Question 1

A perfectly elastic demand curve is _______.

Accepted Answer

A)  vertical 
B)  horizontal 
C)  curvilinear 
D)  upward sloping 
A)  vertical 
B)  horizontal 
C)  curvilinear 
D)  upward sloping

Question 2

The demand for heating oil in the short run is more elastic than the long run demand for heating oil.

Accepted Answer

A) True 
 B)False

Question 3

The statement which explains why a firm would be interested in knowing the price elasticity of demand for a good it sells is:

Accepted Answer

A)  The price elasticity of demand can be used to determine the impact of changes in income on quantity sold. 
B)  Knowing the price elasticity of demand allows the firm to determine how the cost of producing additional units of the good will change. 
C)  Knowing the price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total profit. 
D)  The price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total revenue. 
A)  The price elasticity of demand can be used to determine the impact of changes in income on quantity sold. 
B)  Knowing the price elasticity of demand allows the firm to determine how the cost of producing additional units of the good will change. 
C)  Knowing the price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total profit. 
D)  The price elasticity of demand allows the firm to calculate how changes in the price of the good will affect the firm's total revenue.

Question 4

If,when price changes by 35 per cent,the quantity demanded changes by 7 per cent,then the absolute value of the price elasticity of demand is 5.

Accepted Answer

A) True 
 B)False

Question 5

Table 4.1
 $$\begin{array} { | c | c | } 
\hline \text { Price (dollars) } & \text { Quantity } \
\hline 35 & 40 \
\hline 25 & 50 \
\hline
\end{array}$$
-Refer to Table 4.1.Suppose you own a bookstore.You believe that you can sell 40 copies per day of the latest John Grisham novel when the price is $35.You consider lowering the price to $25 and believe this will increase the quantity sold to 50 books per day.Compute the price elasticity of demand using the midpoint formula and these data.Select the correct implication from your work.

Accepted Answer

A)  The demand for the John Grisham book is inelastic. Revenue will fall if the price is lowered. 
B)  The demand for the John Grisham book is elastic. Revenue will rise if the price is lowered. 
C)  The demand for the John Grisham book is inelastic. Revenue will rise if the price is lowered. 
D)  The demand for the John Grisham book is elastic. Revenue will fall if the price is lowered. 
A)  The demand for the John Grisham book is inelastic. Revenue will fall if the price is lowered. 
B)  The demand for the John Grisham book is elastic. Revenue will rise if the price is lowered. 
C)  The demand for the John Grisham book is inelastic. Revenue will rise if the price is lowered. 
D)  The demand for the John Grisham book is elastic. Revenue will fall if the price is lowered.

Question 6

Which statement is true of the market for a product that is broadly defined?

Accepted Answer

A)  The good has many complements. 
B)  There are few substitutes for the product, and the demand for the product is relatively inelastic. 
C)  There are many substitutes for the product, and the demand for the product is relatively elastic. 
D)  The expenditure on the good is likely to make up a large share of one's budget. 
A)  The good has many complements. 
B)  There are few substitutes for the product, and the demand for the product is relatively inelastic. 
C)  There are many substitutes for the product, and the demand for the product is relatively elastic. 
D)  The expenditure on the good is likely to make up a large share of one's budget.

Question 7

Suppose that at a price of $55,100 units were sold while at a price of $33,153 units were sold.Without calculating the price elasticity value,can you determine whether demand is elastic,unit-elastic,or inelastic? Explain your answer.
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

The first total revenue is ($5

Question 8

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 positive 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 9

If a 5 per cent increase in income leads to a 10 per cent decrease in quantity demanded for a product this product is _______.

Accepted Answer

A)  an income elastic good 
B)  an inferior good 
C)  a necessity 
D)  a luxury good 
A)  an income elastic good 
B)  an inferior good 
C)  a necessity 
D)  a luxury good

Question 10

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,a

Question 11

The process involved in bringing oil to world markets can take years.Substitutes for oil-based products such as petrol are limited.As a result________.

Accepted Answer

A)  the supply of oil is very elastic and the demand for oil is very elastic over short periods of time 
B)  the supply of oil is very inelastic and the demand for petrol is inelastic over short periods of time 
C)  the supply of oil and the demand for oil shift to the right over short periods of time 
D)  the supply of oil and the demand for oil are both perfectly elastic over short periods of time 
A)  the supply of oil is very elastic and the demand for oil is very elastic over short periods of time 
B)  the supply of oil is very inelastic and the demand for petrol is inelastic over short periods of time 
C)  the supply of oil and the demand for oil shift to the right over short periods of time 
D)  the supply of oil and the demand for oil are both perfectly elastic over short periods of time

Question 12

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 13

How is cross-price elasticity of demand calculated?

