Question 1

When a supply curve

Accepted Answer

A) intersects the origin, the good has an elasticity of supply equal to 1. 
B) is vertical, the good has an elasticity of supply equal to infinity. 
C) is horizontal, the good has an elasticity of supply equal to zero. 
D) intersects the origin, the good has an elasticity of supply equal to zero. 
E) intersects the origin, the good has an elasticity of supply that is negative. 
A) intersects the origin, the good has an elasticity of supply equal to 1. 
B) is vertical, the good has an elasticity of supply equal to infinity. 
C) is horizontal, the good has an elasticity of supply equal to zero. 
D) intersects the origin, the good has an elasticity of supply equal to zero. 
E) intersects the origin, the good has an elasticity of supply that is negative.

Question 2

Tina and Brian work for the same recording company. Tina claims they would be better off by raising the price of their CDs, while Brian claims they would be better off by lowering the price. Choose the correct statement.

Accepted Answer

A) Tina thinks the demand for CDs has price elasticity of demand equal to zero, and Brian thinks price elasticity of demand equals 1. 
B) Tina thinks the demand for CDs has price elasticity of demand equal to 1, and Brian thinks price elasticity of demand equals zero. 
C) Tina thinks the demand for CDs is price elastic, and Brian thinks it is price inelastic. 
D) Tina thinks the demand for CDs is price inelastic, and Brian thinks it is price elastic. 
E) Tina and Brian should stick to singing and forget about economics. 
A) Tina thinks the demand for CDs has price elasticity of demand equal to zero, and Brian thinks price elasticity of demand equals 1. 
B) Tina thinks the demand for CDs has price elasticity of demand equal to 1, and Brian thinks price elasticity of demand equals zero. 
C) Tina thinks the demand for CDs is price elastic, and Brian thinks it is price inelastic. 
D) Tina thinks the demand for CDs is price inelastic, and Brian thinks it is price elastic. 
E) Tina and Brian should stick to singing and forget about economics.

Question 3

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

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 4

With higher fuel costs, airlines raise their average fare from $0.50 to $1.50 per passenger kilometre and the number of passenger kilometres decreases from 2.5 million a day to 1.5 million a day. Over this price range, demand is

Accepted Answer

A) perfectly elastic. 
B) perfectly inelastic. 
C) unit elastic. 
D) elastic, but not perfectly elastic. 
E) inelastic, but not perfectly inelastic. 
A) perfectly elastic. 
B) perfectly inelastic. 
C) unit elastic. 
D) elastic, but not perfectly elastic. 
E) inelastic, but not perfectly inelastic.

Question 5

A perfectly vertical demand curve indicates that the price elasticity of demand for the good is

Accepted Answer

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

Question 6

Use the table below to answer the following questions.
Table 4.2.2
  
-Refer to Table 4.2.2. The cross elasticity of demand for Jolt with respect to the price of Coke is

Accepted Answer

A) 0.75. 
B) 1.5. 
C) 0.40. 
D) 10. 
E) It cannot be calculated because income is not constant. 
A) 0.75. 
B) 1.5. 
C) 0.40. 
D) 10. 
E) It cannot be calculated because income is not constant.

Question 7

Use the table below to answer the following question.
Table 4.1.5
  
-Refer to Table 4.1.5. The demand for hotel rooms is ________ because ________.

Accepted Answer

A) inelastic; if the price is set low enough, total revenue will decrease 
B) elastic; if the price is set high enough, total revenue will decrease 
C) unit elastic; a price cut leaves total revenue unchanged. Total revenue never reaches a maximum 
D) decreasing as the price falls; the demand curve for hotel rooms is a straight-line demand curve 
E) inelastic; if the price is set low enough, total revenue will increase 
A) inelastic; if the price is set low enough, total revenue will decrease 
B) elastic; if the price is set high enough, total revenue will decrease 
C) unit elastic; a price cut leaves total revenue unchanged. Total revenue never reaches a maximum 
D) decreasing as the price falls; the demand curve for hotel rooms is a straight-line demand curve 
E) inelastic; if the price is set low enough, total revenue will increase

Question 8

Which one of the following illustrates an inelastic demand?

