Question 1

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 2

If the income elasticity for canned food is 0.8,then canned food is an inferior good.

Accepted Answer

A) True 
 B)False

Question 3

If a supply curve is a horizontal line,supply is said to be

Accepted Answer

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

Question 4

If a firm is in an antitrust court case being accused of monopolising a product,the firm would hire an economist to show

Accepted Answer

A) the cross-price elasticity of demand between the firm's good and another is negative. 
B) the cross-price elasticity of demand between the firm's good and another is positive. 
C) the price elasticity of demand for the firm's good is highly inelastic. 
D) the income elasticity of the firm's good is inferior. 
A) the cross-price elasticity of demand between the firm's good and another is negative. 
B) the cross-price elasticity of demand between the firm's good and another is positive. 
C) the price elasticity of demand for the firm's good is highly inelastic. 
D) the income elasticity of the firm's good is inferior.

Question 5

Suppose a 4 per cent increase in price results in a 2 per cent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterise the product.

Accepted Answer

A) 2;The product is elastic. 
B) 0.2;The product is inelastic. 
C) 0.5;The product is inelastic. 
D) 50%;The product is inelastic. 
A) 2;The product is elastic. 
B) 0.2;The product is inelastic. 
C) 0.5;The product is inelastic. 
D) 50%;The product is inelastic.

Question 6

Demand for staples such as dairy products and bread is likely to be both income and price inelastic.

Accepted Answer

A) True 
 B)False

Question 7

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 every thing 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 8

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative,demand for using the toll road must be

Accepted Answer

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

Question 9

Which of the following correctly comments on the following statement? 'The only way to increase the revenue from selling a product is to increase the product's price.'

Accepted Answer

A) It is not true.Revenue will increase as the price of the product increases only if demand is elastic. 
B) This statement is not true.Revenue will increase as the price of the product increases only if demand is inelastic. 
C) The statement is true. 
D) This statement is not true.Revenue will decrease as the price of the product increases because quantity demanded will fall. 
A) It is not true.Revenue will increase as the price of the product increases only if demand is elastic. 
B) This statement is not true.Revenue will increase as the price of the product increases only if demand is inelastic. 
C) The statement is true. 
D) This statement is not true.Revenue will decrease as the price of the product increases because quantity demanded will fall.

Question 10

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 11

Figure 4-7  
-Refer to Figure 4-7.A unit-elastic supply curve is shown in

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 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

Which of the following statements is true about the price elasticity of demand along a downward-sloping linear demand curve?

Accepted Answer

A) It is inelastic at high prices and elastic at low prices. 
B) It is unit-elastic throughout the demand curve. 
C) It is elastic at high prices and inelastic at low prices. 
D) It is perfectly elastic at very high prices and perfectly inelastic at very low prices. 
A) It is inelastic at high prices and elastic at low prices. 
B) It is unit-elastic throughout the demand curve. 
C) It is elastic at high prices and inelastic at low prices. 
D) It is perfectly elastic at very high prices and perfectly inelastic at very low prices.

Question 14

If demand for a product is perfectly inelastic,a change in price will not change total revenue.

Accepted Answer

A) True 
 B)False

Question 15

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 16

A private school is considering increasing its tuition to raise revenue.If the school believes that raising tuition will increase revenue,

Accepted Answer

A) it is assuming that the demand for attending the school is inelastic. 
B) it is assuming that the demand for attending the school is elastic. 
C) it is assuming that the demand for attending the school is unit-elastic. 
D) it is assuming that the demand for attending the school is perfectly elastic. 
A) it is assuming that the demand for attending the school is inelastic. 
B) it is assuming that the demand for attending the school is elastic. 
C) it is assuming that the demand for attending the school is unit-elastic. 
D) it is assuming that the demand for attending the school is perfectly elastic.

Question 17

The price elasticity of demand for canned soup is estimated at -1.62.What happens to sales revenue if the price of canned soup rises?

