Question 1

A horizontal 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 there is a fixed quantity of the good that can be supplied. 
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 there is a fixed quantity of the good that can be supplied.

Question 2

The demand for corn increases.As a result, the price of corn ________, and the less elastic the supply of corn, the ________ will be the effect on the price.

Accepted Answer

A) falls; smaller 
B) falls; greater 
C) rises; smaller 
D) rises; greater 
E) does not change; smaller 
A) falls; smaller 
B) falls; greater 
C) rises; smaller 
D) rises; greater 
E) does not change; smaller

Question 3

A given percentage rise in the price of a good is likely to result in a larger percentage decrease in the quantity of the good demanded

Accepted Answer

A) the shorter the passage of time. 
B) the larger the proportion of income spent on it. 
C) the harder it is to obtain good substitutes. 
D) all of the above 
E) none of the above 
A) the shorter the passage of time. 
B) the larger the proportion of income spent on it. 
C) the harder it is to obtain good substitutes. 
D) all of the above 
E) none of the above

Question 4

For which one of the following is demand likely to be most inelastic?

Accepted Answer

A) diamonds 
B) insulin for a diabetic 
C) potatoes 
D) gasoline 
E) books 
A) diamonds 
B) insulin for a diabetic 
C) potatoes 
D) gasoline 
E) books

Question 5

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 $13 to $11,

Accepted Answer

A) total revenue increases. 
B) total revenue decreases. 
C) total revenue remains unchanged. 
D) total revenue initially increases then decreases. 
E) total revenue initially decreases then increases. 
A) total revenue increases. 
B) total revenue decreases. 
C) total revenue remains unchanged. 
D) total revenue initially increases then decreases. 
E) total revenue initially decreases then increases.

Question 6

Suppose Clyde always eats ice cream and chocolate syrup together.If the price of syrup increases by 10 percent, and the cross elasticity of demand is -2, the quantity of ice cream demanded

Accepted Answer

A) increases by 5 percent. 
B) increases by 20 percent. 
C) decreases by 5 percent. 
D) decreases by 20 percent. 
E) decreases by 2 percent. 
A) increases by 5 percent. 
B) increases by 20 percent. 
C) decreases by 5 percent. 
D) decreases by 20 percent. 
E) decreases by 2 percent.

Question 7

Suppose a fall from $110 to $90 in the price of playing golf on a public golf course results in an increase in the quantity of golf balls demanded (at the current price of golf balls)from 9,950 units to 10,050 units.The cross elasticity of demand of playing golf with respect to the price of golf balls is

Accepted Answer

A) -0.05. 
B) -0.1. 
C) 0.01. 
D) 0.08. 
E) 0.05. 
A) -0.05. 
B) -0.1. 
C) 0.01. 
D) 0.08. 
E) 0.05.

Question 8

If a large percentage fall in the price of good A results in a small percentage decrease in the quantity supplied, then

Accepted Answer

A) demand is elastic. 
B) demand is inelastic. 
C) demand is income inelastic. 
D) supply is inelastic. 
E) supply is elastic. 
A) demand is elastic. 
B) demand is inelastic. 
C) demand is income inelastic. 
D) supply is inelastic. 
E) supply is elastic.

Question 9

When Erika's income increases by 6 percent, her demand for tickets to professional hockey games increases by 3 percent.Erika's demand for tickets is income ________.For Erika, hockey tickets are ________ good.

Accepted Answer

A) elastic; a normal 
B) inelastic; an inferior 
C) elastic; an inferior 
D) inelastic; a normal 
E) inelastic; a normative 
A) elastic; a normal 
B) inelastic; an inferior 
C) elastic; an inferior 
D) inelastic; a normal 
E) inelastic; a normative

Question 10

Suppose that Simon Fraser University decides to raise tuition fees to increase the total revenue it receives from students.This policy works only if the demand for a Simon Fraser University education is

Accepted Answer

A) unit elastic. 
B) inelastic. 
C) elastic. 
D) greater than the demand for a University of Western Ontario education. 
E) perfectly elastic. 
A) unit elastic. 
B) inelastic. 
C) elastic. 
D) greater than the demand for a University of Western Ontario education. 
E) perfectly elastic.

Question 11

A price elasticity of demand of 2 means that a 10 percent increase in price will result in a

Accepted Answer

A) 2 percent decrease in quantity demanded. 
B) 20 percent decrease in quantity demanded. 
C) 5 percent decrease in quantity demanded. 
D) 2 percent increase in quantity demanded. 
E) 20 percent increase in quantity demanded. 
A) 2 percent decrease in quantity demanded. 
B) 20 percent decrease in quantity demanded. 
C) 5 percent decrease in quantity demanded. 
D) 2 percent increase in quantity demanded. 
E) 20 percent increase in quantity demanded.

Question 12

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 13

When the price of peanut butter rises by 4 percent, total revenue decreases by 8 percent.The demand for peanut butter

Accepted Answer

A) is elastic. 
B) is inelastic. 
C) is unit elastic. 
D) has a price elasticity equal to 1/2. 
E) has a price elasticity equal to 2. 
A) is elastic. 
B) is inelastic. 
C) is unit elastic. 
D) has a price elasticity equal to 1/2. 
E) has a price elasticity equal to 2.

