Question 1

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 2

The price of apples falls by 5 percent and quantity of apples demanded increases by 6 percent.We conclude that the demand for apples is

Accepted Answer

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

Question 3

There is an increase in the price of broccoli because of the disastrous weather that destroyed half of this year's spinach crop.Choose the statement that is correct.

Accepted Answer

A) The demand curve for broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is positive. 
B) The demand curve for broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is negative. 
C) The supply curve of broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is positive. 
D) The supply curve of broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is negative. 
E) The demand curve for broccoli shifted leftward and the cross elasticity of demand for broccoli with respect to the price of spinach is negative. 
A) The demand curve for broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is positive. 
B) The demand curve for broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is negative. 
C) The supply curve of broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is positive. 
D) The supply curve of broccoli shifted rightward and the cross elasticity of demand for broccoli with respect to the price of spinach is negative. 
E) The demand curve for broccoli shifted leftward and the cross elasticity of demand for broccoli with respect to the price of spinach is negative.

Question 4

Suppose a rise of 8 percent in the price of bison meat in Saskatchewan reduces the consumption of bison meat by 24 percent.Such a price rise will induce consumers to spend

Accepted Answer

A) more of their income on bison. 
B) the same amount of their income on bison as before. 
C) less of their income on bison. 
D) more on products that are complements of bison. 
E) zero dollars on bison meat. 
A) more of their income on bison. 
B) the same amount of their income on bison as before. 
C) less of their income on bison. 
D) more on products that are complements of bison. 
E) zero dollars on bison meat.

Question 5

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 6

Suppose that the price elasticity of demand for bottled water in Sackville, New Brunswick is 1.5, while the price elasticity of demand for bottled water in Prince Albert, Saskatchewan is 0.93.This implies that the demand in Sackville is ________ and demand in Prince Albert is ________.

Accepted Answer

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

Question 7

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 8

If a rise in the price of good A from $100 to $120 results in an increase in quantity supplied from 10,000 to 12,000 units, then the elasticity of supply is

Accepted Answer

A) 0.625. 
B) 0.8. 
C) 1.25. 
D) 0.2. 
E) 1.0. 
A) 0.625. 
B) 0.8. 
C) 1.25. 
D) 0.2. 
E) 1.0.

Question 9

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 10

A fall in the price of a good from $10.50 to $9.50 results in an increase in the quantity demanded from 18,800 to 21,200 units.The price elasticity of demand is

Accepted Answer

A) 0.8. 
B) 1.25. 
C) 1.2. 
D) 8.0. 
E) 2.4. 
A) 0.8. 
B) 1.25. 
C) 1.2. 
D) 8.0. 
E) 2.4.

Question 11

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 12

Fred's income increases from $800 per week to $1,200 per week.As a result, he decides to purchase 40 percent more bubble gum each week.The income elasticity of Fred's demand for bubble gum is

Accepted Answer

A) 0.40. 
B) 40. 
C) 1.0. 
D) 0.12. 
E) 10. 
A) 0.40. 
B) 40. 
C) 1.0. 
D) 0.12. 
E) 10.

Question 13

If the cross elasticity of demand between goods A and B is negative, 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 14

The price elasticity of demand for airplane travel one week in advance of the departure date is most likely to be

Accepted Answer

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

Question 15

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 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

Business people speak about price elasticity of demand without using the actual term.Which one of the following statements reflects elastic demand for a good?

Accepted Answer

A) "A price cut won't help me. It won't increase sales, and I'll just get less money for each unit." 
B) "I don't think a price cut will make any difference to my bottom line. What I may gain from selling more I would lose on the lower price." 
C) "My customers are real bargain hunters. Since I set my prices just a few cents below my competitors, customers have flocked to the store, and sales are booming." 
D) "With the recent economic recovery, people have more income to spend and sales are booming, even at the previous prices." 
E) "A very cold winter has increased my sales of skates and hockey sticks." 
A) "A price cut won't help me. It won't increase sales, and I'll just get less money for each unit." 
B) "I don't think a price cut will make any difference to my bottom line. What I may gain from selling more I would lose on the lower price." 
C) "My customers are real bargain hunters. Since I set my prices just a few cents below my competitors, customers have flocked to the store, and sales are booming." 
D) "With the recent economic recovery, people have more income to spend and sales are booming, even at the previous prices." 
E) "A very cold winter has increased my sales of skates and hockey sticks."

