Question 1

If margarine and butter are substitutes, then their cross-elasticity coefficient will be:

Accepted Answer

A)  strictly greater than one. 
B)  positive. 
C)  equal to zero. 
D)  negative. 
A)  strictly greater than one. 
B)  positive. 
C)  equal to zero. 
D)  negative.

Question 2

If the price elasticity of demand for football tickets is estimated to be 4.5, then a 10 per cent increase in football ticket prices would be expected to cause a:

Accepted Answer

A)  4.5 per cent decrease in quantity demanded. 
B)  4.5 per cent increase in quantity demanded. 
C)  45 per cent decrease in quantity demanded. 
D)  45 per cent increase in quantity demanded. 
A)  4.5 per cent decrease in quantity demanded. 
B)  4.5 per cent increase in quantity demanded. 
C)  45 per cent decrease in quantity demanded. 
D)  45 per cent increase in quantity demanded.

Question 3

Within different price ranges along a linear demand curve, elasticities are:

Accepted Answer

A)  constant. 
B)  different. 
C)  equal. 
D)  the same as slope. 
A)  constant. 
B)  different. 
C)  equal. 
D)  the same as slope.

Question 4

If Pete raises the price of his muffins from $2 to $3 and his sales revenue increases from $35 000 to $38 000, then:

Accepted Answer

A)  the demand for Pete's muffins in this range is price elastic. 
B)  the demand for Pete's muffins in this range is price inelastic. 
C)  the demand for Pete's muffins in this range is unit elastic. 
D)  the percentage change in quantity demanded must exceed the percentage change in product price. 
A)  the demand for Pete's muffins in this range is price elastic. 
B)  the demand for Pete's muffins in this range is price inelastic. 
C)  the demand for Pete's muffins in this range is unit elastic. 
D)  the percentage change in quantity demanded must exceed the percentage change in product price.

Question 5

If demand for a good is price elastic, it must also be income elastic.

Accepted Answer

A) True 
 B)False

Question 6

Karin is a popular hairdresser in a small town. She charges her clients $30 for a haircut and earned $60 000 last year only doing haircuts. This year, Karin decided to increase the price for the haircut by $5. What is the elasticity of demand for Karin's haircut, if the number of her clients has dropped to 1800 per year?

Accepted Answer

A)  It is approximately equal to 2.3. 
B)  It is approximately equal to 1.68. 
C)  It is approximately equal to 1. 
D)  It is approximately equal to 0.68. 
A)  It is approximately equal to 2.3. 
B)  It is approximately equal to 1.68. 
C)  It is approximately equal to 1. 
D)  It is approximately equal to 0.68.

Question 7

If the income elasticity of demand for a good is 1.75, then it is what type of good?

Accepted Answer

A)  Price elastic. 
B)  Price inelastic. 
C)  Income inelastic. 
D)  Income elastic. 
A)  Price elastic. 
B)  Price inelastic. 
C)  Income inelastic. 
D)  Income elastic.

Question 8

If a good only takes up a small proportion of your income, the elasticity of demand is likely to be:

Accepted Answer

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

Question 9

If Coke and Pepsi are close substitutes, then if:

Accepted Answer

A)  Coke raises its price, so will Pepsi. 
B)  Coke raises its price, it will not lose customers to Pepsi. 
C)  Pepsi lowers its price, it will not hurt Coke. 
D)  Coke raises its price, some customers will switch to Pepsi. 
A)  Coke raises its price, so will Pepsi. 
B)  Coke raises its price, it will not lose customers to Pepsi. 
C)  Pepsi lowers its price, it will not hurt Coke. 
D)  Coke raises its price, some customers will switch to Pepsi.

Question 10

If Sam, the Pizza Man, lowers the price of his pizzas from $6 to $5 and finds that sales increase from 400 to 600 pizzas per week, then the demand for Sam's pizzas in this range is:

Accepted Answer

A)  3.5. 
B)  0.5. 
C) 1. 
D)  2.2. 
A)  3.5. 
B)  0.5. 
C) 1. 
D)  2.2.

