Question 1

Which of the following products has the most inelastic demand?

Accepted Answer

A) Restaurant meals. 
B) Tomatoes. 
C) Movie theatre admissions. 
D) Eggs. 
E) Ocean cruises. 
A) Restaurant meals. 
B) Tomatoes. 
C) Movie theatre admissions. 
D) Eggs. 
E) Ocean cruises.

Question 2

Suppose that a 10% increase in the price of product A results in a 12% decrease in the quantity demanded of product B. Which of the following statements is correct?

Accepted Answer

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

Question 3

The graph below illustrates three demand curves.
  
-Refer to the graph above to answer this question.Which of the following statements is correct?

Accepted Answer

A) The price elasticity of demand between points A and C on D3 is 0.267. 
B) The price elasticity of demand between points A and C on D3 is 0.375. 
C) The demand between points A and C on D3 is elastic. 
D) The slope of demand curve D1 and its price elasticity are the same. 
A) The price elasticity of demand between points A and C on D3 is 0.267. 
B) The price elasticity of demand between points A and C on D3 is 0.375. 
C) The demand between points A and C on D3 is elastic. 
D) The slope of demand curve D1 and its price elasticity are the same.

Question 4

If the government increases the excise tax on cigarettes by 10%,which of the following statements is correct?

Accepted Answer

A) The government's tax revenue will fall since the demand for cigarettes is inelastic. 
B) The quantity demanded of cigarettes will fall by more than 10% because the demand is inelastic. 
C) Both the quantity demanded and supplied of cigarettes will fall by more than 10% because the demand is inelastic. 
D) Since the demand for cigarettes is highly inelastic,the subsequent increase in price will be greater than the decrease in quantity demanded. 
A) The government's tax revenue will fall since the demand for cigarettes is inelastic. 
B) The quantity demanded of cigarettes will fall by more than 10% because the demand is inelastic. 
C) Both the quantity demanded and supplied of cigarettes will fall by more than 10% because the demand is inelastic. 
D) Since the demand for cigarettes is highly inelastic,the subsequent increase in price will be greater than the decrease in quantity demanded.

Question 5

Below is some information on the demand for products K,L and M.
  
-Refer to information above to answer this question.What is the income elasticity of product L?

Accepted Answer

A) approximately 12. 
B) approximately 1.2. 
C) greater than the income elasticity of product K. 
D) approximately 0.8. 
E) 8. 
A) approximately 12. 
B) approximately 1.2. 
C) greater than the income elasticity of product K. 
D) approximately 0.8. 
E) 8.

Question 6

Define cross-price elasticity.What does it mean if the cross-price elasticity is equal -3?
A.An increase in the price of the complementary good will lead to a greater proportional decrease in the quantity demanded of the product.
B.If the cross-price elasticity is -3,product A and B are complements.This means that a 1% increase in the price of product B will lead to a 3% decrease in the quantity demanded of product

Accepted Answer

Cross-price elasticity measures the resp

Question 7

If cross-elasticity of demand is positive,we could conclude that the two products are substitutes.

Accepted Answer

A) True 
 B)False

Question 8

What is the effect of the imposition of a sales tax?

Accepted Answer

A) The supply curve will shift to the left. 
B) The supply curve will shift to the right. 
C) The demand curve will shift to the left. 
D) The demand curve will shift to the right. 
A) The supply curve will shift to the left. 
B) The supply curve will shift to the right. 
C) The demand curve will shift to the left. 
D) The demand curve will shift to the right.

Question 9

What is a normal good?

Accepted Answer

A) It is a good whose income elasticity of demand is  1. 
A) It is a good whose income elasticity of demand is  1.

Question 10

Under which of the following two scenarios would demand for hot dogs be more elastic? Explain.
(a)You are at a hockey game at the local ice rink and want to eat a hot dog.
(b)It is Tuesday,you are planning the menu for a picnic you are going to have on Saturday and you decide to serve hot dogs.

Accepted Answer

Demand for hot dogs will be more elastic

Question 11

-Refer to the information above to answer this question.What are the elasticity coefficients for the price ranges $1 to $2 and $9 to $10,respectively?

Accepted Answer

A) 0.22 and 2 
B) 2 and 0.22 
C) 0.16 and 6.33 
D) 6.33 and 0.15 
A) 0.22 and 2 
B) 2 and 0.22 
C) 0.16 and 6.33 
D) 6.33 and 0.15

Question 12

Suppose that the value of the income elasticity of demand for a product is -2 and average incomes decrease by 10%.What will happen to the quantity demanded?

Accepted Answer

A) It will increase by 5%. 
B) It will increase by 20%. 
C) It will decrease by 5%. 
D) It will decrease by 20%. 
E) It cannot be determined without further information. 
A) It will increase by 5%. 
B) It will increase by 20%. 
C) It will decrease by 5%. 
D) It will decrease by 20%. 
E) It cannot be determined without further information.

Question 13

Suppose that the value of the price elasticity of demand for a product is 0.5 and its price decreases by 10%.What will happen to the quantity demanded?

Accepted Answer

A) It will increase by 5%. 
B) It will increase by 20%. 
C) It will decrease by 5%. 
D) It will decrease by 20%. 
E) It cannot be determined without further information. 
A) It will increase by 5%. 
B) It will increase by 20%. 
C) It will decrease by 5%. 
D) It will decrease by 20%. 
E) It cannot be determined without further information.

Question 14

If the short-run price elasticity of demand for petroleum is 0.8,which of the following statements is most likely to be true for the long run?

Accepted Answer

A) The price elasticity of demand will be less than 0.8. 
B) The price elasticity of demand will be greater than 0.8. 
C) The price elasticity of demand will be 0.8. 
D) No generalization can be made about the differences between the short run and the long run. 
A) The price elasticity of demand will be less than 0.8. 
B) The price elasticity of demand will be greater than 0.8. 
C) The price elasticity of demand will be 0.8. 
D) No generalization can be made about the differences between the short run and the long run.

Question 15

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

Accepted Answer

A) Demand is inelastic if the price changes from $5 to $7. 
B) Demand is inelastic if the price changes from $4 to $7. 
C) Demand is inelastic if the price changes from $6 to $10. 
D) Demand is unitary elastic if the price changes from $1 to $10. 
E) None of the choices are correct. 
A) Demand is inelastic if the price changes from $5 to $7. 
B) Demand is inelastic if the price changes from $4 to $7. 
C) Demand is inelastic if the price changes from $6 to $10. 
D) Demand is unitary elastic if the price changes from $1 to $10. 
E) None of the choices are correct.

Question 16

The list below refers to the price elasticity of demand.
1)perfectly inelastic
2)perfectly elastic
3)unitary elasticity
4)elastic
5)inelastic
-Refer to the information above to answer this question.What is a demand curve that forms a rectangular hyperbola?

Accepted Answer

A) 1. 
B) 2. 
C) 3. 
D) 4. 
E) 5. 
A) 1. 
B) 2. 
C) 3. 
D) 4. 
E) 5.

Question 17

-Refer to the information above to answer this question.What is the elasticity of demand in the $20 to $22 range?

Accepted Answer

A) 0.02. 
B) 0.7. 
C) 1.4. 
D) 2.1. 
E) 3.33. 
A) 0.02. 
B) 0.7. 
C) 1.4. 
D) 2.1. 
E) 3.33.

Question 18

A firm's total revenue is equal to price times demand.

Accepted Answer

A) True 
 B)False

Question 19

According to reports,the supply of rose hip tea has doubled in the last five years yet the price has not changed.This suggests that the demand for this type of tea must be perfectly elastic.Comment on this statement.

Accepted Answer

It is very unlikely (and probably imposs

Question 20

Under which of the following situations will total revenue rise?

Accepted Answer

A) If elasticity is > 1 and price falls. B) If elasticity is > 1 and price rises. C) If elasticity is < 1 and price falls. D) If elasticity is = 1 and price falls. A) If elasticity is > 1 and price falls. B) If elasticity is > 1 and price rises. C) If elasticity is < 1 and price falls. D) If elasticity is = 1 and price falls.

