Question 1

If,for a given percentage decrease in price,quantity supplied decreases by a proportionately smaller percentage,then supply is

Accepted Answer

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

Question 2

Suppose when Nablom's Bakery raised the price of its breads by 10 per cent,the quantity demanded fell by 15 per cent.What was the effect on sales revenue?

Accepted Answer

A) Sales revenue increased. 
B) Sales revenue remained unchanged. 
C) Sales revenue decreased. 
D) It cannot be determined without information on prices. 
A) Sales revenue increased. 
B) Sales revenue remained unchanged. 
C) Sales revenue decreased. 
D) It cannot be determined without information on prices.

Question 3

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 cross-price elasticity of zero?

Accepted Answer

A) a and b only 
B) c only,since most people cannot do without computers 
C) e only 
D) none of the pairs listed 
A) a and b only 
B) c only,since most people cannot do without computers 
C) e only 
D) none of the pairs listed

Question 4

If the demand for a steak is unit-elastic,then

Accepted Answer

A) the percentage change in quantity demanded is 1 per cent greater than the percentage change in price. 
B) the percentage change in quantity demanded is equal to the percentage change in price. 
C) the percentage change in quantity demanded is 100 per cent greater than the percentage change in price (in absolute value). 
D) quantity demanded does not respond to changes in price. 
A) the percentage change in quantity demanded is 1 per cent greater than the percentage change in price. 
B) the percentage change in quantity demanded is equal to the percentage change in price. 
C) the percentage change in quantity demanded is 100 per cent greater than the percentage change in price (in absolute value). 
D) quantity demanded does not respond to changes in price.

Question 5

Economists estimated that the price elasticity of beer is -0.30 and the income elasticity of beer is 0.09.This means that

Accepted Answer

A) an increase in the price of beer will increase the quantity demanded of beer,and beer is a normal good. 
B) an increase in the price of beer will lead to an increase in revenue for beer sellers,and beer is a normal good. 
C) a decrease in the price of beer will lead to an increase in revenue for beer sellers,and beer is an inferior good. 
D) an increase in the price of beer will lead to a decrease in the quantity demanded of beer,and beer is a necessity. 
A) an increase in the price of beer will increase the quantity demanded of beer,and beer is a normal good. 
B) an increase in the price of beer will lead to an increase in revenue for beer sellers,and beer is a normal good. 
C) a decrease in the price of beer will lead to an increase in revenue for beer sellers,and beer is an inferior good. 
D) an increase in the price of beer will lead to a decrease in the quantity demanded of beer,and beer is a necessity.

Question 6

What does price elasticity of demand measure? When is demand elastic? Inelastic? Unit elastic?

Accepted Answer

Price elasticity of demand measures the

Question 7

Suppose a decrease in the supply of bottled water results in a decrease in revenue.This indicates that

Accepted Answer

A) the demand for bottled water is inelastic in the price range considered. 
B) the demand for bottled water is elastic in the price range considered. 
C) the supply of bottled water is inelastic in the price range considered. 
D) the supply of bottled water is elastic in the price range considered. 
A) the demand for bottled water is inelastic in the price range considered. 
B) the demand for bottled water is elastic in the price range considered. 
C) the supply of bottled water is inelastic in the price range considered. 
D) the supply of bottled water is elastic in the price range considered.

Question 8

If the cross-price elasticity of demand between beer and wine is 0.31,then beer and wine are

Accepted Answer

A) complements. 
B) price inelastic goods. 
C) substitutes. 
D) necessities. 
A) complements. 
B) price inelastic goods. 
C) substitutes. 
D) necessities.

Question 9

If the price of steel increases drastically,the quantity of steel demanded by the building industry will fall significantly over the long run because

Accepted Answer

A) buyers of steel are more sensitive to a price change if they have more time to adjust to the price change. 
B) buyers of steel are less sensitive to a price change if they have more time to adjust to the price change. 
C) sales revenue in the building industry will fall sharply. 
D) profits will fall by a greater amount in the long run than in the short run. 
A) buyers of steel are more sensitive to a price change if they have more time to adjust to the price change. 
B) buyers of steel are less sensitive to a price change if they have more time to adjust to the price change. 
C) sales revenue in the building industry will fall sharply. 
D) profits will fall by a greater amount in the long run than in the short run.

Question 10

The demand for most farm products is relatively inelastic.All else constant,what is the effect on farm revenues as a result of the introduction of new and better farm equipment which increases productivity?

