Question 1

The price elasticity of demand is a units-free measure of the responsiveness of the ________ when all other influences on buying plans remain the same.

Accepted Answer

A) quantity demanded to a change in the price of a substitute or complement 
B) quantity demanded to a change in income 
C) quantity demanded of a good to a change in its price 
D) price to a change in quantity demanded 
E) quantity demanded of a good to a change in supply 
A) quantity demanded to a change in the price of a substitute or complement 
B) quantity demanded to a change in income 
C) quantity demanded of a good to a change in its price 
D) price to a change in quantity demanded 
E) quantity demanded of a good to a change in supply

Question 2

Use the figure below to answer the following question.
   
Figure 4.1.1
-Figure 4.1.1 illustrates a linear demand curve. Comparing the price elasticity in the $2 to $3 price range with the elasticity in the $8 to $9 range, we can conclude

Accepted Answer

A) that demand is more elastic in the $8 to $9 price range. 
B) that demand is more elastic in the $2 to $3 price range. 
C) that the price elasticity of demand is the same in both price ranges. 
D) nothing without numerical information about quantities. 
E) that the price elasticity of demand is zero in both price ranges because the demand curve is a straight-line demand curve. 
A) that demand is more elastic in the $8 to $9 price range. 
B) that demand is more elastic in the $2 to $3 price range. 
C) that the price elasticity of demand is the same in both price ranges. 
D) nothing without numerical information about quantities. 
E) that the price elasticity of demand is zero in both price ranges because the demand curve is a straight-line demand curve.

Question 3

If a 12 percent fall in price results in an 8 percent increase in quantity demanded, the price elasticity of demand equals

Accepted Answer

A) 0.96. 
B) 0.12. 
C) 0.67. 
D) 1.5. 
E) 0.8. 
A) 0.96. 
B) 0.12. 
C) 0.67. 
D) 1.5. 
E) 0.8.

Question 4

The price elasticity of demand for purses is measured in

Accepted Answer

A) dollars. 
B) purses. 
C) dollars per purse. 
D) purses per dollar. 
E) none of the above 
A) dollars. 
B) purses. 
C) dollars per purse. 
D) purses per dollar. 
E) none of the above

Question 5

If an increase in the supply of good A decreases the demand for good B, then

Accepted Answer

A) the demands for A and B are independent. 
B) the elasticity of supply for good A is greater than 1. 
C) A and B are complements. 
D) A and B are substitutes. 
E) the demand for A is price elastic. 
A) the demands for A and B are independent. 
B) the elasticity of supply for good A is greater than 1. 
C) A and B are complements. 
D) A and B are substitutes. 
E) the demand for A is price elastic.

Question 6

Use the information below to answer the following questions.
Fact 4.3.1 Weak coal prices hit China's third-largest coal miner
The chairman of Yanzhou Coal Mining reported that the recession had decreased the demand for coal, with its sales falling by 11.9 percent, despite a 10.6 percent cut in price.
Source: cbc.ca, February 5, 2014
-The price elasticity of supply of coal at Yanzhou Coal Mining is

Accepted Answer

A) 1.12. 
B) 0.89. 
C) 11.2. 
D) -1.12. 
E) 8.9. 
A) 1.12. 
B) 0.89. 
C) 11.2. 
D) -1.12. 
E) 8.9.

Question 7

Supply is inelastic if

Accepted Answer

A) a small percentage change in price results in a large percentage change in quantity supplied. 
B) a large percentage change in price results in a small percentage change in quantity supplied. 
C) the good is a normal good. 
D) the good is an inferior good. 
E) the good has many substitutes. 
A) a small percentage change in price results in a large percentage change in quantity supplied. 
B) a large percentage change in price results in a small percentage change in quantity supplied. 
C) the good is a normal good. 
D) the good is an inferior good. 
E) the good has many substitutes.

Question 8

Sally's Ski Shoppe maximizes total revenue when the price elasticity of demand for skis is

Accepted Answer

A) greater than 10. 
B) greater than 1 but less than 10. 
C) zero. 
D) 1. 
E) -1. 
A) greater than 10. 
B) greater than 1 but less than 10. 
C) zero. 
D) 1. 
E) -1.

Question 9

If an increase in the supply of good A increases the demand for good B, then

Accepted Answer

A) the demands for A and B are independent. 
B) the elasticity of supply for good A is greater than 1. 
C) A and B are complements. 
D) A and B are substitutes. 
E) the demand for A is price elastic. 
A) the demands for A and B are independent. 
B) the elasticity of supply for good A is greater than 1. 
C) A and B are complements. 
D) A and B are substitutes. 
E) the demand for A is price elastic.

Question 10

If a 10 percent increase in income results in a 5 percent increase in quantity demanded, what is the income elasticity of demand?

Accepted Answer

A) 0.5 
B) -0.5 
C) 2.0 
D) -2.0 
E) 1.5 
A) 0.5 
B) -0.5 
C) 2.0 
D) -2.0 
E) 1.5

Question 11

Which one of the following must be true if demand is income inelastic?

Accepted Answer

A) A large percentage increase in income will result in a small percentage increase in quantity demanded. 
B) A small percentage increase in income will result in a large percentage increase in quantity demanded. 
C) An increase in income will decrease the quantity demanded. 
D) The good is an inferior good. 
E) A percentage rise in price increases the quantity demanded by a smaller percentage. 
A) A large percentage increase in income will result in a small percentage increase in quantity demanded. 
B) A small percentage increase in income will result in a large percentage increase in quantity demanded. 
C) An increase in income will decrease the quantity demanded. 
D) The good is an inferior good. 
E) A percentage rise in price increases the quantity demanded by a smaller percentage.

