Question 1

Demand for a luxury item, such as a yacht, is likely to be

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 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

The current price of canvas messenger bags is $36 each, and sales of the bags equal 400 per week. If the price elasticity of demand is -2.5 and the price changes to $44, how many messenger bags will be sold per week? Use the midpoint formula.

Accepted Answer

= 400 - X

Question 4

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 negative 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 5

Shifts in the supply of oil have caused large changes in price since the 1970s because

Accepted Answer

A)  the supply of oil is very inelastic while the demand for oil is very elastic over short periods of time. 
B)  the supply of oil is very elastic while the demand for oil is inelastic over short periods of time. 
C)  both the supply of oil and the demand for oil are inelastic over short periods of time. 
D)  the supply of oil and the demand for oil are perfectly elastic over short periods of time. 
A)  the supply of oil is very inelastic while the demand for oil is very elastic over short periods of time. 
B)  the supply of oil is very elastic while the demand for oil is inelastic over short periods of time. 
C)  both the supply of oil and the demand for oil are inelastic over short periods of time. 
D)  the supply of oil and the demand for oil are perfectly elastic over short periods of time.

Question 6

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 7

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 8

If a 6 per cent increase in income leads to a 4 per cent increase in quantity demanded for audio books the income elasticity of demand is

Accepted Answer

A)  -0.67. 
B)  0.67. 
C)  1.5. 
D)  2. 
A)  -0.67. 
B)  0.67. 
C)  1.5. 
D)  2.

Question 9

Most food products have low income and price elasticities of demand.

Accepted Answer

A) True 
 B)False

Question 10

If the demand for a life-saving drug was perfectly inelastic and the price doubled, the quantity demanded would

Accepted Answer

A)  also double. 
B)  decrease by 50%. 
C)  be cut in half. 
D)  remain constant. 
A)  also double. 
B)  decrease by 50%. 
C)  be cut in half. 
D)  remain constant.

Question 11

If, for a given percentage decrease in price, quantity supplied decreases by a proportionately smaller 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 12

Which of the following statements is true?

Accepted Answer

A)  Whenever a firm raises its price, its total revenue will increase. 
B)  When a firm lowers its price, its total revenue may either increase or decrease. 
C)  Whenever a firm increases its quantity sold, its revenue will increase. 
D)  Total revenue will equal zero when the demand for a product is unit-elastic. 
A)  Whenever a firm raises its price, its total revenue will increase. 
B)  When a firm lowers its price, its total revenue may either increase or decrease. 
C)  Whenever a firm increases its quantity sold, its revenue will increase. 
D)  Total revenue will equal zero when the demand for a product is unit-elastic.

Question 13

Which of the following pairs of goods is likely to have a negative cross-price elasticity of demand?

Accepted Answer

A)  pancakes and syrup 
B)  hot dogs and hamburgers 
C)  orange juice and grapefruit juice 
D)  peanuts and cat food 
A)  pancakes and syrup 
B)  hot dogs and hamburgers 
C)  orange juice and grapefruit juice 
D)  peanuts and cat food

Question 14

Holding everything else constant, the absolute value of the price elasticity of demand for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes.

Accepted Answer

A)  less than 
B)  equal to 
C)  twice as great as 
D)  greater than 
A)  less than 
B)  equal to 
C)  twice as great as 
D)  greater than

Question 15

A supply curve that is vertical

Accepted Answer

A)  is perfectly elastic. 
B)  is perfectly inelastic. 
C)  is impossible. 
D)  has an elasticity equal to 1. 
A)  is perfectly elastic. 
B)  is perfectly inelastic. 
C)  is impossible. 
D)  has an elasticity equal to 1.

Question 16

Price elasticity of supply is used to gauge

Accepted Answer

A)  how responsive suppliers are to price changes. 
B)  how responsive suppliers are to changes in future prices. 
C)  how responsive suppliers are to a change in demand. 
D)  how responsive sales are to a change in input prices. 
A)  how responsive suppliers are to price changes. 
B)  how responsive suppliers are to changes in future prices. 
C)  how responsive suppliers are to a change in demand. 
D)  how responsive sales are to a change in input prices.

Question 17

-Refer to Figure 4-1. A perfectly elastic demand 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 18

With the increased usage of mobile services, what has happened to the price elasticity of demand for land-line telephone services?

Accepted Answer

A)  It has become more price inelastic. 
B)  It has become more price elastic. 
C)  It has become more income elastic. 
D)  The absolute value of the price elasticity coefficient has probably gone down. 
A)  It has become more price inelastic. 
B)  It has become more price elastic. 
C)  It has become more income elastic. 
D)  The absolute value of the price elasticity coefficient has probably gone down.

Question 19

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 20

If the income elasticity for canned food is 0.8, then canned food is an inferior good.

Accepted Answer

A) True 
 B)False

Demand for a luxury item, such as a yacht, is likely to be

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

The current price of canvas messenger bags is $36 each, and sales of the bags equal 400 per week. If the price elasticity of demand is -2.5 and the price changes to $44, how many messenger bags will be sold per week? Use the midpoint formula.

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 negative cross-price elasticity?

Shifts in the supply of oil have caused large changes in price since the 1970s because

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

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

If a 6 per cent increase in income leads to a 4 per cent increase in quantity demanded for audio books the income elasticity of demand is

Most food products have low income and price elasticities of demand.

If the demand for a life-saving drug was perfectly inelastic and the price doubled, the quantity demanded would

If, for a given percentage decrease in price, quantity supplied decreases by a proportionately smaller percentage, then supply is

Which of the following statements is true?

Which of the following pairs of goods is likely to have a negative cross-price elasticity of demand?

Holding everything else constant, the absolute value of the price elasticity of demand for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes.

A supply curve that is vertical

Price elasticity of supply is used to gauge

-Refer to Figure 4-1. A perfectly elastic demand curve is shown in

With the increased usage of mobile services, what has happened to the price elasticity of demand for land-line telephone services?

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?

If the income elasticity for canned food is 0.8, then canned food is an inferior good.

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

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

Demand for a luxury item, such as a yacht, is likely to be

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

The current price of canvas messenger bags is $36 each, and sales of the bags equal 400 per week. If the price elasticity of demand is -2.5 and the price changes to $44, how many messenger bags will be sold per week? Use the midpoint formula.

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 negative cross-price elasticity?

Shifts in the supply of oil have caused large changes in price since the 1970s because

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

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

If a 6 per cent increase in income leads to a 4 per cent increase in quantity demanded for audio books the income elasticity of demand is

Most food products have low income and price elasticities of demand.

If the demand for a life-saving drug was perfectly inelastic and the price doubled, the quantity demanded would

If, for a given percentage decrease in price, quantity supplied decreases by a proportionately smaller percentage, then supply is

Which of the following statements is true?

Which of the following pairs of goods is likely to have a negative cross-price elasticity of demand?

Holding everything else constant, the absolute value of the price elasticity of demand for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes.

A supply curve that is vertical

Price elasticity of supply is used to gauge

-Refer to Figure 4-1. A perfectly elastic demand curve is shown in

With the increased usage of mobile services, what has happened to the price elasticity of demand for land-line telephone services?

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?

If the income elasticity for canned food is 0.8, then canned food is an inferior good.

Economics Foundations and Models

Choices and Trade - Offs in the Market

Where Prices Come Frome : The Interaction of Demand and Supply

Economic Efficiency , Government Price Setting and Taxes

Concumer Choice and Behavioural Economics

Technology , Production and Costs

Firms in Perfectly Compitive Markets

Monopoly Markets

Monopolistic Competition : The Competitive Model in More Realistic Setting

Oligopoly : Firms in Less Competitve Markets

The Market for Labour and Other Factors of Production

International Trade

Government Intervention in the Market

Externalities , Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters