Question 1

When there are few close substitutes available for a good, demand tends to be:

Accepted Answer

A) perfectly inelastic. 
B) perfectly elastic. 
C) relatively inelastic. 
D) relatively elastic. 
A) perfectly inelastic. 
B) perfectly elastic. 
C) relatively inelastic. 
D) relatively elastic.

Question 2

If, for a given percentage increase in price, quantity supplied increases by a proportionately larger percentage, then supply is:

Accepted Answer

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

Question 3

A private school is considering increasing its tuition to raise revenue.If the school believes that raising tuition will increase revenue,

Accepted Answer

A) it is assuming that the demand for attending the school is inelastic. 
B) it is assuming that the demand for attending the school is elastic. 
C) it is assuming that the demand for attending the school is unit-elastic. 
D) it is assuming that the demand for attending the school is perfectly elastic. 
A) it is assuming that the demand for attending the school is inelastic. 
B) it is assuming that the demand for attending the school is elastic. 
C) it is assuming that the demand for attending the school is unit-elastic. 
D) it is assuming that the demand for attending the school is perfectly elastic.

Question 4

Figure 4.7  
-Refer to Figure 4.7.A unit-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 5

If the price of steel increases drastically, the quantity of steel demanded by the building industry will fall significantly over the long run because:

Accepted Answer

A) buyers of steel are more sensitive to a price change if they have more time to adjust to the price change. 
B) buyers of steel are less sensitive to a price change if they have more time to adjust to the price change. 
C) sales revenue in the building industry will fall sharply. 
D) profits will fall by a greater amount in the long run than in the short run. 
A) buyers of steel are more sensitive to a price change if they have more time to adjust to the price change. 
B) buyers of steel are less sensitive to a price change if they have more time to adjust to the price change. 
C) sales revenue in the building industry will fall sharply. 
D) profits will fall by a greater amount in the long run than in the short run.

Question 6

Which of the following correctly comments on the following statement? 'The only way to increase the revenue from selling a product is to increase the product's price.'

Accepted Answer

A) It is not true.Revenue will increase as the price of the product increases only if demand is elastic. 
B) This statement is not true.Revenue will increase as the price of the product increases only if demand is inelastic. 
C) The statement is true. 
D) This statement is not true.Revenue will decrease as the price of the product increases because quantity demanded will fall. 
A) It is not true.Revenue will increase as the price of the product increases only if demand is elastic. 
B) This statement is not true.Revenue will increase as the price of the product increases only if demand is inelastic. 
C) The statement is true. 
D) This statement is not true.Revenue will decrease as the price of the product increases because quantity demanded will fall.

Question 7

The absolute value of the price elasticity of demand for telescopes is 1.5.Therefore, telescopes can be classified as a luxury.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following statements is true?

Accepted Answer

A) If the price of a good is lowered and total revenue decreases, demand is elastic. 
B) If the price of a good is raised and total revenue does not change, demand is perfectly elastic. 
C) If the price of a good is raised and total revenue increases, demand is inelastic. 
D) If the price of a good is lowered and total revenue increases, demand is inelastic. 
A) If the price of a good is lowered and total revenue decreases, demand is elastic. 
B) If the price of a good is raised and total revenue does not change, demand is perfectly elastic. 
C) If the price of a good is raised and total revenue increases, demand is inelastic. 
D) If the price of a good is lowered and total revenue increases, demand is inelastic.

Question 9

Demand for staples such as dairy products and bread is likely to be both income and price inelastic.

Accepted Answer

A) True 
 B)False

Question 10

Suppose the demand for milk is relatively inelastic.What happens to sales revenue if the government imposes a price floor above the free market equilibrium price in the market for milk?

Accepted Answer

A) Sales revenue falls. 
B) Sales revenue rises. 
C) Sales revenue remains unchanged. 
D) It cannot be determined without information on prices. 
A) Sales revenue falls. 
B) Sales revenue rises. 
C) Sales revenue remains unchanged. 
D) It cannot be determined without information on prices.