Question 11

Tax incidence means that:

Accepted Answer

A)  the government increases tax. 
B)  the tax was lifted from a particular good. 
C)  no more tax will be imposed on a particular good. 
D)  the share of the tax is paid by producers or sellers or both. 
A)  the government increases tax. 
B)  the tax was lifted from a particular good. 
C)  no more tax will be imposed on a particular good. 
D)  the share of the tax is paid by producers or sellers or both.

Question 12

Narrbegin Exhibit 5.1 Demand curves   
-In Exhibit 5.1, the demand curve between points a and b is:

Accepted Answer

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

Question 13

The price elasticity of demand coefficient for a good will be lower if which of the following occurs?

Accepted Answer

A)  There are many substitutes for the good. 
B)  A price change persists for longer. 
C)  The less of the budget is spent on the good. 
D)  The higher the price of complements. 
A)  There are many substitutes for the good. 
B)  A price change persists for longer. 
C)  The less of the budget is spent on the good. 
D)  The higher the price of complements.

Question 14

The long-run price elasticity of demand is usually larger than the short-run price elasticity of demand because:

Accepted Answer

A)  demand curves tend to become steeper over time. 
B)  economists take the absolute value of long-run price elasticities but not of short-run
Elasticities. 
C)  people have more time to find substitute goods. 
D)  incomes tend to rise over time. 
A)  demand curves tend to become steeper over time. 
B)  economists take the absolute value of long-run price elasticities but not of short-run
Elasticities. 
C)  people have more time to find substitute goods. 
D)  incomes tend to rise over time.

Question 15

Price elasticity of demand can be:

Accepted Answer

A)  only greater than 1. 
B)  equal to 1, greater than 1, less than 1. 
C)  only less than 1. 
D)  only equal to 1. 
A)  only greater than 1. 
B)  equal to 1, greater than 1, less than 1. 
C)  only less than 1. 
D)  only equal to 1.

Question 16

If bus travel is an inferior good, then its income elasticity of demand will be:

Accepted Answer

A)  strictly greater than one. 
B)  positive. 
C)  equal to zero. 
D)  negative. 
A)  strictly greater than one. 
B)  positive. 
C)  equal to zero. 
D)  negative.

Question 17

When the price of bread increases by 5 per cent, the quantity demanded of crackers increases by 2 per cent. The cross elasticity of demand between crackers and bread is:

Accepted Answer

A)  0.67. 
B)  1.5. 
C)  2.5. 
D)  0.4. 
A)  0.67. 
B)  1.5. 
C)  2.5. 
D)  0.4.

Question 18

The longer the time period under study:

Accepted Answer

A)  the more elastic is the price elasticity of demand. 
B)  the less sensitive consumers will be to price changes. 
C)  the less adjustment consumers will make to price changes. 
D)  the more inelastic is the price elasticity of demand. 
A)  the more elastic is the price elasticity of demand. 
B)  the less sensitive consumers will be to price changes. 
C)  the less adjustment consumers will make to price changes. 
D)  the more inelastic is the price elasticity of demand.

Question 19

A study of consumers in an area found that as family income increased from $25 000 per year to $35 000 per year and other factors held constant, the number of houses purchased increased from 7000 per year to 11 000 per year. This finding indicates an income elasticity of demand coefficient for housing over this family income range of:

Accepted Answer

A)  0.22. 
B)  0.75. 
C)  1.33. 
D)  4.50. 
A)  0.22. 
B)  0.75. 
C)  1.33. 
D)  4.50.

