smaller will be the price elasticity of the good. 
D) the smaller will be the effect of the price increase on the increase in the demand.

Question 13

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

Accepted Answer

A) 4.1. 
B) 1.8. 
C) 1.5. 
D) 0.3. 
E) 0.8. 
A) 4.1. 
B) 1.8. 
C) 1.5. 
D) 0.3. 
E) 0.8.

Question 14

Price elasticity remains constant along a straight-line demand curve

Accepted Answer

A) True 
 B)False

Question 15

Karin is a popular hairdresser in a small town.She charges her clients $30 for a haircut and earned $60 000 last year only doing haircuts.This year,Karin decided to increase the price for the haircut by $5.What is the elasticity of demand for Karin's haircut,if the number of her clients has dropped to 1800 per year?

Accepted Answer

A) It is approximately equal to 2.3. 
B) It is approximately equal to 1.68. 
C) It is approximately equal to 1. 
D) It is approximately equal to 0.68. 
A) It is approximately equal to 2.3. 
B) It is approximately equal to 1.68. 
C) It is approximately equal to 1. 
D) It is approximately equal to 0.68.

Question 16

The elasticity of demand for food would most likely be:

Accepted Answer

A) perfectly elastic. 
B) unit elastic. 
C) relatively more elastic than the elasticity of demand for bread. 
D) perfectly inelastic. 
E) indeterminate. 
A) perfectly elastic. 
B) unit elastic. 
C) relatively more elastic than the elasticity of demand for bread. 
D) perfectly inelastic. 
E) indeterminate.

Question 17

Which of the following statements is most likely to be true?

Accepted Answer

A) The elasticity of demand for a night at a caravan park is likely to be more elastic than a night at a five-star resort. 
B) The elasticity of demand for the latest model Porsche is likely to be less elastic than that for a toy model of a Porsche. 
C) The elasticity of demand for a meal at an exclusive restaurant is likely to be less elastic than that for a packet of two-minute noodles. 
D) The elasticity of demand for salt is likely to be less elastic than that for chinaware. 
A) The elasticity of demand for a night at a caravan park is likely to be more elastic than a night at a five-star resort. 
B) The elasticity of demand for the latest model Porsche is likely to be less elastic than that for a toy model of a Porsche. 
C) The elasticity of demand for a meal at an exclusive restaurant is likely to be less elastic than that for a packet of two-minute noodles. 
D) The elasticity of demand for salt is likely to be less elastic than that for chinaware.

Question 18

The cross-elasticity of demand:

Accepted Answer

A) reveals whether the good is income elastic. 
B) reveals whether the good is a necessity. 
C) reveals whether the good is important. 
D) reveals whether the good is a substitute. 
A) reveals whether the good is income elastic. 
B) reveals whether the good is a necessity. 
C) reveals whether the good is important. 
D) reveals whether the good is a substitute.

Question 19

The straight line demand curve represents the price elasticity of demand that:

Accepted Answer

A) increases as the price decreases. 
B) decreases as the price decreases. 
C) increases as the price increases. 
D) decreases as the price increases. 
A) increases as the price decreases. 
B) decreases as the price decreases. 
C) increases as the price increases. 
D) decreases as the price increases.

Question 20

Tara buys four music CDs when the price is $10 and two CDs when the price is $14.Her price elasticity of demand is (using the average values method):

Accepted Answer

A) 0. 
B) 1. 
C) 2. 
D) 3. 
E) 4. 
A) 0. 
B) 1. 
C) 2. 
D) 3. 
E) 4.

On a part of the demand curve where the price elasticity of demand is less than 1,a decrease in price:

In the long run,price elasticities of demand are usually:

If a straight-line demand curve slopes down,price elasticity will not:

Price elasticity of supply measures the responsiveness of the quality of supplied good to a change in price.

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

Exhibit 5-2 Demand curves for silver -Refer to Exhibit 5-2.Assume that a wealthy buyer,Mr Hunt,declares that he will purchase any amount of silver at a price of $125 an ounce.In Exhibit 5-2,which graph illustrates the shape of the demand curve for silver?

The income elasticity of demand for shoes is estimated to be 1.5.We can conclude that shoes:

Along a straight-line demand curve,the elasticity of demand:

If a 1 per cent decrease in the price of product A brings about a 3 per cent increase in the sales of product B,then:

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

Using supply and demand analysis,which of the following is true?

The less important the good in everyday consumption and the less percentage of budget is spent on the good:

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

Price elasticity remains constant along a straight-line demand curve

The elasticity of demand for food would most likely be:

Which of the following statements is most likely to be true?

The cross-elasticity of demand:

The straight line demand curve represents the price elasticity of demand that:

Tara buys four music CDs when the price is $10 and two CDs when the price is $14.Her price elasticity of demand is (using the average values method):

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

On a part of the demand curve where the price elasticity of demand is less than 1,a decrease in price:

In the long run,price elasticities of demand are usually:

If a straight-line demand curve slopes down,price elasticity will not:

Price elasticity of supply measures the responsiveness of the quality of supplied good to a change in price.

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

Exhibit 5-2 Demand curves for silver -Refer to Exhibit 5-2.Assume that a wealthy buyer,Mr Hunt,declares that he will purchase any amount of silver at a price of $125 an ounce.In Exhibit 5-2,which graph illustrates the shape of the demand curve for silver?

The income elasticity of demand for shoes is estimated to be 1.5.We can conclude that shoes:

Along a straight-line demand curve,the elasticity of demand:

If a 1 per cent decrease in the price of product A brings about a 3 per cent increase in the sales of product B,then:

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

Using supply and demand analysis,which of the following is true?

The less important the good in everyday consumption and the less percentage of budget is spent on the good:

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

Price elasticity remains constant along a straight-line demand curve

The elasticity of demand for food would most likely be:

Which of the following statements is most likely to be true?

The cross-elasticity of demand:

The straight line demand curve represents the price elasticity of demand that:

Tara buys four music CDs when the price is $10 and two CDs when the price is $14.Her price elasticity of demand is (using the average values method):

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