Accepted Answer

A) It falls by 162 per cent. 
B) It rises by 1.62 per cent. 
C) It falls. 
D) It rises. 
A) It falls by 162 per cent. 
B) It rises by 1.62 per cent. 
C) It falls. 
D) It rises.

Question 18

Total revenue is equal to

Accepted Answer

A) the amount of funds earned by a firm minus its costs of production. 
B) the total quantity sold of a product over a given period of time. 
C) the price of a product multiplied by the number of units of the product sold. 
D) the monetary value of the capital (for example,plant and equipment)a firm owns. 
A) the amount of funds earned by a firm minus its costs of production. 
B) the total quantity sold of a product over a given period of time. 
C) the price of a product multiplied by the number of units of the product sold. 
D) the monetary value of the capital (for example,plant and equipment)a firm owns.

Question 19

If a firm's goal is to maximise revenue,it will price its product to correspond to the unit-elastic segment of its demand curve.

Accepted Answer

A) True 
 B)False

Question 20

Explain the relationship between price elasticity of demand and total revenue.

Accepted Answer

If demand is elastic,an increase in pric

Figure 4-4 -Refer to Figure 4-4.The inelastic segment of the demand curve

If the income elasticity for canned food is 0.8,then canned food is an inferior good.

If a supply curve is a horizontal line,supply is said to be

If a firm is in an antitrust court case being accused of monopolising a product,the firm would hire an economist to show

Suppose a 4 per cent increase in price results in a 2 per cent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterise the product.

Demand for staples such as dairy products and bread is likely to be both income and price inelastic.

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 every thing else constant,will cause the quantity of beef demanded to

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative,demand for using the toll road must be

Which of the following correctly comments on the following statement? 'The only way to increase the revenue from selling a product is to increase the product's price.'

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?

Figure 4-7 -Refer to Figure 4-7.A unit-elastic supply curve is shown in

Which of the following statements is true about the price elasticity of demand along a downward-sloping linear demand curve?

If demand for a product is perfectly inelastic,a change in price will not change total revenue.

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?

A private school is considering increasing its tuition to raise revenue.If the school believes that raising tuition will increase revenue,

The price elasticity of demand for canned soup is estimated at -1.62.What happens to sales revenue if the price of canned soup rises?

Total revenue is equal to

If a firm's goal is to maximise revenue,it will price its product to correspond to the unit-elastic segment of its demand curve.

Explain the relationship between price elasticity of demand and total revenue.

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

Figure 4-4 -Refer to Figure 4-4.The inelastic segment of the demand curve

If the income elasticity for canned food is 0.8,then canned food is an inferior good.

If a supply curve is a horizontal line,supply is said to be

If a firm is in an antitrust court case being accused of monopolising a product,the firm would hire an economist to show

Suppose a 4 per cent increase in price results in a 2 per cent increase in the quantity supplied of a good.Calculate the price elasticity of supply and characterise the product.

Demand for staples such as dairy products and bread is likely to be both income and price inelastic.

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 every thing else constant,will cause the quantity of beef demanded to

If tolls on a toll road can be raised significantly before commuters will consider using a free alternative,demand for using the toll road must be

Which of the following correctly comments on the following statement? 'The only way to increase the revenue from selling a product is to increase the product's price.'

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?

Figure 4-7 -Refer to Figure 4-7.A unit-elastic supply curve is shown in

Which of the following statements is true about the price elasticity of demand along a downward-sloping linear demand curve?

If demand for a product is perfectly inelastic,a change in price will not change total revenue.

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?

A private school is considering increasing its tuition to raise revenue.If the school believes that raising tuition will increase revenue,

The price elasticity of demand for canned soup is estimated at -1.62.What happens to sales revenue if the price of canned soup rises?

Total revenue is equal to

If a firm's goal is to maximise revenue,it will price its product to correspond to the unit-elastic segment of its demand curve.

Explain the relationship between price elasticity of demand and total revenue.

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