Question 1

If good A is a complement of good B, then the cross elasticity of demand is

Accepted Answer

A) 12. 
B) infinity. 
C) positive. 
D) zero. 
E) negative. 
A) 12. 
B) infinity. 
C) positive. 
D) zero. 
E) negative.

Question 2

The concept used by economists to indicate the responsiveness of the quantity demanded of a good to a change in its price is the

Accepted Answer

A) cross elasticity of demand. 
B) income elasticity of demand. 
C) substitute elasticity of demand. 
D) price elasticity of demand. 
E) elasticity of supply. 
A) cross elasticity of demand. 
B) income elasticity of demand. 
C) substitute elasticity of demand. 
D) price elasticity of demand. 
E) elasticity of supply.

Question 3

Use the table below to answer the following question.
Table 4.1.4
  
-Refer to Table 4.1.4.The table shows the demand schedule for computer chips.As the price rises from $200 a chip to $300 a chip, total revenue ________.So at a price of $250 a chip, demand is ________.

Accepted Answer

A) falls; inelastic 
B) rises; inelastic 
C) falls; rises 
D) rises; elastic 
E) rises; unit elastic 
A) falls; inelastic 
B) rises; inelastic 
C) falls; rises 
D) rises; elastic 
E) rises; unit elastic

Question 4

The price elasticity of demand for airplane travel one year 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 5

A 3 percent rise in the price of orange juice decreases the quantity of orange juice demanded by 9 percent and increases the quantity of apple juice demanded by 15 percent.The price elasticity of demand for orange juice is ________.The cross elasticity of demand for apple juice with respect to the price of orange juice is ________.

Accepted Answer

A) -3; 5 
B) 3; 5 
C) 0.33; 0.2 
D) -0.33; 0.2 
E) 0.33; -5 
A) -3; 5 
B) 3; 5 
C) 0.33; 0.2 
D) -0.33; 0.2 
E) 0.33; -5

Question 6

Suppose the price of a television set rises by 10 percent.Which one of the following would we expect to be the most elastic following such a price change?

Accepted Answer

A) the momentary supply of television sets 
B) the short-run supply of television sets 
C) the long-run supply of television sets 
D) the momentary demand for television sets 
E) the normal demand for television sets 
A) the momentary supply of television sets 
B) the short-run supply of television sets 
C) the long-run supply of television sets 
D) the momentary demand for television sets 
E) the normal demand for television sets

Question 7

A rise in the price of good A shifts the

Accepted Answer

A) demand curve for good B rightward if the cross elasticity of demand between A and B is negative. 
B) demand curve for good B rightward if the cross elasticity of demand between A and B is positive. 
C) supply curve of B rightward if the cross elasticity of demand between A and B is negative. 
D) supply curve of B rightward if the cross elasticity of demand between A and B is positive. 
E) demand curve for B rightward if the income elasticity of demand for B is positive. 
A) demand curve for good B rightward if the cross elasticity of demand between A and B is negative. 
B) demand curve for good B rightward if the cross elasticity of demand between A and B is positive. 
C) supply curve of B rightward if the cross elasticity of demand between A and B is negative. 
D) supply curve of B rightward if the cross elasticity of demand between A and B is positive. 
E) demand curve for B rightward if the income elasticity of demand for B is positive.

Question 8

If a rise in the price of good B increases the demand for good A, then

Accepted Answer

A) A and B are substitutes. 
B) A and B are complements. 
C) the cross elasticity of demand between A and B is negative. 
D) A is a resource used in the production of B. 
E) the demand for A is price elastic. 
A) A and B are substitutes. 
B) A and B are complements. 
C) the cross elasticity of demand between A and B is negative. 
D) A is a resource used in the production of B. 
E) the demand for A is price elastic.

Question 9

Preferences for brussels sprouts increase.The price of brussels sprouts will not change if the price elasticity of

Accepted Answer

A) demand is 0. 
B) demand is 1. 
C) supply is 0. 
D) supply is 1. 
E) supply is infinity. 
A) demand is 0. 
B) demand is 1. 
C) supply is 0. 
D) supply is 1. 
E) supply is infinity.

