Question 1

The demand for petrol is perfectly inelastic because most people need petrol to drive their cars.

Accepted Answer

A) True 
 B)False

Question 2

Necessities tend to have more inelastic demands than luxuries.

Accepted Answer

A) True 
 B)False

Question 3

If demand is inelastic,what is the absolute value of the price elasticity of demand?

Accepted Answer

A)  One 
B)  Less than one 
C)  Greater than one 
D)  Greater than the absolute value of the slope of the demand curve 
A)  One 
B)  Less than one 
C)  Greater than one 
D)  Greater than the absolute value of the slope of the demand curve

Question 4

The price elasticity of demand for beef is estimated to be 0.60 (in absolute value).This means that a 20 per cent increase in the price of beef,holding everything else constant,will cause the quantity of beef demanded to________.

Accepted Answer

A)  decrease by 12 per cent 
B)  decrease by 26 per cent 
C)  decrease by 32 per cent 
D)  decrease by 60 per cent 
A)  decrease by 12 per cent 
B)  decrease by 26 per cent 
C)  decrease by 32 per cent 
D)  decrease by 60 per cent

Question 5

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 6

If 50 units are sold at a price of $20 and 80 units are sold at a price of $15,what is the absolute value of the price elasticity of demand? Use the midpoint formula.

Accepted Answer

A)  0.17 
B)  0.62 
C)  1.62 
D)  5 
A)  0.17 
B)  0.62 
C)  1.62 
D)  5

Question 7

If the price of steel increases drastically,the quantity of steel demanded by the building industry will fall significantly over the long run because ________.

Accepted Answer

A)  buyers of steel are more sensitive to a price change if they have more time to adjust to the price change. 
B)  buyers of steel are less sensitive to a price change if they have more time to adjust to the price change. 
C)  sales revenue in the building industry will fall sharply. 
D)  profits will fall by a greater amount in the long run than in the short run. 
A)  buyers of steel are more sensitive to a price change if they have more time to adjust to the price change. 
B)  buyers of steel are less sensitive to a price change if they have more time to adjust to the price change. 
C)  sales revenue in the building industry will fall sharply. 
D)  profits will fall by a greater amount in the long run than in the short run.

Question 8

Studies show that the income elasticity of demand for wine is 5.03 and the income elasticity of demand for spirits is 1.21.This indicates that________.

Accepted Answer

A)  wine and spirits are luxury goods 
B)  wine is a luxury good and spirits are inferior goods 
C)  wine and spirits are highly price elastic 
D)  wine is a luxury good and spirits are necessities 
A)  wine and spirits are luxury goods 
B)  wine is a luxury good and spirits are inferior goods 
C)  wine and spirits are highly price elastic 
D)  wine is a luxury good and spirits are necessities

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

With the increased usage of mobile services,what has happened to the price elasticity of demand for landline 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 11

Suppose that the price of a money clip increases from $0.75 to $0.90 and quantity supplied rises from 8 000 units to 10 000 units.Use the midpoint formula to calculate the price elasticity of supply.

Accepted Answer

A)  1.22 
B)  1.0 
C)  0.82 
D)  0.07 
A)  1.22 
B)  1.0 
C)  0.82 
D)  0.07

Question 12

If the slope of a demand curve is equal to −0.1,then________.

Accepted Answer

A)  demand is inelastic 
B)  we do not know whether the demand is elastic or inelastic 
C)  the demand is elastic at low prices and inelastic at high prices 
D)  as price increases by 10 per cent, quantity demanded decreases by 1 per cent 
A)  demand is inelastic 
B)  we do not know whether the demand is elastic or inelastic 
C)  the demand is elastic at low prices and inelastic at high prices 
D)  as price increases by 10 per cent, quantity demanded decreases by 1 per cent

Question 13

Which of the following statements about price elasticity of demand is false?

Accepted Answer

A)  The value of the price elasticity of demand is the reciprocal of the value of the demand curve's slope. 
B)  If quantity demanded changes by a larger percentage than the percentage change in price, demand is elastic. 
C)  The value of the price elasticity of demand along a downward-sloping demand curve is always negative. 
D)  A linear downward-sloping demand curve has a varying price elasticity coefficient. 
A)  The value of the price elasticity of demand is the reciprocal of the value of the demand curve's slope. 
B)  If quantity demanded changes by a larger percentage than the percentage change in price, demand is elastic. 
C)  The value of the price elasticity of demand along a downward-sloping demand curve is always negative. 
D)  A linear downward-sloping demand curve has a varying price elasticity coefficient.

Question 14

The cross-price elasticity of demand between Coca-Cola and Pepsi-Cola is calculated by dividing________.

Accepted Answer

A)  the percentage change in quantity demanded of Coca-Cola by the percentage change in the quantity demanded of Pepsi-Cola 
B)  the percentage change in the price of Pepsi-Cola by the percentage change in quantity demanded of Coca-Cola 
C)  the percentage change in the price of Coca-Cola by the percentage change in the price of Pepsi-Cola 
D)  the percentage change in the quantity demanded of Coca-Cola by the percentage change in the price of Pepsi-Cola 
A)  the percentage change in quantity demanded of Coca-Cola by the percentage change in the quantity demanded of Pepsi-Cola 
B)  the percentage change in the price of Pepsi-Cola by the percentage change in quantity demanded of Coca-Cola 
C)  the percentage change in the price of Coca-Cola by the percentage change in the price of Pepsi-Cola 
D)  the percentage change in the quantity demanded of Coca-Cola by the percentage change in the price of Pepsi-Cola

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

If at a price of $24,Octavia sells 36 homegrown orchids and at $30 she sells 24 homegrown orchids,what is the demand for her orchids?

Accepted Answer

A)  Elastic 
B)  Inelastic 
C)  Unit-elastic 
D)  Perfectly elastic 
A)  Elastic 
B)  Inelastic 
C)  Unit-elastic 
D)  Perfectly elastic

Question 17

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 18

To what is price elasticity of demand equal?

Accepted Answer

A)  The value of the slope of the demand curve 
B)  The change in quantity demanded divided by the change in price 
C)  The percentage change in price divided by the percentage change in quantity demanded 
D)  The percentage change in quantity demanded divided by the percentage change in price 
A)  The value of the slope of the demand curve 
B)  The change in quantity demanded divided by the change in price 
C)  The percentage change in price divided by the percentage change in quantity demanded 
D)  The percentage change in quantity demanded divided by the percentage change in price

Question 19

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 20

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

The demand for petrol is perfectly inelastic because most people need petrol to drive their cars.

Necessities tend to have more inelastic demands than luxuries.

If demand is inelastic,what is the absolute value of the price elasticity of demand?

The price elasticity of demand for beef is estimated to be 0.60 (in absolute value).This means that a 20 per cent increase in the price of beef,holding everything else constant,will cause the quantity of beef demanded to________.

What does total revenue equal?

If 50 units are sold at a price of $20 and 80 units are sold at a price of $15,what is the absolute value of the price elasticity of demand? Use the midpoint formula.

If the price of steel increases drastically,the quantity of steel demanded by the building industry will fall significantly over the long run because ________.

Studies show that the income elasticity of demand for wine is 5.03 and the income elasticity of demand for spirits is 1.21.This indicates that________.

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

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

Suppose that the price of a money clip increases from $0.75 to $0.90 and quantity supplied rises from 8 000 units to 10 000 units.Use the midpoint formula to calculate the price elasticity of supply.

If the slope of a demand curve is equal to −0.1,then________.

Which of the following statements about price elasticity of demand is false?

The cross-price elasticity of demand between Coca-Cola and Pepsi-Cola is calculated by dividing________.

A supply curve that is vertical________.

If at a price of $24,Octavia sells 36 homegrown orchids and at $30 she sells 24 homegrown orchids,what is the demand for her orchids?

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?

To what is price elasticity of demand equal?

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

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.

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

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters

Exam 4: Elasticity: The Responsiveness of Demand and Supply

The demand for petrol is perfectly inelastic because most people need petrol to drive their cars.

Necessities tend to have more inelastic demands than luxuries.

If demand is inelastic,what is the absolute value of the price elasticity of demand?

The price elasticity of demand for beef is estimated to be 0.60 (in absolute value).This means that a 20 per cent increase in the price of beef,holding everything else constant,will cause the quantity of beef demanded to________.

What does total revenue equal?

If 50 units are sold at a price of $20 and 80 units are sold at a price of $15,what is the absolute value of the price elasticity of demand? Use the midpoint formula.

If the price of steel increases drastically,the quantity of steel demanded by the building industry will fall significantly over the long run because ________.

Studies show that the income elasticity of demand for wine is 5.03 and the income elasticity of demand for spirits is 1.21.This indicates that________.

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

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

Suppose that the price of a money clip increases from $0.75 to $0.90 and quantity supplied rises from 8 000 units to 10 000 units.Use the midpoint formula to calculate the price elasticity of supply.

If the slope of a demand curve is equal to −0.1,then________.

Which of the following statements about price elasticity of demand is false?

The cross-price elasticity of demand between Coca-Cola and Pepsi-Cola is calculated by dividing________.

A supply curve that is vertical________.

If at a price of $24,Octavia sells 36 homegrown orchids and at $30 she sells 24 homegrown orchids,what is the demand for her orchids?

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?

To what is price elasticity of demand equal?

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

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.

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

Technology,production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition and Oligopoly

The Markets for Labour and Other Factors of Production

Government Intervention in the Market

Social Policy and Inequality

Gdp: Measuring Total Production, income and Economic Growth

Unemployment and Inflation

Aggregate Demand and Aggregate Supply Analysis

Money,banks and the Reserve Bank of Australia

Monetary Policy

Fiscal Policy

Comparative Advantage and the Gains From International Trade

Macroeconomics in an Open Economy

Filters

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.