Question 1

Figure 4.4  
-Refer to Figure 4.4.The inelastic segment of the demand curve________.

Accepted Answer

A) is coincident with the horizontal axis. 
B) is coincident with the vertical axis. 
C) lies below the midpoint of the curve. 
D) lies above the midpoint of the curve. 
A) is coincident with the horizontal axis. 
B) is coincident with the vertical axis. 
C) lies below the midpoint of the curve. 
D) lies above the midpoint of the curve.

Question 2

If demand is perfectly inelastic, what is the absolute value of the price elasticity coefficient?

Accepted Answer

A) Infinity 
B) Zero 
C) More than one 
D) Equal to the absolute value of the slope of the demand curve 
A) Infinity 
B) Zero 
C) More than one 
D) Equal to the absolute value of the slope of the demand curve

Question 3

When demand is elastic, a fall in price causes total revenue to rise because:

Accepted Answer

A) when price falls, quantity sold increases so total revenue automatically rises. 
B) the increase in quantity sold is large enough to offset the lower price. 
C) the percentage increase in quantity demanded is less than the percentage fall in price. 
D) the demand curve shifts. 
A) when price falls, quantity sold increases so total revenue automatically rises. 
B) the increase in quantity sold is large enough to offset the lower price. 
C) the percentage increase in quantity demanded is less than the percentage fall in price. 
D) the demand curve shifts.

Question 4

To what is price elasticity of demand equal?

Accepted Answer

A) The value of the slope of the demand curve 
B) The change in quantity demanded divided by the change in price 
C) The percentage change in price divided by the percentage change in quantity demanded 
D) The percentage change in quantity demanded divided by the percentage change in price 
A) The value of the slope of the demand curve 
B) The change in quantity demanded divided by the change in price 
C) The percentage change in price divided by the percentage change in quantity demanded 
D) The percentage change in quantity demanded divided by the percentage change in price

Question 5

Inelastic supply occurs whenever the elasticity of supply value is:

Accepted Answer

A) negative and  1. 
D) positive and < 1. 
A) negative and  1. 
D) positive and < 1.

Question 6

Figure 4.6  
-Refer to Figure 4.6.As price falls from PA to PB, the quantity demanded increases most along D1; therefore,

Accepted Answer

A) D1 is unit elastic. 
B) D1 is more inelastic than D2 or D3. 
C) D1 is more elastic than D2 or D3 
D) D1 is elastic at PA but inelastic at PB. 
A) D1 is unit elastic. 
B) D1 is more inelastic than D2 or D3. 
C) D1 is more elastic than D2 or D3 
D) D1 is elastic at PA but inelastic at PB.

Question 7

The cross-price elasticity between Gillette razors and a related good is -3.4.What happens to the demand for the related good if the price of Gillette razors falls by 10 per cent?

Accepted Answer

A) The quantity demanded of the related good rises by 3.4 per cent. 
B) The quantity demanded of the related good falls by 34 per cent. 
C) The quantity demanded of the related good rises by 34 per cent. 
D) The quantity demanded of the related good falls by 3.4 per cent. 
A) The quantity demanded of the related good rises by 3.4 per cent. 
B) The quantity demanded of the related good falls by 34 per cent. 
C) The quantity demanded of the related good rises by 34 per cent. 
D) The quantity demanded of the related good falls by 3.4 per cent.

Question 8

Figure 4.4  
-Refer to Figure 4.4.Which of the following statements is true about the price elasticity of demand?

Accepted Answer

A) The elasticity coefficient is constant along the demand curve. 
B) The elastic portion of a straight-line downward-sloping demand curve corresponds to the segment above the midpoint. 
C) The inelastic portion of the demand curve corresponds to the segment above the midpoint. 
D) At the midpoint of the demand curve, the elasticity coefficient is zero. 
A) The elasticity coefficient is constant along the demand curve. 
B) The elastic portion of a straight-line downward-sloping demand curve corresponds to the segment above the midpoint. 
C) The inelastic portion of the demand curve corresponds to the segment above the midpoint. 
D) At the midpoint of the demand curve, the elasticity coefficient is zero.

Question 9

Assume that you own a small boutique hotel.In an attempt to raise revenue you reduce your rates by 20 per cent.However, your revenue falls.What does this indicate about the demand for your boutique hotel rooms?

Accepted Answer

A) Boutique hotel rooms are inferior goods. 
B) Demand is inelastic. 
C) The demand curve for your hotel rooms is vertical. 
D) Demand is elastic. 
A) Boutique hotel rooms are inferior goods. 
B) Demand is inelastic. 
C) The demand curve for your hotel rooms is vertical. 
D) Demand is elastic.