Which of the following products has the most inelastic demand?

Suppose that a 10% increase in the price of product A results in a 12% decrease in the quantity demanded of product B. Which of the following statements is correct?

The graph below illustrates three demand curves. -Refer to the graph above to answer this question.Which of the following statements is correct?

If the government increases the excise tax on cigarettes by 10%,which of the following statements is correct?

Below is some information on the demand for products K,L and M. -Refer to information above to answer this question.What is the income elasticity of product L?

If cross-elasticity of demand is positive,we could conclude that the two products are substitutes.

What is the effect of the imposition of a sales tax?

What is a normal good?

Under which of the following two scenarios would demand for hot dogs be more elastic? Explain. (a)You are at a hockey game at the local ice rink and want to eat a hot dog. (b)It is Tuesday,you are planning the menu for a picnic you are going to have on Saturday and you decide to serve hot dogs.

-Refer to the information above to answer this question.What are the elasticity coefficients for the price ranges $1 to $2 and $9 to $10,respectively?

Suppose that the value of the income elasticity of demand for a product is -2 and average incomes decrease by 10%.What will happen to the quantity demanded?

Suppose that the value of the price elasticity of demand for a product is 0.5 and its price decreases by 10%.What will happen to the quantity demanded?

If the short-run price elasticity of demand for petroleum is 0.8,which of the following statements is most likely to be true for the long run?

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

The list below refers to the price elasticity of demand. 1)perfectly inelastic 2)perfectly elastic 3)unitary elasticity 4)elastic 5)inelastic -Refer to the information above to answer this question.What is a demand curve that forms a rectangular hyperbola?

-Refer to the information above to answer this question.What is the elasticity of demand in the $20 to $22 range?

A firm's total revenue is equal to price times demand.

According to reports,the supply of rose hip tea has doubled in the last five years yet the price has not changed.This suggests that the demand for this type of tea must be perfectly elastic.Comment on this statement.

Under which of the following situations will total revenue rise?

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

Which of the following products has the most inelastic demand?

Suppose that a 10% increase in the price of product A results in a 12% decrease in the quantity demanded of product B. Which of the following statements is correct?

The graph below illustrates three demand curves. -Refer to the graph above to answer this question.Which of the following statements is correct?

If the government increases the excise tax on cigarettes by 10%,which of the following statements is correct?

Below is some information on the demand for products K,L and M. -Refer to information above to answer this question.What is the income elasticity of product L?

If cross-elasticity of demand is positive,we could conclude that the two products are substitutes.

What is the effect of the imposition of a sales tax?

What is a normal good?

Under which of the following two scenarios would demand for hot dogs be more elastic? Explain. (a)You are at a hockey game at the local ice rink and want to eat a hot dog. (b)It is Tuesday,you are planning the menu for a picnic you are going to have on Saturday and you decide to serve hot dogs.

-Refer to the information above to answer this question.What are the elasticity coefficients for the price ranges $1 to $2 and $9 to $10,respectively?

Suppose that the value of the income elasticity of demand for a product is -2 and average incomes decrease by 10%.What will happen to the quantity demanded?

Suppose that the value of the price elasticity of demand for a product is 0.5 and its price decreases by 10%.What will happen to the quantity demanded?

If the short-run price elasticity of demand for petroleum is 0.8,which of the following statements is most likely to be true for the long run?

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

The list below refers to the price elasticity of demand. 1)perfectly inelastic 2)perfectly elastic 3)unitary elasticity 4)elastic 5)inelastic -Refer to the information above to answer this question.What is a demand curve that forms a rectangular hyperbola?

-Refer to the information above to answer this question.What is the elasticity of demand in the $20 to $22 range?

A firm's total revenue is equal to price times demand.

According to reports,the supply of rose hip tea has doubled in the last five years yet the price has not changed.This suggests that the demand for this type of tea must be perfectly elastic.Comment on this statement.

Under which of the following situations will total revenue rise?

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