Question 1

Long-run supply is

Accepted Answer

A) more elastic than momentary supply but less elastic than short-run supply. 
B) less elastic than momentary supply but more elastic than short-run supply. 
C) less elastic than both momentary and short-run supply. 
D) more elastic than both momentary and short-run supply. 
E) equal in elasticity to short-run supply. 
A) more elastic than momentary supply but less elastic than short-run supply. 
B) less elastic than momentary supply but more elastic than short-run supply. 
C) less elastic than both momentary and short-run supply. 
D) more elastic than both momentary and short-run supply. 
E) equal in elasticity to short-run supply.

Question 2

All normal goods have

Accepted Answer

A) an income elasticity of demand greater than 1.0. 
B) a price elasticity of demand greater than 1.0. 
C) a negative price elasticity of demand. 
D) a positive income elasticity of demand. 
E) a negative cross elasticity of demand. 
A) an income elasticity of demand greater than 1.0. 
B) a price elasticity of demand greater than 1.0. 
C) a negative price elasticity of demand. 
D) a positive income elasticity of demand. 
E) a negative cross elasticity of demand.

Question 3

Goods that can be produced using rare productive resources have a ________ elasticity of supply. The greater the amount of time available after a price change, the ________ is the elasticity of supply.

Accepted Answer

A) low; smaller 
B) high; greater 
C) high; smaller 
D) low; greater 
E) high; more inelastic 
A) low; smaller 
B) high; greater 
C) high; smaller 
D) low; greater 
E) high; more inelastic

Question 4

If price elasticity of demand is zero, then as the price falls,

Accepted Answer

A) total revenue does not change. 
B) quantity demanded does not change. 
C) quantity demanded falls to zero. 
D) total revenue increases. 
E) quantity demanded increases. 
A) total revenue does not change. 
B) quantity demanded does not change. 
C) quantity demanded falls to zero. 
D) total revenue increases. 
E) quantity demanded increases.

Question 5

Fred's income increases from $840 per week to $1,160 per week. As a result, he decides to purchase 24 percent more bubble gum each week. The income elasticity of Fred's demand for bubble gum is

Accepted Answer

A) 0.32. 
B) 1.33. 
C) 24. 
D) 0.24. 
E) 0.75. 
A) 0.32. 
B) 1.33. 
C) 24. 
D) 0.24. 
E) 0.75.

Question 6

When the price elasticity of demand is ________, demand for the good is perfectly 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 7

Suppose this coming winter France will have unusually bad weather, and that next year's wine crop will be substantially reduced. Select the best statement.

Accepted Answer

A) The French wine supply will increase as price rises. 
B) If the demand for French wine is elastic, wine producers will experience an increase in total revenue. 
C) The initial change in the market will create a surplus of French wine. 
D) In the final equilibrium, price and quantity will be higher. 
E) None of the above 
A) The French wine supply will increase as price rises. 
B) If the demand for French wine is elastic, wine producers will experience an increase in total revenue. 
C) The initial change in the market will create a surplus of French wine. 
D) In the final equilibrium, price and quantity will be higher. 
E) None of the above

Question 8

If the demand for salmon in Cape Breton, Nova Scotia, is unit elastic, the price elasticity of demand for salmon equals

Accepted Answer

A) 1.0. 
B) 100.0. 
C) 0.10. 
D) zero. 
E) 10.0. 
A) 1.0. 
B) 100.0. 
C) 0.10. 
D) zero. 
E) 10.0.

Question 9

When the price of a bicycle falls from $220 to $180 and other things remain the same, I. the quantity demanded of bicycles increases from 150 to 250 an hour.
II. the quantity demanded of skateboards decreases from 125 to 75 an hour.
III. the quantity demanded of bicycle helmets increases from 170 to 230 an hour.
Skateboards and bicycles are ________ because a fall in the price of a bicycle brings ________ in the quantity demanded of skateboards. The cross elasticity of demand for skateboards with respect to bicycles is ________.

Accepted Answer

A) complements; an increase; -0.4 
B) complements; a decrease; 0.4 
C) substitutes; an increase; -2.5 
D) substitutes; a decrease; 2.5 
E) substitutes; a decrease; 0.4 
A) complements; an increase; -0.4 
B) complements; a decrease; 0.4 
C) substitutes; an increase; -2.5 
D) substitutes; a decrease; 2.5 
E) substitutes; a decrease; 0.4

Question 10

Use the table below to answer the following questions.
Table 4.2.2
  
-Refer to Table 4.2.2. The income elasticity of demand for Jolt is

Accepted Answer

A) +0.67. 
B) -0.67. 
C) +1.5. 
D) -1.5. 
E) It cannot be calculated because the price of Coke is not constant. 
A) +0.67. 
B) -0.67. 
C) +1.5. 
D) -1.5. 
E) It cannot be calculated because the price of Coke is not constant.

Question 11

Use the table below to answer the following questions.
Table 4.2.2
  
-Refer to Table 4.2.2. All of the following statements regarding Jolt are true except

Accepted Answer

A) it has an elastic demand. 
B) it is an inferior good. 
C) it is a substitute for Coke. 
D) it has a negative cross elasticity of demand with respect to Coke. 
E) it has a negative income elasticity of demand. 
A) it has an elastic demand. 
B) it is an inferior good. 
C) it is a substitute for Coke. 
D) it has a negative cross elasticity of demand with respect to Coke. 
E) it has a negative income elasticity of demand.

