Question 1

To calculate the price elasticity of demand we divide

Accepted Answer

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

Question 2

Which of the following statements is true?

Accepted Answer

A) The supply of oil is very elastic over short time periods but becomes perfectly inelastic over time.A given shift in supply results in a greater increase in the price of oil when the supply of oil is perfectly inelastic. 
B) The supply of oil is very inelastic over short time periods but becomes more elastic over time.A given shift in supply results in a smaller increase in the price of oil when the supply is more elastic. 
C) The supply of oil is perfectly inelastic;therefore,as the demand for oil increases over time,the price of oil increases significantly. 
D) Over short periods of time,increases in the demand for oil are greater than increases in the supply of oil.Over the long run,increases in the demand and the supply of oil are about equal.As a result,the price of oil increases greatly in the short run but is stable in the long run. 
A) The supply of oil is very elastic over short time periods but becomes perfectly inelastic over time.A given shift in supply results in a greater increase in the price of oil when the supply of oil is perfectly inelastic. 
B) The supply of oil is very inelastic over short time periods but becomes more elastic over time.A given shift in supply results in a smaller increase in the price of oil when the supply is more elastic. 
C) The supply of oil is perfectly inelastic;therefore,as the demand for oil increases over time,the price of oil increases significantly. 
D) Over short periods of time,increases in the demand for oil are greater than increases in the supply of oil.Over the long run,increases in the demand and the supply of oil are about equal.As a result,the price of oil increases greatly in the short run but is stable in the long run.

Question 3

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 4

Assume that you own a small boutique hotel.In an attempt to raise revenue you reduce your rates by 20 per cent.However,your revenue falls.What does this indicate about the demand for your boutique hotel rooms?

Accepted Answer

A) Boutique hotel rooms are inferior goods. 
B) Demand is inelastic. 
C) The demand curve for your hotel rooms is vertical. 
D) Demand is elastic. 
A) Boutique hotel rooms are inferior goods. 
B) Demand is inelastic. 
C) The demand curve for your hotel rooms is vertical. 
D) Demand is elastic.

Question 5

If the market for a product is narrowly defined,then there are likely to be many substitutes for the product and the demand for the product is relatively elastic.

Accepted Answer

A) True 
 B)False

Question 6

The income elasticity of demand measures

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.

To calculate the price elasticity of demand we divide

Which of the following statements is true?

Assume that you own a small boutique hotel.In an attempt to raise revenue you reduce your rates by 20 per cent.However,your revenue falls.What does this indicate about the demand for your boutique hotel rooms?

If the market for a product is narrowly defined,then there are likely to be many substitutes for the product and the demand for the product is relatively elastic.

The income elasticity of demand measures

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

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Exam 4: Elasticity: the Responsiveness of Demand and Supply

To calculate the price elasticity of demand we divide

Which of the following statements is true?

Assume that you own a small boutique hotel.In an attempt to raise revenue you reduce your rates by 20 per cent.However,your revenue falls.What does this indicate about the demand for your boutique hotel rooms?

If the market for a product is narrowly defined,then there are likely to be many substitutes for the product and the demand for the product is relatively elastic.

The income elasticity of demand measures

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