Question 10

Demand is perfectly inelastic when

Accepted Answer

A) a good has perfect substitutes. 
B) an increase in supply does not change total revenue. 
C) a decrease in supply decreases total revenue. 
D) the price elasticity of demand is negative. 
E) an increase in supply does not change the equilibrium quantity. 
A) a good has perfect substitutes. 
B) an increase in supply does not change total revenue. 
C) a decrease in supply decreases total revenue. 
D) the price elasticity of demand is negative. 
E) an increase in supply does not change the equilibrium quantity.

Question 11

The demand for a good is perfectly elastic when the price elasticity of demand is

Accepted Answer

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

Question 12

Demand is unit elastic when

Accepted Answer

A) an increase in supply does not change the price of the good. 
B) a decrease in supply raises the price of the good. 
C) a change in price does not change total revenue. 
D) the slope of the demand curve is -1. 
E) the slope of the demand curve is +1. 
A) an increase in supply does not change the price of the good. 
B) a decrease in supply raises the price of the good. 
C) a change in price does not change total revenue. 
D) the slope of the demand curve is -1. 
E) the slope of the demand curve is +1.

Question 13

Use the table below to answer the following questions.
Table 4.1.1
Demand schedule for good A.
  
-Refer to Table 4.1.1.If the price of good A falls from $4 to $3,

Accepted Answer

A) total revenue will increase. 
B) total revenue will remain constant. 
C) demand is elastic in this range. 
D) demand is unit elastic in this range. 
E) demand is inelastic in this range. 
A) total revenue will increase. 
B) total revenue will remain constant. 
C) demand is elastic in this range. 
D) demand is unit elastic in this range. 
E) demand is inelastic in this range.

Question 14

If an increase in the supply of good A decreases 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.

Question 15

A unit elastic demand

Accepted Answer

A) means that the ratio of a change in quantity demanded to a change in price is equal to 1. 
B) means that the ratio of a percentage change in quantity demanded to a percentage change in price is equal to 1. 
C) means that the ratio of a change in price to a change in quantity demanded is equal to 1. 
D) is illustrated by a horizontal demand curve. 
E) is illustrated by a vertical demand curve. 
A) means that the ratio of a change in quantity demanded to a change in price is equal to 1. 
B) means that the ratio of a percentage change in quantity demanded to a percentage change in price is equal to 1. 
C) means that the ratio of a change in price to a change in quantity demanded is equal to 1. 
D) is illustrated by a horizontal demand curve. 
E) is illustrated by a vertical demand curve.

Question 16

Suppose a rise in the price of a good from $6.50 to $7.50 leads to a decrease in the quantity demanded from 10,500 to 9,500 units.In this range of demand, the price elasticity of demand is

Accepted Answer

A) 14. 
B) 7. 
C) 1,000. 
D) 1. 
E) 0.7. 
A) 14. 
B) 7. 
C) 1,000. 
D) 1. 
E) 0.7.

Question 17

The price of gasoline rises by 25 percent and remains fixed at the new higher level.Choose the correct statement.

Accepted Answer

A) The demand for gasoline will increase after consumers adjust their consumption behaviour to the new higher price. 
B) The demand for gasoline will decrease after consumers adjust their consumption behaviour to the new higher price. 
C) Initially after the price change, the price elasticity of demand will be less elastic than it will be a few years after the price change. 
D) The price elasticity of demand for gasoline will decrease in the future. 
E) Initially after the price change, the price elasticity of demand will be more elastic than it will be a few years after the price change. 
A) The demand for gasoline will increase after consumers adjust their consumption behaviour to the new higher price. 
B) The demand for gasoline will decrease after consumers adjust their consumption behaviour to the new higher price. 
C) Initially after the price change, the price elasticity of demand will be less elastic than it will be a few years after the price change. 
D) The price elasticity of demand for gasoline will decrease in the future. 
E) Initially after the price change, the price elasticity of demand will be more elastic than it will be a few years after the price change.

