Question 1

If a supply curve is a horizontal line, supply is said to be:

Accepted Answer

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

Question 2

If a good has a negative income elasticity of demand, this indicates that the good is:

Accepted Answer

A) a substitute with another good. 
B) a complement with another good. 
C) inferior. 
D) normal. 
A) a substitute with another good. 
B) a complement with another good. 
C) inferior. 
D) normal.

Question 3

Figure 4.3  
-Refer to Figure 4.3.Using the midpoint formula, calculate the absolute value of the price elasticity of demand between e and f.

Accepted Answer

A) 0)32 
B) 0)4 
C) 2)5 
D) 3)125 
A) 0)32 
B) 0)4 
C) 2)5 
D) 3)125

Question 4

The price elasticity of demand for Kellogg Corn Flakes is larger in absolute value than the price elasticity for all breakfast cereals.

Accepted Answer

A) True 
 B)False

Question 5

A study of the effects of the minimum wage on employment of low-skilled workers estimated the price elasticity of demand for low-skilled workers is -0.75.Suppose that the government is considering raising the minimum wage from $7.25 per hour to $7.75 per hour.Based on this information, calculate the percentage change in the employment of low skilled workers.Use the midpoint formula.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

per cent change in q

Question 6

The price elasticity of supply measures________.

Accepted Answer

A) the responsiveness of quantity supplied to changes in input prices. 
B) the responsiveness of quantity supplied to changes in technology. 
C) the responsiveness of quantity supplied to changes in price. 
D) a supplier's ability to produce a good in the face of scarcity. 
A) the responsiveness of quantity supplied to changes in input prices. 
B) the responsiveness of quantity supplied to changes in technology. 
C) the responsiveness of quantity supplied to changes in price. 
D) a supplier's ability to produce a good in the face of scarcity.

Question 7

What does the income elasticity of demand measure?

Accepted Answer

A) The responsiveness of quantity demanded to changes in income 
B) How a consumer's purchasing power is affected by a change in the price of a product 
C) The percentage change in the price of a product divided by the percentage change in consumer income 
D) The income effect of a change in price 
A) The responsiveness of quantity demanded to changes in income 
B) How a consumer's purchasing power is affected by a change in the price of a product 
C) The percentage change in the price of a product divided by the percentage change in consumer income 
D) The income effect of a change in price

Question 8

With the increased usage of mobile services, what has happened to the price elasticity of demand for landline telephone services?

Accepted Answer

A) It has become more price inelastic. 
B) It has become more price elastic. 
C) It has become more income elastic. 
D) The absolute value of the price elasticity coefficient has probably gone down. 
A) It has become more price inelastic. 
B) It has become more price elastic. 
C) It has become more income elastic. 
D) The absolute value of the price elasticity coefficient has probably gone down.

Question 9

If a firm lowered the price of the product it sells and found that total revenue did not change, then what is true about the demand for its product?

Accepted Answer

A) It is perfectly inelastic. 
B) It is perfectly elastic. 
C) It is unit-elastic. 
D) It is relatively elastic. 
A) It is perfectly inelastic. 
B) It is perfectly elastic. 
C) It is unit-elastic. 
D) It is relatively elastic.

Question 10

The process involved in bringing oil to world markets can take years.Substitutes for oil-based products such as petrol are limited.As a result________.

Accepted Answer

A) the supply of oil is very elastic and the demand for oil is very elastic over short periods of time. 
B) the supply of oil is very inelastic and the demand for petrol is inelastic over short periods of time. 
C) the supply of oil and the demand for oil shift to the right over short periods of time. 
D) the supply of oil and the demand for oil are both perfectly elastic over short periods of time. 
A) the supply of oil is very elastic and the demand for oil is very elastic over short periods of time. 
B) the supply of oil is very inelastic and the demand for petrol is inelastic over short periods of time. 
C) the supply of oil and the demand for oil shift to the right over short periods of time. 
D) the supply of oil and the demand for oil are both perfectly elastic over short periods of time.

Question 11

Holding everything else constant, the absolute value of the price elasticity of demand for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes.

Accepted Answer

A) less than 
B) equal to 
C) twice as great as 
D) greater than 
A) less than 
B) equal to 
C) twice as great as 
D) greater than

Question 12

Assume that the market for barley is in equilibrium and the demand for barley is inelastic.Predict what happens to the revenue of barley farmers if a prolonged drought reduces the supply of barley.The drought will cause farm revenue to________.

