Question 1

The elasticity of supply for airplane travel one day 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 2

Demand will be more elastic 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 substitutes are available. 
E) smaller 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 substitutes are available. 
E) smaller the fraction of income spent on the good.

Question 3

The demand for good A is unit elastic if

Accepted Answer

A) a 5 percent fall in the price of A results in an infinite increase in the quantity of A demanded. 
B) a 5 percent rise in the price of A results in a 10 percent decrease in the quantity of A demanded. 
C) any increase in the price of A results in a 1 percent decrease in the quantity of A demanded. 
D) a 5 percent rise in the price of A results in no change in the quantity of A demanded. 
E) a 5 percent rise in the price of A results in a 5 percent decrease in the quantity of A demanded. 
A) a 5 percent fall in the price of A results in an infinite increase in the quantity of A demanded. 
B) a 5 percent rise in the price of A results in a 10 percent decrease in the quantity of A demanded. 
C) any increase in the price of A results in a 1 percent decrease in the quantity of A demanded. 
D) a 5 percent rise in the price of A results in no change in the quantity of A demanded. 
E) a 5 percent rise in the price of A results in a 5 percent decrease in the quantity of A demanded.

Question 4

Fred's income increases from $1,950 per week to $2,050 per week.As a result, he decides to increase the number of movies he attends each month by 10 percent.Fred's demand for movies is

Accepted Answer

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

Question 5

Suppose there is an increase in the cost of resources used in the production of good A.Then

Accepted Answer

A) if the price of A rises, we know the demand for A is elastic. 
B) if the total revenue from sales of A rises, we know the demand for A is elastic. 
C) if the total revenue from sales of A falls, we know the demand for A is elastic. 
D) total revenue will increase because the price of A must rise. 
E) total revenue must fall because the quantity bought and sold of A must fall. 
A) if the price of A rises, we know the demand for A is elastic. 
B) if the total revenue from sales of A rises, we know the demand for A is elastic. 
C) if the total revenue from sales of A falls, we know the demand for A is elastic. 
D) total revenue will increase because the price of A must rise. 
E) total revenue must fall because the quantity bought and sold of A must fall.

Question 6

The price elasticity of demand depends on

Accepted Answer

A) the units used to measure price and the units used to measure quantity. 
B) the units used to measure price but not the units used to measure quantity. 
C) the units used to measure quantity but not the units used to measure price. 
D) neither the units used to measure price nor the units used to measure quantity. 
E) the relative price of the good. 
A) the units used to measure price and the units used to measure quantity. 
B) the units used to measure price but not the units used to measure quantity. 
C) the units used to measure quantity but not the units used to measure price. 
D) neither the units used to measure price nor the units used to measure quantity. 
E) the relative price of the good.

Question 7

A good has an income elasticity of +0.5.An increase in income from $15,000 to $25,000 will lead to a

Accepted Answer

A) 2.5 percent increase in the quantity demanded of the good. 
B) 5 percent increase in the quantity demanded of the good. 
C) 5 percent decrease in the quantity demanded of the good. 
D) 25 percent decrease in the quantity demanded of the good. 
E) 25 percent increase in the quantity demanded of the good. 
A) 2.5 percent increase in the quantity demanded of the good. 
B) 5 percent increase in the quantity demanded of the good. 
C) 5 percent decrease in the quantity demanded of the good. 
D) 25 percent decrease in the quantity demanded of the good. 
E) 25 percent increase in the quantity demanded of the good.

Question 8

Short-run supply is

Accepted Answer

A) more elastic than momentary supply but less elastic than long-run supply. 
B) less elastic than momentary supply but more elastic than long-run supply. 
C) less elastic than both momentary and long-run supply. 
D) more elastic than both momentary and long-run supply. 
E) as elastic as either the momentary or the long-run supply. 
A) more elastic than momentary supply but less elastic than long-run supply. 
B) less elastic than momentary supply but more elastic than long-run supply. 
C) less elastic than both momentary and long-run supply. 
D) more elastic than both momentary and long-run supply. 
E) as elastic as either the momentary or the long-run supply.

Question 9

The longer the time that has elapsed since a price change the more time consumers will have to respond to price changes.As a result, demand becomes

Accepted Answer

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

Question 10

A technological breakthrough lowers the cost of photocopiers.If the demand for photocopiers is price inelastic, we predict that photocopier sales

Accepted Answer

A) fall and total revenue increases. 
B) fall and total revenue decreases. 
C) rise and total revenue increases. 
D) rise and total revenue decreases. 
E) rise, but changes in total revenue will depend on elasticity of supply. 
A) fall and total revenue increases. 
B) fall and total revenue decreases. 
C) rise and total revenue increases. 
D) rise and total revenue decreases. 
E) rise, but changes in total revenue will depend on elasticity of supply.

Question 11

If the demand for good Z is perfectly inelastic, then the demand curve for good Z is

Accepted Answer

A) vertical. 
B) horizontal. 
C) upward sloping. 
D) downward sloping. 
E) initially upward sloping and then downward sloping. 
A) vertical. 
B) horizontal. 
C) upward sloping. 
D) downward sloping. 
E) initially upward sloping and then downward sloping.

Question 12

In 2003, when music downloading first took off, Universal Music slashed the average price of a CD from $21 to $15.The company expected the price cut to boost the quantity of CDs sold by 30 percent, other things remaining the same.What was Universal Music's estimate of the price elasticity of demand for CDs?

Accepted Answer

A) 0.9 
B) 90 
C) 1.11 
D) 0.011 
E) 0.2 
A) 0.9 
B) 90 
C) 1.11 
D) 0.011 
E) 0.2

Question 13

The income elasticity of demand equals the percentage change in ________, other things remaining the same.