Question 12

Suppose the demand curve for good X is horizontal. This shows that the demand for good X is

Accepted Answer

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

Question 13

You are told that a 5 percent increase in the price of a good increases the quantity supplied by 10 percent after one month. Supply of this good is ________. This good is most likely produced using productive resources that are ________.

Accepted Answer

A) inelastic; plentiful or easily obtained 
B) decreasing; unique or rare 
C) elastic; plentiful or easily obtained 
D) unit elastic; unique or rare 
E) elastic; unique or rare 
A) inelastic; plentiful or easily obtained 
B) decreasing; unique or rare 
C) elastic; plentiful or easily obtained 
D) unit elastic; unique or rare 
E) elastic; unique or rare

Question 14

The supply of coal at Yanzhou Coal Mining is

Accepted Answer

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

Question 15

Use the figure below to answer the following question.
   
Figure 4.3.1
-The two supply curves in Figure 4.3.1 are parallel. Between $7 to $8,

Accepted Answer

A) S₁ is more elastic than S₂. 
B) S₁ is more inelastic than S₂. 
C) S₁ and S₂ have the same elasticity. 
D) S₁ is steeper than S₂. 
E) S₁ is flatter than S₂. 
A) S₁ is more elastic than S₂. 
B) S₁ is more inelastic than S₂. 
C) S₁ and S₂ have the same elasticity. 
D) S₁ is steeper than S₂. 
E) S₁ is flatter than S₂.

Question 16

Which one of the following illustrates an elastic 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 0.2 
D) A price elasticity of demand equal to 1.0 
E) A price elasticity of demand equal to zero 
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 0.2 
D) A price elasticity of demand equal to 1.0 
E) A price elasticity of demand equal to zero

Question 17

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

Accepted Answer

A) daily newspapers 
B) Ontario newspapers 
C) Toronto newspapers 
D) the Toronto Star 
E) Each of the above will exhibit the same price elasticity of demand. 
A) daily newspapers 
B) Ontario newspapers 
C) Toronto newspapers 
D) the Toronto Star 
E) Each of the above will exhibit the same price elasticity of demand.

Question 18

Demand is inelastic if

Accepted Answer

A) a small change in price results in a large change in quantity demanded. 
B) the quantity demanded is very responsive to a change in price. 
C) the price elasticity of demand is 0.2. 
D) the price does not change when supply increases. 
E) a 10 percent change in price results in a 1 percent change in the quantity supplied. 
A) a small change in price results in a large change in quantity demanded. 
B) the quantity demanded is very responsive to a change in price. 
C) the price elasticity of demand is 0.2. 
D) the price does not change when supply increases. 
E) a 10 percent change in price results in a 1 percent change in the quantity supplied.

Question 19

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, the price elasticity of demand is

Accepted Answer

A) 2. 
B) 0.18. 
C) 5.6. 
D) 50. 
E) 0.5. 
A) 2. 
B) 0.18. 
C) 5.6. 
D) 50. 
E) 0.5.

Question 20

The demand for orange juice is price elastic. A severe frost, which destroys large quantities of oranges will

Accepted Answer

A) lower the equilibrium price but increase total consumer spending on juice. 
B) decrease the equilibrium quantity and decrease total consumer spending on juice. 
C) decrease both the equilibrium quantity and the price of juice. 
D) raise the equilibrium price as well as total consumer spending for juice. 
E) raise the equilibrium price but leave total consumer spending for juice constant. 
A) lower the equilibrium price but increase total consumer spending on juice. 
B) decrease the equilibrium quantity and decrease total consumer spending on juice. 
C) decrease both the equilibrium quantity and the price of juice. 
D) raise the equilibrium price as well as total consumer spending for juice. 
E) raise the equilibrium price but leave total consumer spending for juice constant.

Exam 4: Elasticity

Long-run supply is

All normal goods have

Goods that can be produced using rare productive resources have a ________ elasticity of supply. The greater the amount of time available after a price change, the ________ is the elasticity of supply.

If price elasticity of demand is zero, then as the price falls,

Fred's income increases from $840 per week to $1,160 per week. As a result, he decides to purchase 24 percent more bubble gum each week. The income elasticity of Fred's demand for bubble gum is

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

Suppose this coming winter France will have unusually bad weather, and that next year's wine crop will be substantially reduced. Select the best statement.

If the demand for salmon in Cape Breton, Nova Scotia, is unit elastic, the price elasticity of demand for salmon equals

Use the table below to answer the following questions. Table 4.2.2 -Refer to Table 4.2.2. The income elasticity of demand for Jolt is

Use the table below to answer the following questions. Table 4.2.2 -Refer to Table 4.2.2. All of the following statements regarding Jolt are true except

Suppose the demand curve for good X is horizontal. This shows that the demand for good X is

You are told that a 5 percent increase in the price of a good increases the quantity supplied by 10 percent after one month. Supply of this good is ________. This good is most likely produced using productive resources that are ________.

The supply of coal at Yanzhou Coal Mining is

Use the figure below to answer the following question. Figure 4.3.1 -The two supply curves in Figure 4.3.1 are parallel. Between $7 to $8,

Which one of the following illustrates an elastic demand?

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

Demand is inelastic if

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, the price elasticity of demand is

The demand for orange juice is price elastic. A severe frost, which destroys large quantities of oranges will

What Is Economics

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Goods that can be produced using rare productive resources have a elasticity of supply. The greater the amount of time available after a price change, the is the elasticity of supply.

You are told that a 5 percent increase in the price of a good increases the quantity supplied by 10 percent after one month. Supply of this good is . This good is most likely produced using productive resources that are .