Accepted Answer

A) A 10 percent rise in price leads to a 5 percent decrease in quantity demanded. 
B) A 10 percent rise in price leads to a 20 percent decrease in quantity demanded. 
C) A price elasticity of demand equal to infinity 
D) A price elasticity of demand equal to 1.0. 
E) A price elasticity of demand equal to 2.0 
A) A 10 percent rise in price leads to a 5 percent decrease in quantity demanded. 
B) A 10 percent rise in price leads to a 20 percent decrease in quantity demanded. 
C) A price elasticity of demand equal to infinity 
D) A price elasticity of demand equal to 1.0. 
E) A price elasticity of demand equal to 2.0

Question 9

The amount of time elapsed since a price change influences the price elasticity of demand because as more time passes,

Accepted Answer

A) consumers find more substitutes and the price elasticity of demand for the original good decreases. 
B) consumers find more substitutes and the price elasticity of demand for the original good increases. 
C) the price of the good will return to its original value. 
D) the income of consumers rises and the price elasticity of demand for the good increases. 
E) the income of consumers rises and the price elasticity of demand for the good decreases. 
A) consumers find more substitutes and the price elasticity of demand for the original good decreases. 
B) consumers find more substitutes and the price elasticity of demand for the original good increases. 
C) the price of the good will return to its original value. 
D) the income of consumers rises and the price elasticity of demand for the good increases. 
E) the income of consumers rises and the price elasticity of demand for the good decreases.

Question 10

The price of oranges rises by 3 percent and quantity of oranges demanded decreases by 3 percent. We conclude that the demand for oranges is

Accepted Answer

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

Question 11

Demand will be more inelastic the

Accepted Answer

A) higher the income level. 
B) lower the income level. 
C) longer the passage of time after a price increase. 
D) fewer good substitutes that are available. 
E) larger the fraction of income spent on the good. 
A) higher the income level. 
B) lower the income level. 
C) longer the passage of time after a price increase. 
D) fewer good substitutes that are available. 
E) larger the fraction of income spent on the good.

Question 12

Total revenue is more likely to rise when the price rises if

Accepted Answer

A) there are few substitutes for the good. 
B) a high proportion of income is spent on the good. 
C) some extended period of time passes. 
D) all of the above 
E) none of the above 
A) there are few substitutes for the good. 
B) a high proportion of income is spent on the good. 
C) some extended period of time passes. 
D) all of the above 
E) none of the above

Question 13

Which one of the following will yield a measured price elasticity of demand of 5.0? A 10 percent rise in price results in a

Accepted Answer

A) 10 percent decrease in quantity demanded. 
B) 5 percent decrease in quantity demanded. 
C) 2 percent decrease in quantity demanded. 
D) 50 percent decrease in quantity demanded. 
E) 0.5 percent decrease in quantity demanded. 
A) 10 percent decrease in quantity demanded. 
B) 5 percent decrease in quantity demanded. 
C) 2 percent decrease in quantity demanded. 
D) 50 percent decrease in quantity demanded. 
E) 0.5 percent decrease in quantity demanded.

Question 14

The cross elasticity of demand between Coca-Cola and Pepsi-Cola is ________. From this information, we know that Coke and Pepsi are ________.

Accepted Answer

A) positive; normal goods 
B) positive; complements 
C) negative; substitutes 
D) positive; substitutes 
E) negative; complements 
A) positive; normal goods 
B) positive; complements 
C) negative; substitutes 
D) positive; substitutes 
E) negative; complements

Question 15

If the cross elasticity of demand between peanut butter and jelly is negative, then

Accepted Answer

A) a rise in the price of peanut butter results in a rise in the equilibrium price of jelly. 
B) a rise in the price of peanut butter results in a fall in the equilibrium price of jelly. 
C) a rise in the price of peanut butter has no effect on the equilibrium price of jelly. 
D) a fall in the price of peanut butter results in a fall in the equilibrium price of jelly. 
E) peanut butter and jelly are substitutes. 
A) a rise in the price of peanut butter results in a rise in the equilibrium price of jelly. 
B) a rise in the price of peanut butter results in a fall in the equilibrium price of jelly. 
C) a rise in the price of peanut butter has no effect on the equilibrium price of jelly. 
D) a fall in the price of peanut butter results in a fall in the equilibrium price of jelly. 
E) peanut butter and jelly are substitutes.

