Question 1

When the price elasticity of demand is ________, demand for the good is unit elastic.

Accepted Answer

A) equal to infinity 
B) greater than 1 
C) equal to 1 
D) between 1 and zero 
E) equal to zero. 
A) equal to infinity 
B) greater than 1 
C) equal to 1 
D) between 1 and zero 
E) equal to zero.

Question 2

Short-run supply is

Accepted Answer

A) more elastic than momentary supply but less elastic than long-run supply. 
B) less elastic than momentary supply but more elastic than long-run supply. 
C) less elastic than both momentary and long-run supply. 
D) more elastic than both momentary and long-run supply. 
E) as elastic as either the momentary or the long-run supply. 
A) more elastic than momentary supply but less elastic than long-run supply. 
B) less elastic than momentary supply but more elastic than long-run supply. 
C) less elastic than both momentary and long-run supply. 
D) more elastic than both momentary and long-run supply. 
E) as elastic as either the momentary or the long-run supply.

Question 3

Suppose the quantity of gasoline is measured in litres and the price of gasoline is measured in dollars. The price elasticity of demand is 0.67. If the price of gasoline is then measured in cents rather than in dollars, the price elasticity of demand would be

Accepted Answer

A) 6.7. 
B) 67.0. 
C) 0.67. 
D) 0.0067. 
E) negative. 
A) 6.7. 
B) 67.0. 
C) 0.67. 
D) 0.0067. 
E) negative.

Question 4

If the quantity of chicken demanded increases by 1.25 percent when the price of beef increases by 2.5 percent, the cross elasticity of demand between chicken and beef is

Accepted Answer

A) 3.125. 
B) -3.125. 
C) -0.5. 
D) 2.0. 
E) 0.5. 
A) 3.125. 
B) -3.125. 
C) -0.5. 
D) 2.0. 
E) 0.5.

Question 5

The income elasticity of demand is largest for

Accepted Answer

A) food. 
B) clothing. 
C) shelter. 
D) used cars. 
E) luxury cars. 
A) food. 
B) clothing. 
C) shelter. 
D) used cars. 
E) luxury cars.

Question 6

If the cross elasticity of demand between goods A and B is positive, then

Accepted Answer

A) the demands for A and B are both price elastic. 
B) the demands for A and B are both price inelastic. 
C) A and B are complements. 
D) A and B are substitutes. 
E) A and B are independent goods. 
A) the demands for A and B are both price elastic. 
B) the demands for A and B are both price inelastic. 
C) A and B are complements. 
D) A and B are substitutes. 
E) A and B are independent goods.

Question 7

When price rises from $1.50 to $2.50, quantity supplied increases from 9,000 to 11,000 units. What is the price elasticity of supply?

Accepted Answer

A) 0.4 
B) 0.8 
C) 2.5 
D) 4.0 
E) -0.4 
A) 0.4 
B) 0.8 
C) 2.5 
D) 4.0 
E) -0.4

Question 8

The price of good A falls by 10 percent and quantity of good A demanded does not change. We conclude that the demand for good A is

Accepted Answer

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

Question 9

As a result of a poor growing season, the supply curve of apples shifted leftward, the equilibrium price of apples rose, and total revenue fell. This suggests that the price elasticity of demand for apples is

Accepted Answer

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

Question 10

When the price elasticity of demand is ________, demand for the good is elastic.

Accepted Answer

A) equal to infinity 
B) greater than 1 
C) equal to 1 
D) between 1 and zero 
E) equal to zero 
A) equal to infinity 
B) greater than 1 
C) equal to 1 
D) between 1 and zero 
E) equal to zero

Question 11

A good has a price elasticity of demand equal to 2. If new imports lower its price from $1.20 to $0.80, the percentage change in quantity demanded will be

Accepted Answer

A) an increase of 80 percent. 
B) a decrease of 80 percent. 
C) a decrease of 40 percent. 
D) an increase of 2 percent. 
E) an increase of 40 percent. 
A) an increase of 80 percent. 
B) a decrease of 80 percent. 
C) a decrease of 40 percent. 
D) an increase of 2 percent. 
E) an increase of 40 percent.

Question 12

Use the table below to answer the following questions.
Table 4.1.1
Demand schedule for good A.
  
-Refer to Table 4.1.1. If the price of good A falls from $4 to $3,

Accepted Answer

A) total revenue will increase. 
B) total revenue will remain constant. 
C) demand is elastic in this range. 
D) demand is unit elastic in this range. 
E) demand is inelastic in this range. 
A) total revenue will increase. 
B) total revenue will remain constant. 
C) demand is elastic in this range. 
D) demand is unit elastic in this range. 
E) demand is inelastic in this range.

Question 13

The elasticity of supply for airplane travel one year in advance of the departure date is most likely to be

Accepted Answer

A) substantially lower than -1. 
B) between -1 and zero. 
C) between zero and 1. 
D) around 1. 
E) substantially greater than 1. 
A) substantially lower than -1. 
B) between -1 and zero. 
C) between zero and 1. 
D) around 1. 
E) substantially greater than 1.

Question 14

Suppose Clyde always eats ice cream and chocolate syrup together. If the price of syrup increases by 10 percent, and the cross elasticity of demand is -2, the quantity of ice cream demanded

Accepted Answer

A) increases by 5 percent. 
B) increases by 20 percent. 
C) decreases by 5 percent. 
D) decreases by 20 percent. 
E) decreases by 2 percent. 
A) increases by 5 percent. 
B) increases by 20 percent. 
C) decreases by 5 percent. 
D) decreases by 20 percent. 
E) decreases by 2 percent.

Question 15

Suppose the Lethbridge Computer Company decides to increase the quantity of computers it sells by 6 percent. If the price elasticity of demand is 3.5, the company must

Accepted Answer

A) raise the price of a computer by 1.714 percent. 
B) raise the price of a computer by 0.21 percent. 
C) lower the price of a computer by 0.21 percent. 
D) lower the price of a computer by 1.714 percent. 
E) lower the price of a computer by 0.58 percent. 
A) raise the price of a computer by 1.714 percent. 
B) raise the price of a computer by 0.21 percent. 
C) lower the price of a computer by 0.21 percent. 
D) lower the price of a computer by 1.714 percent. 
E) lower the price of a computer by 0.58 percent.

Question 16

Use the table below to answer the following questions.
Table 4.1.1
Demand schedule for good A.
  
-Refer to Table 4.1.1. Demand is unit elastic when the price falls from

Accepted Answer

A) $8 to $7. 
B) $7 to $6. 
C) $6 to $5. 
D) $5 to $4. 
E) $4 to $3. 
A) $8 to $7. 
B) $7 to $6. 
C) $6 to $5. 
D) $5 to $4. 
E) $4 to $3.

Question 17

Factors that influence the price elasticity of demand include

Accepted Answer

A) the closeness of substitutes. 
B) the price of complements but not the price of substitutes. 
C) income. 
D) preferences. 
E) the price of substitutes and complements. 
A) the closeness of substitutes. 
B) the price of complements but not the price of substitutes. 
C) income. 
D) preferences. 
E) the price of substitutes and complements.

Question 18

For which one of the following will demand be the most price inelastic?

Accepted Answer

A) milk 
B) Happy Cow brand milk 
C) Happy Cow brand milk in Regina 
D) Happy Cow brand milk at Ralph's Grocery Store in Regina 
E) All of the above will exhibit the same price elasticity of demand. 
A) milk 
B) Happy Cow brand milk 
C) Happy Cow brand milk in Regina 
D) Happy Cow brand milk at Ralph's Grocery Store in Regina 
E) All of the above will exhibit the same price elasticity of demand.

Question 19

If the quantity of carrots demanded increases by a small percentage when income increases by a large amount, we know that the demand for carrots is

Accepted Answer

A) price elastic. 
B) price inelastic. 
C) income inferior. 
D) income elastic. 
E) income inelastic. 
A) price elastic. 
B) price inelastic. 
C) income inferior. 
D) income elastic. 
E) income inelastic.

Question 20

Use the table below to answer the following question.
Table 4.1.2
  
-Refer to Table 4.1.2. The table shows two points on the demand curve for volleyballs. What is the price elasticity of demand between these two points?

Accepted Answer

A) 2.5 
B) 2.0 
C) 0.5 
D) 0.4 
E) 5.0 
A) 2.5 
B) 2.0 
C) 0.5 
D) 0.4 
E) 5.0

Exam 4: Elasticity

When the price elasticity of demand is ________, demand for the good is unit elastic.

Short-run supply is

Suppose the quantity of gasoline is measured in litres and the price of gasoline is measured in dollars. The price elasticity of demand is 0.67. If the price of gasoline is then measured in cents rather than in dollars, the price elasticity of demand would be

If the quantity of chicken demanded increases by 1.25 percent when the price of beef increases by 2.5 percent, the cross elasticity of demand between chicken and beef is

The income elasticity of demand is largest for

If the cross elasticity of demand between goods A and B is positive, then

When price rises from $1.50 to $2.50, quantity supplied increases from 9,000 to 11,000 units. What is the price elasticity of supply?

The price of good A falls by 10 percent and quantity of good A demanded does not change. We conclude that the demand for good A is

As a result of a poor growing season, the supply curve of apples shifted leftward, the equilibrium price of apples rose, and total revenue fell. This suggests that the price elasticity of demand for apples is

When the price elasticity of demand is ________, demand for the good is elastic.

A good has a price elasticity of demand equal to 2. If new imports lower its price from $1.20 to $0.80, the percentage change in quantity demanded will be

Use the table below to answer the following questions. Table 4.1.1 Demand schedule for good A. -Refer to Table 4.1.1. If the price of good A falls from $4 to $3,

The elasticity of supply for airplane travel one year in advance of the departure date is most likely to be

Suppose Clyde always eats ice cream and chocolate syrup together. If the price of syrup increases by 10 percent, and the cross elasticity of demand is -2, the quantity of ice cream demanded

Suppose the Lethbridge Computer Company decides to increase the quantity of computers it sells by 6 percent. If the price elasticity of demand is 3.5, the company must

Use the table below to answer the following questions. Table 4.1.1 Demand schedule for good A. -Refer to Table 4.1.1. Demand is unit elastic when the price falls from

Factors that influence the price elasticity of demand include

For which one of the following will demand be the most price inelastic?

If the quantity of carrots demanded increases by a small percentage when income increases by a large amount, we know that the demand for carrots is

Use the table below to answer the following question. Table 4.1.2 -Refer to Table 4.1.2. The table shows two points on the demand curve for volleyballs. What is the price elasticity of demand between these two points?

What Is Economics

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