Question 1

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 2

Figure 4-5  
-Refer to Figure 4-5.The section of the demand curve labeled 'A' represents

Accepted Answer

A) the inelastic section of the demand curve. 
B) the unit-elastic section of the demand curve. 
C) the elastic section of the demand curve. 
D) the perfectly elastic section of the demand curve. 
A) the inelastic section of the demand curve. 
B) the unit-elastic section of the demand curve. 
C) the elastic section of the demand curve. 
D) the perfectly elastic section of the demand curve.

Question 3

If a firm lowered the price of the product it sells and found that total revenue did not change,then the demand for its product is

Accepted Answer

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

Question 4

Which of the following could explain why the demand for table salt is inelastic?

Accepted Answer

A) Salt is a luxury good. 
B) Salt is a rare commodity. 
C) Households devote a very small portion of their income to salt purchases. 
D) Salt is a luxury for high income consumers but a necessity for low income consumers. 
A) Salt is a luxury good. 
B) Salt is a rare commodity. 
C) Households devote a very small portion of their income to salt purchases. 
D) Salt is a luxury for high income consumers but a necessity for low income consumers.

Question 5

Consider a demand curve that has a constant elasticity value of 0.What happens to quantity demanded and total revenue when price increases?

Accepted Answer

A) The quantity demanded and total revenue remain the same. 
B) The quantity demanded does not change,but total revenue increases. 
C) The quantity demanded and total revenue fall to zero. 
D) The quantity demanded does not change,but total revenue decreases. 
A) The quantity demanded and total revenue remain the same. 
B) The quantity demanded does not change,but total revenue increases. 
C) The quantity demanded and total revenue fall to zero. 
D) The quantity demanded does not change,but total revenue decreases.

Question 6

Which of the following would result in a higher absolute value of the price elasticity of demand for a product?

Accepted Answer

A) A wide variety of substitutes are available for the good. 
B) The time period under consideration is short. 
C) The good is a necessity. 
D) The expenditure on the good is small relative to one's budget. 
A) A wide variety of substitutes are available for the good. 
B) The time period under consideration is short. 
C) The good is a necessity. 
D) The expenditure on the good is small relative to one's budget.

Question 7

Assume that the price elasticity of demand for petrol is -0.06.If the government tax causes the price of petrol to increase by 50 per cent,what will be the decrease in the quantity of petrol demanded?

Accepted Answer

A) 0.5 per cent 
B) 3.0 per cent 
C) 8.33 per cent 
D) 50 per cent 
A) 0.5 per cent 
B) 3.0 per cent 
C) 8.33 per cent 
D) 50 per cent

Question 8

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 9

Barbara,the consummate hostess,proudly announced as she served dessert,'A port is often the perfect end to a meal,sipped with a piece of my scrumptious chocolate cake.' Evidently,Barbara views

Accepted Answer

A) port and chocolate cake as luxury items. 
B) port and chocolate cake as necessities. 
C) port and chocolate cake as complementary goods. 
D) port and chocolate cake as substitutes to other desserts. 
A) port and chocolate cake as luxury items. 
B) port and chocolate cake as necessities. 
C) port and chocolate cake as complementary goods. 
D) port and chocolate cake as substitutes to other desserts.

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

When there are few substitutes available for a good,demand tends to be relatively inelastic.

Accepted Answer

A) True 
 B)False

Question 12

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 13

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 14

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 15

For people who live near a bus route,a subway station,or a commuter rail line,public transportation provides a substitute to driving their own cars.So,for these people,the cross-price elasticity of demand between petrol and public transportation is

Accepted Answer

A) positive. 
B) negative. 
C) zero. 
D) infinity. 
A) positive. 
B) negative. 
C) zero. 
D) infinity.

Question 16

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 17

Jill Borts believes that the price elasticity of demand for her economics textbook is relatively inelastic.She argues 'I was told I had to purchase a book written by Hubbard and O'Brien that is required by my instructor.If I wanted to buy a mystery novel I would have many authors to choose from.Therefore,the demand for mystery novels is more elastic than the demand for my textbook.' Is Jill correct?