Accepted Answer

A) Farm revenues increase. 
B) Farm revenues decrease. 
C) Farm revenues remain constant because consumers will not increase their consumption of farm products by much. 
D) Farm revenues could increase or decrease depending on the cost of this new equipment. 
A) Farm revenues increase. 
B) Farm revenues decrease. 
C) Farm revenues remain constant because consumers will not increase their consumption of farm products by much. 
D) Farm revenues could increase or decrease depending on the cost of this new equipment.

Question 11

A linear downward-sloping demand curve has price elasticities (in absolute values)that

Accepted Answer

A) increase as price decreases. 
B) remain constant along the demand curve. 
C) decrease as price decreases. 
D) are greater than or equal to 1. 
A) increase as price decreases. 
B) remain constant along the demand curve. 
C) decrease as price decreases. 
D) are greater than or equal to 1.

Question 12

Holding everything else constant,the absolute value of the price elasticity of demand for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes.

Accepted Answer

A) less than 
B) equal to 
C) twice as great as 
D) greater than 
A) less than 
B) equal to 
C) twice as great as 
D) greater than

Question 13

When Audrina raised the price of her homemade cookies,her total revenue increased.This suggests that the demand for Audrina's cookies is elastic.

Accepted Answer

A) True 
 B)False

Question 14

Suppose at the current price,the demand for copper is estimated at -3.14.What happens to sales revenue if the government imposes a price ceiling below the free market equilibrium price in the copper market?

Accepted Answer

A) Sales revenue falls. 
B) Sales revenue rises. 
C) Sales revenue remains unchanged because copper is a necessity for most industries. 
D) It cannot be determined without information on prices. 
A) Sales revenue falls. 
B) Sales revenue rises. 
C) Sales revenue remains unchanged because copper is a necessity for most industries. 
D) It cannot be determined without information on prices.

Question 15

Jaycee Jeans sold 40 pairs of jeans at a price of $40.When it lowered its price to $20,the quantity sold increased to 60 pairs.Calculate the absolute value of the price elasticity of demand.Use the midpoint formula.

Accepted Answer

A) 1.67 
B) 1.0 
C) 0.6 
D) 0.53 
A) 1.67 
B) 1.0 
C) 0.6 
D) 0.53

Question 16

If the percentage increase in price is 15 per cent and the value of the price elasticity of demand is -3,then 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 17

The cross-price elasticity of demand measures the

Accepted Answer

A) absolute change in the quantity demanded of one good divided by the absolute change in the price of another good. 
B) percentage change in the quantity demanded of one good divided by the percentage change in the price of another good. 
C) percentage change in the price of one good divided by the percentage change in the quantity demanded of another good. 
D) percentage change in the quantity demanded of one good in one location divided by the price of the same good in another location. 
A) absolute change in the quantity demanded of one good divided by the absolute change in the price of another good. 
B) percentage change in the quantity demanded of one good divided by the percentage change in the price of another good. 
C) percentage change in the price of one good divided by the percentage change in the quantity demanded of another good. 
D) percentage change in the quantity demanded of one good in one location divided by the price of the same good in another location.

Question 18

Income elasticity measures

Accepted Answer

A) how a good's quantity demanded responds to change in the good's price. 
B) how a good's quantity demanded responds to change in the price of another good. 
C) how a good's quantity demanded responds to change in buyers' incomes. 
D) how a good's quantity demanded responds to producers' incomes. 
A) how a good's quantity demanded responds to change in the good's price. 
B) how a good's quantity demanded responds to change in the price of another good. 
C) how a good's quantity demanded responds to change in buyers' incomes. 
D) how a good's quantity demanded responds to producers' incomes.

Question 19

Figure 4-7  
-Refer to Figure 4-7.The supply curve on which price elasticity changes at every point 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 20

Since 1950 there has been a substantial increase in wheat production.The increase in production has led to a decrease in the price of wheat because of which of the following factors?

Accepted Answer

A) The absolute value of the price elasticity of demand for wheat is less than 1,and the income elasticity of demand for wheat is greater than 1. 
B) The absolute value of the price elasticity of demand for wheat is greater than 1,and wheat is a close substitute for other food products. 
C) The absolute value of the price elasticity of demand for wheat is less than 1,and the income elasticity of demand for wheat is low. 
D) The income elasticity of demand for wheat is high,and wheat is an inferior good. 
A) The absolute value of the price elasticity of demand for wheat is less than 1,and the income elasticity of demand for wheat is greater than 1. 
B) The absolute value of the price elasticity of demand for wheat is greater than 1,and wheat is a close substitute for other food products. 
C) The absolute value of the price elasticity of demand for wheat is less than 1,and the income elasticity of demand for wheat is low. 
D) The income elasticity of demand for wheat is high,and wheat is an inferior good.

