Question 1

-Refer to the graph above to answer this question.Which of the following statements is correct?

Accepted Answer

A) Demand curve D1 is the inelastic portion of a curve that could be extended downward to the right. 
B) Demand curve D1 is the elastic portion of a curve that could be extended downward to the right. 
C) Demand curve D1 is more inelastic than D2. 
D) Demand curve D1 is perfectly elastic. 
A) Demand curve D1 is the inelastic portion of a curve that could be extended downward to the right. 
B) Demand curve D1 is the elastic portion of a curve that could be extended downward to the right. 
C) Demand curve D1 is more inelastic than D2. 
D) Demand curve D1 is perfectly elastic.

Question 2

Suppose that average incomes increased from $30,000 to $34,000,and the quantity demanded of a product increased from 45 to 55.What is the value of the income elasticity of demand?

Accepted Answer

A) +0.625. 
B) +0.74. 
C) -1.0. 
D) +1.36. 
E) +1.6. 
A) +0.625. 
B) +0.74. 
C) -1.0. 
D) +1.36. 
E) +1.6.

Question 3

During an economic boom,should investors invest in an industry that produces goods whose demand is income elastic or one in which the demand is income inelastic?

Accepted Answer

An industry that produces a good whose d

Question 4

What is the most likely effect of a government reducing the supply of illegal drugs?

Accepted Answer

A) The total amount spent on illegal drugs will decrease. 
B) The total amount spent on illegal drugs will increase. 
C) The quantity of illegal drugs consumed will remain unchanged. 
D) The demand for illegal drugs will fall. 
E) The demand for illegal drugs will increase. 
A) The total amount spent on illegal drugs will decrease. 
B) The total amount spent on illegal drugs will increase. 
C) The quantity of illegal drugs consumed will remain unchanged. 
D) The demand for illegal drugs will fall. 
E) The demand for illegal drugs will increase.

Question 5

What will cause the price elasticity of demand for a product to be high?

Accepted Answer

A) A low percentage of income is spent on the product. 
B) There are a small number of available substitutes. 
C) The elasticity of supply for the product is high. 
D) A long time period is used to measure elasticity. 
A) A low percentage of income is spent on the product. 
B) There are a small number of available substitutes. 
C) The elasticity of supply for the product is high. 
D) A long time period is used to measure elasticity.

Question 6

Supply elasticity is measured by percentage change in quantity supplied divided by percentage change in quantity demanded.

Accepted Answer

A) True 
 B)False

Question 7

-Refer to the graphs above to answer this question.Suppose that the price of orange juice increases from P1 to P2 and the demand curve for apple juice shifts to the right from D1 to D2.What can be said about the cross-elasticity of demand for the two juices and their relationship?

Accepted Answer

A) The cross elasticity of demand coefficient between the two juices is negative and the juices are substitutes. 
B) The cross elasticity of demand coefficient between the two juices is negative and the juices are complements. 
C) The cross elasticity of demand coefficient between the two juices is positive and the juices are complements. 
D) The cross elasticity of demand coefficient between the two juices is positive and the juices are substitutes. 
A) The cross elasticity of demand coefficient between the two juices is negative and the juices are substitutes. 
B) The cross elasticity of demand coefficient between the two juices is negative and the juices are complements. 
C) The cross elasticity of demand coefficient between the two juices is positive and the juices are complements. 
D) The cross elasticity of demand coefficient between the two juices is positive and the juices are substitutes.

Question 8

Below are some data on price,income and demand for five different time periods.
  
-Refer to the information above to answer this question.What is the price elasticity of demand for product X between years 1 and 2?

Accepted Answer

A) 0.31. 
B) 1.0. 
C) 3.2. 
D) 22.2. 
A) 0.31. 
B) 1.0. 
C) 3.2. 
D) 22.2.

Question 9

The graph below shows the supply and demand for tickets to a Raptors basketball game.
  
-Refer to the graph above to answer this question.All of the statements below,except one are correct.Which is the exception?

Accepted Answer

A) If the price of a ticket is $40 and demand is D3,then there will be 5,000 unsold tickets. 
B) If the price of a ticket is $60 and demand is D2,then there is a shortage of 2,500 seats. 
C) If the price of a ticket is $20 and demand is D1,then 5,000 people who would like to attend the game will not be able to unless they are able to buy a ticket from a scalper. 
D) Any price under $40 will result in all the tickets being sold regardless of which of the three demand curves is considered. 
A) If the price of a ticket is $40 and demand is D3,then there will be 5,000 unsold tickets. 
B) If the price of a ticket is $60 and demand is D2,then there is a shortage of 2,500 seats. 
C) If the price of a ticket is $20 and demand is D1,then 5,000 people who would like to attend the game will not be able to unless they are able to buy a ticket from a scalper. 
D) Any price under $40 will result in all the tickets being sold regardless of which of the three demand curves is considered.

