Question 1

In the nation of Transporta, the income elasticity of demand for used cars is -2.66.If incomes in this nation increase by 10 percent,

Accepted Answer

A) the quantity of used cars demanded increase by 26.6 percent. 
B) used cars will be normal goods. 
C) the quantity of used cars demanded decrease by 26.6 percent. 
D) the demand curve for used cars shifts rightward. 
E) the supply curve of used cars shifts rightward. 
A) the quantity of used cars demanded increase by 26.6 percent. 
B) used cars will be normal goods. 
C) the quantity of used cars demanded decrease by 26.6 percent. 
D) the demand curve for used cars shifts rightward. 
E) the supply curve of used cars shifts rightward.

Question 2

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 3

The demand for a good is price elastic if

Accepted Answer

A) a rise in price results in an increase in total revenue. 
B) a fall in price results in a decrease in total revenue. 
C) a rise in price results in a decrease in total revenue. 
D) the good is a necessity. 
E) the demand for the good is very insensitive to changes in price. 
A) a rise in price results in an increase in total revenue. 
B) a fall in price results in a decrease in total revenue. 
C) a rise in price results in a decrease in total revenue. 
D) the good is a necessity. 
E) the demand for the good is very insensitive to changes in price.

Question 4

The price of plums falls by 7 percent and quantity of plums demanded increases by 6.75 percent.We conclude that the demand for plums is

Accepted Answer

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

Question 5

Use the table below to answer the following question.
Table 4.1.2
  
-Refer to Table 4.1.2.The table shows two points on the demand curve for volleyballs.What is the price elasticity of demand between these two points?

Accepted Answer

A) 2.5 
B) 2.0 
C) 0.5 
D) 0.4 
E) 5.0 
A) 2.5 
B) 2.0 
C) 0.5 
D) 0.4 
E) 5.0

Question 6

The cross elasticity of demand between any two goods is defined as the

Accepted Answer

A) percentage change in the quantity demanded of one good divided by the percentage change in the price of the other good. 
B) change in the price elasticity of demand for one good divided by the change in the price elasticity of demand for the other good. 
C) percentage change in the quantity of a good demanded divided by the percentage change in its price. 
D) percentage change in the quantity of a good demanded divided by the percentage change in income. 
E) percentage change in the price of one good divided by the percentage change in the price of the other good. 
A) percentage change in the quantity demanded of one good divided by the percentage change in the price of the other good. 
B) change in the price elasticity of demand for one good divided by the change in the price elasticity of demand for the other good. 
C) percentage change in the quantity of a good demanded divided by the percentage change in its price. 
D) percentage change in the quantity of a good demanded divided by the percentage change in income. 
E) percentage change in the price of one good divided by the percentage change in the price of the other good.

Question 7

The quantity of apples demanded decreases by 8 percent when the price rises by 8 percent.The demand for apples is

Accepted Answer

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

Question 8

Business people speak about cross elasticity of demand without using the actual term. Which one of the following statements reflects cross elasticity of demand?

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) "Since the price of gasoline fell at the neighbouring station, my milk sales have been booming." 
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) "Since the price of gasoline fell at the neighbouring station, my milk sales have been booming."

Question 9

If the price elasticity of demand for peaches is 1.76 and the price elasticity of demand for apples is 1.59, then consumers are

Accepted Answer

A) more sensitive to a change in the price of apples than they are to a change in the price of peaches. 
B) more sensitive to a change in the price of peaches than they are to a change in the price of apples. 
C) more likely to substitute strawberries for peaches than for apples. 
D) more likely to substitute strawberries for apples than for peaches. 
E) eating more peaches than apples. 
A) more sensitive to a change in the price of apples than they are to a change in the price of peaches. 
B) more sensitive to a change in the price of peaches than they are to a change in the price of apples. 
C) more likely to substitute strawberries for peaches than for apples. 
D) more likely to substitute strawberries for apples than for peaches. 
E) eating more peaches than apples.

Question 10

If a 4 percent decrease in income (at a constant price)results in a 2 percent decrease in the consumption of dweedles then

Accepted Answer

A) the income elasticity of demand for dweedles is negative. 
B) dweedles are a necessity and a normal good. 
C) dweedles are a luxury and a normal good. 
D) dweedles are an inferior good. 
E) the price elasticity of demand for dweedles is negative. 
A) the income elasticity of demand for dweedles is negative. 
B) dweedles are a necessity and a normal good. 
C) dweedles are a luxury and a normal good. 
D) dweedles are an inferior good. 
E) the price elasticity of demand for dweedles is negative.

Question 11

The elasticity of supply is a units-free measure of the responsiveness of the

Accepted Answer

A) quantity demanded to a change in supply. 
B) quantity supplied to a change in demand. 
C) quantity supplied to a change in price. 
D) price of one good to a change in the quantity supplied of a second good. 
E) quantity supplied of one good to a change in the price of another good. 
A) quantity demanded to a change in supply. 
B) quantity supplied to a change in demand. 
C) quantity supplied to a change in price. 
D) price of one good to a change in the quantity supplied of a second good. 
E) quantity supplied of one good to a change in the price of another good.

Question 12

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 13

A fall in the price of a good from $11.50 to $8.50 results in an increase in the quantity demanded from 19,200 to 20,800 units.The price elasticity of demand is

Accepted Answer

A) 0.27. 
B) 3.75. 
C) 0.08. 
D) 8.0. 
E) 30. 
A) 0.27. 
B) 3.75. 
C) 0.08. 
D) 8.0. 
E) 30.

Question 14

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 15

If the cross elasticity of demand between two goods is -0.56, then a fall in the price of one good leads to a ________ shift of the ________ curve of the other good.

Accepted Answer

A) rightward; demand 
B) rightward; supply 
C) leftward; demand 
D) leftward; supply 
E) rightward; demand curve and the supply 
A) rightward; demand 
B) rightward; supply 
C) leftward; demand 
D) leftward; supply 
E) rightward; demand curve and the supply

Question 16

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 17

If a rise in price results in a decrease in total revenue, then the price elasticity of demand is

Accepted Answer

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

Question 18

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 19

The elasticity of supply for airplane travel one year in advance of the departure date is most likely to be

Accepted Answer

A) substantially lower than -1. 
B) between -1 and zero. 
C) between zero and 1. 
D) around 1. 
E) substantially greater than 1. 
A) substantially lower than -1. 
B) between -1 and zero. 
C) between zero and 1. 
D) around 1. 
E) substantially greater than 1.

Question 20

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

In the nation of Transporta, the income elasticity of demand for used cars is -2.66.If incomes in this nation increase by 10 percent,

Demand will be more inelastic the

The demand for a good is price elastic if

The price of plums falls by 7 percent and quantity of plums demanded increases by 6.75 percent.We conclude that the demand for plums is

Use the table below to answer the following question. Table 4.1.2 -Refer to Table 4.1.2.The table shows two points on the demand curve for volleyballs.What is the price elasticity of demand between these two points?

The cross elasticity of demand between any two goods is defined as the

The quantity of apples demanded decreases by 8 percent when the price rises by 8 percent.The demand for apples is

Business people speak about cross elasticity of demand without using the actual term. Which one of the following statements reflects cross elasticity of demand?

If the price elasticity of demand for peaches is 1.76 and the price elasticity of demand for apples is 1.59, then consumers are

If a 4 percent decrease in income (at a constant price)results in a 2 percent decrease in the consumption of dweedles then

The elasticity of supply is a units-free measure of the responsiveness of the

Long-run supply is

A fall in the price of a good from $11.50 to $8.50 results in an increase in the quantity demanded from 19,200 to 20,800 units.The price elasticity of demand is

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

If the cross elasticity of demand between two goods is -0.56, then a fall in the price of one good leads to a shift of the curve of the other good.

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

If a rise in price results in a decrease in total revenue, then the price elasticity of demand is

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 elasticity of supply for airplane travel one year in advance of the departure date is most likely to be

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

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

In the nation of Transporta, the income elasticity of demand for used cars is -2.66.If incomes in this nation increase by 10 percent,

Demand will be more inelastic the

The demand for a good is price elastic if

The price of plums falls by 7 percent and quantity of plums demanded increases by 6.75 percent.We conclude that the demand for plums is

Use the table below to answer the following question. Table 4.1.2 -Refer to Table 4.1.2.The table shows two points on the demand curve for volleyballs.What is the price elasticity of demand between these two points?

The cross elasticity of demand between any two goods is defined as the

The quantity of apples demanded decreases by 8 percent when the price rises by 8 percent.The demand for apples is

Business people speak about cross elasticity of demand without using the actual term. Which one of the following statements reflects cross elasticity of demand?

If the price elasticity of demand for peaches is 1.76 and the price elasticity of demand for apples is 1.59, then consumers are

If a 4 percent decrease in income (at a constant price)results in a 2 percent decrease in the consumption of dweedles then

The elasticity of supply is a units-free measure of the responsiveness of the

Long-run supply is

A fall in the price of a good from $11.50 to $8.50 results in an increase in the quantity demanded from 19,200 to 20,800 units.The price elasticity of demand is

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

If the cross elasticity of demand between two goods is -0.56, then a fall in the price of one good leads to a ________ shift of the ________ curve of the other good.

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

If a rise in price results in a decrease in total revenue, then the price elasticity of demand is

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 elasticity of supply for airplane travel one year in advance of the departure date is most likely to be

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

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

If the cross elasticity of demand between two goods is -0.56, then a fall in the price of one good leads to a shift of the curve of the other good.