If,for a given percentage decrease in price,quantity supplied decreases by a proportionately smaller percentage,then supply is

Suppose when Nablom's Bakery raised the price of its breads by 10 per cent,the quantity demanded fell by 15 per cent.What was the effect on sales revenue?

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 cross-price elasticity of zero?

If the demand for a steak is unit-elastic,then

Economists estimated that the price elasticity of beer is -0.30 and the income elasticity of beer is 0.09.This means that

What does price elasticity of demand measure? When is demand elastic? Inelastic? Unit elastic?

Suppose a decrease in the supply of bottled water results in a decrease in revenue.This indicates that

If the cross-price elasticity of demand between beer and wine is 0.31,then beer and wine are

If the price of steel increases drastically,the quantity of steel demanded by the building industry will fall significantly over the long run because

The demand for most farm products is relatively inelastic.All else constant,what is the effect on farm revenues as a result of the introduction of new and better farm equipment which increases productivity?

A linear downward-sloping demand curve has price elasticities (in absolute values)that

Holding everything else constant,the absolute value of the price elasticity of demand for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes.

When Audrina raised the price of her homemade cookies,her total revenue increased.This suggests that the demand for Audrina's cookies is elastic.

Suppose at the current price,the demand for copper is estimated at -3.14.What happens to sales revenue if the government imposes a price ceiling below the free market equilibrium price in the copper market?

Jaycee Jeans sold 40 pairs of jeans at a price of $40.When it lowered its price to $20,the quantity sold increased to 60 pairs.Calculate the absolute value of the price elasticity of demand.Use the midpoint formula.

If the percentage increase in price is 15 per cent and the value of the price elasticity of demand is -3,then quantity demanded

The cross-price elasticity of demand measures the

Income elasticity measures

Figure 4-7 -Refer to Figure 4-7.The supply curve on which price elasticity changes at every point is shown in

Since 1950 there has been a substantial increase in wheat production.The increase in production has led to a decrease in the price of wheat because of which of the following factors?

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,for a given percentage decrease in price,quantity supplied decreases by a proportionately smaller percentage,then supply is

Suppose when Nablom's Bakery raised the price of its breads by 10 per cent,the quantity demanded fell by 15 per cent.What was the effect on sales revenue?

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 cross-price elasticity of zero?

If the demand for a steak is unit-elastic,then

Economists estimated that the price elasticity of beer is -0.30 and the income elasticity of beer is 0.09.This means that

What does price elasticity of demand measure? When is demand elastic? Inelastic? Unit elastic?

Suppose a decrease in the supply of bottled water results in a decrease in revenue.This indicates that

If the cross-price elasticity of demand between beer and wine is 0.31,then beer and wine are

If the price of steel increases drastically,the quantity of steel demanded by the building industry will fall significantly over the long run because

The demand for most farm products is relatively inelastic.All else constant,what is the effect on farm revenues as a result of the introduction of new and better farm equipment which increases productivity?

A linear downward-sloping demand curve has price elasticities (in absolute values)that

Holding everything else constant,the absolute value of the price elasticity of demand for Saucony tennis shoes is ________ the price elasticity of demand for tennis shoes.

When Audrina raised the price of her homemade cookies,her total revenue increased.This suggests that the demand for Audrina's cookies is elastic.

Suppose at the current price,the demand for copper is estimated at -3.14.What happens to sales revenue if the government imposes a price ceiling below the free market equilibrium price in the copper market?

Jaycee Jeans sold 40 pairs of jeans at a price of $40.When it lowered its price to $20,the quantity sold increased to 60 pairs.Calculate the absolute value of the price elasticity of demand.Use the midpoint formula.

If the percentage increase in price is 15 per cent and the value of the price elasticity of demand is -3,then quantity demanded

The cross-price elasticity of demand measures the

Income elasticity measures

Figure 4-7 -Refer to Figure 4-7.The supply curve on which price elasticity changes at every point is shown in

Since 1950 there has been a substantial increase in wheat production.The increase in production has led to a decrease in the price of wheat because of which of the following factors?

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