Question 1

Suppose that a 20 percent increase in income increases the quantity of good A demanded from 19,200 to 20,800 units.The income elasticity of demand for good A is

Accepted Answer

A) 0.05. 
B) 0.8. 
C) 0.4. 
D) 1.2. 
E) 2.0. 
A) 0.05. 
B) 0.8. 
C) 0.4. 
D) 1.2. 
E) 2.0.

Question 2

If Mr.Brown's income increases by 12 percent and as a result his quantity demanded of music downloads increases by 4 percent, Mr.Brown's income elasticity of demand for music downloads is

Accepted Answer

A) 3.0. 
B) 0.33. 
C) -0.33. 
D) -3.0. 
E) 48.0. 
A) 3.0. 
B) 0.33. 
C) -0.33. 
D) -3.0. 
E) 48.0.

Question 3

All normal goods have

Accepted Answer

A) an income elasticity of demand greater than 1.0. 
B) a price elasticity of demand greater than 1.0. 
C) a negative price elasticity of demand. 
D) a positive income elasticity of demand. 
E) a negative cross elasticity of demand. 
A) an income elasticity of demand greater than 1.0. 
B) a price elasticity of demand greater than 1.0. 
C) a negative price elasticity of demand. 
D) a positive income elasticity of demand. 
E) a negative cross elasticity of demand.

Question 4

Suppose the quantity of root beer demanded decreases from 105,000 litres per week to 95,000 litres per week when the price rises by 5 percent.The price elasticity of demand

Accepted Answer

A) is 2.0. 
B) is 0.5. 
C) is 10. 
D) is inelastic. 
E) cannot be computed unless we know the original price and the new price. 
A) is 2.0. 
B) is 0.5. 
C) is 10. 
D) is inelastic. 
E) cannot be computed unless we know the original price and the new price.

Question 5

The supply of coal at Yanzhou Coal Mining is

Accepted Answer

A) inelastic but not perfectly inelastic. 
B) unit elastic. 
C) elastic but not perfectly elastic. 
D) perfectly inelastic. 
E) perfectly elastic. 
A) inelastic but not perfectly inelastic. 
B) unit elastic. 
C) elastic but not perfectly elastic. 
D) perfectly inelastic. 
E) perfectly elastic.

Question 6

If a 10 percent increase in price results in a 9 percent increase in quantity supplied,

Accepted Answer

A) the good is a normal good. 
B) the good is an inferior good. 
C) supply is unit elastic. 
D) supply is inelastic. 
E) supply is elastic. 
A) the good is a normal good. 
B) the good is an inferior good. 
C) supply is unit elastic. 
D) supply is inelastic. 
E) supply is elastic.

Question 7

Use the figure below to answer the following question.
   
Figure 4.1.1
-Figure 4.1.1 illustrates a linear demand curve.Comparing the price elasticity in the $2 to $3 price range with the elasticity in the $8 to $9 range, we can conclude

Accepted Answer

A) that demand is more elastic in the $8 to $9 price range. 
B) that demand is more elastic in the $2 to $3 price range. 
C) that the price elasticity of demand is the same in both price ranges. 
D) nothing without numerical information about quantities. 
E) that the price elasticity of demand is zero in both price ranges because the demand curve is a straight-line demand curve. 
A) that demand is more elastic in the $8 to $9 price range. 
B) that demand is more elastic in the $2 to $3 price range. 
C) that the price elasticity of demand is the same in both price ranges. 
D) nothing without numerical information about quantities. 
E) that the price elasticity of demand is zero in both price ranges because the demand curve is a straight-line demand curve.

Question 8

A good has a price elasticity of demand equal to 2.If new imports lower its price from $1.20 to $0.80, the percentage change in quantity demanded will be

Accepted Answer

A) an increase of 80 percent. 
B) a decrease of 80 percent. 
C) a decrease of 40 percent. 
D) an increase of 2 percent. 
E) an increase of 40 percent. 
A) an increase of 80 percent. 
B) a decrease of 80 percent. 
C) a decrease of 40 percent. 
D) an increase of 2 percent. 
E) an increase of 40 percent.

Question 9

If a price decrease results in an increase in total revenue, then demand is

Accepted Answer

A) inelastic. 
B) unit elastic. 
C) perfectly inelastic. 
D) equal to supply. 
E) elastic. 
A) inelastic. 
B) unit elastic. 
C) perfectly inelastic. 
D) equal to supply. 
E) elastic.