Accepted Answer

A) The demand for the textbook is more inelastic,but Jill's reasoning is incorrect.The reason the textbook has an inelastic demand is that it is more expensive than any novel. 
B) She is correct. 
C) She is confused.She should have concluded that the textbook has a more elastic demand than a novel. 
D) She is correct that the textbook has a more inelastic demand,but that is because most students pay for their textbooks with credit or debit cards.Most people pay for novels and other books with cash or by check. 
A) The demand for the textbook is more inelastic,but Jill's reasoning is incorrect.The reason the textbook has an inelastic demand is that it is more expensive than any novel. 
B) She is correct. 
C) She is confused.She should have concluded that the textbook has a more elastic demand than a novel. 
D) She is correct that the textbook has a more inelastic demand,but that is because most students pay for their textbooks with credit or debit cards.Most people pay for novels and other books with cash or by check.

Question 18

Figure 4-6  
-Refer to Figure 4-6.As price falls from PA to PB,the quantity demanded increases most along D1;therefore,

Accepted Answer

A) D1 is unit elastic. 
B) D1 is more inelastic than D2 or D3. 
C) D1 is more elastic than D2 or D3 
D) D1 is elastic at PA but inelastic at PB. 
A) D1 is unit elastic. 
B) D1 is more inelastic than D2 or D3. 
C) D1 is more elastic than D2 or D3 
D) D1 is elastic at PA but inelastic at PB.

Question 19

The demand for all carbonated beverages is likely to be ________ the demand for Pepsi.

Accepted Answer

A) more elastic than 
B) perfectly elastic compared to 
C) less elastic than 
D) perfectly inelastic compared to 
A) more elastic than 
B) perfectly elastic compared to 
C) less elastic than 
D) perfectly inelastic compared to

Question 20

Total revenue equals

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.

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

Figure 4-5 -Refer to Figure 4-5.The section of the demand curve labeled 'A' represents

If a firm lowered the price of the product it sells and found that total revenue did not change,then the demand for its product is

Which of the following could explain why the demand for table salt is inelastic?

Consider a demand curve that has a constant elasticity value of 0.What happens to quantity demanded and total revenue when price increases?

Which of the following would result in a higher absolute value of the price elasticity of demand for a product?

Assume that the price elasticity of demand for petrol is -0.06.If the government tax causes the price of petrol to increase by 50 per cent,what will be the decrease in the quantity of petrol demanded?

Which of the following statements is true?

Barbara,the consummate hostess,proudly announced as she served dessert,'A port is often the perfect end to a meal,sipped with a piece of my scrumptious chocolate cake.' Evidently,Barbara views

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

When there are few substitutes available for a good,demand tends to be relatively inelastic.

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

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.

For people who live near a bus route,a subway station,or a commuter rail line,public transportation provides a substitute to driving their own cars.So,for these people,the cross-price elasticity of demand between petrol and public transportation is

To calculate the price elasticity of supply we divide

Figure 4-6 -Refer to Figure 4-6.As price falls from P_A to P_B,the quantity demanded increases most along D_1;therefore,

The demand for all carbonated beverages is likely to be ________ the demand for Pepsi.

Total revenue equals

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

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets 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

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

Figure 4-5 -Refer to Figure 4-5.The section of the demand curve labeled 'A' represents

If a firm lowered the price of the product it sells and found that total revenue did not change,then the demand for its product is

Which of the following could explain why the demand for table salt is inelastic?

Consider a demand curve that has a constant elasticity value of 0.What happens to quantity demanded and total revenue when price increases?

Which of the following would result in a higher absolute value of the price elasticity of demand for a product?

Assume that the price elasticity of demand for petrol is -0.06.If the government tax causes the price of petrol to increase by 50 per cent,what will be the decrease in the quantity of petrol demanded?

Which of the following statements is true?

Barbara,the consummate hostess,proudly announced as she served dessert,'A port is often the perfect end to a meal,sipped with a piece of my scrumptious chocolate cake.' Evidently,Barbara views

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

When there are few substitutes available for a good,demand tends to be relatively inelastic.

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

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.

For people who live near a bus route,a subway station,or a commuter rail line,public transportation provides a substitute to driving their own cars.So,for these people,the cross-price elasticity of demand between petrol and public transportation is

To calculate the price elasticity of supply we divide

Figure 4-6 -Refer to Figure 4-6.As price falls from PA to PB,the quantity demanded increases most along D1;therefore,

The demand for all carbonated beverages is likely to be ________ the demand for Pepsi.

Total revenue equals

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

Consumer Choice and Behavioural Economics

Technology, Production and Costs

Firms in Perfectly Competitive Markets

Monopoly Markets

Monopolistic Competition

Oligopoly: Firms in Less Competitive Markets

The Markets 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

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.

Figure 4-6 -Refer to Figure 4-6.As price falls from P_A to P_B,the quantity demanded increases most along D_1;therefore,