Question 10

If the percentage change in the quantity of teapots demanded is greater than the percentage change in the price of teapots, then________.

Accepted Answer

A) the price elasticity of demand for teapots is greater than 1 in absolute value. 
B) the demand for teapots is unit-elastic. 
C) the price elasticity of demand for teapots is equal to zero. 
D) the price elasticity of demand for teapots is less than 1 in absolute value. 
A) the price elasticity of demand for teapots is greater than 1 in absolute value. 
B) the demand for teapots is unit-elastic. 
C) the price elasticity of demand for teapots is equal to zero. 
D) the price elasticity of demand for teapots is less than 1 in absolute value.

Question 11

The statement which is correct about the price elasticity of demand is:

Accepted Answer

A) the elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good. 
B) the absolute value of the elasticity of demand ranges from zero to one. 
C) demand is more elastic in the long run than it is in the short run. 
D) demand is more elastic the smaller the percentage of the consumer's budget the item takes up. 
A) the elasticity of demand for a good in general is equal to the elasticity of demand for a specific brand of the good. 
B) the absolute value of the elasticity of demand ranges from zero to one. 
C) demand is more elastic in the long run than it is in the short run. 
D) demand is more elastic the smaller the percentage of the consumer's budget the item takes up.

Question 12

Figure 4.4  
-Refer to Figure 4.4.At the midpoint of the demand curve, in absolute value________.

Accepted Answer

A) the price elasticity coefficient is at a maximum. 
B) the price elasticity coefficient is at a minimum. 
C) the price elasticity coefficient is zero. 
D) the price elasticity coefficient is one. 
A) the price elasticity coefficient is at a maximum. 
B) the price elasticity coefficient is at a minimum. 
C) the price elasticity coefficient is zero. 
D) the price elasticity coefficient is one.

Question 13

Suppose a hurricane decreased the supply of oranges so that the price of oranges rose from $120 a tonne to $180 a tonne and quantity sold decreased from 800 tonnes to 240 tonnes.The absolute value of the price elasticity of demand is:

Accepted Answer

A) 0)11 
B) 0)37 
C) 2)69 
D) 9)33 
A) 0)11 
B) 0)37 
C) 2)69 
D) 9)33

Question 14

Consider the following pairs of items: 
a.shampoo and conditioner
b.iPhones and earbuds
c.a laptop computer and a desktop computer
d.beef and pork
e.air-travel and weed killer
Which of the pairs listed will have a positive cross-price elasticity?

Accepted Answer

A) a and b only 
B) c and d only 
C) e only 
D) a, b, and c only 
A) a and b only 
B) c and d only 
C) e only 
D) a, b, and c only

Question 15

If the percentage increase in price is 15 per cent and the value of the price elasticity of demand is - then what is the quantity demanded?

Accepted Answer

A) Will increase by 45 per cent 
B) Will increase by 5 per cent 
C) Will decrease by 45 per cent 
D) Will decrease by 5 per cent 
A) Will increase by 45 per cent 
B) Will increase by 5 per cent 
C) Will decrease by 45 per cent 
D) Will decrease by 5 per cent

Question 16

Carrie Bradshaw claims that when it comes to buying shoes, 'price is no object.' If this is true, then what is her demand for shoes?

Accepted Answer

A) Perfectly elastic 
B) Perfectly inelastic 
C) Unit-elastic 
D) Horizontal 
A) Perfectly elastic 
B) Perfectly inelastic 
C) Unit-elastic 
D) Horizontal

Question 17

How is cross-price elasticity of demand calculated?

Accepted Answer

A) As the percentage change in quantity demanded divided by percentage change in price of a good 
B) As the percentage change in quantity demanded of one good divided by percentage change in price of a different good 
C) As the percentage change in quantity sold divided by percentage change in buyers' incomes 
D) As the percentage change in quantity supplied divided by percentage change in price of a good 
A) As the percentage change in quantity demanded divided by percentage change in price of a good 
B) As the percentage change in quantity demanded of one good divided by percentage change in price of a different good 
C) As the percentage change in quantity sold divided by percentage change in buyers' incomes 
D) As the percentage change in quantity supplied divided by percentage change in price of a good

Question 18

If the cross-price elasticity of demand for goods A and B is zero, this means the two goods are unrelated.

Accepted Answer

A) True 
 B)False

Question 19

Suppose the absolute value of the price elasticity of demand for basketball game tickets on your campus is greater than 1.Increasing ticket prices will increase the total revenue from ticket sales.

Accepted Answer

A) True 
 B)False

Question 20

Figure 4.7  
-Refer to Figure 4.7.The supply curve on which price elasticity changes at every point 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.

