Question 1

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

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 2

Studies show that the income elasticity of demand for wine is approximately five.What does this mean?

Accepted Answer

A) A 1 per cent decrease in the price of wine leads to a 5 per cent increase in wine consumption. 
B) A 1 per cent increase in income leads to a 5 per cent increase in wine consumption. 
C) A 5 per cent increase in income leads to a 1 per cent increase in wine consumption. 
D) Wine is a relatively elastic good. 
A) A 1 per cent decrease in the price of wine leads to a 5 per cent increase in wine consumption. 
B) A 1 per cent increase in income leads to a 5 per cent increase in wine consumption. 
C) A 5 per cent increase in income leads to a 1 per cent increase in wine consumption. 
D) Wine is a relatively elastic good.

Question 3

With the increased usage of mobile services,what has happened to the price elasticity of demand for land-line telephone services?

Accepted Answer

A) It has become more price inelastic. 
B) It has become more price elastic. 
C) It has become more income elastic. 
D) The absolute value of the price elasticity coefficient has probably gone down. 
A) It has become more price inelastic. 
B) It has become more price elastic. 
C) It has become more income elastic. 
D) The absolute value of the price elasticity coefficient has probably gone down.

Question 4

Which of the following goods would have the most inelastic demand?

Accepted Answer

A) ski vacations 
B) bread 
C) luxury cars 
D) big screen TVs 
A) ski vacations 
B) bread 
C) luxury cars 
D) big screen TVs

Question 5

If the market for a product is broadly defined,then

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 6

When there are few close substitutes available for a good,demand tends to be

Accepted Answer

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

Question 7

There is a limited number of original Picasso paintings.This means that the supply of original Picasso paintings is perfectly inelastic.

Accepted Answer

A) True 
 B)False

Question 8

Carrie Bradshaw claims that when it comes to buying shoes,'price is no object.' If this is true,then her demand for shoes is

Accepted Answer

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

Question 9

Which of the following statements is true?

Accepted Answer

A) In general,if a product has few substitutes,it will have an elastic demand. 
B) The more time that passes,the more inelastic the demand for a product becomes. 
C) The demand curve for a necessity is more elastic than the demand curve for a luxury. 
D) The more narrowly we define a market,the more elastic the demand for a product will be. 
A) In general,if a product has few substitutes,it will have an elastic demand. 
B) The more time that passes,the more inelastic the demand for a product becomes. 
C) The demand curve for a necessity is more elastic than the demand curve for a luxury. 
D) The more narrowly we define a market,the more elastic the demand for a product will be.

Question 10

Suppose the value of the price elasticity of demand is -3.What does this mean?

Accepted Answer

A) A 1 per cent increase in the price of the good causes quantity demanded to increase by 3 per cent. 
B) A 1 per cent increase in the price of the good causes quantity demanded to decrease by 3 per cent. 
C) A 3 per cent increase in the price of the good causes quantity demanded to decrease by 1 per cent. 
D) A $1 increase in price causes quantity demanded to fall by 3 units. 
A) A 1 per cent increase in the price of the good causes quantity demanded to increase by 3 per cent. 
B) A 1 per cent increase in the price of the good causes quantity demanded to decrease by 3 per cent. 
C) A 3 per cent increase in the price of the good causes quantity demanded to decrease by 1 per cent. 
D) A $1 increase in price causes quantity demanded to fall by 3 units.

Question 11

The cross-price elasticity between Gillette razors and a related good is -3.4.What happens to the demand for the related good if the price of Gillette razors falls by 10 per cent?

Accepted Answer

A) The quantity demanded of the related good rises by 3.4 per cent. 
B) The quantity demanded of the related good falls by 34 per cent. 
C) The quantity demanded of the related good rises by 34 per cent. 
D) The quantity demanded of the related good falls by 3.4 per cent. 
A) The quantity demanded of the related good rises by 3.4 per cent. 
B) The quantity demanded of the related good falls by 34 per cent. 
C) The quantity demanded of the related good rises by 34 per cent. 
D) The quantity demanded of the related good falls by 3.4 per cent.

Question 12

If demand is inelastic,the absolute value of the price elasticity of demand is

Accepted Answer

A) one. 
B) less than one. 
C) greater than one. 
D) greater than the absolute value of the slope of the demand curve. 
A) one. 
B) less than one. 
C) greater than one. 
D) greater than the absolute value of the slope of the demand curve.

Question 13

Suppose a decrease in the supply of paper results in an increase in revenue.This indicates that

Accepted Answer

A) the demand for paper is inelastic. 
B) the demand for paper is elastic. 
C) the supply of paper is inelastic. 
D) the supply of paper is elastic. 
A) the demand for paper is inelastic. 
B) the demand for paper is elastic. 
C) the supply of paper is inelastic. 
D) the supply of paper is elastic.

Question 14

If a 35 per cent increase in the price of golf balls led to a 42 per cent decrease in quantity demanded,then the demand for golf balls is

Accepted Answer

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

Question 15

Supply is elastic whenever the elasticity value for supply is positive and greater than 1.