Accepted Answer

A) rise because there will be a shortage of barley. 
B) rise because the percentage decrease in quantity sold is less than the percentage increase in price. 
C) rise because the percentage increase in quantity sold is greater than the percentage increase in price. 
D) fall because of the decrease in the quantity of barley sold. 
A) rise because there will be a shortage of barley. 
B) rise because the percentage decrease in quantity sold is less than the percentage increase in price. 
C) rise because the percentage increase in quantity sold is greater than the percentage increase in price. 
D) fall because of the decrease in the quantity of barley sold.

Question 13

The demand for heating oil in the short run is more elastic than the long run demand for heating oil.

Accepted Answer

A) True 
 B)False

Question 14

Suppose the demand curve for a product is represented by a typical downward-sloping curve.Now suppose the demand for this product decreases.Which of the following statements accurately predicts the resulting decrease in price?

Accepted Answer

A) The more elastic the supply curve, the greater the price increase. 
B) The more elastic the supply curve, the smaller the price decrease. 
C) The increase in price is not affected by the elasticity of the supply curve. 
D) The decrease in price will always be proportional to the magnitude of the demand shift. 
A) The more elastic the supply curve, the greater the price increase. 
B) The more elastic the supply curve, the smaller the price decrease. 
C) The increase in price is not affected by the elasticity of the supply curve. 
D) The decrease in price will always be proportional to the magnitude of the demand shift.

Question 15

If the price elasticity of demand is unit-elastic, a 10 per cent increase in price will result in a 10 per cent increase in revenue.

Accepted Answer

A) True 
 B)False

Question 16

If the demand for iPods is price elastic, then________.

Accepted Answer

A) the percentage change in quantity demanded is greater than the percentage change in price (in absolute value). 
B) the percentage change in quantity demanded is less than the percentage change in price (in absolute value). 
C) the percentage change in quantity demanded is equal to the percentage change in price. 
D) quantity demanded is not responsive to changes in price. 
A) the percentage change in quantity demanded is greater than the percentage change in price (in absolute value). 
B) the percentage change in quantity demanded is less than the percentage change in price (in absolute value). 
C) the percentage change in quantity demanded is equal to the percentage change in price. 
D) quantity demanded is not responsive to changes in price.

Question 17

Figure 4.8  
-Refer to Figure 4.8.What is the value of the price elasticity of supply between g and h?

Accepted Answer

A) 20 
B) 0)5 
C) 2 
D) 0)02 
A) 20 
B) 0)5 
C) 2 
D) 0)02

Question 18

Figure 4.9  
-Refer to Figure 4.9.Suppose the diagram shows the supply curves for a product in the short run and in the long run.Which supply curve represents supply in the short run and which curve represents supply in the long run?

Accepted Answer

A) SB represents supply in the short run, and SA represents supply in the long run. 
B) Either SA or SB could represent supply in the short run; in the long run, the supply curve must be a vertical line. 
C) Either SA or SB could represent supply in the long run; in the short run, the supply curve must be a horizontal line. 
D) SA represents supply in the short run, and SB represents supply in the long run. 
A) SB represents supply in the short run, and SA represents supply in the long run. 
B) Either SA or SB could represent supply in the short run; in the long run, the supply curve must be a vertical line. 
C) Either SA or SB could represent supply in the long run; in the short run, the supply curve must be a horizontal line. 
D) SA represents supply in the short run, and SB represents supply in the long run.

Question 19

Figure 4.7  
-Refer to Figure 4.7.A perfectly elastic supply curve is shown in:

Accepted Answer

A) Panel A. 
B) Panel B. 
C) Panel C. 
D) Panel D. 
A) Panel A. 
B) Panel B. 
C) Panel C. 
D) Panel D.

Question 20

The demand for all carbonated beverages is likely to be ________ the demand for Pepsi.

Accepted Answer

A) more elastic than 
B) perfectly elastic compared to 
C) less elastic than 
D) perfectly inelastic compared to 
A) more elastic than 
B) perfectly elastic compared to 
C) less elastic than 
D) perfectly inelastic compared to

If a supply curve is a horizontal line, supply is said to be:

If a good has a negative income elasticity of demand, this indicates that the good is:

Figure 4.3 -Refer to Figure 4.3.Using the midpoint formula, calculate the absolute value of the price elasticity of demand between e and f.