Figure 4.4 -Refer to Figure 4.4.The inelastic segment of the demand curve________.

If demand is perfectly inelastic, what is the absolute value of the price elasticity coefficient?

When demand is elastic, a fall in price causes total revenue to rise because:

To what is price elasticity of demand equal?

Inelastic supply occurs whenever the elasticity of supply value is:

Figure 4.6 -Refer to Figure 4.6.As price falls from P_A to P_B, the quantity demanded increases most along D_1;therefore,

The cross-price elasticity between Gillette razors and a related good is -3.4.What happens to the demand for the related good if the price of Gillette razors falls by 10 per cent?

Figure 4.4 -Refer to Figure 4.4.Which of the following statements is true about the price elasticity of demand?

Assume that you own a small boutique hotel.In an attempt to raise revenue you reduce your rates by 20 per cent.However, your revenue falls.What does this indicate about the demand for your boutique hotel rooms?

If the percentage change in the quantity of teapots demanded is greater than the percentage change in the price of teapots, then________.

The statement which is correct about the price elasticity of demand is:

Figure 4.4 -Refer to Figure 4.4.At the midpoint of the demand curve, in absolute value________.

Suppose a hurricane decreased the supply of oranges so that the price of oranges rose from $120 a tonne to $180 a tonne and quantity sold decreased from 800 tonnes to 240 tonnes.The absolute value of the price elasticity of demand is:

Consider the following pairs of items: a.shampoo and conditioner b.iPhones and earbuds c.a laptop computer and a desktop computer d.beef and pork e.air-travel and weed killer Which of the pairs listed will have a positive cross-price elasticity?

If the percentage increase in price is 15 per cent and the value of the price elasticity of demand is - then what is the quantity demanded?

Carrie Bradshaw claims that when it comes to buying shoes, 'price is no object.' If this is true, then what is her demand for shoes?

How is cross-price elasticity of demand calculated?

If the cross-price elasticity of demand for goods A and B is zero, this means the two goods are unrelated.

Suppose the absolute value of the price elasticity of demand for basketball game tickets on your campus is greater than 1.Increasing ticket prices will increase the total revenue from ticket sales.

Figure 4.7 -Refer to Figure 4.7.The supply curve on which price elasticity changes at every point is shown in:

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

Figure 4.4 -Refer to Figure 4.4.The inelastic segment of the demand curve________.

If demand is perfectly inelastic, what is the absolute value of the price elasticity coefficient?

When demand is elastic, a fall in price causes total revenue to rise because:

To what is price elasticity of demand equal?

Inelastic supply occurs whenever the elasticity of supply value is:

Figure 4.6 -Refer to Figure 4.6.As price falls from PA to PB, the quantity demanded increases most along D1; therefore,

The cross-price elasticity between Gillette razors and a related good is -3.4.What happens to the demand for the related good if the price of Gillette razors falls by 10 per cent?

Figure 4.4 -Refer to Figure 4.4.Which of the following statements is true about the price elasticity of demand?

Assume that you own a small boutique hotel.In an attempt to raise revenue you reduce your rates by 20 per cent.However, your revenue falls.What does this indicate about the demand for your boutique hotel rooms?

If the percentage change in the quantity of teapots demanded is greater than the percentage change in the price of teapots, then________.

The statement which is correct about the price elasticity of demand is:

Figure 4.4 -Refer to Figure 4.4.At the midpoint of the demand curve, in absolute value________.

Suppose a hurricane decreased the supply of oranges so that the price of oranges rose from $120 a tonne to $180 a tonne and quantity sold decreased from 800 tonnes to 240 tonnes.The absolute value of the price elasticity of demand is:

Consider the following pairs of items: a.shampoo and conditioner b.iPhones and earbuds c.a laptop computer and a desktop computer d.beef and pork e.air-travel and weed killer Which of the pairs listed will have a positive cross-price elasticity?

If the percentage increase in price is 15 per cent and the value of the price elasticity of demand is - then what is the quantity demanded?

Carrie Bradshaw claims that when it comes to buying shoes, 'price is no object.' If this is true, then what is her demand for shoes?

How is cross-price elasticity of demand calculated?

If the cross-price elasticity of demand for goods A and B is zero, this means the two goods are unrelated.

Suppose the absolute value of the price elasticity of demand for basketball game tickets on your campus is greater than 1.Increasing ticket prices will increase the total revenue from ticket sales.

Figure 4.7 -Refer to Figure 4.7.The supply curve on which price elasticity changes at every point is shown in:

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

Figure 4.6 -Refer to Figure 4.6.As price falls from P_A to P_B, the quantity demanded increases most along D_1;therefore,