Question 20

If an excise tax is placed on a product that has a perfectly inelastic demand, then:

Accepted Answer

A)  the entire tax will be paid by the consumer. 
B)  the entire tax will be paid by the producer. 
C)  the consumer and producer will each pay a share of the tax. 
D)  the incidence of the tax cannot be determined unless we know the coefficient of price elasticity of supply. 
A)  the entire tax will be paid by the consumer. 
B)  the entire tax will be paid by the producer. 
C)  the consumer and producer will each pay a share of the tax. 
D)  the incidence of the tax cannot be determined unless we know the coefficient of price elasticity of supply.

If margarine and butter are substitutes, then their cross-elasticity coefficient will be:

If the price elasticity of demand for football tickets is estimated to be 4.5, then a 10 per cent increase in football ticket prices would be expected to cause a:

Within different price ranges along a linear demand curve, elasticities are:

If Pete raises the price of his muffins from $2 to $3 and his sales revenue increases from $35 000 to $38 000, then:

If demand for a good is price elastic, it must also be income elastic.

If the income elasticity of demand for a good is 1.75, then it is what type of good?

If a good only takes up a small proportion of your income, the elasticity of demand is likely to be:

If Coke and Pepsi are close substitutes, then if:

If Sam, the Pizza Man, lowers the price of his pizzas from $6 to $5 and finds that sales increase from 400 to 600 pizzas per week, then the demand for Sam's pizzas in this range is:

Tax incidence means that:

Narrbegin Exhibit 5.1 Demand curves -In Exhibit 5.1, the demand curve between points a and b is:

The price elasticity of demand coefficient for a good will be lower if which of the following occurs?

The long-run price elasticity of demand is usually larger than the short-run price elasticity of demand because:

Price elasticity of demand can be:

If bus travel is an inferior good, then its income elasticity of demand will be:

When the price of bread increases by 5 per cent, the quantity demanded of crackers increases by 2 per cent. The cross elasticity of demand between crackers and bread is:

The longer the time period under study:

If an excise tax is placed on a product that has a perfectly inelastic demand, then:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

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Exam 6: Elasticity of Demand and Supply

If margarine and butter are substitutes, then their cross-elasticity coefficient will be:

If the price elasticity of demand for football tickets is estimated to be 4.5, then a 10 per cent increase in football ticket prices would be expected to cause a:

Within different price ranges along a linear demand curve, elasticities are:

If Pete raises the price of his muffins from $2 to $3 and his sales revenue increases from $35 000 to $38 000, then:

If demand for a good is price elastic, it must also be income elastic.

If the income elasticity of demand for a good is 1.75, then it is what type of good?

If a good only takes up a small proportion of your income, the elasticity of demand is likely to be:

If Coke and Pepsi are close substitutes, then if:

If Sam, the Pizza Man, lowers the price of his pizzas from $6 to $5 and finds that sales increase from 400 to 600 pizzas per week, then the demand for Sam's pizzas in this range is:

Tax incidence means that:

Narrbegin Exhibit 5.1 Demand curves -In Exhibit 5.1, the demand curve between points a and b is:

The price elasticity of demand coefficient for a good will be lower if which of the following occurs?

The long-run price elasticity of demand is usually larger than the short-run price elasticity of demand because:

Price elasticity of demand can be:

If bus travel is an inferior good, then its income elasticity of demand will be:

When the price of bread increases by 5 per cent, the quantity demanded of crackers increases by 2 per cent. The cross elasticity of demand between crackers and bread is:

The longer the time period under study:

If an excise tax is placed on a product that has a perfectly inelastic demand, then:

Thinking Like an Economist

Applying Graphs to Economics

Production Possibilities and Opportunity Cost

Market Demand and Supply

Markets in Action

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Policy Issues: Housing Affordability and Climate Change

Measuring the Size of the Economy

Business Cycles and Economic Growth

Inflation and Unemployment

A Simple Model of the Macro Economy

The Monetary and Financial System

Macroeconomic Policy I: Monetary Policy

Macroeconomic Policy II: Fiscal Policy

International Trade and Finance

Filters