Question 16

If the Canucks lower ticket prices and find that total revenue does not change, then the price elasticity of demand for tickets is

Accepted Answer

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

Question 17

If a turnip is an inferior good, then

Accepted Answer

A) a small decrease in income decreases the quantity of turnips demanded at the current price by a large amount. 
B) a large decrease in income decreases the quantity of turnips demanded at the current price by a small amount. 
C) an increase in income increases the quantity demanded at the current price. 
D) an increase in income decreases the quantity demanded at the current price. 
E) turnips taste awful. 
A) a small decrease in income decreases the quantity of turnips demanded at the current price by a large amount. 
B) a large decrease in income decreases the quantity of turnips demanded at the current price by a small amount. 
C) an increase in income increases the quantity demanded at the current price. 
D) an increase in income decreases the quantity demanded at the current price. 
E) turnips taste awful.

Question 18

If Saudi Arabia argues that an increase in the supply of oil will decrease total revenue, then Saudi Arabia believes the demand for oil is

Accepted Answer

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

Question 19

When the price of peanut butter rises by 4 percent, total revenue decreases by 8 percent. The demand for peanut butter

Accepted Answer

A) is elastic. 
B) is inelastic. 
C) is unit elastic. 
D) has a price elasticity equal to 1/2. 
E) has a price elasticity equal to 2. 
A) is elastic. 
B) is inelastic. 
C) is unit elastic. 
D) has a price elasticity equal to 1/2. 
E) has a price elasticity equal to 2.

Question 20

Use the figure below to answer the following question.
   
Figure 4.1.3
-Given the relationship shown in Figure 4.1.3 between total revenue from the sale of a good and the quantity of the good sold, then

Accepted Answer

A) this is an inferior good. 
B) this is a normal good. 
C) the price elasticity of demand is zero. 
D) demand for this good is perfectly elastic. 
E) the price elasticity of demand is 1. 
A) this is an inferior good. 
B) this is a normal good. 
C) the price elasticity of demand is zero. 
D) demand for this good is perfectly elastic. 
E) the price elasticity of demand is 1.

Exam 4: Elasticity

When a supply curve

Tina and Brian work for the same recording company. Tina claims they would be better off by raising the price of their CDs, while Brian claims they would be better off by lowering the price. Choose the correct statement.

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

With higher fuel costs, airlines raise their average fare from $0.50 to $1.50 per passenger kilometre and the number of passenger kilometres decreases from 2.5 million a day to 1.5 million a day. Over this price range, demand is

A perfectly vertical demand curve indicates that the price elasticity of demand for the good is

Use the table below to answer the following questions. Table 4.2.2 -Refer to Table 4.2.2. The cross elasticity of demand for Jolt with respect to the price of Coke is

Use the table below to answer the following question. Table 4.1.5 -Refer to Table 4.1.5. The demand for hotel rooms is ________ because ________.

Which one of the following illustrates an inelastic demand?

The amount of time elapsed since a price change influences the price elasticity of demand because as more time passes,

The price of oranges rises by 3 percent and quantity of oranges demanded decreases by 3 percent. We conclude that the demand for oranges is

Demand will be more inelastic the

Total revenue is more likely to rise when the price rises if

Which one of the following will yield a measured price elasticity of demand of 5.0? A 10 percent rise in price results in a

The cross elasticity of demand between Coca-Cola and Pepsi-Cola is ________. From this information, we know that Coke and Pepsi are ________.

If the cross elasticity of demand between peanut butter and jelly is negative, then

If the Canucks lower ticket prices and find that total revenue does not change, then the price elasticity of demand for tickets is

If a turnip is an inferior good, then

If Saudi Arabia argues that an increase in the supply of oil will decrease total revenue, then Saudi Arabia believes the demand for oil is

When the price of peanut butter rises by 4 percent, total revenue decreases by 8 percent. The demand for peanut butter

Use the figure below to answer the following question. Figure 4.1.3 -Given the relationship shown in Figure 4.1.3 between total revenue from the sale of a good and the quantity of the good sold, then

What Is Economics

The Economic Problem

Demand and Supply

Efficiency and Equity

Governments Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Measuring Gdp and Economic Growth

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers

The Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

Macro Only: International Trade Policy

Filters

Use the table below to answer the following question. Table 4.1.5 -Refer to Table 4.1.5. The demand for hotel rooms is because .

The cross elasticity of demand between Coca-Cola and Pepsi-Cola is . From this information, we know that Coke and Pepsi are .