Question 10

Answer the following questions with respect to elasticity:
A)Define the term 'price elasticity of demand'.
B)Name three forms it can take.
C)What does it mean if a calculation of the price elasticity of demand turns out to be less than one?

Accepted Answer

a)Price elasticity of demand is the resp

Question 11

What is the effect of a rise in income on the demand for a product?

Accepted Answer

A) It will rise if the product is an inferior product. 
B) It will rise if the product is a normal product. 
C) It will fall if the product is a normal product. 
D) It will fall in both cases of a normal or inferior product. 
A) It will rise if the product is an inferior product. 
B) It will rise if the product is a normal product. 
C) It will fall if the product is a normal product. 
D) It will fall in both cases of a normal or inferior product.

Question 12

Table 4.3 shows the market demand for video rentals.
Table 4.3

Accepted Answer

a)Calculate the price elasticity of dema

Question 13

Define the term income elasticity.What does it mean if the calculation of income elasticity turns out to be positive and greater than one?

Accepted Answer

Income elasticity refers to the responsi

Question 14

Suppose the supply curve is perfectly inelastic and the equilibrium price is $5 and equilibrium quantity is 7.If the government impose an excise tax of $1 per unit,what will be the new price and quantity traded? What is the total tax revenue and who pays the tax?

Accepted Answer

P = $5
Q = 7
Tax rev

Question 15

The graph below shows the supply and demand for tickets to a Raptors basketball game.
  
-Refer to the graph above to answer this question.Which of the following statements is correct?

Accepted Answer

A) If demand is D3,then all the tickets could not be sold. 
B) If demand in D2,then there would be a shortage of tickets. 
C) If the price of a ticket is $40 and demand is D2,then ticket scalping would result. 
D) If the price of a ticket is $40 and demand is D3,then ticket scalping would result. 
E) The supply curve is perfectly elastic and the demand curves are inelastic. 
A) If demand is D3,then all the tickets could not be sold. 
B) If demand in D2,then there would be a shortage of tickets. 
C) If the price of a ticket is $40 and demand is D2,then ticket scalping would result. 
D) If the price of a ticket is $40 and demand is D3,then ticket scalping would result. 
E) The supply curve is perfectly elastic and the demand curves are inelastic.

Question 16

Historical data from the college bookstore shows that when the price of textbooks is increased by 5%,the number of textbooks sold falls by 10%.Should the bookstore lower its prices?

Accepted Answer

The elasticity of demand is 2

Question 17

The following graph shows the demand and supply for i-Pods.

Accepted Answer

@#IMG-DLM& 
a)What is equilibrium price and quanti

Question 18

Define price elasticity of demand.What does it mean if the price elasticity of demand is equal to 4?

Accepted Answer

Price elasticity of demand measures the

Question 19

The data in the table below are for boxes of fresh shrimp.
   a)Before the tax,what is the equilibrium price and quantity?
b)Fill in the Quantity Supplied After Tax column assuming that a $10 per unit excise tax is put on the product.
c)What is the new equilibrium price and quantity?
d)What portion of the $10 per unit tax is paid by the seller and what portion is paid by the consumer?

Accepted Answer

a)$65 and 450
b)
 @#IMG-DLM&

Question 20

What is the formula used to calculate elasticity of supply?

Accepted Answer

A) Change in price divided by change in quantity supplied 
B) Change in quantity supplied divided by change in price 
C) Percentage change in price divided by percentage change in quantity supplied 
D) Percentage change in quantity supplied divided by percentage change in price 
A) Change in price divided by change in quantity supplied 
B) Change in quantity supplied divided by change in price 
C) Percentage change in price divided by percentage change in quantity supplied 
D) Percentage change in quantity supplied divided by percentage change in price

-Refer to the graph above to answer this question.Which of the following statements is correct?

Suppose that average incomes increased from $30,000 to $34,000,and the quantity demanded of a product increased from 45 to 55.What is the value of the income elasticity of demand?

During an economic boom,should investors invest in an industry that produces goods whose demand is income elastic or one in which the demand is income inelastic?

What is the most likely effect of a government reducing the supply of illegal drugs?

What will cause the price elasticity of demand for a product to be high?

Supply elasticity is measured by percentage change in quantity supplied divided by percentage change in quantity demanded.

