Question 1

Supply is elastic 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) a small percentage change in demand results in a large percentage change in quantity supplied. 
D) the good is an inferior good. 
E) the good is a normal good. 
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) a small percentage change in demand results in a large percentage change in quantity supplied. 
D) the good is an inferior good. 
E) the good is a normal good. A

Question 2

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

Accepted Answer

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

Question 3

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

Accepted Answer

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

Question 4

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 5

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 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

Suppose Swiss Chalet in Moncton knows that the demand for their half-chicken meals is elastic.If the manager wants to increase total revenue from half-chicken meal sales, he should

Accepted Answer

A) lower the price of a half-chicken meal. 
B) not change the price of a half-chicken meal. 
C) raise the price of a half-chicken meal. 
D) decrease the supply of half-chicken meals. 
E) hire fewer employees. 
A) lower the price of a half-chicken meal. 
B) not change the price of a half-chicken meal. 
C) raise the price of a half-chicken meal. 
D) decrease the supply of half-chicken meals. 
E) hire fewer employees.

Question 8

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 9

Use the figure below to answer the following questions.
   
Figure 4.1.2
-Figure 4.1.2 illustrates a linear demand curve.If the price falls from $4 to $2,

Accepted Answer

A) total revenue increases. 
B) total revenue decreases. 
C) total revenue remains unchanged. 
D) the quantity demanded increases by more than 10 percent. 
E) the percentage change in quantity demanded is more than the percentage change in price. 
A) total revenue increases. 
B) total revenue decreases. 
C) total revenue remains unchanged. 
D) the quantity demanded increases by more than 10 percent. 
E) the percentage change in quantity demanded is more than the percentage change in price.

Question 10

If a large percentage drop in the price level results in a small percentage increase in the quantity demanded,

Accepted Answer

A) demand is inelastic. 
B) demand is elastic. 
C) demand is unit elastic. 
D) the price elasticity of demand is close to infinity. 
E) the price elasticity of demand is zero. 
A) demand is inelastic. 
B) demand is elastic. 
C) demand is unit elastic. 
D) the price elasticity of demand is close to infinity. 
E) the price elasticity of demand is zero.

Question 11

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 12

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 13

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 14

A vertical supply curve

Accepted Answer

A) is impossible except in the long run. 
B) implies an elasticity of supply equal to zero. 
C) implies an elasticity of supply equal to infinity. 
D) indicates that suppliers are unwilling to produce the good. 
E) indicates a shortage of the good. 
A) is impossible except in the long run. 
B) implies an elasticity of supply equal to zero. 
C) implies an elasticity of supply equal to infinity. 
D) indicates that suppliers are unwilling to produce the good. 
E) indicates a shortage of the good.

Question 15

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 16

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 17

The demand for a good will be more price inelastic,

Accepted Answer

A) the higher is its price. 
B) the larger is the percentage of income spent on it. 
C) the longer is the passage of time since a price change. 
D) the smaller the supply of the good. 
E) the fewer substitutes are available for the good. 
A) the higher is its price. 
B) the larger is the percentage of income spent on it. 
C) the longer is the passage of time since a price change. 
D) the smaller the supply of the good. 
E) the fewer substitutes are available for the good.

Question 18

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 19

The cross elasticity of demand for good A with respect to the price of good B is -1.5.A 10 percent rise in the price of good B will lead to

Accepted Answer

A) an increase of 1.5 percent in the quantity of A demanded. 
B) an increase of 15 percent in the quantity of A demanded. 
C) a decrease of 15 percent in the quantity of A demanded. 
D) an increase of 6.7 percent in the quantity of A demanded. 
E) a decrease of 6.7 percent in the quantity of A demanded. 
A) an increase of 1.5 percent in the quantity of A demanded. 
B) an increase of 15 percent in the quantity of A demanded. 
C) a decrease of 15 percent in the quantity of A demanded. 
D) an increase of 6.7 percent in the quantity of A demanded. 
E) a decrease of 6.7 percent in the quantity of A demanded.

Question 20

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.

Supply is elastic if

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

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

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

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

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

Suppose Swiss Chalet in Moncton knows that the demand for their half-chicken meals is elastic.If the manager wants to increase total revenue from half-chicken meal sales, he should

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

Use the figure below to answer the following questions. Figure 4.1.2 -Figure 4.1.2 illustrates a linear demand curve.If the price falls from $4 to $2,

If a large percentage drop in the price level results in a small percentage increase in the quantity demanded,

If a turnip is an inferior good, then

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

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

A vertical supply curve

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

The demand for a good will be more price inelastic,

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

The cross elasticity of demand for good A with respect to the price of good B is -1.5.A 10 percent rise in the price of good B will lead to

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

What Is Economics

The Economic Problem

Demand and Supply

Efficiency and Equity

Government 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

Filters

Exam 4: Elasticity

Supply is elastic if

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

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

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

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

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

Suppose Swiss Chalet in Moncton knows that the demand for their half-chicken meals is elastic.If the manager wants to increase total revenue from half-chicken meal sales, he should

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

Use the figure below to answer the following questions. Figure 4.1.2 -Figure 4.1.2 illustrates a linear demand curve.If the price falls from $4 to $2,

If a large percentage drop in the price level results in a small percentage increase in the quantity demanded,

If a turnip is an inferior good, then

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

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

A vertical supply curve

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

The demand for a good will be more price inelastic,

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

The cross elasticity of demand for good A with respect to the price of good B is -1.5.A 10 percent rise in the price of good B will lead to

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

What Is Economics

The Economic Problem

Demand and Supply

Efficiency and Equity

Government 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

Filters