Question 18

A union leader who claims that "higher wages increase living standards without causing unemployment" believes that the demand for labour is

Accepted Answer

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

Question 19

If Saudi Arabia argues that an increase in the supply of oil will decrease total revenue, then Saudi Arabia believes the demand for oil is

Accepted Answer

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

Question 20

Suppose a fall in the price of a good from $10 to $8 leads to an increase in quantity demanded from 20 to 24 units.The price elasticity of demand is

Accepted Answer

A) 1. 
B) 9/11. 
C) 11/9. 
D) 2.0. 
E) 4.5/11. 
A) 1. 
B) 9/11. 
C) 11/9. 
D) 2.0. 
E) 4.5/11.

If good A is a complement of good B, then the cross elasticity of demand is

The concept used by economists to indicate the responsiveness of the quantity demanded of a good to a change in its price is the

Use the table below to answer the following question. Table 4.1.4 -Refer to Table 4.1.4.The table shows the demand schedule for computer chips.As the price rises from $200 a chip to $300 a chip, total revenue .So at a price of $250 a chip, demand is .

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

Suppose the price of a television set rises by 10 percent.Which one of the following would we expect to be the most elastic following such a price change?

A rise in the price of good A shifts the

If a rise in the price of good B increases the demand for good A, then

Preferences for brussels sprouts increase.The price of brussels sprouts will not change if the price elasticity of

Demand is perfectly inelastic when

The demand for a good is perfectly elastic when the price elasticity of demand is

Demand is unit elastic when

Use the table below to answer the following questions. Table 4.1.1 Demand schedule for good A. -Refer to Table 4.1.1.If the price of good A falls from $4 to $3,

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

A unit elastic demand

Suppose a rise in the price of a good from $6.50 to $7.50 leads to a decrease in the quantity demanded from 10,500 to 9,500 units.In this range of demand, the price elasticity of demand is

The price of gasoline rises by 25 percent and remains fixed at the new higher level.Choose the correct statement.

A union leader who claims that "higher wages increase living standards without causing unemployment" believes that the demand for labour is

If Saudi Arabia argues that an increase in the supply of oil will decrease total revenue, then Saudi Arabia believes the demand for oil is

Suppose a fall in the price of a good from $10 to $8 leads to an increase in quantity demanded from 20 to 24 units.The price elasticity of demand 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

If good A is a complement of good B, then the cross elasticity of demand is

The concept used by economists to indicate the responsiveness of the quantity demanded of a good to a change in its price is the

Use the table below to answer the following question. Table 4.1.4 -Refer to Table 4.1.4.The table shows the demand schedule for computer chips.As the price rises from $200 a chip to $300 a chip, total revenue ________.So at a price of $250 a chip, demand is ________.

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

Suppose the price of a television set rises by 10 percent.Which one of the following would we expect to be the most elastic following such a price change?

A rise in the price of good A shifts the

If a rise in the price of good B increases the demand for good A, then

Preferences for brussels sprouts increase.The price of brussels sprouts will not change if the price elasticity of

Demand is perfectly inelastic when

The demand for a good is perfectly elastic when the price elasticity of demand is

Demand is unit elastic when

Use the table below to answer the following questions. Table 4.1.1 Demand schedule for good A. -Refer to Table 4.1.1.If the price of good A falls from $4 to $3,

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

A unit elastic demand

Suppose a rise in the price of a good from $6.50 to $7.50 leads to a decrease in the quantity demanded from 10,500 to 9,500 units.In this range of demand, the price elasticity of demand is

The price of gasoline rises by 25 percent and remains fixed at the new higher level.Choose the correct statement.

A union leader who claims that "higher wages increase living standards without causing unemployment" believes that the demand for labour is

If Saudi Arabia argues that an increase in the supply of oil will decrease total revenue, then Saudi Arabia believes the demand for oil is

Suppose a fall in the price of a good from $10 to $8 leads to an increase in quantity demanded from 20 to 24 units.The price elasticity of demand 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

Use the table below to answer the following question. Table 4.1.4 -Refer to Table 4.1.4.The table shows the demand schedule for computer chips.As the price rises from $200 a chip to $300 a chip, total revenue .So at a price of $250 a chip, demand is .