Accepted Answer

A) True 
 B)False

Question 16

Inelastic supply occurs whenever the elasticity of supply value is

Accepted Answer

A) negative and  1. 
D) positive and < 1. 
A) negative and  1. 
D) positive and < 1.

Question 17

Figure 4-3  
-Refer to Figure 4-3.Using the midpoint formula,calculate the absolute value of the price elasticity of demand between e and f.

Accepted Answer

A) 0.32 
B) 0.4 
C) 2.5 
D) 3.125 
A) 0.32 
B) 0.4 
C) 2.5 
D) 3.125

Question 18

Suppose the current price of oil is $90 a barrel and the quantity supplied is 800 million barrels per day.If the price elasticity of supply for oil in the short run is estimated at 0.5,use the midpoint formula to calculate the percentage change in quantity supplied when the price of oil rises to $98 a barrel.

Accepted Answer

The percentage change in quant

Question 19

At a price of $100,Beachside Canoe Rentals rented 11 canoes.When it increased its rental price to $125,9 canoes were rented.Calculate the absolute value of the price elasticity of demand for canoe rentals,using the midpoint formula.

Accepted Answer

A) 2 
B) 1.25 
C) 0.9 
D) 0.75 
A) 2 
B) 1.25 
C) 0.9 
D) 0.75

Question 20

If the absolute value of the price elasticity of demand for aspirin equals 0.8 then

Accepted Answer

A) aspirin is a normal good. 
B) the demand for aspirin is inelastic. 
C) aspirin has few substitutes. 
D) the demand for aspirin is elastic. 
A) aspirin is a normal good. 
B) the demand for aspirin is inelastic. 
C) aspirin has few substitutes. 
D) the demand for aspirin is elastic.

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

Studies show that the income elasticity of demand for wine is approximately five.What does this mean?

With the increased usage of mobile services,what has happened to the price elasticity of demand for land-line telephone services?

Which of the following goods would have the most inelastic demand?

If the market for a product is broadly defined,then

When there are few close substitutes available for a good,demand tends to be

There is a limited number of original Picasso paintings.This means that the supply of original Picasso paintings is perfectly inelastic.

Carrie Bradshaw claims that when it comes to buying shoes,'price is no object.' If this is true,then her demand for shoes is

Which of the following statements is true?

Suppose the value of the price elasticity of demand is -3.What does this mean?

The cross-price elasticity between Gillette razors and a related good is -3.4.What happens to the demand for the related good if the price of Gillette razors falls by 10 per cent?

If demand is inelastic,the absolute value of the price elasticity of demand is

Suppose a decrease in the supply of paper results in an increase in revenue.This indicates that

If a 35 per cent increase in the price of golf balls led to a 42 per cent decrease in quantity demanded,then the demand for golf balls is

Supply is elastic whenever the elasticity value for supply is positive and greater than 1.

Inelastic supply occurs whenever the elasticity of supply value is

Figure 4-3 -Refer to Figure 4-3.Using the midpoint formula,calculate the absolute value of the price elasticity of demand between e and f.

At a price of $100,Beachside Canoe Rentals rented 11 canoes.When it increased its rental price to $125,9 canoes were rented.Calculate the absolute value of the price elasticity of demand for canoe rentals,using the midpoint formula.

If the absolute value of the price elasticity of demand for aspirin equals 0.8 then

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

Studies show that the income elasticity of demand for wine is approximately five.What does this mean?

With the increased usage of mobile services,what has happened to the price elasticity of demand for land-line telephone services?

Which of the following goods would have the most inelastic demand?

If the market for a product is broadly defined,then

When there are few close substitutes available for a good,demand tends to be

There is a limited number of original Picasso paintings.This means that the supply of original Picasso paintings is perfectly inelastic.

Carrie Bradshaw claims that when it comes to buying shoes,'price is no object.' If this is true,then her demand for shoes is

Which of the following statements is true?

Suppose the value of the price elasticity of demand is -3.What does this mean?

The cross-price elasticity between Gillette razors and a related good is -3.4.What happens to the demand for the related good if the price of Gillette razors falls by 10 per cent?

If demand is inelastic,the absolute value of the price elasticity of demand is

Suppose a decrease in the supply of paper results in an increase in revenue.This indicates that

If a 35 per cent increase in the price of golf balls led to a 42 per cent decrease in quantity demanded,then the demand for golf balls is

Supply is elastic whenever the elasticity value for supply is positive and greater than 1.

Inelastic supply occurs whenever the elasticity of supply value is

Figure 4-3 -Refer to Figure 4-3.Using the midpoint formula,calculate the absolute value of the price elasticity of demand between e and f.

At a price of $100,Beachside Canoe Rentals rented 11 canoes.When it increased its rental price to $125,9 canoes were rented.Calculate the absolute value of the price elasticity of demand for canoe rentals,using the midpoint formula.

If the absolute value of the price elasticity of demand for aspirin equals 0.8 then

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