The price elasticity of demand for Kellogg Corn Flakes is larger in absolute value than the price elasticity for all breakfast cereals.

The price elasticity of supply measures________.

What does the income elasticity of demand measure?

With the increased usage of mobile services, what has happened to the price elasticity of demand for landline telephone services?

If a firm lowered the price of the product it sells and found that total revenue did not change, then what is true about the demand for its product?

The process involved in bringing oil to world markets can take years.Substitutes for oil-based products such as petrol are limited.As a result________.

Holding everything else constant, the absolute value of the price elasticity of demand for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes.

Assume that the market for barley is in equilibrium and the demand for barley is inelastic.Predict what happens to the revenue of barley farmers if a prolonged drought reduces the supply of barley.The drought will cause farm revenue to________.

The demand for heating oil in the short run is more elastic than the long run demand for heating oil.

Suppose the demand curve for a product is represented by a typical downward-sloping curve.Now suppose the demand for this product decreases.Which of the following statements accurately predicts the resulting decrease in price?

If the price elasticity of demand is unit-elastic, a 10 per cent increase in price will result in a 10 per cent increase in revenue.

If the demand for iPods is price elastic, then________.

Figure 4.8 -Refer to Figure 4.8.What is the value of the price elasticity of supply between g and h?

Figure 4.9 -Refer to Figure 4.9.Suppose the diagram shows the supply curves for a product in the short run and in the long run.Which supply curve represents supply in the short run and which curve represents supply in the long run?

Figure 4.7 -Refer to Figure 4.7.A perfectly elastic supply curve is shown in:

The demand for all carbonated beverages is likely to be ________ the demand for Pepsi.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition: The Competitive Model in a More Realistic

Oligopoly: Markets With Few Competitors

The Markets for Labour and Other Factors of Production

Comparative Advantage and the Gains From International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Exam 4: Elasticity: The Responsiveness of Demand and Supply

If a supply curve is a horizontal line, supply is said to be:

If a good has a negative income elasticity of demand, this indicates that the good is:

Figure 4.3 -Refer to Figure 4.3.Using the midpoint formula, calculate the absolute value of the price elasticity of demand between e and f.

The price elasticity of demand for Kellogg Corn Flakes is larger in absolute value than the price elasticity for all breakfast cereals.

The price elasticity of supply measures________.

What does the income elasticity of demand measure?

With the increased usage of mobile services, what has happened to the price elasticity of demand for landline telephone services?

If a firm lowered the price of the product it sells and found that total revenue did not change, then what is true about the demand for its product?

The process involved in bringing oil to world markets can take years.Substitutes for oil-based products such as petrol are limited.As a result________.

Holding everything else constant, the absolute value of the price elasticity of demand for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes.

Assume that the market for barley is in equilibrium and the demand for barley is inelastic.Predict what happens to the revenue of barley farmers if a prolonged drought reduces the supply of barley.The drought will cause farm revenue to________.

The demand for heating oil in the short run is more elastic than the long run demand for heating oil.

Suppose the demand curve for a product is represented by a typical downward-sloping curve.Now suppose the demand for this product decreases.Which of the following statements accurately predicts the resulting decrease in price?

If the price elasticity of demand is unit-elastic, a 10 per cent increase in price will result in a 10 per cent increase in revenue.

If the demand for iPods is price elastic, then________.

Figure 4.8 -Refer to Figure 4.8.What is the value of the price elasticity of supply between g and h?

Figure 4.9 -Refer to Figure 4.9.Suppose the diagram shows the supply curves for a product in the short run and in the long run.Which supply curve represents supply in the short run and which curve represents supply in the long run?

Figure 4.7 -Refer to Figure 4.7.A perfectly elastic supply curve is shown in:

The demand for all carbonated beverages is likely to be ________ the demand for Pepsi.

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: The Interaction of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition: The Competitive Model in a More Realistic

Oligopoly: Markets With Few Competitors

The Markets for Labour and Other Factors of Production

Comparative Advantage and the Gains From International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters