Question 1

Figure 4.1  
-Refer to Figure 4.1.On which panel is a perfectly inelastic demand curve shown?

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

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 3

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 4

To calculate the price elasticity of supply,we divide________.

Accepted Answer

A)  the percentage change in price by the percentage change in quantity supplied 
B)  the percentage change in quantity supplied by the percentage change in price 
C)  rise by the run 
D)  the average price by the average quantity supplied 
A)  the percentage change in price by the percentage change in quantity supplied 
B)  the percentage change in quantity supplied by the percentage change in price 
C)  rise by the run 
D)  the average price by the average quantity supplied

Question 5

If an 8 per cent decrease in the price of lobster leads to a 15 per cent decrease in the quantity supplied of lobster,then the supply of lobster is _______.

Accepted Answer

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

Question 6

When demand is elastic,a fall in price causes total revenue to rise because_______.

Accepted Answer

A)  when price falls, quantity sold increases so total revenue automatically rises 
B)  the increase in quantity sold is large enough to offset the lower price 
C)  the percentage increase in quantity demanded is less than the percentage fall in price 
D)  the demand curve shifts 
A)  when price falls, quantity sold increases so total revenue automatically rises 
B)  the increase in quantity sold is large enough to offset the lower price 
C)  the percentage increase in quantity demanded is less than the percentage fall in price 
D)  the demand curve shifts

Question 7

Bringing oil to the market is a relatively long and costly process.The whole process from exploration to pumping significant amounts of oil can take years.What does this indicate about the price elasticity of supply for oil?

Accepted Answer

A)  The elasticity coefficient is likely to be very high, and supply is inelastic. 
B)  The elasticity coefficient is likely to be close to zero, and supply is perfectly elastic. 
C)  The elasticity coefficient is likely to be low, and supply is highly inelastic. 
D)  The elasticity coefficient is likely to be low, and supply is highly elastic. 
A)  The elasticity coefficient is likely to be very high, and supply is inelastic. 
B)  The elasticity coefficient is likely to be close to zero, and supply is perfectly elastic. 
C)  The elasticity coefficient is likely to be low, and supply is highly inelastic. 
D)  The elasticity coefficient is likely to be low, and supply is highly elastic.

Question 8

What is likely to be the demand for a luxury item,like a yacht?

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 9

Suppose a hurricane decreased the supply of oranges so that the price of oranges rose from $120 a tonne to $180 a tonne and quantity sold decreased from 800 tonnes to 240 tonnes.The absolute value of the price elasticity of demand is ________.

Accepted Answer

A)  0.11 
B)  0.37 
C)  2.69 
D)  9.33 
A)  0.11 
B)  0.37 
C)  2.69 
D)  9.33

Question 10

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 11

If the percentage increase in price is 15 per cent and the value of the price elasticity of demand is - then what is the quantity demanded?

Accepted Answer

A)  Will increase by 45 per cent 
B)  Will increase by 5 per cent 
C)  Will decrease by 45 per cent 
D)  Will decrease by 5 per cent 
A)  Will increase by 45 per cent 
B)  Will increase by 5 per cent 
C)  Will decrease by 45 per cent 
D)  Will decrease by 5 per cent

Question 12

For each pair of items below,determine which product would have the higher price elasticity of demand (in absolute value).
a.Blood pressure medicine for someone who has high blood pressure and the purchase of Clairol hair colouring product
b.A new Ford Fusion or a tank of gas for your current car
c.A Seiko watch or watches in general
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

a.The demand for the hair product is mor

Question 13

Figure 4.4  
-Refer to Figure 4.4.At the midpoint of the demand curve,in absolute value________.

Accepted Answer

A)  the price elasticity coefficient is at a maximum. 
B)  the price elasticity coefficient is at a minimum. 
C)  the price elasticity coefficient is zero. 
D)  the price elasticity coefficient is one. 
A)  the price elasticity coefficient is at a maximum. 
B)  the price elasticity coefficient is at a minimum. 
C)  the price elasticity coefficient is zero. 
D)  the price elasticity coefficient is one.

Question 14

Which of the following is not a determinant of a good's price elasticity of demand?

Accepted Answer

A)  The slope of the demand curve 
B)  The share of the good in the consumer's total budget 
C)  Whether the good is a luxury or a necessity 
D)  The passage of time 
A)  The slope of the demand curve 
B)  The share of the good in the consumer's total budget 
C)  Whether the good is a luxury or a necessity 
D)  The passage of time

Question 15

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

Accepted Answer

A)  Less than 0.8 in absolute value 
B)  Greater than 0.8 in absolute value 
C)  Equal to 1 in absolute value 
D)  Equal to 0 because the DVD of this movie has been out for several years 
A)  Less than 0.8 in absolute value 
B)  Greater than 0.8 in absolute value 
C)  Equal to 1 in absolute value 
D)  Equal to 0 because the DVD of this movie has been out for several years

Question 16

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 17

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 18

If the demand for a product is elastic,the quantity demanded changes by a larger percentage than the percentage change in price.

Accepted Answer

A) True 
 B)False

Question 19

Suppose that when the price per ream of recycled printer paper rises from $4 to $4.50,the quantity demanded falls from 800 to 600 reams per day.Using the midpoint formula,what is the price elasticity of demand (in absolute value)over this range?

Accepted Answer

A)  0.003 
B)  0.41 
C)  2.43 
D)  4 
A)  0.003 
B)  0.41 
C)  2.43 
D)  4

Question 20

Most people buy salt infrequently and in small quantities.Even a doubling of the price of salt is likely to result in a small decline in the quantity of salt demanded.Therefore,__________.

Accepted Answer

A)  the demand for salt will be perfectly inelastic 
B)  salt is a normal good 
C)  the demand for salt is relatively inelastic 
D)  the price elasticity of demand for salt is greater than 1 (in absolute value) 
A)  the demand for salt will be perfectly inelastic 
B)  salt is a normal good 
C)  the demand for salt is relatively inelastic 
D)  the price elasticity of demand for salt is greater than 1 (in absolute value)

Figure 4.1 -Refer to Figure 4.1.On which panel is a perfectly inelastic demand curve shown?

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?

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

To calculate the price elasticity of supply,we divide________.

If an 8 per cent decrease in the price of lobster leads to a 15 per cent decrease in the quantity supplied of lobster,then the supply of lobster is _______.

When demand is elastic,a fall in price causes total revenue to rise because_______.

Bringing oil to the market is a relatively long and costly process.The whole process from exploration to pumping significant amounts of oil can take years.What does this indicate about the price elasticity of supply for oil?

What is likely to be the demand for a luxury item,like a yacht?

Suppose a hurricane decreased the supply of oranges so that the price of oranges rose from $120 a tonne to $180 a tonne and quantity sold decreased from 800 tonnes to 240 tonnes.The absolute value of the price elasticity of demand is ________.

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

If the percentage increase in price is 15 per cent and the value of the price elasticity of demand is - then what is the quantity demanded?

Figure 4.4 -Refer to Figure 4.4.At the midpoint of the demand curve,in absolute value________.

Which of the following is not a determinant of a good's price elasticity of demand?

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

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________.

Which of the following statements is true?

If the demand for a product is elastic,the quantity demanded changes by a larger percentage than the percentage change in price.

Suppose that when the price per ream of recycled printer paper rises from $4 to $4.50,the quantity demanded falls from 800 to 600 reams per day.Using the midpoint formula,what is the price elasticity of demand (in absolute value)over this range?

Most people buy salt infrequently and in small quantities.Even a doubling of the price of salt is likely to result in a small decline in the quantity of salt demanded.Therefore,__________.

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

Figure 4.1 -Refer to Figure 4.1.On which panel is a perfectly inelastic demand curve shown?

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?

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

To calculate the price elasticity of supply,we divide________.

If an 8 per cent decrease in the price of lobster leads to a 15 per cent decrease in the quantity supplied of lobster,then the supply of lobster is _______.

When demand is elastic,a fall in price causes total revenue to rise because_______.

Bringing oil to the market is a relatively long and costly process.The whole process from exploration to pumping significant amounts of oil can take years.What does this indicate about the price elasticity of supply for oil?

What is likely to be the demand for a luxury item,like a yacht?

Suppose a hurricane decreased the supply of oranges so that the price of oranges rose from $120 a tonne to $180 a tonne and quantity sold decreased from 800 tonnes to 240 tonnes.The absolute value of the price elasticity of demand is ________.

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

If the percentage increase in price is 15 per cent and the value of the price elasticity of demand is - then what is the quantity demanded?

Figure 4.4 -Refer to Figure 4.4.At the midpoint of the demand curve,in absolute value________.

Which of the following is not a determinant of a good's price elasticity of demand?

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

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________.

Which of the following statements is true?

If the demand for a product is elastic,the quantity demanded changes by a larger percentage than the percentage change in price.

Suppose that when the price per ream of recycled printer paper rises from $4 to $4.50,the quantity demanded falls from 800 to 600 reams per day.Using the midpoint formula,what is the price elasticity of demand (in absolute value)over this range?

Most people buy salt infrequently and in small quantities.Even a doubling of the price of salt is likely to result in a small decline in the quantity of salt demanded.Therefore,__________.

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