-Refer to the graphs above to answer this question.Suppose that the price of orange juice increases from P₁ to P₂ and the demand curve for apple juice shifts to the right from D₁ to D₂.What can be said about the cross-elasticity of demand for the two juices and their relationship?

Below are some data on price,income and demand for five different time periods. -Refer to the information above to answer this question.What is the price elasticity of demand for product X between years 1 and 2?

The graph below shows the supply and demand for tickets to a Raptors basketball game. -Refer to the graph above to answer this question.All of the statements below,except one are correct.Which is the exception?

Answer the following questions with respect to elasticity: A)Define the term 'price elasticity of demand'. B)Name three forms it can take. C)What does it mean if a calculation of the price elasticity of demand turns out to be less than one?

What is the effect of a rise in income on the demand for a product?

Table 4.3 shows the market demand for video rentals. Table 4.3

Define the term income elasticity.What does it mean if the calculation of income elasticity turns out to be positive and greater than one?

Suppose the supply curve is perfectly inelastic and the equilibrium price is $5 and equilibrium quantity is 7.If the government impose an excise tax of $1 per unit,what will be the new price and quantity traded? What is the total tax revenue and who pays the tax?

The graph below shows the supply and demand for tickets to a Raptors basketball game. -Refer to the graph above to answer this question.Which of the following statements is correct?

Historical data from the college bookstore shows that when the price of textbooks is increased by 5%,the number of textbooks sold falls by 10%.Should the bookstore lower its prices?

The following graph shows the demand and supply for i-Pods.

Define price elasticity of demand.What does it mean if the price elasticity of demand is equal to 4?

What is the formula used to calculate elasticity of supply?

The Economic Problem

Demand and Supply: An Introduction

Demand and Supply: An Elaboration

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

Perfect Competition

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters

Exam 4: Elasticity

-Refer to the graph above to answer this question.Which of the following statements is correct?

Suppose that average incomes increased from $30,000 to $34,000,and the quantity demanded of a product increased from 45 to 55.What is the value of the income elasticity of demand?

During an economic boom,should investors invest in an industry that produces goods whose demand is income elastic or one in which the demand is income inelastic?

What is the most likely effect of a government reducing the supply of illegal drugs?

What will cause the price elasticity of demand for a product to be high?

Supply elasticity is measured by percentage change in quantity supplied divided by percentage change in quantity demanded.

-Refer to the graphs above to answer this question.Suppose that the price of orange juice increases from P1 to P2 and the demand curve for apple juice shifts to the right from D1 to D2.What can be said about the cross-elasticity of demand for the two juices and their relationship?

Below are some data on price,income and demand for five different time periods. -Refer to the information above to answer this question.What is the price elasticity of demand for product X between years 1 and 2?

The graph below shows the supply and demand for tickets to a Raptors basketball game. -Refer to the graph above to answer this question.All of the statements below,except one are correct.Which is the exception?

Answer the following questions with respect to elasticity: A)Define the term 'price elasticity of demand'. B)Name three forms it can take. C)What does it mean if a calculation of the price elasticity of demand turns out to be less than one?

What is the effect of a rise in income on the demand for a product?

Table 4.3 shows the market demand for video rentals. Table 4.3

Define the term income elasticity.What does it mean if the calculation of income elasticity turns out to be positive and greater than one?

Suppose the supply curve is perfectly inelastic and the equilibrium price is $5 and equilibrium quantity is 7.If the government impose an excise tax of $1 per unit,what will be the new price and quantity traded? What is the total tax revenue and who pays the tax?

The graph below shows the supply and demand for tickets to a Raptors basketball game. -Refer to the graph above to answer this question.Which of the following statements is correct?

Historical data from the college bookstore shows that when the price of textbooks is increased by 5%,the number of textbooks sold falls by 10%.Should the bookstore lower its prices?

The following graph shows the demand and supply for i-Pods.

Define price elasticity of demand.What does it mean if the price elasticity of demand is equal to 4?

What is the formula used to calculate elasticity of supply?

The Economic Problem

Demand and Supply: An Introduction

Demand and Supply: An Elaboration

Consumer Choice

A Firms Production Decisions and Costs in the Short Run

Costs in the Long Run

Perfect Competition

An Evaluation of Competitive Markets

Monopoly

Imperfect Competition

The Factors of Production

International Trade

Filters

-Refer to the graphs above to answer this question.Suppose that the price of orange juice increases from P₁ to P₂ and the demand curve for apple juice shifts to the right from D₁ to D₂.What can be said about the cross-elasticity of demand for the two juices and their relationship?