Accepted Answer

A) price divided by the percentage change in income 
B) price divided by the percentage change in quantity demanded 
C) income divided by the percentage change in quantity demanded 
D) quantity demanded divided by the percentage change in price 
E) quantity demanded divided by the percentage change in income 
A) price divided by the percentage change in income 
B) price divided by the percentage change in quantity demanded 
C) income divided by the percentage change in quantity demanded 
D) quantity demanded divided by the percentage change in price 
E) quantity demanded divided by the percentage change in income

Question 14

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

Accepted Answer

A) milk 
B) Happy Cow brand milk 
C) Happy Cow brand milk in Regina 
D) Happy Cow brand milk at Ralph's Grocery Store in Regina 
E) All of the above will exhibit the same price elasticity of demand. 
A) milk 
B) Happy Cow brand milk 
C) Happy Cow brand milk in Regina 
D) Happy Cow brand milk at Ralph's Grocery Store in Regina 
E) All of the above will exhibit the same price elasticity of demand.

Question 15

A fall in the price of X from $6 to $4 results in an increase in the quantity of Y demanded (at the current price of Y)from 900 to 1,100 units.What is the cross elasticity of demand between X and Y?

Accepted Answer

A) 0.5 
B) -0.5 
C) 2 
D) -2 
E) Either A or B, depending on whether X and Y are substitutes or complements. 
A) 0.5 
B) -0.5 
C) 2 
D) -2 
E) Either A or B, depending on whether X and Y are substitutes or complements.

Question 16

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 17

When the price of a good increased by 6 percent, the quantity demanded of it decreased 3 percent.Most likely, this good ________ and ________.

Accepted Answer

A) is a necessity; has poor substitutes 
B) has poor substitutes; is a luxury 
C) is a necessity; has good substitutes 
D) is a luxury; is narrowly defined 
E) is a luxury; has experienced a recent price change 
A) is a necessity; has poor substitutes 
B) has poor substitutes; is a luxury 
C) is a necessity; has good substitutes 
D) is a luxury; is narrowly defined 
E) is a luxury; has experienced a recent price change

Question 18

The price elasticity of demand for purses is measured in

Accepted Answer

A) dollars. 
B) purses. 
C) dollars per purse. 
D) purses per dollar. 
E) none of the above 
A) dollars. 
B) purses. 
C) dollars per purse. 
D) purses per dollar. 
E) none of the above

Question 19

A decrease in tuition fees will decrease the university's total revenue if the price elasticity of demand for university education is

Accepted Answer

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

Question 20

As a result of a poor growing season, the supply curve of apples shifted leftward, the equilibrium price of apples rose, and total revenue fell.This suggests that the price elasticity of demand for apples is

Accepted Answer

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

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

Demand will be more elastic the

The demand for good A is unit elastic if

Fred's income increases from $1,950 per week to $2,050 per week.As a result, he decides to increase the number of movies he attends each month by 10 percent.Fred's demand for movies is

Suppose there is an increase in the cost of resources used in the production of good A.Then

The price elasticity of demand depends on

A good has an income elasticity of +0.5.An increase in income from $15,000 to $25,000 will lead to a

Short-run supply is

The longer the time that has elapsed since a price change the more time consumers will have to respond to price changes.As a result, demand becomes

A technological breakthrough lowers the cost of photocopiers.If the demand for photocopiers is price inelastic, we predict that photocopier sales

If the demand for good Z is perfectly inelastic, then the demand curve for good Z is

The income elasticity of demand equals the percentage change in ________, other things remaining the same.

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

A fall in the price of X from $6 to $4 results in an increase in the quantity of Y demanded (at the current price of Y)from 900 to 1,100 units.What is the cross elasticity of demand between X and Y?

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.

When the price of a good increased by 6 percent, the quantity demanded of it decreased 3 percent.Most likely, this good and .

The price elasticity of demand for purses is measured in

A decrease in tuition fees will decrease the university's total revenue if the price elasticity of demand for university education is

As a result of a poor growing season, the supply curve of apples shifted leftward, the equilibrium price of apples rose, and total revenue fell.This suggests that the price elasticity of demand for apples is

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

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

Demand will be more elastic the

The demand for good A is unit elastic if

Fred's income increases from $1,950 per week to $2,050 per week.As a result, he decides to increase the number of movies he attends each month by 10 percent.Fred's demand for movies is

Suppose there is an increase in the cost of resources used in the production of good A.Then

The price elasticity of demand depends on

A good has an income elasticity of +0.5.An increase in income from $15,000 to $25,000 will lead to a

Short-run supply is

The longer the time that has elapsed since a price change the more time consumers will have to respond to price changes.As a result, demand becomes

A technological breakthrough lowers the cost of photocopiers.If the demand for photocopiers is price inelastic, we predict that photocopier sales

If the demand for good Z is perfectly inelastic, then the demand curve for good Z is

The income elasticity of demand equals the percentage change in ________, other things remaining the same.

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

A fall in the price of X from $6 to $4 results in an increase in the quantity of Y demanded (at the current price of Y)from 900 to 1,100 units.What is the cross elasticity of demand between X and Y?

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.

When the price of a good increased by 6 percent, the quantity demanded of it decreased 3 percent.Most likely, this good ________ and ________.

The price elasticity of demand for purses is measured in

A decrease in tuition fees will decrease the university's total revenue if the price elasticity of demand for university education is

As a result of a poor growing season, the supply curve of apples shifted leftward, the equilibrium price of apples rose, and total revenue fell.This suggests that the price elasticity of demand for apples is

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

When the price of a good increased by 6 percent, the quantity demanded of it decreased 3 percent.Most likely, this good and .