Accepted Answer

A)  As the percentage change in quantity demanded divided by percentage change in price of a good 
B)  As the percentage change in quantity demanded of one good divided by percentage change in price of a different good 
C)  As the percentage change in quantity sold divided by percentage change in buyers' incomes 
D)  As the percentage change in quantity supplied divided by percentage change in price of a good 
A)  As the percentage change in quantity demanded divided by percentage change in price of a good 
B)  As the percentage change in quantity demanded of one good divided by percentage change in price of a different good 
C)  As the percentage change in quantity sold divided by percentage change in buyers' incomes 
D)  As the percentage change in quantity supplied divided by percentage change in price of a good

Question 14

Figure 4.4  
-Refer to Figure 4.4.The inelastic segment of the demand curve________.

Accepted Answer

A)  is coincident with the horizontal axis. 
B)  is coincident with the vertical axis. 
C)  lies below the midpoint of the curve. 
D)  lies above the midpoint of the curve. 
A)  is coincident with the horizontal axis. 
B)  is coincident with the vertical axis. 
C)  lies below the midpoint of the curve. 
D)  lies above the midpoint of the curve.

Question 15

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

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 16

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

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

What does the income elasticity of demand measure?

Accepted Answer

A)  The responsiveness of quantity demanded to changes in income 
B)  How a consumer's purchasing power is affected by a change in the price of a product 
C)  The percentage change in the price of a product divided by the percentage change in consumer income 
D)  The income effect of a change in price 
A)  The responsiveness of quantity demanded to changes in income 
B)  How a consumer's purchasing power is affected by a change in the price of a product 
C)  The percentage change in the price of a product divided by the percentage change in consumer income 
D)  The income effect of a change in price

Question 18

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 19

At a price of $8 per dozen,Chuy sells 40 dozen home-made tamales per week.When he raised his price to $12 per dozen,he still sold 40 dozen per week.Based on this information,the demand for his tamales is _______.

Accepted Answer

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

Question 20

If firms do not increase their quantity supplied when price changes,then supply is ________.

Accepted Answer

A)  perfectly elastic 
B)  perfectly inelastic 
C)  relatively inelastic 
D)  elastic 
A)  perfectly elastic 
B)  perfectly inelastic 
C)  relatively inelastic 
D)  elastic

A perfectly elastic demand curve is _______.

The demand for heating oil in the short run is more elastic than the long run demand for heating oil.

The statement which explains why a firm would be interested in knowing the price elasticity of demand for a good it sells is:

If,when price changes by 35 per cent,the quantity demanded changes by 7 per cent,then the absolute value of the price elasticity of demand is 5.

Which statement is true of the market for a product that is broadly defined?

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 positive cross-price elasticity?

If a 5 per cent increase in income leads to a 10 per cent decrease in quantity demanded for a product this product is _______.

The process involved in bringing oil to world markets can take years.Substitutes for oil-based products such as petrol are limited.As a result________.

How is cross-price elasticity of demand calculated?

Figure 4.4 -Refer to Figure 4.4.The inelastic segment of the demand curve________.

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

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

What does the income elasticity of demand measure?

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

At a price of $8 per dozen,Chuy sells 40 dozen home-made tamales per week.When he raised his price to $12 per dozen,he still sold 40 dozen per week.Based on this information,the demand for his tamales is _______.

If firms do not increase their quantity supplied when price changes,then supply is ________.

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

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Exam 4: Elasticity: The Responsiveness of Demand and Supply

A perfectly elastic demand curve is _______.

The demand for heating oil in the short run is more elastic than the long run demand for heating oil.

The statement which explains why a firm would be interested in knowing the price elasticity of demand for a good it sells is:

If,when price changes by 35 per cent,the quantity demanded changes by 7 per cent,then the absolute value of the price elasticity of demand is 5.

Which statement is true of the market for a product that is broadly defined?

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 positive cross-price elasticity?

If a 5 per cent increase in income leads to a 10 per cent decrease in quantity demanded for a product this product is _______.

The process involved in bringing oil to world markets can take years.Substitutes for oil-based products such as petrol are limited.As a result________.

How is cross-price elasticity of demand calculated?

Figure 4.4 -Refer to Figure 4.4.The inelastic segment of the demand curve________.

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

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

What does the income elasticity of demand measure?

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

At a price of $8 per dozen,Chuy sells 40 dozen home-made tamales per week.When he raised his price to $12 per dozen,he still sold 40 dozen per week.Based on this information,the demand for his tamales is _______.

If firms do not increase their quantity supplied when price changes,then supply is ________.

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