Question 10

When the price of a bicycle falls from $220 to $180 and other things remain the same, I. the quantity of bicycles demanded increases from 150 to 250 an hour.
II. the quantity of skateboards demanded decreases from 125 to 75 an hour.
III. the quantity of bicycle helmets demanded increases from 170 to 230 an hour.
Bicycle helmets and bicycles are ________ because a fall in the price of a bicycle brings ________ in the quantity demanded of bicycle helmets.The cross elasticity of demand for bicycle helmets with respect to bicycles is ________.

Accepted Answer

A) complements; an increase; -1.5 
B) substitutes; a decrease; 1.5 
C) substitutes; an increase; -0.67 
D) complements; a decrease; 0.67 
E) complements; an increase; 1.5 
A) complements; an increase; -1.5 
B) substitutes; a decrease; 1.5 
C) substitutes; an increase; -0.67 
D) complements; a decrease; 0.67 
E) complements; an increase; 1.5

Question 11

Use the figure below to answer the following question.
   
Figure 4.1.3
-Given the relationship shown in Figure 4.1.3 between total revenue from the sale of a good and the quantity of the good sold, then

Accepted Answer

A) this is an inferior good. 
B) this is a normal good. 
C) the price elasticity of demand is zero. 
D) demand for this good is perfectly elastic. 
E) the price elasticity of demand is 1. 
A) this is an inferior good. 
B) this is a normal good. 
C) the price elasticity of demand is zero. 
D) demand for this good is perfectly elastic. 
E) the price elasticity of demand is 1.

Question 12

Use the table below to answer the following question.
Table 4.1.3
  
-Refer to Table 4.1.3.The price elasticity of demand for Jolt is

Accepted Answer

A) 1. 
B) 2.5. 
C) 3.0. 
D) 0.33. 
E) cannot be calculated because income is not constant. 
A) 1. 
B) 2.5. 
C) 3.0. 
D) 0.33. 
E) cannot be calculated because income is not constant.

Question 13

When a supply curve

Accepted Answer

A) intersects the origin, the good has an elasticity of supply equal to 1. 
B) is vertical, the good has an elasticity of supply equal to infinity. 
C) is horizontal, the good has an elasticity of supply equal to zero. 
D) intersects the origin, the good has an elasticity of supply equal to zero. 
E) intersects the origin, the good has an elasticity of supply that is negative. 
A) intersects the origin, the good has an elasticity of supply equal to 1. 
B) is vertical, the good has an elasticity of supply equal to infinity. 
C) is horizontal, the good has an elasticity of supply equal to zero. 
D) intersects the origin, the good has an elasticity of supply equal to zero. 
E) intersects the origin, the good has an elasticity of supply that is negative.

Question 14

Suppose the Nunavut government decides to repair Iqaluit roads.One way to generate sufficient funds for this plan is to increase taxes on gasoline.The government will be able to raise total revenue from gasoline sales only if the demand for gasoline is

Accepted Answer

A) perfectly elastic. 
B) equal to the supply of gasoline. 
C) unit elastic. 
D) inelastic. 
E) elastic. 
A) perfectly elastic. 
B) equal to the supply of gasoline. 
C) unit elastic. 
D) inelastic. 
E) elastic.

Question 15

Which one of the following illustrates an elastic 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 0.2 
D) A price elasticity of demand equal to 1.0 
E) A price elasticity of demand equal to zero 
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 0.2 
D) A price elasticity of demand equal to 1.0 
E) A price elasticity of demand equal to zero

Question 16

Total revenue is more likely to rise when the price falls if

Accepted Answer

A) there are few substitutes for the good. 
B) a low proportion of income is spent on the good. 
C) some extended period of time passes. 
D) all of the above 
E) none of the above 
A) there are few substitutes for the good. 
B) a low proportion of income is spent on the good. 
C) some extended period of time passes. 
D) all of the above 
E) none of the above

Question 17

Goods that can be produced using rare productive resources have a ________ elasticity of supply.The greater the amount of time available after a price change, the ________ is the elasticity of supply.

Accepted Answer

A) low; smaller 
B) high; greater 
C) high; smaller 
D) low; greater 
E) high; more inelastic 
A) low; smaller 
B) high; greater 
C) high; smaller 
D) low; greater 
E) high; more inelastic

Question 18

Luxury goods tend to have income elasticities of demand that are

Accepted Answer

A) greater than 1. 
B) greater than zero but less than 1. 
C) less than the income elasticities of demand for necessary goods. 
D) negative. 
E) first positive and then negative as income increases. 
A) greater than 1. 
B) greater than zero but less than 1. 
C) less than the income elasticities of demand for necessary goods. 
D) negative. 
E) first positive and then negative as income increases.

Question 19

The cross elasticity of demand between Coca-Cola and Pepsi-Cola is ________.From this information, we know that Coke and Pepsi are ________.

Accepted Answer

A) positive; normal goods 
B) positive; complements 
C) negative; substitutes 
D) positive; substitutes 
E) negative; complements 
A) positive; normal goods 
B) positive; complements 
C) negative; substitutes 
D) positive; substitutes 
E) negative; complements

Question 20

The price of good A falls by 10 percent and quantity of good A demanded does not change.We conclude that the demand for good A is

Accepted Answer

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

Suppose that a 20 percent increase in income increases the quantity of good A demanded from 19,200 to 20,800 units.The income elasticity of demand for good A is

If Mr.Brown's income increases by 12 percent and as a result his quantity demanded of music downloads increases by 4 percent, Mr.Brown's income elasticity of demand for music downloads is

All normal goods have

Suppose the quantity of root beer demanded decreases from 105,000 litres per week to 95,000 litres per week when the price rises by 5 percent.The price elasticity of demand

The supply of coal at Yanzhou Coal Mining is

If a 10 percent increase in price results in a 9 percent increase in quantity supplied,

Use the figure below to answer the following question. Figure 4.1.1 -Figure 4.1.1 illustrates a linear demand curve.Comparing the price elasticity in the $2 to $3 price range with the elasticity in the $8 to $9 range, we can conclude

A good has a price elasticity of demand equal to 2.If new imports lower its price from $1.20 to $0.80, the percentage change in quantity demanded will be

If a price decrease results in an increase in total revenue, then demand is

Use the figure below to answer the following question. Figure 4.1.3 -Given the relationship shown in Figure 4.1.3 between total revenue from the sale of a good and the quantity of the good sold, then

Use the table below to answer the following question. Table 4.1.3 -Refer to Table 4.1.3.The price elasticity of demand for Jolt is

When a supply curve

Suppose the Nunavut government decides to repair Iqaluit roads.One way to generate sufficient funds for this plan is to increase taxes on gasoline.The government will be able to raise total revenue from gasoline sales only if the demand for gasoline is

Which one of the following illustrates an elastic demand?

Total revenue is more likely to rise when the price falls if

Goods that can be produced using rare productive resources have a elasticity of supply.The greater the amount of time available after a price change, the is the elasticity of supply.

Luxury goods tend to have income elasticities of demand that are

The cross elasticity of demand between Coca-Cola and Pepsi-Cola is .From this information, we know that Coke and Pepsi are .

The price of good A falls by 10 percent and quantity of good A demanded does not change.We conclude that the demand for good A 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

Suppose that a 20 percent increase in income increases the quantity of good A demanded from 19,200 to 20,800 units.The income elasticity of demand for good A is

If Mr.Brown's income increases by 12 percent and as a result his quantity demanded of music downloads increases by 4 percent, Mr.Brown's income elasticity of demand for music downloads is

All normal goods have

Suppose the quantity of root beer demanded decreases from 105,000 litres per week to 95,000 litres per week when the price rises by 5 percent.The price elasticity of demand

The supply of coal at Yanzhou Coal Mining is

If a 10 percent increase in price results in a 9 percent increase in quantity supplied,

Use the figure below to answer the following question. Figure 4.1.1 -Figure 4.1.1 illustrates a linear demand curve.Comparing the price elasticity in the $2 to $3 price range with the elasticity in the $8 to $9 range, we can conclude

A good has a price elasticity of demand equal to 2.If new imports lower its price from $1.20 to $0.80, the percentage change in quantity demanded will be

If a price decrease results in an increase in total revenue, then demand is

Use the figure below to answer the following question. Figure 4.1.3 -Given the relationship shown in Figure 4.1.3 between total revenue from the sale of a good and the quantity of the good sold, then

Use the table below to answer the following question. Table 4.1.3 -Refer to Table 4.1.3.The price elasticity of demand for Jolt is

When a supply curve

Suppose the Nunavut government decides to repair Iqaluit roads.One way to generate sufficient funds for this plan is to increase taxes on gasoline.The government will be able to raise total revenue from gasoline sales only if the demand for gasoline is

Which one of the following illustrates an elastic demand?

Total revenue is more likely to rise when the price falls if

Goods that can be produced using rare productive resources have a ________ elasticity of supply.The greater the amount of time available after a price change, the ________ is the elasticity of supply.

Luxury goods tend to have income elasticities of demand that are

The cross elasticity of demand between Coca-Cola and Pepsi-Cola is ________.From this information, we know that Coke and Pepsi are ________.

The price of good A falls by 10 percent and quantity of good A demanded does not change.We conclude that the demand for good A 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

Goods that can be produced using rare productive resources have a elasticity of supply.The greater the amount of time available after a price change, the is the elasticity of supply.

The cross elasticity of demand between Coca-Cola and Pepsi-Cola is .From this information, we know that Coke and Pepsi are .