Question 12

If the price elasticity of demand is 2, then a 1 percent fall in price

Accepted Answer

A) doubles the quantity demanded. 
B) decreases the quantity demanded by half. 
C) increases the quantity demanded by 2 percent. 
D) decreases the quantity demanded by 2 percent. 
E) increases the quantity demanded by 0.5 percent. 
A) doubles the quantity demanded. 
B) decreases the quantity demanded by half. 
C) increases the quantity demanded by 2 percent. 
D) decreases the quantity demanded by 2 percent. 
E) increases the quantity demanded by 0.5 percent.

Question 13

When the price of a good increased by 6 percent, the quantity demanded of it decreased 3 percent. Most likely, this good ________ and ________.

Accepted Answer

A) is a necessity; has poor substitutes 
B) has poor substitutes; is a luxury 
C) is a necessity; has good substitutes 
D) is a luxury; is narrowly defined 
E) is a luxury; has experienced a recent price change 
A) is a necessity; has poor substitutes 
B) has poor substitutes; is a luxury 
C) is a necessity; has good substitutes 
D) is a luxury; is narrowly defined 
E) is a luxury; has experienced a recent price change

Question 14

If good A is a complement of good B, then the cross elasticity of demand is

Accepted Answer

A) 12. 
B) infinity. 
C) positive. 
D) zero. 
E) negative. 
A) 12. 
B) infinity. 
C) positive. 
D) zero. 
E) negative.

Question 15

A 3 percent rise in the price of orange juice decreases the quantity of orange juice demanded by 9 percent and increases the quantity of apple juice demanded by 15 percent. The price elasticity of demand for orange juice is ________. The cross elasticity of demand for apple juice with respect to the price of orange juice is ________.

Accepted Answer

A) -3; 5 
B) 3; 5 
C) 0.33; 0.2 
D) -0.33; 0.2 
E) 0.33; -5 
A) -3; 5 
B) 3; 5 
C) 0.33; 0.2 
D) -0.33; 0.2 
E) 0.33; -5

Question 16

A good has an income elasticity of +0.5. An increase in income from $15,000 to $25,000 will lead to a

Accepted Answer

A) 2.5 percent increase in the quantity demanded of the good. 
B) 5 percent increase in the quantity demanded of the good. 
C) 5 percent decrease in the quantity demanded of the good. 
D) 25 percent decrease in the quantity demanded of the good. 
E) 25 percent increase in the quantity demanded of the good. 
A) 2.5 percent increase in the quantity demanded of the good. 
B) 5 percent increase in the quantity demanded of the good. 
C) 5 percent decrease in the quantity demanded of the good. 
D) 25 percent decrease in the quantity demanded of the good. 
E) 25 percent increase in the quantity demanded of the good.

Question 17

If a 10 percent rise in the price of goods leads to a 10 percent decrease in quantity demanded, the demand curve for this good

Accepted Answer

A) is vertical. 
B) is horizontal. 
C) has slope equal to 1. 
D) is a straight line with slope equal to 10. 
E) none of the above 
A) is vertical. 
B) is horizontal. 
C) has slope equal to 1. 
D) is a straight line with slope equal to 10. 
E) none of the above

Question 18

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

Accepted Answer

A) there are few substitutes for the good. 
B) a low 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 low 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 19

Preferences for brussels sprouts increase. The price of brussels sprouts will not change if the price elasticity of

Accepted Answer

A) demand is 0. 
B) demand is 1. 
C) supply is 0. 
D) supply is 1. 
E) supply is infinity. 
A) demand is 0. 
B) demand is 1. 
C) supply is 0. 
D) supply is 1. 
E) supply is infinity.

Question 20

Suppose the quantity of root beer demanded decreases from 105,000 litres per week to 95,000 litres per week when the price rises by 5 percent. The price elasticity of demand

Accepted Answer

A) is 2.0. 
B) is 0.5. 
C) is 10. 
D) is inelastic. 
E) cannot be computed unless we know the original price and the new price. 
A) is 2.0. 
B) is 0.5. 
C) is 10. 
D) is inelastic. 
E) cannot be computed unless we know the original price and the new price.

Exam 4: Elasticity

The price elasticity of demand is a units-free measure of the responsiveness of the ________ when all other influences on buying plans remain the same.

Use the figure below to answer the following question. Figure 4.1.1 -Figure 4.1.1 illustrates a linear demand curve. Comparing the price elasticity in the $2 to $3 price range with the elasticity in the $8 to $9 range, we can conclude

If a 12 percent fall in price results in an 8 percent increase in quantity demanded, the price elasticity of demand equals

The price elasticity of demand for purses is measured in

If an increase in the supply of good A decreases the demand for good B, then

Supply is inelastic if

Sally's Ski Shoppe maximizes total revenue when the price elasticity of demand for skis is

If an increase in the supply of good A increases the demand for good B, then

If a 10 percent increase in income results in a 5 percent increase in quantity demanded, what is the income elasticity of demand?

Which one of the following must be true if demand is income inelastic?

If the price elasticity of demand is 2, then a 1 percent fall in price

When the price of a good increased by 6 percent, the quantity demanded of it decreased 3 percent. Most likely, this good ________ and ________.

If good A is a complement of good B, then the cross elasticity of demand is

A good has an income elasticity of +0.5. An increase in income from $15,000 to $25,000 will lead to a

If a 10 percent rise in the price of goods leads to a 10 percent decrease in quantity demanded, the demand curve for this good

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

Preferences for brussels sprouts increase. The price of brussels sprouts will not change if the price elasticity of

Suppose the quantity of root beer demanded decreases from 105,000 litres per week to 95,000 litres per week when the price rises by 5 percent. The price elasticity of demand

What Is Economics

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When the price of a good increased by 6 percent, the quantity demanded of it decreased 3 percent. Most likely, this good and .