Question 1

Figure 4.7  
-Refer to Figure 4.7.A perfectly inelastic 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 2

When the price of tortilla chips rose by 10 per cent, the quantity of tortilla chips sold fell 4 per cent.This indicates that the demand for tortilla chips is:

Accepted Answer

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

Question 3

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 cross-price elasticity of zero?

Accepted Answer

A) a and b only 
B) c only, since most people cannot do without computers 
C) e only 
D) none of the pairs listed 
A) a and b only 
B) c only, since most people cannot do without computers 
C) e only 
D) none of the pairs listed

Question 4

What is likely to be the demand for a luxury item, like a yacht?

Accepted Answer

A) Both income and price inelastic 
B) Both income elastic and price elastic 
C) Income elastic and price inelastic 
D) Income inelastic and price elastic 
A) Both income and price inelastic 
B) Both income elastic and price elastic 
C) Income elastic and price inelastic 
D) Income inelastic and price elastic

Question 5

Consider a demand curve that has a constant elasticity value of 0.What happens to quantity demanded and total revenue when price increases?

Accepted Answer

A) The quantity demanded and total revenue remain the same. 
B) The quantity demanded does not change, but total revenue increases. 
C) The quantity demanded and total revenue fall to zero. 
D) The quantity demanded does not change, but total revenue decreases. 
A) The quantity demanded and total revenue remain the same. 
B) The quantity demanded does not change, but total revenue increases. 
C) The quantity demanded and total revenue fall to zero. 
D) The quantity demanded does not change, but total revenue decreases.

Question 6

What does total revenue equal?

Accepted Answer

A) Price per unit times quantity sold 
B) Price per unit times quantity supplied 
C) Price per unit times change in quantity sold 
D) Change in price per unit times quantity sold 
A) Price per unit times quantity sold 
B) Price per unit times quantity supplied 
C) Price per unit times change in quantity sold 
D) Change in price per unit times quantity sold

Question 7

When Audrina raised the price of her homemade cookies, her total revenue increased.This suggests that the demand for Audrina's cookies is elastic.

Accepted Answer

A) True 
 B)False

Question 8

If the demand for a product is elastic, the quantity demanded changes by a larger percentage than the percentage change in price.

Accepted Answer

A) True 
 B)False

Question 9

If the absolute value of the price elasticity of demand for aspirin equals 0.8 then________.

Accepted Answer

A) aspirin is a normal good. 
B) the demand for aspirin is inelastic. 
C) aspirin has few substitutes. 
D) the demand for aspirin is elastic. 
A) aspirin is a normal good. 
B) the demand for aspirin is inelastic. 
C) aspirin has few substitutes. 
D) the demand for aspirin is elastic.

Question 10

Figure 4.1  
-Refer to Figure 4.1.On which panel is a perfectly inelastic demand curve shown?

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 11

Holding everything else constant, the demand for a good tends to be more elastic______.

Accepted Answer

A) the more substitutes there are for the good. 
B) the shorter the time period involved. 
C) the more consumers perceive the good to be a necessity. 
D) the less important the product is in consumers' budgets. 
A) the more substitutes there are for the good. 
B) the shorter the time period involved. 
C) the more consumers perceive the good to be a necessity. 
D) the less important the product is in consumers' budgets.

Question 12

Figure 4.5  
-Refer to Figure 4.5.What does the section of the demand curve labelled 'A' represent?

Accepted Answer

A) The inelastic section of the demand curve 
B) The unit-elastic section of the demand curve 
C) The elastic section of the demand curve 
D) The perfectly elastic section of the demand curve 
A) The inelastic section of the demand curve 
B) The unit-elastic section of the demand curve 
C) The elastic section of the demand curve 
D) The perfectly elastic section of the demand curve

Question 13

Suppose you are considering buying stock in the stock market, and your objective is to maximise your net worth.Furthermore, your study of the market reveals that the economy will be slowing down over the next several months.Under these conditions, it would be best to purchase stock in companies that produce________.

Accepted Answer

A) normal goods. 
B) luxury goods. 
C) inferior goods. 
D) price elastic goods. 
A) normal goods. 
B) luxury goods. 
C) inferior goods. 
D) price elastic goods.

Question 14

During an economic expansion, as consumer incomes rise, holding everything else constant,

Accepted Answer

A) the demand for most goods, except luxuries, will rise. 
B) the demand for luxuries will rise while the demand for inferior goods will fall. 
C) the demand for luxuries and inferior goods will rise. 
D) the prices of luxuries will fall while the prices of inferior goods will rise. 
A) the demand for most goods, except luxuries, will rise. 
B) the demand for luxuries will rise while the demand for inferior goods will fall. 
C) the demand for luxuries and inferior goods will rise. 
D) the prices of luxuries will fall while the prices of inferior goods will rise.

Question 15

Studies show that the income elasticity of demand for wine is approximately five.What does this mean?

Accepted Answer

A) A 1 per cent decrease in the price of wine leads to a 5 per cent increase in wine consumption. 
B) A 1 per cent increase in income leads to a 5 per cent increase in wine consumption. 
C) A 5 per cent increase in income leads to a 1 per cent increase in wine consumption. 
D) Wine is a relatively elastic good. 
A) A 1 per cent decrease in the price of wine leads to a 5 per cent increase in wine consumption. 
B) A 1 per cent increase in income leads to a 5 per cent increase in wine consumption. 
C) A 5 per cent increase in income leads to a 1 per cent increase in wine consumption. 
D) Wine is a relatively elastic good.

Question 16

According to a study of the price elasticities of products sold in supermarkets, the price elasticity of demand for toothpaste is estimated at -0.45.Which of the following could explain why the price elasticity of demand for toothpaste is so low?

Accepted Answer

A) The toothpaste industry is highly competitive. 
B) Toothpaste is relatively inexpensive. 
C) Toothpaste is heavily endorsed by dentists. 
D) There are few close substitutes for toothpaste. 
A) The toothpaste industry is highly competitive. 
B) Toothpaste is relatively inexpensive. 
C) Toothpaste is heavily endorsed by dentists. 
D) There are few close substitutes for toothpaste.

Question 17

Last year, Joan bought 50 kilograms of hamburger when her household income was $40 000.This year, her household income was only $30 000 and Joan bought 60 kilograms of hamburger.Holding everything else constant, Joan's income elasticity of demand for hamburger is:

Accepted Answer

A) positive, so Joan considers hamburger to be an inferior good. 
B) negative, so Joan considers hamburger to be an inferior good. 
C) positive, so Joan considers hamburger to be a normal good and a necessity. 
D) negative, so Joan considers hamburger to be a normal good. 
A) positive, so Joan considers hamburger to be an inferior good. 
B) negative, so Joan considers hamburger to be an inferior good. 
C) positive, so Joan considers hamburger to be a normal good and a necessity. 
D) negative, so Joan considers hamburger to be a normal good.

Question 18

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative, demand for using the toll road must be:

Accepted Answer

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

Question 19

The price elasticity of supply is calculated as the change in supply divided by the change in price.

Accepted Answer

A) True 
 B)False

Question 20

Suppose a decrease in the supply of paper results in an increase in revenue.This indicates that________.

Accepted Answer

A) the demand for paper is inelastic. 
B) the demand for paper is elastic. 
C) the supply of paper is inelastic. 
D) the supply of paper is elastic. 
A) the demand for paper is inelastic. 
B) the demand for paper is elastic. 
C) the supply of paper is inelastic. 
D) the supply of paper is elastic.

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

When the price of tortilla chips rose by 10 per cent, the quantity of tortilla chips sold fell 4 per cent.This indicates that the demand for tortilla chips 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 cross-price elasticity of zero?

What is likely to be the demand for a luxury item, like a yacht?

Consider a demand curve that has a constant elasticity value of 0.What happens to quantity demanded and total revenue when price increases?

What does total revenue equal?

When Audrina raised the price of her homemade cookies, her total revenue increased.This suggests that the demand for Audrina's cookies is elastic.

If the demand for a product is elastic, the quantity demanded changes by a larger percentage than the percentage change in price.

If the absolute value of the price elasticity of demand for aspirin equals 0.8 then________.

Figure 4.1 -Refer to Figure 4.1.On which panel is a perfectly inelastic demand curve shown?

Holding everything else constant, the demand for a good tends to be more elastic______.

Figure 4.5 -Refer to Figure 4.5.What does the section of the demand curve labelled 'A' represent?

During an economic expansion, as consumer incomes rise, holding everything else constant,

Studies show that the income elasticity of demand for wine is approximately five.What does this mean?

According to a study of the price elasticities of products sold in supermarkets, the price elasticity of demand for toothpaste is estimated at -0.45.Which of the following could explain why the price elasticity of demand for toothpaste is so low?

Last year, Joan bought 50 kilograms of hamburger when her household income was $40 000.This year, her household income was only $30 000 and Joan bought 60 kilograms of hamburger.Holding everything else constant, Joan's income elasticity of demand for hamburger is:

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative, demand for using the toll road must be:

The price elasticity of supply is calculated as the change in supply divided by the change in price.

Suppose a decrease in the supply of paper results in an increase in revenue.This indicates that________.

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

When the price of tortilla chips rose by 10 per cent, the quantity of tortilla chips sold fell 4 per cent.This indicates that the demand for tortilla chips 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 cross-price elasticity of zero?

What is likely to be the demand for a luxury item, like a yacht?

Consider a demand curve that has a constant elasticity value of 0.What happens to quantity demanded and total revenue when price increases?

What does total revenue equal?

When Audrina raised the price of her homemade cookies, her total revenue increased.This suggests that the demand for Audrina's cookies is elastic.

If the demand for a product is elastic, the quantity demanded changes by a larger percentage than the percentage change in price.

If the absolute value of the price elasticity of demand for aspirin equals 0.8 then________.

Figure 4.1 -Refer to Figure 4.1.On which panel is a perfectly inelastic demand curve shown?

Holding everything else constant, the demand for a good tends to be more elastic______.

Figure 4.5 -Refer to Figure 4.5.What does the section of the demand curve labelled 'A' represent?

During an economic expansion, as consumer incomes rise, holding everything else constant,

Studies show that the income elasticity of demand for wine is approximately five.What does this mean?

According to a study of the price elasticities of products sold in supermarkets, the price elasticity of demand for toothpaste is estimated at -0.45.Which of the following could explain why the price elasticity of demand for toothpaste is so low?

Last year, Joan bought 50 kilograms of hamburger when her household income was $40 000.This year, her household income was only $30 000 and Joan bought 60 kilograms of hamburger.Holding everything else constant, Joan's income elasticity of demand for hamburger is:

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative, demand for using the toll road must be:

The price elasticity of supply is calculated as the change in supply divided by the change in price.

Suppose a decrease in the supply of paper results in an increase in revenue.This indicates that________.

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