Question 18

If the demand curve for a good is a horizontal line, then the good has

Accepted Answer

A) zero income elasticity. 
B) price elasticity of demand equal to zero. 
C) infinite price elasticity of demand. 
D) a price elasticity of demand that is likely to rise in the short run. 
E) a price elasticity of demand that is likely to fall in the short run. 
A) zero income elasticity. 
B) price elasticity of demand equal to zero. 
C) infinite price elasticity of demand. 
D) a price elasticity of demand that is likely to rise in the short run. 
E) a price elasticity of demand that is likely to fall in the short run.

Question 19

In the market for farm crops momentary supply is ________.In the market for farm crops, short-run supply is ________.

Accepted Answer

A) less elastic than short-run supply; less elastic than long-run supply 
B) more elastic than short-run supply; more elastic than long-run supply 
C) negative; positive 
D) positive; negative 
E) perfectly elastic; perfectly inelastic 
A) less elastic than short-run supply; less elastic than long-run supply 
B) more elastic than short-run supply; more elastic than long-run supply 
C) negative; positive 
D) positive; negative 
E) perfectly elastic; perfectly inelastic

Question 20

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.

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

The price of apples falls by 5 percent and quantity of apples demanded increases by 6 percent.We conclude that the demand for apples is

There is an increase in the price of broccoli because of the disastrous weather that destroyed half of this year's spinach crop.Choose the statement that is correct.

Suppose a rise of 8 percent in the price of bison meat in Saskatchewan reduces the consumption of bison meat by 24 percent.Such a price rise will induce consumers to spend

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

Suppose that the price elasticity of demand for bottled water in Sackville, New Brunswick is 1.5, while the price elasticity of demand for bottled water in Prince Albert, Saskatchewan is 0.93.This implies that the demand in Sackville is and demand in Prince Albert is .

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

If a rise in the price of good A from $100 to $120 results in an increase in quantity supplied from 10,000 to 12,000 units, then the elasticity of supply is

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

A fall in the price of a good from $10.50 to $9.50 results in an increase in the quantity demanded from 18,800 to 21,200 units.The price elasticity of demand is

Which one of the following illustrates an inelastic demand?

Fred's income increases from $800 per week to $1,200 per week.As a result, he decides to purchase 40 percent more bubble gum each week.The income elasticity of Fred's demand for bubble gum is

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

The price elasticity of demand for airplane travel one week in advance of the departure date is most likely to be

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

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

Business people speak about price elasticity of demand without using the actual term.Which one of the following statements reflects elastic demand for a good?

If the demand curve for a good is a horizontal line, then the good has

In the market for farm crops momentary supply is .In the market for farm crops, short-run supply is .

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

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

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

The price of apples falls by 5 percent and quantity of apples demanded increases by 6 percent.We conclude that the demand for apples is

There is an increase in the price of broccoli because of the disastrous weather that destroyed half of this year's spinach crop.Choose the statement that is correct.

Suppose a rise of 8 percent in the price of bison meat in Saskatchewan reduces the consumption of bison meat by 24 percent.Such a price rise will induce consumers to spend

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

Suppose that the price elasticity of demand for bottled water in Sackville, New Brunswick is 1.5, while the price elasticity of demand for bottled water in Prince Albert, Saskatchewan is 0.93.This implies that the demand in Sackville is ________ and demand in Prince Albert is ________.

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

If a rise in the price of good A from $100 to $120 results in an increase in quantity supplied from 10,000 to 12,000 units, then the elasticity of supply is

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

A fall in the price of a good from $10.50 to $9.50 results in an increase in the quantity demanded from 18,800 to 21,200 units.The price elasticity of demand is

Which one of the following illustrates an inelastic demand?

Fred's income increases from $800 per week to $1,200 per week.As a result, he decides to purchase 40 percent more bubble gum each week.The income elasticity of Fred's demand for bubble gum is

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

The price elasticity of demand for airplane travel one week in advance of the departure date is most likely to be

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

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

Business people speak about price elasticity of demand without using the actual term.Which one of the following statements reflects elastic demand for a good?

If the demand curve for a good is a horizontal line, then the good has

In the market for farm crops momentary supply is ________.In the market for farm crops, short-run supply is ________.

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

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

Suppose that the price elasticity of demand for bottled water in Sackville, New Brunswick is 1.5, while the price elasticity of demand for bottled water in Prince Albert, Saskatchewan is 0.93.This implies that the demand in Sackville is and demand in Prince Albert is .

In the market for farm crops momentary supply is .In the market for farm crops, short-run supply is .