Question 11

Suppose at the current price, the demand for copper is estimated at -3.14.What happens to sales revenue if the government imposes a price ceiling below the free market equilibrium price in the copper market?

Accepted Answer

A) Sales revenue falls. 
B) Sales revenue rises. 
C) Sales revenue remains unchanged because copper is a necessity for most industries. 
D) It cannot be determined without information on prices. 
A) Sales revenue falls. 
B) Sales revenue rises. 
C) Sales revenue remains unchanged because copper is a necessity for most industries. 
D) It cannot be determined without information on prices.

Question 12

Suppose a 4 per cent increase in price results in a 2 per cent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterise the product.

Accepted Answer

A) 2; The product is elastic. 
B) 0)2; The product is inelastic. 
C) 0)5; The product is inelastic. 
D) 50%; The product is inelastic. 
A) 2; The product is elastic. 
B) 0)2; The product is inelastic. 
C) 0)5; The product is inelastic. 
D) 50%; The product is inelastic.

Question 13

The midpoint formula is used to measure the elasticity of demand between two points on a demand curve________.

Accepted Answer

A) when demand is elastic. 
B) in special cases when the percentage change in the quantity demanded is equal to the percentage change in price. 
C) to ensure that the elasticity has a negative value. 
D) to ensure that we have only one value of the price elasticity of demand between two points on a demand curve. 
A) when demand is elastic. 
B) in special cases when the percentage change in the quantity demanded is equal to the percentage change in price. 
C) to ensure that the elasticity has a negative value. 
D) to ensure that we have only one value of the price elasticity of demand between two points on a demand curve.

Question 14

If the price elasticity of demand for insulin is equal to zero, then what is the demand curve for insulin?

Accepted Answer

A) Horizontal 
B) Downward sloping 
C) Curvilinear 
D) Vertical 
A) Horizontal 
B) Downward sloping 
C) Curvilinear 
D) Vertical

Question 15

To calculate the price elasticity of demand we divide________.

Accepted Answer

A) the percentage change in quantity demanded by the percentage change in price. 
B) the percentage change in price by the percentage change in quantity demanded. 
C) rise by the run. 
D) the average price by the average quantity demanded. 
A) the percentage change in quantity demanded by the percentage change in price. 
B) the percentage change in price by the percentage change in quantity demanded. 
C) rise by the run. 
D) the average price by the average quantity demanded.

Question 16

Suppose the current price of oil is $90 a barrel and the quantity supplied is 800 million barrels per day.If the price elasticity of supply for oil in the short run is estimated at 0.5, use the midpoint formula to calculate the percentage change in quantity supplied when the price of oil rises to $98 a barrel.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

The percentage change in quant

Question 17

Jaycee Jeans sold 40 pairs of jeans at a price of $40.When it lowered its price to $20, the quantity sold increased to 60 pairs.Calculate the absolute value of the price elasticity of demand.Use the midpoint formula.

Accepted Answer

A) 1)67 
B) 1)0 
C) 0)6 
D) 0)53 
A) 1)67 
B) 1)0 
C) 0)6 
D) 0)53

Question 18

Suppose the demand curve for hybrid cars shifts to the right.This will cause a relatively small increase in the price of hybrid cars if:

Accepted Answer

A) demand is elastic and supply is inelastic. 
B) demand is inelastic and supply is elastic. 
C) both demand and supply are inelastic. 
D) both demand and supply are elastic. 
A) demand is elastic and supply is inelastic. 
B) demand is inelastic and supply is elastic. 
C) both demand and supply are inelastic. 
D) both demand and supply are elastic.

Question 19

Which of the following statements about price elasticity of demand is false?

Accepted Answer

A) The value of the price elasticity of demand is the reciprocal of the value of the demand curve's slope. 
B) If quantity demanded changes by a larger percentage than the percentage change in price, demand is elastic. 
C) The value of the price elasticity of demand along a downward-sloping demand curve is always negative. 
D) A linear downward-sloping demand curve has a varying price elasticity coefficient. 
A) The value of the price elasticity of demand is the reciprocal of the value of the demand curve's slope. 
B) If quantity demanded changes by a larger percentage than the percentage change in price, demand is elastic. 
C) The value of the price elasticity of demand along a downward-sloping demand curve is always negative. 
D) A linear downward-sloping demand curve has a varying price elasticity coefficient.

Question 20

If demand is inelastic, the absolute value of the price elasticity coefficient is greater than one.

Accepted Answer

A) True 
 B)False

When there are few close substitutes available for a good, demand tends to be:

If, for a given percentage increase in price, quantity supplied increases by a proportionately larger percentage, then supply is:

A private school is considering increasing its tuition to raise revenue.If the school believes that raising tuition will increase revenue,

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

If the price of steel increases drastically, the quantity of steel demanded by the building industry will fall significantly over the long run because:

Which of the following correctly comments on the following statement? 'The only way to increase the revenue from selling a product is to increase the product's price.'

The absolute value of the price elasticity of demand for telescopes is 1.5.Therefore, telescopes can be classified as a luxury.

Which of the following statements is true?

Demand for staples such as dairy products and bread is likely to be both income and price inelastic.

Suppose the demand for milk is relatively inelastic.What happens to sales revenue if the government imposes a price floor above the free market equilibrium price in the market for milk?

Suppose at the current price, the demand for copper is estimated at -3.14.What happens to sales revenue if the government imposes a price ceiling below the free market equilibrium price in the copper market?

Suppose a 4 per cent increase in price results in a 2 per cent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterise the product.

The midpoint formula is used to measure the elasticity of demand between two points on a demand curve________.

If the price elasticity of demand for insulin is equal to zero, then what is the demand curve for insulin?

To calculate the price elasticity of demand we divide________.

Jaycee Jeans sold 40 pairs of jeans at a price of $40.When it lowered its price to $20, the quantity sold increased to 60 pairs.Calculate the absolute value of the price elasticity of demand.Use the midpoint formula.

Suppose the demand curve for hybrid cars shifts to the right.This will cause a relatively small increase in the price of hybrid cars if:

Which of the following statements about price elasticity of demand is false?

If demand is inelastic, the absolute value of the price elasticity coefficient is greater than one.

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

When there are few close substitutes available for a good, demand tends to be:

If, for a given percentage increase in price, quantity supplied increases by a proportionately larger percentage, then supply is:

A private school is considering increasing its tuition to raise revenue.If the school believes that raising tuition will increase revenue,

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

If the price of steel increases drastically, the quantity of steel demanded by the building industry will fall significantly over the long run because:

Which of the following correctly comments on the following statement? 'The only way to increase the revenue from selling a product is to increase the product's price.'

The absolute value of the price elasticity of demand for telescopes is 1.5.Therefore, telescopes can be classified as a luxury.

Which of the following statements is true?

Demand for staples such as dairy products and bread is likely to be both income and price inelastic.

Suppose the demand for milk is relatively inelastic.What happens to sales revenue if the government imposes a price floor above the free market equilibrium price in the market for milk?

Suppose at the current price, the demand for copper is estimated at -3.14.What happens to sales revenue if the government imposes a price ceiling below the free market equilibrium price in the copper market?

Suppose a 4 per cent increase in price results in a 2 per cent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterise the product.

The midpoint formula is used to measure the elasticity of demand between two points on a demand curve________.

If the price elasticity of demand for insulin is equal to zero, then what is the demand curve for insulin?

To calculate the price elasticity of demand we divide________.

Jaycee Jeans sold 40 pairs of jeans at a price of $40.When it lowered its price to $20, the quantity sold increased to 60 pairs.Calculate the absolute value of the price elasticity of demand.Use the midpoint formula.

Suppose the demand curve for hybrid cars shifts to the right.This will cause a relatively small increase in the price of hybrid cars if:

Which of the following statements about price elasticity of demand is false?

If demand is inelastic, the absolute value of the price elasticity coefficient is greater than one.

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