Question 1

-Refer to Figure 4-7. The supply curve on which price elasticity changes at every point 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

Economists estimated that the cross-price elasticity of demand for beer and wine is -0.83 and the income elasticity of wine is 5.03. This means that

Accepted Answer

A)  beer and wine are substitutes and wine is an inferior good. 
B)  beer and wine are complements and wine is a luxury good. 
C)  beer and wine are substitutes and wine is a luxury good. 
D)  beer and wine are complements and wine is an inferior good. 
A)  beer and wine are substitutes and wine is an inferior good. 
B)  beer and wine are complements and wine is a luxury good. 
C)  beer and wine are substitutes and wine is a luxury good. 
D)  beer and wine are complements and wine is an inferior good.

Question 3

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 4

If a supply curve is a horizontal line, supply is said to be

Accepted Answer

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

Question 5

Assume that when the price of cantaloupes is $2.50, the demand for cantaloupes is unit-elastic, and that the demand curve for cantaloupes is linear and downward sloping. If firms lower the price of cantaloupes to $2.00, which of the following statements can be made regarding the price elasticity of demand for cantaloupes?

Accepted Answer

A)  The demand for cantaloupes at $2.00 must be inelastic. 
B)  We cannot determine whether the demand for cantaloupes is elastic or inelastic without knowing what the quantity demanded is at each price. 
C)  The demand for cantaloupes at $2.00 must be elastic. 
D)  The demand for cantaloupes at $2.00 must be unit-elastic. 
A)  The demand for cantaloupes at $2.00 must be inelastic. 
B)  We cannot determine whether the demand for cantaloupes is elastic or inelastic without knowing what the quantity demanded is at each price. 
C)  The demand for cantaloupes at $2.00 must be elastic. 
D)  The demand for cantaloupes at $2.00 must be unit-elastic.

Question 6

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 7

When is demand perfectly elastic? When is demand perfectly inelastic? What are the values of the price elasticity of demand when demand is perfectly elastic or perfectly inelastic? What do perfectly elastic and perfectly inelastic demand curves look like?

Accepted Answer

Demand is perfectly elastic when quantit

Question 8

Assume that the market for barley is in equilibrium and the demand for barley is inelastic. Predict what happens to the revenue of barley farmers if a prolonged drought reduces the supply of barley. The drought will cause farm revenue to

Accepted Answer

A)  rise because there will be a shortage of barley. 
B)  rise because the percentage decrease in quantity sold is less than the percentage increase in price. 
C)  rise because the percentage increase in quantity sold is greater than the percentage increase in price. 
D)  fall because of the decrease in the quantity of barley sold. 
A)  rise because there will be a shortage of barley. 
B)  rise because the percentage decrease in quantity sold is less than the percentage increase in price. 
C)  rise because the percentage increase in quantity sold is greater than the percentage increase in price. 
D)  fall because of the decrease in the quantity of barley sold.

Question 9

Suppose the price elasticity of demand for methamphetamine is -0.35. If decriminalisation caused the price of methamphetamine to fall by 75 per cent, what will be the percentage increase in the quantity of methamphetamine demanded? If the price elasticity is -3.5, what will be the percentage increase in quantity demanded?

Accepted Answer

If price elasticity of demand is -0.35,

Question 10

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 11

Which of the following goods would have the most inelastic demand?

Accepted Answer

A)  ski vacations 
B)  bread 
C)  luxury cars 
D)  big screen TVs 
A)  ski vacations 
B)  bread 
C)  luxury cars 
D)  big screen TVs

Question 12

Suppose the absolute value of the price elasticity of demand for basketball game tickets on your campus is greater than 1. Increasing ticket prices will increase the total revenue from ticket sales.

Accepted Answer

A) True 
 B)False

Question 13

Economists have estimated that the cross-price elasticity of demand between beer and spirits is -0.50, the income elasticity for spirits is 1.21 and the income elasticity for wine is 5.03. These elasticities mean that

Accepted Answer

A)  beer and spirits are complements; spirits and wine are luxuries. 
B)  beer and spirits are normal goods; spirits and wine are luxuries. 
C)  beer and spirits are complements; spirits are substitutes. 
D)  beer and spirits are substitutes; spirits and wine are luxuries. 
A)  beer and spirits are complements; spirits and wine are luxuries. 
B)  beer and spirits are normal goods; spirits and wine are luxuries. 
C)  beer and spirits are complements; spirits are substitutes. 
D)  beer and spirits are substitutes; spirits and wine are luxuries.

Question 14

In order to prove that Motrin and Ibuprofen are substitutes, one should measure the ________ and get a ________.

Accepted Answer

A)  cross-price elasticity; positive number 
B)  cross-price elasticity; negative number 
C)  price elasticity of demand; number greater than 1 (in absolute value) 
D)  price elasticity of demand; number less than 1 (in absolute value) 
A)  cross-price elasticity; positive number 
B)  cross-price elasticity; negative number 
C)  price elasticity of demand; number greater than 1 (in absolute value) 
D)  price elasticity of demand; number less than 1 (in absolute value)

Question 15

The price elasticity of demand for Kellogg Corn Flakes is larger in absolute value than the price elasticity for all breakfast cereals.

Accepted Answer

A) True 
 B)False

Question 16

If demand is perfectly elastic, the absolute value of the price elasticity coefficient is

Accepted Answer

A)  infinity. 
B)  zero. 
C)  more than one. 
D)  equal to the absolute value of the slope of the demand curve. 
A)  infinity. 
B)  zero. 
C)  more than one. 
D)  equal to the absolute value of the slope of the demand curve.

Question 17

If the quantity demanded for a good rises as income rises, then the income elasticity of demand for this good is ________ than 0, and the good is ________ good.

Accepted Answer

A)  greater; an inferior 
B)  less; a normal 
C)  less; an inferior 
D)  greater; a normal 
A)  greater; an inferior 
B)  less; a normal 
C)  less; an inferior 
D)  greater; a normal

Question 18

If a 35 per cent increase in the price of golf balls led to a 42 per cent decrease in quantity demanded, then the demand for golf balls is

Accepted Answer

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

Question 19

If the absolute value of the price elasticity of demand for DVD movies is 0.8, then the elasticity of demand for the DVD for the movie The Hangover should be

Accepted Answer

A)  less then 0.8 in absolute value. 
B)  greater than 0.8 in absolute value. 
C)  equal to 1 in absolute value. 
D)  equal to zero because the DVD of this movie has been out for several years. 
A)  less then 0.8 in absolute value. 
B)  greater than 0.8 in absolute value. 
C)  equal to 1 in absolute value. 
D)  equal to zero because the DVD of this movie has been out for several years.

Question 20

If the demand for iPods is price elastic, then

Accepted Answer

A)  the percentage change in quantity demanded is greater than the percentage change in price (in absolute value). 
B)  the percentage change in quantity demanded is less than the percentage change in price (in absolute value). 
C)  the percentage change in quantity demanded is equal to the percentage change in price. 
D)  quantity demanded is not responsive to changes in price. 
A)  the percentage change in quantity demanded is greater than the percentage change in price (in absolute value). 
B)  the percentage change in quantity demanded is less than the percentage change in price (in absolute value). 
C)  the percentage change in quantity demanded is equal to the percentage change in price. 
D)  quantity demanded is not responsive to changes in price.

-Refer to Figure 4-7. The supply curve on which price elasticity changes at every point is shown in

Economists estimated that the cross-price elasticity of demand for beer and wine is -0.83 and the income elasticity of wine is 5.03. This means that

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

If a supply curve is a horizontal line, supply is said to be

Which of the following statements is true?

When is demand perfectly elastic? When is demand perfectly inelastic? What are the values of the price elasticity of demand when demand is perfectly elastic or perfectly inelastic? What do perfectly elastic and perfectly inelastic demand curves look like?

Assume that the market for barley is in equilibrium and the demand for barley is inelastic. Predict what happens to the revenue of barley farmers if a prolonged drought reduces the supply of barley. The drought will cause farm revenue to

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?

Which of the following goods would have the most inelastic demand?

Suppose the absolute value of the price elasticity of demand for basketball game tickets on your campus is greater than 1. Increasing ticket prices will increase the total revenue from ticket sales.

Economists have estimated that the cross-price elasticity of demand between beer and spirits is -0.50, the income elasticity for spirits is 1.21 and the income elasticity for wine is 5.03. These elasticities mean that

In order to prove that Motrin and Ibuprofen are substitutes, one should measure the and get a .

The price elasticity of demand for Kellogg Corn Flakes is larger in absolute value than the price elasticity for all breakfast cereals.

If demand is perfectly elastic, the absolute value of the price elasticity coefficient is

If the quantity demanded for a good rises as income rises, then the income elasticity of demand for this good is than 0, and the good is good.

If a 35 per cent increase in the price of golf balls led to a 42 per cent decrease in quantity demanded, then the demand for golf balls is

If the absolute value of the price elasticity of demand for DVD movies is 0.8, then the elasticity of demand for the DVD for the movie The Hangover should be

If the demand for iPods is price elastic, then

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

-Refer to Figure 4-7. The supply curve on which price elasticity changes at every point is shown in

Economists estimated that the cross-price elasticity of demand for beer and wine is -0.83 and the income elasticity of wine is 5.03. This means that

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

If a supply curve is a horizontal line, supply is said to be

Which of the following statements is true?

When is demand perfectly elastic? When is demand perfectly inelastic? What are the values of the price elasticity of demand when demand is perfectly elastic or perfectly inelastic? What do perfectly elastic and perfectly inelastic demand curves look like?

Assume that the market for barley is in equilibrium and the demand for barley is inelastic. Predict what happens to the revenue of barley farmers if a prolonged drought reduces the supply of barley. The drought will cause farm revenue to

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?

Which of the following goods would have the most inelastic demand?

Suppose the absolute value of the price elasticity of demand for basketball game tickets on your campus is greater than 1. Increasing ticket prices will increase the total revenue from ticket sales.

Economists have estimated that the cross-price elasticity of demand between beer and spirits is -0.50, the income elasticity for spirits is 1.21 and the income elasticity for wine is 5.03. These elasticities mean that

In order to prove that Motrin and Ibuprofen are substitutes, one should measure the ________ and get a ________.

The price elasticity of demand for Kellogg Corn Flakes is larger in absolute value than the price elasticity for all breakfast cereals.

If demand is perfectly elastic, the absolute value of the price elasticity coefficient is

If the quantity demanded for a good rises as income rises, then the income elasticity of demand for this good is ________ than 0, and the good is ________ good.

If a 35 per cent increase in the price of golf balls led to a 42 per cent decrease in quantity demanded, then the demand for golf balls is

If the absolute value of the price elasticity of demand for DVD movies is 0.8, then the elasticity of demand for the DVD for the movie The Hangover should be

If the demand for iPods is price elastic, then

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

In order to prove that Motrin and Ibuprofen are substitutes, one should measure the and get a .

If the quantity demanded for a good rises as income rises, then the income elasticity of demand for this good is than 0, and the good is good.