Question 14

If a 10 percent increase in income results in a 10 percent decrease in the consumption of widgets, then

Accepted Answer

A) the price elasticity of demand for widgets equals 1. 
B) the income elasticity of demand for widgets is negative. 
C) the income elasticity of demand for widgets equals 1. 
D) widgets are a normal good. 
E) the price elasticity demand for widgets is negative. 
A) the price elasticity of demand for widgets equals 1. 
B) the income elasticity of demand for widgets is negative. 
C) the income elasticity of demand for widgets equals 1. 
D) widgets are a normal good. 
E) the price elasticity demand for widgets is negative.

Question 15

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

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 change in price will lead to a larger percentage change in quantity demanded. 
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 change in price will lead to a larger percentage change in quantity demanded.

Question 16

If a 10 percent rise in price leads to an 8 percent decrease in quantity demanded, the price elasticity of demand is

Accepted Answer

A) 0.8. 
B) 1.25. 
C) 8. 
D) 0.125. 
E) 80. 
A) 0.8. 
B) 1.25. 
C) 8. 
D) 0.125. 
E) 80.

Question 17

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 18

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 19

Suppose the Lethbridge Computer Company decides to increase the quantity of computers it sells by 6 percent.If the price elasticity of demand is 3.5, the company must

Accepted Answer

A) raise the price of a computer by 1.714 percent. 
B) raise the price of a computer by 0.21 percent. 
C) lower the price of a computer by 0.21 percent. 
D) lower the price of a computer by 1.714 percent. 
E) lower the price of a computer by 0.58 percent. 
A) raise the price of a computer by 1.714 percent. 
B) raise the price of a computer by 0.21 percent. 
C) lower the price of a computer by 0.21 percent. 
D) lower the price of a computer by 1.714 percent. 
E) lower the price of a computer by 0.58 percent.

Question 20

Suppose the quantity of gasoline is measured in litres and the price of gasoline is measured in dollars.The price elasticity of demand is 0.67.If the price of gasoline is then measured in cents rather than in dollars, the price elasticity of demand would be

Accepted Answer

A) 6.7. 
B) 67.0. 
C) 0.67. 
D) 0.0067. 
E) negative. 
A) 6.7. 
B) 67.0. 
C) 0.67. 
D) 0.0067. 
E) negative.

A horizontal supply curve

The demand for corn increases.As a result, the price of corn , and the less elastic the supply of corn, the will be the effect on the price.

A given percentage rise in the price of a good is likely to result in a larger percentage decrease in the quantity of the good demanded

For which one of the following is demand likely to be most inelastic?

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 $13 to $11,

Suppose Clyde always eats ice cream and chocolate syrup together.If the price of syrup increases by 10 percent, and the cross elasticity of demand is -2, the quantity of ice cream demanded

If a large percentage fall in the price of good A results in a small percentage decrease in the quantity supplied, then

When Erika's income increases by 6 percent, her demand for tickets to professional hockey games increases by 3 percent.Erika's demand for tickets is income .For Erika, hockey tickets are good.

Suppose that Simon Fraser University decides to raise tuition fees to increase the total revenue it receives from students.This policy works only if the demand for a Simon Fraser University education is

A price elasticity of demand of 2 means that a 10 percent increase in price will result in a

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,

When the price of peanut butter rises by 4 percent, total revenue decreases by 8 percent.The demand for peanut butter

If a 10 percent increase in income results in a 10 percent decrease in the consumption of widgets, then

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

If a 10 percent rise in price leads to an 8 percent decrease in quantity demanded, the price elasticity of demand is

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.

Suppose the Lethbridge Computer Company decides to increase the quantity of computers it sells by 6 percent.If the price elasticity of demand is 3.5, the company must

Suppose the quantity of gasoline is measured in litres and the price of gasoline is measured in dollars.The price elasticity of demand is 0.67.If the price of gasoline is then measured in cents rather than in dollars, the price elasticity of demand would be

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

A horizontal supply curve

The demand for corn increases.As a result, the price of corn ________, and the less elastic the supply of corn, the ________ will be the effect on the price.

A given percentage rise in the price of a good is likely to result in a larger percentage decrease in the quantity of the good demanded

For which one of the following is demand likely to be most inelastic?

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 $13 to $11,

Suppose Clyde always eats ice cream and chocolate syrup together.If the price of syrup increases by 10 percent, and the cross elasticity of demand is -2, the quantity of ice cream demanded

If a large percentage fall in the price of good A results in a small percentage decrease in the quantity supplied, then

When Erika's income increases by 6 percent, her demand for tickets to professional hockey games increases by 3 percent.Erika's demand for tickets is income ________.For Erika, hockey tickets are ________ good.

Suppose that Simon Fraser University decides to raise tuition fees to increase the total revenue it receives from students.This policy works only if the demand for a Simon Fraser University education is

A price elasticity of demand of 2 means that a 10 percent increase in price will result in a

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,

When the price of peanut butter rises by 4 percent, total revenue decreases by 8 percent.The demand for peanut butter

If a 10 percent increase in income results in a 10 percent decrease in the consumption of widgets, then

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

If a 10 percent rise in price leads to an 8 percent decrease in quantity demanded, the price elasticity of demand is

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.

Suppose the Lethbridge Computer Company decides to increase the quantity of computers it sells by 6 percent.If the price elasticity of demand is 3.5, the company must

Suppose the quantity of gasoline is measured in litres and the price of gasoline is measured in dollars.The price elasticity of demand is 0.67.If the price of gasoline is then measured in cents rather than in dollars, the price elasticity of demand would be

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

The demand for corn increases.As a result, the price of corn , and the less elastic the supply of corn, the will be the effect on the price.

When Erika's income increases by 6 percent, her demand for tickets to professional hockey games increases by 3 percent.Erika's demand for tickets is income .For Erika, hockey tickets are good.